The eleventh hour measure that was meant to make the mortgage market accessible to more borrowers was suspended as President Donald J. Trump’s cohorts began to take their positions in government.

Trade publication Market Watch said in a report that the Federal Housing Administration (FHA) had “suspended indefinitely” a cut in mortgage insurance premiums that was adopted merely days earlier under the helm of outgoing Housing and Urban Development head Julian Castro.

According to Castro, FHA reserves could absorb the shock of the 25 basis points reduction that was aimed at bringing more borrowers to the mortgage market. 

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However, some quarters are skeptical about the fiscal health of the agency. Market Watch noted that in 2013, the FHA needed to be bailed out of a $1.7 billion deficit following a reserves shortage.

Industry analysts had expected such a challenge to the rate reduction. However, the publication reports that the cut “wasn’t universally seen as a big game-changer.” FHA estimates the decrease to amount to an average $500 per year.

The agency has also ruffled the feathers of some lenders, resulting in many big banks giving up on FHA as a channel for their loans, after being slapped with fines for what they say are minor offenses. Among others, the report said that Quicken Loans sued the government after being threatened with penalties for rule infractions.


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