Hensarling blasts FHA premium reduction

by Ryan Smith10 Jan 2017
Many in the mortgage and real estate community are praising the recent Obama administration decision to lower FHA mortgage insurance premiums — but the chairman of the House Financial Services Committee isn’t happy about the move.

The FHA is reducing its premiums from 0.85% to 0.60%, a move which real estate professionals say will put homeownership within reach for more people.

“The high cost of mortgage insurance has unfortunately put those opportunities out of reach for many young, first-time- and lower-income borrowers. Now, we have a real opportunity to get back on track,” said William E. Brown, president of the National Association of Realtors.

But Financial Services Committee Chairman Jeb Hensarling (R-Texas) said that the move was “cynical” and put taxpayers at risk.

“It seems the Obama administration’s parting gift to hardworking taxpayers is to put them at greater risk of footing the bill for yet another bailout,” Hensarling said. “Just three years ago the taxpayers had to spend $1.7 billion to bail out the FHA.  Lowering premiums to below market rates now only puts the FHA in a more precarious financial condition.” 

Hensarling said the administration was “playing politics” with the FHA in a way that endangered the agency’s integrity.

“To be successful, the FHA must be fiscally sound, with a clearly defined mission, to ensure homeownership opportunities for creditworthy first-time homebuyers and low-income families,” he said. “Lowering FHA premiums now is counterproductive to achieving these goals and puts the U.S. taxpayer at greater risk.”


Photo: Gage Skidmore


Related stories:
Mortgage insurance premiums are coming down
Hensarling: Fed needs more accountability, transparency
 

COMMENTS

  • by The Poobah | 1/10/2017 3:00:18 PM

    Hensarling doesn't seem to understand how FHA, or the mortgage industry, works. That is unfortunate since he is the head of the Financial Services Committee.

  • by NW-LoanOriginator | 1/10/2017 3:33:16 PM

    A better move to entice any borrower to obtain an FHA Mortgage, would be to reverse the Life of Loan premium renewal on mortgages with less than 10% down. This is why borrowers are not choosing to finance FHA and opt for more reasonable Conventional PMI or decide to wait to enter the market until they have saved additional funds. The lower premium, while nice to have a lower payment, is not the limiting factor for the majority of First-time homebuyers.

  • by The Greek | 1/10/2017 3:36:21 PM

    The reason HUD had to be bailed out has more to do with another poorly run government agency he should look into that first and get his facts straight

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