Executive Action to Cut FHA Mortgage Insurance Premiums

executive action

Yesterday, Pres. Obama used executive action to direct FHA to cut mortgage insurance premium for FHA insured loans. The idea behind this cut is to motivated buyers to buy and to help homeowners save money.

It will be interesting to see how it is presented. What will be left pout of the marketing spin?

In the mean time, what will not be addressed?

• The average savings will be less than $900 per year. That’s $75 or less per month! Is that going to make buyers buy? Is that really going to save homeowners money?
• FHA was essentially bankrupt in 2012
• It will suffer losses of over $100 million
• It is funded by these insurance premiums

According to HUD’s website, FHA has 4.8 million insured SFH mortgages in their current portfolio. So, by simple math FHA would be defunded by $360,000,000 per month!

Congress will hopefully take action to block this.