Hello, LOs!
Don't get your hopes up about the Department of Housing and Urban Development lowering mortgage insurance premiums.
Officials from the Federal Housing Administration said today that they will "assess options" about mortgage insurance premiums at the end of the first quarter. At that time, they said they will have a "better indication" of borrower outcomes for the more than 550,000 homeowners still coming through forbearance. But no promises.
For some, including the Community Home Lenders Association, the stance is puzzling.
HUD's Mutual Mortgage Insurance fund is in stellar shape. At the end of September, the capital ratio rose nearly two percentage points to 8.03%, driven by home price appreciation and low mortgage rates.
In 2020, four of every five single-family mortgages the FHA insured were for first-time homebuyers. In November 2021, FHA's first-time homebuyer share rose to nearly 85%, according to the latest monthly analysis by Polygon Research.
Lopa Kolluri, principal deputy assistant Secretary for the Office of Housing and the FHA, reiterated that HUD would take a "cautious" approach to any decision about mortgage insurance premiums.
"We are pleased with the health of the MMI Fund, at the same time we want to be cautious in our approach to any decision," Kolluri said. She said a strong macroeconomic environment, inflationary pressures and house-price appreciation all played a role.
"These factors, coupled with the more than 550,000 struggling homeowners still coming through forbearance… the outcome of those borrowers is not yet known," Kolluri said.
Do you think HUD is being overly cautious? Or might there be tail risk for losses on FHA-insured loans that explains HUD's wait-and-see approach? Send a note to gkromrei@housingwire.com
Georgia Kromrei
Senior Mortgage Reporter, HousingWire
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