In an announcement made by U.S. Housing and Urban Development Secretary Julian Castro, FHA is reducing its annual mortgage insurance premium (MIP) by 25 basis points. This reduction applies to most new mortgages with closing/disbursement dates on or after January 27, 2017.
The action is in response to the current risk environment. The Mutual Mortgage Insurance Fund (MMIF) has increased in health for four straight years and mortgage rates are increasing forcing mortgage credit costs to go up.
Many are wondering if the cuts will stick once the new Republican administration takes over. The thoughts on this subject are mixed, according to an article in Housingwire House Financial Services Committee Chairman Jeb Hensarling, R-Texas, called the cut "dangerous" and puts taxpayers "at greater risk of footing the bill for yet another bailout." Castro believes the new administration will not roll the cut back as it "offers a good benefit to hardworking American families at a time when interest rates may well continue to go up."
In a statement made at the time of his confirmation hearing in reference to the MIP decrease, Ben Carson said they will "work with the FHA administrator and other experts to really examine that policy."