Community Home Lenders Association Once Again Renews Call For FHA Premium Cut
. . .CHLA Continues Campaign for Premium Reduction in Letter to Castro
Contact: Scott Olson For Immediate Release 571-527-2601 December 18, 2014
The Community Home Lenders Association (CHLA) has once again renewed its call for the Federal Housing Administration to lower the annual premiums it charges, in order to make FHA loans more affordable for lower and middle income homebuyers.
In a letter (attached) to HUD Secretary Julian Castro, CHLA wrote that this change would “allow FHA to more fully meet its mission of affordable mortgage credit, while at the same time maintaining a steady buildup in the FHA MMIF Fund.”
The letter comes in the immediate aftermath of FHA’s annual Actuarial Report which showed the FHA to be making steady progress in strengthening FHA’s finances. The letter calls on FHA to reduce premiums as a means of fulfilling its mission of increasing affordability especially for first time and minority borrowers.
CHLA first called for a reduction in FHA premiums last February, in a letter to OMB calling for a reduction in the annual premium level from 1.35% to .75%. Today’s letter renews this call, and points out that the cost of this could be partially offset with an increase in upfront premiums, which do not have the same impact on affordability, and also with increased revenues resulting from more borrowers qualifying for an FHA loan.
In the letter, CHLA notes that an estimated 125,000 to 375,000 borrowers would have purchased a home in 2013 with an FHA loan except for FHA’s recent hikes in annual premiums. The letter also notes that FHA home purchase volume has fallen by more than 40% since 2010, and has experienced comparable declines in loans to African-American and Hispanic homebuyers.
Scott Olson, Executive Director of CHLA said, “We commend the FHA for the work it has done to stabilize the finances of FHA. This makes it possible to balance this continuing progress in building up the FHA Fund with the objective of improving access to credit and increased homeownership opportunities for qualified homebuyers.”