About an hour after Donald Trump took the oath of office...
Wednesday, February 22, 2017 at 2:31PM About an hour after Donald Trump took the oath of office last month, his administration caught my attention when it/he abruptly suspended a planned cut in Federal Housing Administration mortgage-insurance premiums.
The Department of Housing and Urban Development cited the need for further analysis to protect taxpayers in halting the policy that would have saved FHA-borrowers as much as $1,000 or more a year. Now Ben Carson is in charge-Yikes!
In general, borrowers who are able to make a down payment amounting to 20% of a home loan don’t need mortgage insurance, and for those who can’t pony up that amount of cash but have good credit, cheaper insurance from private companies is often available.
But the FHA, with its mission to boost homeownership, is often a preferred option for cash-poor, first-time home buyers and those with spotty credit — or a combination of both. Down payments can be as little as 3.5% of the purchase price and the program is open to borrowers with credit scores as low as 500, which could signal a past bankruptcy or debts sent to collection.
Despite generous underwriting standards, the mortgage insurance premiums covered defaults and fully funded the FHA for decades — until it received its first taxpayer bailout in 2013 because of fallout from the housing bust. Since then, the agency’s finances have improved significantly, though that hasn’t assuaged concerns of some Republicans.