On Jan. 30, 2017, NAR sent a letter to Department of Housing and Urban Development Secretary Designee Ben Carson asking the Federal Housing Administration (FHA) to reinstate the 25 basis point reduction of the annual mortgage insurance premiums that would have applied to mortgages with a closing or disbursement date of Jan. 27, 2017 and to eliminate the life of loan insurance premium. The letter makes the following key points:

  • The premium reduction would have reduced costs for 750,000 to 850,000 homebuyers in 2017 with mortgages backed by the FHA and would have made homeownership possible for an additional 30,000 to 40,000 homebuyers.
  • The suspension of the premium reduction has created uncertainty and confusion for a significant number of borrowers, sellers, lenders and underwriters who entered into a new or refinance mortgage transaction in reliance on the reduced rates.
  • Reducing the premium would keep FHA’s capital reserves on a steady rate of growth and optimize the Mutual Mortgage Insurance Fund size, which would be in line with the treatment of other government insurance programs like the FDIC.
  • Eliminating the life of loan requirement will reduce a borrower’s monthly payments, providing with them more cash on hand so they may better withstand economic shocks and thereby reduce defaults.

NAR Letter to HUDpdf

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