In response to the U.S. Department of Housing and Urban Development’s (HUD) notice earlier today announcing the reduction of annual insurance premiums on most mortgages insured by the Federal Housing Administration (FHA), Congresswoman Maxine Waters (D-CA), Ranking Member of the Financial Services Committee, praised HUD Secretary Julián Castro for his leadership in strengthening the FHA to carry out its mission to expand homeownership to low income borrowers, minority families, and first-time homebuyers. The decision to reduce premiums by 25 basis points is well supported by FHA’s significantly improved economic health, and the decision is expected to save new FHA-insured homeowners an average of $500 this year.
Congresswoman Waters released the following statement:
“Under Secretary Castro’s leadership, the FHA has experienced four straight years of improved economic health, with a gain of $44 billion in value since 2012 and a capital ratio that exceeds the statutorily mandated amount. So I am very pleased that he has taken appropriate steps to ensure that FHA borrowers are not unduly burdened with premiums that add to their monthly housing costs.
“Let’s remember that this is the second premium reduction that we have seen announced under Secretary Castro. Two years ago, the FHA’s announcement to lower premiums was met with loud criticism from my Republican colleagues who claimed that the decision would undermine the financial health of the FHA. Today, we can say with certainty that they were wrong. The FHA has continued to improve its financial health since that decision while also improving access to credit for credit-worthy borrowers. I have no doubt that this latest decision to reduce premiums similarly reflects an appropriate balance that will help borrowers without undermining the FHA’s financial health.
“As Ranking Member of the House Financial Services Committee, I will make it a priority to fight to preserve the important role of the FHA in expanding homeownership opportunities under the incoming Secretary of HUD.”
In the wake of the financial crisis, the FHA increased its premiums to record high levels to help stabilize the economic health of its Mutual Mortgage Insurance Fund (MMIF). Today’s decision to decrease premiums is reflective of the greatly improved health of the FHA since that time, and helps to restore premium levels to its pre-crisis level.
Ranking Member Waters previously praised the FHA’s decision to decrease premiums in 2015 and has been active in supporting the mission of the FHA to expand mortgage credit to creditworthy borrowers who would otherwise have trouble accessing an affordable mortgage loan in the private market.