Daily Quote: A real decision is measured by the fact that you've taken a new action. If there's no action, you haven't truly decided. Tony Robbins
FHA Makes A Move Pre-Inauguration! Will “The Donald” Follow With A Tweet?
Christmas in January? What I’d recently put odds of occurring at 50/50 last week came to fruition this morning…perhaps they read this Commentary?!
In a nutshell the FHA decided to reduce MIP on all new FHA loans by 25 basis points. This reduction, from 85 to 60, brings the MIP premium to within shooting distance of its pre-crisis levels. Great news for sure but there are some caveats you need to consider before you do the Triple “Landy”: (Thank you Brian Landy!)
So What Does This Mean For Mortgage Participants?
This move is clearly aimed at certain demographics of the home purchase market (Millennials, Lower Income/Higher DTI Borrowers, Renters) who will now have a slightly easily time qualifying for an FHA loan.
Interestingly enough, although I am not a conspiracy theorists at heart, this will also allow FHA to potentially steal some much needed market share from other agencies as production slows. In order to keep the MI Fund at strong levels (well above the Congressionally mandated 2%) you need new originations…and a move like this will keep seasoned loans from skewing portfolio statistics after a rate rise. Well played FHA…well played.
Economic News/Activity: There are no economic releases today