The National Association of Realtors® applauds new policy initiatives announced today by President Obama that will enable more first-time and underserved homebuyers to enter the housing market while preserving strong underwriting standards and protecting taxpayers from unnecessary risk.
As the leading advocate for homeowners, Realtors® strongly support the President’s plan to reduce annual mortgage insurance premiums on home loans backed by the Federal Housing Administration, which are currently so expensive that in 2014, roughly 234,000 creditworthy borrowers were priced out of the market.
NAR first raised concerns about the costly premiums in an April 2014 letter to then FHA Commissioner Carol Galante, and we have worked in coordination with advocacy groups and members of Congress to educate the Department of Housing and Urban Development about the critical need to reduce the fees.
We are optimistic that more affordable FHA loans will have a positive impact on first-time buyers who have been entering the market at a lower than normal rate. Over the past four years, as the fees increased, the percent share of first-time buyers using FHA-backed loans shrank from 56 percent to 39 percent.
NAR estimates that a reduction in the annual MIP of 0.50 to 0.85 percent from the current 1.35 percent would price-in an additional 1.6 million to 2.1 million renters along with many trade-up buyers, resulting in 90,000 to 140,000 additional annual home purchases.
The increase in volume of borrowers acquiring FHA-backed loans will also contribute to the solvency of FHA’s Mutual Mortgage Insurance Fund which is already on track to meet the 2 percent excess reserve amount required by Congress.
NAR is a strong supporter of the FHA and its vital role in the mortgage marketplace for homebuyers. We will continue our work with the administration to help make the dream of homeownership a reality for millions more Americans.