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.
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.