On his first day as president, Donald Trump wasted no time in making decisions that would severely alter the future of many Americans. Among his initial executive orders was the suspension of a federal mortgage program plan that would help those in the middle class. Young people aged 16 to 25 already have some of the highest auto insurance rates in the nation, but now they may also face a more significant burden when it comes time for them to buy a home.
At the end of December, the Department of Housing and Urban Development put new guidelines in place pertaining to mortgage insurance fees on loans given out by the Federal Housing Administration. Under the change, premium rates would have dropped by one-fourth of a percentage point, which would be equal to pre-housing crash rates. This move would have been particularly beneficial for first-time buyers and members of the middle class, who could use a government-backed loan and a limited down payment to secure a lower mortgage insurance premium.
While the mortgage insurance cut was slated to begin on January 27, Trump suspended the new guidelines almost immediately after being sworn in. Many lenders had already informed their customers about the expected lower rates, which creates a problem for both mortgage bankers and buyers alike. Some buyers will even be priced out of the market completely.
Now, countless Americans who had planned on buying a home this year may find their options much more limited, at best. Nearly one in five mortgages is backed by the FHA; many low-income and first-time buyers participate in the program. The Government National Mortgage Association had predicted that the average borrower would have saved more than $500 a year in fees with the cut; nearly 1 million households would have an easier time affording a home.
U.S. Senator Chuck Schumer, a vocal opponent of many Trump policies, denounced his decision on the Senate floor:
“One hour after talking about helping working people and ending the cabal in Washington that hurts people, he signs a regulation that makes it more expensive for new homeowners to buy mortgages,” said Schumer.
The Department of Housing and Urban Development has stated the mortgage insurance reduction has been “suspended indefinitely,” but Ben Carson, Trump’s pick to lead the department, noted that he would “really examine” the cut in the future.