FHA to weigh mortgage insurance premium cut after first quarter
The Federal Housing Administration plans to review whether any changes should be made to mortgage insurance premiums after March, according to an official with the Department of Urban Housing Development.
When asked if the extraordinary health of the Mortgage Insurance Mutual Fund could justify a premium cut during a press conference on the achievements of the Biden administration, an official said the answer may depend on the lending and economic performance in the first quarter.
“We are pleased with the health of the MMI fund, at the same time we want to be cautious,” said Lopa Kolluri, principal deputy assistant secretary for the Office of Housing and Federal Housing Administration at HUD.
The mortgage industry has long sought an FHA premium reduction that could make homes more affordable for entry-level buyers with limited incomes. Such a move would support the Biden administration’s affordable housing goals, but it would limit the agency’s claims-paying resources.
HUD refused to reduce premiums last fall, when it reviewed its last fiscal year ending September 30. real estate price appreciation and distressed borrowers abstention.
While the number of borrowers whose payments are temporarily suspended due to the pandemic has become extremely low, the share of them with Federal Housing Administration loans is relatively high.
“The results…of these are not known,” Kolluri said. “I believe that by the end of the first quarter we will have a better indication of what those results look like for borrowers and at that time we will be able to assess all options in terms of insurance premium changes.”