Community Home Lenders Association Renews Call For FHA Premium Cut
CHLA Letter Cites Declining FHA Loan Volume, Low Default Rates to Support Request
Scott Olson For Immediate Release
571-527-2601 October 10, 2014
The Community Home Lenders Association (CHLA) today renewed its call for the Federal Housing Administration to lower the annual premium it charges, in order to make FHA loans more affordable for lower and middle income borrowers.
In a letter (attached) to HUD Secretary Julian Castro, CHLA wrote that “the single most effective thing HUD could do to improve homeownership affordability is to implement an immediate reduction in the level of FHA annual premiums.” The letter follows recent speeches in which Secretary Castro has said that “homeownership is out of reach for too many Americans” and additionally had said HUD would “strive to alleviate the affordability crunch.”
The letter comes in advance of FHA’s annual Actuarial Report, expected in November, which is expected to show a strengthening of FHA’s finances. The letter calls on FHA not to wait until the FHA Fund reaches its 2% net worth target, but instead to act now to make FHA loans more affordable and improve access to mortgage credit.
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%. CHLA has cited high projected profits on new FHA loans, combined with low default rates, to argue that FHA can cut premiums, while continuing to protect and build up the FHA Fund.
In today’s letter, CHLA notes that FHA loan volume is down 19% during the first nine months of 2014 compared to 2013 and that estimates are that between 125,000 – 375,000 would be borrowers are priced out of the market annually by high FHA premiums.
Scott Olson, Executive Director of CHLA, said “FHA’s careful and effective stewardship of the FHA program and its finances has put us in a position where we can afford to make this premium reduction at this time.”