What Trump’s Executive Action On Mortgage Premiums Means for Consumers
On his first day in office, President Donald J. Trump blocked an Obama administration rule that would have lowered mortgage costs for millions of homebuyers. In fact, during the first hour he was in office, the Department of Housing and Urban Development (HUD) sent a mass communication to mortgage lenders, real estate agents and brokers to announce the suspension of the rule, which was scheduled to go into effect on January 27.
The rule suspension affects millions of homeowners with Federal Housing Administration (FHA) loans – approximately 16 percent of all homeowners. Had the Obama rule been allowed to go into effect, it would have provided a 0.25 percent premium rate cut on FHA loans, saving consumers an average $29 per month.
In addition to affecting mortgage payments, the National Association of Realtors reports that Trump’s action will also negatively impact many consumers applying for FHA loans. The Obama cut would have allowed for easier FHA mortgage qualification because of its positive impact on consumers’ debt-to-income ratio.
It remains unclear how the action will impact access and affordability of mortgage loan credit in the long-term. Congressional leaders on both sides of the aisle have urged HUD and the President to study the potential impact of the rule suspension before concluding to suspend the rule indefinitely.
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