Federal Housing Administration Case Study

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On the way out of office, former President Barack Obama enacted a new regulative act that would cause a reduction in Federal Housing Administration (FHA) annual mortgage insurance premiums (MIP) rates. The bill was passed on January 7th, 2017 and it was supposed to take effect on January 27th, 2017. The cut to annual insurance programs was proposed at one quarter of a percent, which for a median house being purchased equates to roughly $500 a year, or about $42 per month in savings. FHA mortgage loans are common among lower income households’ who are lacking the usual 20% down payment and/or have low credit scores. The steady increase in home values the last half of decade America has seen, attached with the high MIP makes the monthly mortgage payments large and mounting. The monthly savings of over $40 was enough to see a spike in applicants for FHA mortgage loans [1]. The one hold up was, newly elected President Donald Trump took office days before the 27th of January. One of his first acts in office was enacting in a halt in the newly issued referendum by former president Obama. This contributed to a 3.2% decrease in total…show more content…
Given today’s market and forecasting for trends, we are observing a rather fierce market of competition to obtain a mortgage. Coupled with a decreasing number of inventory of available houses and increases in mortgage rates. The local real estate market should rise, and continue to gain value throughout the year. This is of course a positive reflection of a growing economy. It just doesn’t seem fair to the 1.1 million borrowers who rely on FHA mortgage loans. This number is predicted to decrease in 2017, as these typical households would not be able to afford the monthly mortgage rates. It is fair to assume that a growth in the number of renters of housing should be observed with the growing local real estate
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