U.S. housing regulators suspend plans to cut mortgage premiums

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By Sarah N. Lynch | WASHINGTON

WASHINGTON The U.S. Department of Housing and
Urban Development on Friday suspended a controversial plan that
would have slashed the premium rates for certain federally
backed mortgages.

The reversal by the Federal Housing Administration came less
than two hours after Donald Trump was sworn in as president.

The announcement came in a letter signed by Deputy Assistant
Secretary for Housing Genger Charles, which said the reduction
in FHA mortgage insurance premiums that was slated to take
effect on Jan. 27 would be “suspended indefinitely.”

When asked for more information about HUD’s decision, a
spokesman referred back to the letter, which states that “more
analysis and research are deemed necessary to assess future
adjustments…”

The FHA, which is part of HUD, offers mortgage insurance,
often to first-time homebuyers and those with low incomes or
less than top-notch credit, which protects lenders in case of
default.

HUD’s decision to lower FHA premiums by a quarter-percentage
point earlier this month sparked a partisan divide on Capitol
Hill, with Republicans accusing the outgoing Obama
administration of putting taxpayers at risk of a potential
bailout of the FHA.

“Just three years ago the taxpayers had to spend $1.7
billion to bail out the FHA,” House Financial Services Chairman
Jeb Hensarling said on Jan. 9 when the premium cut was
announced.

“Playing politics with the FHA through cynical, surprise
11th hour rule changes is irresponsible,” he added.

HUD had projected that the reduced premiums would have saved
FHA-insured homeowners an average of $500 in 2017.

Ben Carson, Trump’s nominee to head HUD, told Congress last
week during a hearing on his nomination that the incoming
administration planned to closely examine the decision.

Shares of mortgage insurer MGIC rose 2 percent after
the reversal was announced to trade flat in mid-afternoon, while
Radian gained 1.7 percent. (additional reporting by Daniel Burns in New York)



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