Posted on 01/11/2017 3:17:33 PM PST by Lorianne
What do you do when a quick rise in mortgage rates suddenly threatens to tame home buying demand from subprime borrowers who, despite the lessons from the past, are still purchasing homes, en masse, with only 3.5% down payments and just enough monthly cash flow to cover mortgage payments? Well, if you're the Obama administration then you simply socialize the problem and force those higher mortgage costs on taxpayers. Anything less would just be a hateful attempt to deny minority and low-income citizens their "right" to home ownership.
And while the Obama administration isn't directly passing out tax dollars to subprime borrowers to make their monthly mortgage payments, its recent decision to lower the FHA's annual mortgage insurance premiums by 0.25% is essentially the same thing since tax payers are still on the hook for the same risk but receiving lower premiums in return.
The FHA doesn’t make mortgages. It sells insurance, paid by borrowers, on loans protecting investors in case of default. The program allows borrowers to get a mortgage with a down payment of as little as 3.5 percent and a credit score of as low as 580, on a scale of 300 to 850. That makes it one of the most forgiving mortgage programs and popular among first-time home buyers.
Some in the real-estate industry have been calling for another fee cut and heralded Monday’s move.
“Dropping mortgage insurance premiums today will mean a whole lot more responsible borrowers are suddenly eligible to purchase a home through FHA,” William Brown, president of the National Association of Realtors, said in a statement.
The FHA last cut premiums two years ago. That cut, which came as rates dropped and lowered the annual fee for most borrowers to 0.85 percent from 1.35 percent, led to a wave of refinances.
(Excerpt) Read more at zerohedge.com ...
Stinker Øbama just left a f@rt bubble....
Stupid sensationalist headline.
FHA premiums have gone up and gone down over the last 10 years. FHA borrowers are not “subprime borrowers”.
A “subprime” borrower wont qualify for FHA financing.
I’m in the business; hate misinformation about the topic.
They still wont pay the mortgage...
its not the amount its priorities and a principled mind and lifestyle
cyclotic wrote: “We bought another, mush smaller and more expensive house (cost of living higher) and because we had lost nearly all of our equity, could only plunk down 10%. 7 years later, we still haven’t missed a payment and home values are somewhat flat, so we haven’t hit the magic 20% equity number yet to refinance and cancel PMI.”
Just a suggestion but there are ways to get around the 20%. Suggest you read the government regulations on PMI. We made some significant improvements which increased the value of the house sufficiently to get the PMI removed. Had to get a new appraisal but it was worth it.
Agreed. It should at least be made optional. Like life insurance.
This is just another spike strip thrown in front of the Trump machine as it rolls towards the White House. But it won’t work!
This once again exposes what a bed wetting AH Obamba and his supporters are.
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