Community Home Lenders Association Renews Call for FHA Fee Cut
In the wake of the Obama Administration release of its FY 2015 Budget, the Community Home Lenders Association (CHLA) today renewed its call for a reduction in the annual loan fee that the Federal Housing Administration (FHA) charges homebuyers.
“Today’s budget shows that our recent call for a meaningful reduction in FHA’s annual premium can be done consistent with a steady buildup of the FHA fund,” said Scott Olson, Executive Director of the CHLA. “The numbers show annual premiums can be cut from 135 to 75 basis points while still increasing FHA’s net worth by around $10 billion in the next year.”
On February 18th, the CHLA sent a letter (enclosed) to the Office of Management and Budget, proposing a reduction in the annual premium from the current 1.35% to .75% (and to .5% for borrowers who complete prepurchase counseling). CHLA also called for a subsequent reduction in the annual premium when the FHA MMIF fund reaches a 2% net worth level.
The FY 2015 budget projects FHA profits in FY 2015 of $12.2 billion – with each loan producing an average net profit of over 9% on each new loan. The numbers also confirm FHA’s steady progress in rebuilding the FHA fund.
“We commend what the FHA has done in rebuilding the FHA fund and making important program changes to improve loan performance,” said Olson. “We think it is now time to balance the emphasis on FHA finances with steps to make FHA loans more affordable and we believe our proposal would help to accomplish that.”