Well, that didn’t take long. In December, we shared the news of Obama’s parting gift to American homebuyers and the media speculated that a reversal of that policy would be unlikely. One thing that hasn’t changed since the campaign….Our new President, Donald Trump, rarely conforms to outside opinion. In an article out just hours after the inauguration, Bloomberg reports on this not-so-welcome surprise:
“The new administration on Friday said it’s canceling a reduction in the Federal Housing Administration’s annual fee for most borrowers. The cut would have reduced the annual premium for someone borrowing $200,000 by $500 in the first year.”
The big question on everyone’s mind of course, is why? In an economy with rising interest rates making it difficult for new homeowners to break into the market, Obama’s policy was the hope that homeowners were holding onto as they also battle rising home prices. So far, Trump’s administration has offered a cautionary approach as to why they have chosen to reverse the policy…
“A letter Friday from HUD to lenders and others in the real-estate industry said, “more analysis and research are deemed necessary to assess future adjustments while also considering potential market conditions in an ever-changing global economy that could impact our efforts.”
While politicians and the public alike are pointing out the hypocrisy between Trump’s inauguration speech about helping American families and this immediate reversal, others see it differently.
“Mark Calabria, director of financial regulation studies for the libertarian Cato Institute, said it was appropriate for the administration to examine last-minute decisions by its predecessor, ‘especially when those decisions appear to be purely motivated by politics.”
As reported earlier in December, the cut in mortgage fees was proposed because FHA had recovered its capital reserve ratio since the initial financial crisis; the idea being that consumers would now benefit from a reduction in fees now that FHA was stable again.