Department of Housing and Urban Development Secretary Marcia Fudge is the latest recipient of a letter — this time from an affordable housing coalition led by the Mortgage Bankers Association — asking for a reduction in Federal Housing Administration premiums.
Sent under the banner of the Black Homeownership Collaborative, the missive follows
But the MBA's effort for a cut
"Lowering the annual MIP would help reduce the cost of buying a home with an FHA mortgage, and ending the life of loan requirement would contribute to building wealth through homeownership in the Black community," the latest letter stated.
The Collaborative is looking to
As interest rates have risen, the share of FHA applications also has grown because these loans have lower credit qualification standards and only require a 3.5% down payment. Conforming mortgages with loan-to-value ratios over 80% normally require private mortgage insurance. But PMI is cancellable as the homeowner builds equity; FHA insurance lasts until the loan is paid off.
The most recent MBA weekly application survey noted that
"Less than three years ago, a salary of $64,400 per year was sufficient to purchase the median-priced home of $329,000 with a 3.31% interest rate. Today, between much higher home prices and
The other signatories to the letter are the NAACP, the National Association of Real Estate Brokers, the National Association of Realtors, the National Fair Housing Alliance, the National Housing Conference and the National Urban League.
Separately, the Community Home Lenders of America,
"FHA is projected to produce over $8 billion in net profits (negative credit subsidy) in FY 2023," the letter said. "Given the significant financial contributions FHA makes to the HUD appropriations bill funding totals, it does not seem appropriate to shortchange the program by this mere $6.6 million in funding."
In federal fiscal year 2021, 85% of FHA forward mortgages were for first-time homebuyers, while 42% were for minority borrowers, the CHLA said, adding "FHA's share of Black and Hispanic borrowers was twice the percentage of all other mortgage loans."
While Federal Housing Commissioner Julia Gordon addressed using the agency to
During the presentation, Gordon noted that FHA has approximately 40 different IT systems and some of them are old — but that doesn't mean they aren't working.
Still, the goal is for a modernized IT system, while still having the customer experience and alignment with the rest of the housing industry, she said.