FHA PMI Reduction Cancelled

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FHA PMI Reduction Cancelled


     Just an hour after the swearing in of our new President, HUD announced that the recent PMI reduction announced by HUD would be cancelled.  The change was supposed to take effect January 27, and now is being put off indefinitely as the new administration has stated they want to take a close examination of HUD and whether or not this cut is necessary or plausible given certain market risks.
FHA PMI reduction cancelled


     This could be a huge inconvenience for some folks who have changed settlement dates and have now done so all for nothing.  The good news is that while FHA loans have their flaws, they are still a very affordable financing source, especially for first time buyers, people with past credit issues, or anyone else looking for low down payment mortgage options.  The cut would have been nice to see and surely would have benefitted many home buyers as an offset to recent rate increases, but in the future I'm hoping for a similar cut being accompanied by the removal of FHA guidelines that make PMI a permanent loan feature, regardless of an FHA mortgage holder's equity position.


If you don't want to read anything political, you can stop now.


     Unless you've been living under a rock you know how contentious things have been between Republicans and Democrats in the past couple of years.  What is truly unnerving is my first thought when the PMI change was announced (you can read that in the blog link above if you want, although it's irrelevant at this point) was "why isn't it effective immediately, or a day later?".  It was a simple change to make on HUD's end, and a simple fix for lenders because it improved loan terms for borrowers.  


     Now I'm left wondering if this was just another political ploy where an elected "leader" puts his ego ahead of the American people to stick it to the incoming administration.  Why schedule something to take place a week after the inauguration ?  Did the previous administration know it would be cancelled, making the incoming administration look bad?  I'd like to think this isn't the case, but for the life of me I can't imagine why the changes, which would have benefitted the American people, would not have been effective immediately, since the change taking places weeks after the announcement obviously caused scheduling issues with already scheduled real estate transactions.  




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Beth Atalay
Cam Realty and Property Management - Clermont, FL
Cam Realty of Clermont FL

John Meussner, I received number of emails regarding this and read many posts, I have my own theory, bottom line, it affects the borrowers. 

Jan 20, 2017 01:04 PM #1
Liz and Bill Spear
RE/MAX Elite 513.520.5305 www.LizTour.com - Mason, OH
RE/MAX Elite Warren County OH (Cincinnati/Dayton)

John, When something smells like a rotting fish, looks like a rotting fish, has fins, scales and gills, I'd call it a fish.

Jan 20, 2017 01:14 PM #2
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hi John --- I saw a couple of similar posts/articles elsewhere and knew if there was something to be said, I could find it through you.  Thanks for the information.   

Jan 20, 2017 03:47 PM #3
Joe Pryor
The Virtual Real Estate Team - Oklahoma City, OK
REALTOR® - Oklahoma Investment Properties

The House Republicans especially want to see the government out of everything except there own personal health care and salaries. They want to eliminate the government backstop on Fannie, FHA, and VA. This will be the year that REALTORS® need to fight for homeowners rights.

Jan 20, 2017 03:55 PM #4
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

John I agree with your conclusion, this was a parting shot by the outgoing administration.  However, I hope the new administration does end up adopting the new PMI it would be the right move, and one that would be painless given how financially sound FHA is these days.

Jan 20, 2017 03:58 PM #5
William Feela
Realtor, Whispering Pines Realty 651-674-5999 No.

The PMI does seem to be to high, but as long as people walk away form their homes it will need to stay high.

Jan 20, 2017 04:52 PM #6
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John Meussner

#MortgageMadeEasy Walnut Creek, CA 484-680-4852
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