Community Home Lenders Association Commends HUD for FHA Premium Cut
For Immediate Release January 8, 2017
Contact: Scott Olson
Scott Olson, Executive Director of the Community Home Lenders Association (CHLA), today released the following statement in response to HUD’s announcement today that it was cutting annual FHA premiums for most FHA loans by a quarter of a point:
“As the first national association to publicly call for this action, the CHLA commends FHA for its announcement today that it is cutting annual premiums by a quarter of a percentage point.
Actual FHA loan volume and a recent Federal Reserve Report showed that the prior FHA premium cut had a significant impact in creating new home purchase opportunities for borrowers – and we expect this new cut will do more of the same.”
CHLA was the first national association to call on the Obama Administration to make a second round of premium cuts when FHA released its Actuarial Report in November 2015 showing the FHA Fund had surpassed its 2% Net Worth Requirement. CHLA renewed its call for this cut two months ago when the more recent 2016 Actuarial Report showed continued financial strength – with the HFA forward loan program’s Net Worth ratio exceeding 3%.
In an October letter CHLA sent renewing its call for a premium cut in anticipation of a strong November Actuarial Report (letter enclosed), CHLA cited a recent Federal Reserve Report that concluded both that the volume of new FHA home purchase loans was “quite sensitive” to the previous FHA premium cut from 1.35% to .85%, and that the reduction “substantially increased the number of loans to lower credit score, high LTV borrowers – who as a group rely heavily on FHA insurance.”
The CHLA letter also highlighted FHA data showing that the prior premium cut drove a substantial increase in home purchase loan volume.
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