NAFCU, Others Praise FHA Premium Cut
NAFCU joined the Consumer Federation of America in praising the Obama Administration’s announcement that the Federal Housing Administration will cut the annual premium on its mortgage insurance from 1.35% to 0.85%.
The administration revealed the move Jan.7 but President Obama highlighted it during a Jan. 8 speech in Phoenix.
“FHA historically has served lower wealth consumers,” Barry Zigas, CFA’s director of housing policy, said. “Today’s announced roll-back of insurance premiums to lower but still financially sound levels will be welcome news to hundreds of thousands of consumers for whom the price of responsible homeownership has been too high.”
NAFCU applauded the president’s announcement of the reduction in borrower costs for FHA-insured mortgage loans, NAFCU General Counsel Carrie Hunt said.
“This will go a long way toward helping many Americans make the dream of homeownership a reality. As Main Street’s not-for-profit, member-owned financial institutions, credit unions constantly strive to make home ownership an achievable goal for their members,” Hunt said. “We are pleased to see FHA take an action that will help make mortgages more affordable.”
NAFCU and CFA were among the signatories on a Jan. 7 letter to Julian Castro, secretary of the U.S. Department of Housing and Urban Development asking the administration to cut the premiums because they contended the higher premiums kept borrowers out of the housing market.
Meanwhile, House Financial Services Committee Chairman Jeb Hensarling (R-Texas) decried the reduction.
“Such an action by the President would be a grave mistake that will end up hurting hardworking taxpayers,” Hensarling said. “It was just two years ago that taxpayers had to bail out the FHA to the tune of $1.7 billion, and just two months ago an audit revealed that FHA is still in violation of federal law because it does not maintain sufficient capital reserves. Lowering premiums now would only put the FHA further behind.”
Hensarling also promised to call Castro before the Committee to answer questions about the FHA’s financial health.