Don’t expect a premium cut anytime soon, FHA head says

The Federal Housing Administration is actively considering cutting the mortgage insurance premium — just don’t expect anything soon, Commissioner Julia Gordon said at the Mortgage Bankers Association annual convention in Nashville on Monday.

“There’s so many different factors we need to consider, and we haven’t yet made that decision of exactly what we’ll do, what magnitude will be, what the composition of it will be” Gordon said. “But directionally, I did want you to know that it is something that we’re thinking about actively, [and] actively analyzing.”

While professing support for an MIP cut, Gordon hinted that one is not imminent.

FHA is part of the federal government and it has to work through an 18-month budgeting cycle. Gordon pointed to the 10 months it took for her to win Senate confirmation as one reason for the delay in considering an MIP cut.

“I am hopeful that we can do something once we have a [fiscal year] ’23 budget,” she commented. “Now, your guess is as good as mine when that will be.”

In the past two months, the MBA and other trade groups sent letters to the Biden Administration and Department of Housing and Urban Development Secretary Marcia Fudge, pressing for a reduction in the MIP.

“MBA appreciates having Commissioner Gordon speak to our members at our Annual Convention,” according to a statement from a spokesperson. “We will continue to call for a reduction in the MIP to provide meaningful relief to FHA-insured borrowers.”

The Community Home Lenders of America also has been advocating for the FHA to act. “CHLA appreciates that a premium cut still seems to be under active consideration — and we renew our call for such action because of the affordability challenges homebuyers face,” Executive Director Scott Olson said in a statement.

But Gordon did agree with assessments made by the MBA, CHLA and others that the Mutual Mortgage Insurance Fund is healthy and that FHA has an opportunity to help the housing market.

However, “we can’t make a big difference with rates where they are, literally anything we do is just marginal,” Gordon said. “But we know that we can make a difference and that is something we’re working toward.”

Earlier in her presentation, Gordon said the best way for FHA to address housing affordability is to get the most innovative and creative ideas from the people in the mortgage industry.

The agency is going to put out more proposed rules and requests for information.

It is concerned about how rising rates are affecting affordability for homebuyers. FHA knows that those will have an impact on volume.

“But the area where I think we are most focused is making sure that those rising rates don’t leave us without the tools we need to help the borrowers who still need the help,” said Gordon.