As the CEO of a company that has been in the mortgage business since 1951,I applauded President Obama’s recent announcement of a major new step to make mortgages more affordable and accessible for creditworthy families.
As outlined by the president on Jan. 7, the Federal Housing Administration (FHA) will cut annual mortgage insurance premiums by half a percentage point - from 1.35 percent to 0.85 percent. This action will translate into a $900 reduction in the annual mortgage payments of typical first-time homebuyers. The lowered premiums will help more than 800,000 homeowners save on their monthly mortgage costs and enable up to 250,000 families to buy their first home.
Existing homeowners who refinance into an FHA mortgage will see similar reductions in their mortgage payments.
This action, along with previous foresightful actions by the Obama administration, makes this a highly opportune time for American families to buy a home or refinance a mortgage.
The FHA provides mortgages largely to lower- and middle-income Americans. As such, the lowering of FHA mortgage insurance premiums will help millions of American families save billions of dollars in mortgage payments in the years ahead, helping to bolster the housing market recovery.
Indeed, the president’s latest action builds on a variety of steps his administration has taken to help more Americans buy homes. These steps have included:
- Launching mortgage modification initiatives that have led to more than eight million homeowners obtaining government or private sector relief - twice as many as those who went through foreclosure during the last six years.
- Working with regulators to create refinancing opportunities for millions of underwater borrowers through the Home Affordable Refinancing Program (HARP), with more than 3.2 million families helped through September 2014, and helping additional borrowers refinance underwater mortgages through FHA’s Short Refinance Program.
- Establishing the Hardest Hit Fund (HHF) and committing $7.6 billion in resources to states to develop locally-tailored programs that reduce blight and assist struggling homeowners in their communities. This has helped more than 200,000 borrowers with programs that reduce principal or help them bridge unemployment.
- Allocating $7 billion through HUD Neighborhood Stabilization Program (NSP) to address foreclosed homes in thousands of neighborhoods.
Numbers tell the story of a housing recovery that is gaining momentum. As noted by the White House:
- Year-over-year home prices have risen for 32 straight months, and are up nearly 30 percent since the lows that were reached during the depths of the crisis.
- Housing wealth is growing again, with owners’ equity up more than $4 trillion since hitting a low at the beginning of 2009.
- Existing single-family home sales have increased as much as 50 percent from their crisis low and are close to historical norms of about 5 million units.
- The number of mortgages more than 90 days delinquent has declined by more than 50 percent to under two million loans, the lowest level since 2008.
- Homebuilding continues to rebound. The annual rate of housing starts has recently been more than double the April 2009 low of 478,000.James B. Nutter Jr. is the president and CEO of Kansas City-based James B. Nutter & Co., one of the largest privately-owned mortgage banking firms in America, based in Kansas City, MO.
Taken all together, the consumer-friendly programs and modifications that have been enacted make now an ideal time for purchasing a home or obtaining a lower mortgage rate. Those who take advantage of these opportunities will derive great benefits for themselves and their families, while generating positive economic ripple effects throughout the U.S. economy.
James B. Nutter Jr. is the president and CEO of Kansas City-based James B. Nutter & Co., one of the largest privately-owned mortgage banking firms in America, based in Kansas City, MO.
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