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How will Trump’s mortgage move impact LOs?

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Mortgage Professional America | 26 Jan 2017, 08:15 AM Agree 0
One of President Donald Trump’s first actions was to freeze a planned cut to FHA premiums. Industry groups weren’t happy – but will the decision really affect originators’ bottom line?
  • Steve R | | 26 Jan 2017, 12:27 PM Agree 0
    Who wasn't happy? The nonstop whining liberals? Anyone remember the $1.7b bailout FHA needed in 2013? Trump saved the country from another bailout. The insurance fund is only 16% above minimum reserve levels. Only an idiot would cut insurance premiums with such little reserves. Oh wait, BO was the one that proposed the cut so it all makes sense.
  • Gabby M | | 26 Jan 2017, 12:40 PM Agree 0
    I agree! We don't need another default on our background
  • Publius | | 26 Jan 2017, 12:55 PM Agree 0
    This is not about being "liberal" or "conservative," this is about government breaking its announced reduction, which may be constituted as a promise. You see, when something is declared or said, and it is not folowed through, it is dishonorable. Period.
  • New Life Home Funding | | 26 Jan 2017, 02:05 PM Agree 0
    MPA,I Just want to thank you for all the amazing information you put out there. Keep up the good Job.
  • MikeMort1 | | 26 Jan 2017, 09:51 PM Agree 0
    Steve R, the fact that you are talking about this through partisan filters indicates you might not undertand these issues very well....Default rates on FHA mortgages are down. Not only that, but MI rates were higher 3 years ago than they are now, and still defaults have gone down....This isnt 2008 anymore...We have been recovering....MI rates affect peoples mortgage payments...Higher mortgage payments mean people have less money....Lower mortgage payments mean people have more money....People who have more money tend to not default on their mortgages as much as people with less money....The MI rate changes do not affect the requirements for getting approved for a mortgage...The MI rates dont just affect new home buyers. They also affect current homeowners...The MI rate cuts would have allowed a ton of people to refinance their FHA mortgage and get a lower payment...Lower payment means less risk of a default...

    The FHA's bailout ended up actually giving something back to the taxpayers, unlike most of the other financial sectors bailouts...And it was asked for because of a lack of business due to rising interest rates, potential for needing funds to cover potential defaults of mortgages originated around the crash time, as well as other reasons....I dont hear you explaining to anyone how much money that bailout cost you personally, so I dont even understand why youre using it as an argument....The benefits of it have been obvious.....And you're here whining about political buzzwords, while advocating taxing the working and middle class more, as if that somehow will do the opposite of increase the risk of a mortgage default....

    Why are you even here?

  • MikeMort1 | | 26 Jan 2017, 10:13 PM Agree 0
    Our bottom line as Originators? Probably not. I adapt and overcome. One target market collapses, then I find a new one...

    But this did just kill over 10 closings I had been planning on for February. And it did just kill the refinance opportunity for 10 of my working and middle class clients, all of whom genuinely need every penny they can get...

    The damage is clear. This is effectively a tax increase on working and middle class americans. And it is also a clear example of a politician claiming to be looking out for small business owners, and then turning around and taking business out of their pockets and costing them money.

    I've heard lots of lame excuses and justifications for this, but none of them hold weight....Ive heard the "obama only set it up because he wanted to make trump look bad" excuse...but thats irrelevant because the decision was Trump's, and he chose to tax people more instead of less, which he promised not to do.......Ive heard the "Trump is only postponing it so he can find out whats going on first, and then he will put it back in place" excuse....Yeah, sure.......Ive heard people use the nonsense arguments of Steve here....None of them hold any weight...

    My bottom line wont be affected. But I will have to work harder to make up for my losses here, which is fine. I'm a broker in the era of TRID and heavy regulations that end up fucking the people they were supposed to benefit. So Im used to dealing with the bureaucratic nonsense...

    But this move will definitely affect the bottom lines of average working and middle class home owners and home buyers..And it definitely killed the chance for a ton of people to refinance into a lower rate...

    I had to tell people this week "I cant refinance you anymore because Im only saving you 50 bucks a month, and the Govt says I have to save you 60 or else I cant refinance you."

    Half of them said to me "But I needed that extra money for my medicine/groceries/healthcare"

    The other half said "What idiot put a stupid rule like that into place?"

    I could have lowered the rate to be in compliance, but it would have raised the costs, and these are borrowers who live paycheck to paycheck.

    I'll applaud him if he puts it back in place, but I have no reason to believe he will do that. Im inclined to believe there will be more things like this that tax average americans in small increments, that they hope we wont notice or pay much attention to...

  • | | 26 Jan 2017, 10:39 PM Agree 0
    Why are you not happy about the suspension? As a taxpayer I am thrilled. As a LO, it is still okay. It wasn't taken day it is suspended for further review. Trump didn't say no. He wants to review to help taxpayers & America. There are many other programs that a people can use to buy with little down. This is bringing so much optimism to the country & take control back. More importantly helping America be great again! Leave Trump alone! Leave to do his job. He might do a great job.
  • JustFactsNoSpin | | 27 Jan 2017, 09:40 AM Agree 0
    This freeze falls into the lap of former Secretary of HUD Castro. His HUD was the only Obama Administration department that did not cooperate in sharing information in the transition to Trump Administration. Shameful is the impact on citizens of Castro's not cooperating for political reasons. Castro is a rising star of Demcratic party and was actually found to have violated the Hatch Act (Google if you want details) for campaigning against candidate Trump while doing an interview while sitting in his office with HUD seal.

    Due to the lack of data on how the future cut was calculated within the federal mandate to maintain at least a 2% reserve, the Trump HUD administration had to freeze until the calculation could be validated. Shame on Julian Castro's self-serving political agenda's impact on citizens using FHA mortgage.
  • | | 01 Feb 2017, 02:36 PM Agree 0
    With the reserve fund over the minimum requirements, Trump could have just as easily left it alone while taking a "wait and see" attitude. Many FHA customers got a nice surprise and then out of the blue and on the fly...."oh by the way....your payment just went up". many had to withdraw their mortgage approvals.
  • | | 01 Feb 2017, 02:38 PM Agree 0
    At least now we have a Heart Surgeon (who doesn't have a mortgage) in charge of HUD.....that should go well.
  • | | 03 Feb 2017, 04:05 PM Agree 0
    mike mort if your clients are living paycheck to paycheck than they got in over their head to begin with. How is it everyone's responsibility to help the people who bit off more than they could chew? Your the only I comment I read that wasn't happy so I suspect your bottom line will be more affected than you admit. I am a broker for 25 years and personally want to go back to when real breathing underwriters made decisions and not some stupid automated system that lets too many weak borrowers in and keeps too many good borrowers out. TRID should be scrapped totally, borrowers are confused and annoyed by the delay in closing and it costs them so much more in the end. There is zero upside to TRID for anyone. Lets just all hope prosperity and common sense prevails in 2017!
  • John R | | 06 Feb 2017, 03:11 PM Agree 0
    The retraction of the reduction seems to be due to anticipating increased claims on insurance. They know pulling from dodd frank is going to have negative results. These claims have been reduced since the ATR/QM rule which is one of the rules in the crosshairs. Personally I feel statements made against dodd-frank are uneducated at best. Interest rates have been historically low, defaults as down. Banks are required today to offer mortgage programs that either meet a defined risk threshold or make an assessment on a consumers ability to pay the debt. Dodd frank and the cfpb were put in place to protect consumers and our economy. It is less profitable to ensure a customer is properly informed of their mortgage and banks may not be able to lend to individuals who cant afford it or have demonstrated the inability to manage credit. That shouldn't mean we should give up our personal protections. In my opinion supporters fall into one if 2 categories. Either they stand to financially gain from the increased risk or they dont understand what they are supporting. Not to say that there isnt room for improvement. The regulation isn't unreasonable but the cost of noncompliance is.

    The primary issue I had with the retraction of the scheduled annual insurance was the timing. There has been little to no coverage of the people it did affect. The rule was retracted 8 days before the effective date (which was effective on disbursement date). Several homeowners were marginally eligible with the lower premium but scheduled to close. They were informed a week prior to close that they no longer qualified to buy the house. At this point they are under contract to sell their current house, half packed, spent money on appraisals & inspections given earnest money. Plus consider all the refinancings that lost their net benefit after paying for services. Even ones that did still benefit may have had to delay closings and extend locks to meet redisclosure requirements. They really should have allowed mortgages in process to keep the premiums they were advised initially. Many homeowners would also not share the opinion that the average difference of $500 per year is not a big deal.
    Just my two cents. What do I know though. I am a democrat.
  • JustFacts NoSpin | | 07 Mar 2017, 07:20 AM Agree 0
    The question here is, "Does FHA Insurance Fund have enough funds and will they have enough funds based upon premiums received and fluctuations in economy's impact on housing?"

    HUD did not cooperate in the transfer of information that was used to determine if the last minute cut at the end of the Obama Administration in FHA premiums was appropriate for the health of the insurance fund. I would hold judgement until such time the numbers used in the calculation for a cut are made public.
  • JustFacts NoSpin | | 07 Mar 2017, 07:29 AM Agree 0
    Heads up: FHA, USDA, and VA are exempt from QM regulations. Fannie & Freddie are exempt while under conservatorship of the federal government. Thus, if the QM regulations were so important to a strong housing market, why would the federal government be exempt? Please folks, if you have ever watched Washington DC bureaucrats you would be aware that they are far removed from reality and self-serving i.e, the exempting their fellow bureaucrats from reality.
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