Obama to announce cut in FHA premiums: Bloomberg
Reuters
Published Jan 07, 2015 12:53PM ET
Obama to announce cut in FHA premiums: Bloomberg
WASHINGTON (Reuters) - U.S. President Barack Obama is set to announce a 0.5 percentage-point reduction of Federal Housing Administration mortgage insurance premiums to 0.85 percent, Bloomberg reported on Wednesday.
Obama is expected to make the announcement in a speech in Phoenix on Thursday, Bloomberg said, citing sources. Reuters could not immediately confirm the report.
Homebuilder stocks were among the top performers on Wednesday, with PulteGroup Inc (NYSE:PHM) rising over 6 percent and Lennar Corp (NYSE:LEN) up 5.3 percent.
The FHA is a major provider of mortgages for first-time homebuyers and lower-income borrowers who have only tepidly returned to purchasing homes since the financial crisis.
With an FHA-backed loan, buyers can put down as little as 3.5 percent of the purchase price.
The agency insures about one-fifth of all new U.S. mortgages.
The FHA was forced to draw on $1.7 billion in taxpayer funds in 2013, for the first time in its history. The FHA has since returned to the black, in part through raising the mortgage insurance premium fees it charges borrowers.
However, its mortgage insurance fund's capital ratio remains below the legal requirement and the FHA projected in its latest audit that it would not meet this minimum until 2016.
National Association of Realtors President Chris Polychron said in a statement that the FHA's current mortgage premiums had priced "too many" potential home owners out of the market.
Housing finance reform has so far proved a contentious issue in Congress, with Democrats encouraging moves to widen mortgage access to first-time and lower-income homebuyers while Republicans want to reduce the U.S. government's role in the market.
Republicans, who now control both the Senate and the House, are expected to be sharply critical of the move.
In December, a group of 18 Democratic U.S. senators sent a letter to Housing and Urban Development Secretary Julian Castro, urging the agency to lower the mortgage insurance fees because of FHA's improved financial health.
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Written By: Reuters
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