Mortgage industry divided over further cuts to FHA insurance premiums

Now that the Federal Housing Administration’s insurance fund has rebounded, some mortgage lobbyists say it’s time for the Obama Administration to cut the FHA’s mortgage insurance premiums for the second year in a row — but not all agree.

In the wake of FHA volumes and loan counts surging in 2015 rather than suffering, some of the industry’s largest trade groups say there is no good reason to lower the premiums right now. Such a move, they say, will only put added stress on the insurance fund, which unexpectedly saw its capital reserves climb above the statutory minimum of 2 percent last year.

“There is no need to cut the MIP [mortgage insurance premium] at this point,” said Ron Haynie, a senior vice president with the Independent Community Bankers of America (ICBA). “There just isn’t. There is nobody saying that we can’t qualify borrowers because of that.”

So far, the Obama administration has hinted that it won’t pursue another cut in 2016, a presidential election year where changes to the FHA loan program would be politically controversial.  FHA head Ed Golding told reporters in November that nothing was on the table.  Some trade groups that are pushing for a cut are still holding out hope, however.