|January 7th, 2015, 11:50 AM||#1|
Join Date: Jan 2012
Location: Washington, DC
FACT SHEET: Making Homeownership More Accessible and Sustainable
When President Obama took office, our housing market was in free-fall, and rising unemployment and plunging house prices posed numerous challenges for families and the broader economy. The President took immediate action to stabilize the housing market and protect the middle class. These steps helped millions of middle class families stay in their homes, save money on their mortgages, and turn their communities around.
Today, the housing market is on firmer footing. Rising home values have brought millions of families out from being underwater, new foreclosures are at the lowest levels since 2006, and home sales have substantially increased. The President’s push for tough enforcement against past abuses and strong new consumer protections have helped curb irresponsible lending and have given responsible Americans more confidence and security in their most substantial investment. And the Consumer Financial Protection Bureau has pioneered new, streamlined mortgage forms to make simpler and easier for families to buy a house.
Still, there’s more work to do: too many creditworthy families who can afford—and want to purchase—a home are shut out of homeownership opportunities due to today’s tight lending market.
That is why today, the President announced a major new step that his Administration is taking to make mortgages more affordable and accessible for creditworthy families. The Federal Housing Administration (FHA) will reduce annual mortgage insurance premiums by 0.5 percentage point from 1.35 percent to 0.85 percent. For the typical first-time homebuyer, this reduction will translate into a $900 reduction in their annual mortgage payment. Existing homeowners who refinance into an FHA mortgage will see similar reductions to their mortgage payments as well. In total, this action will help millions of families save billions of dollars in mortgage payments in the coming years, helping to support the housing market recovery. The new premium level is fully consistent with the FHA’s commitment to continue strengthening its financial health through growing reserves. At the same time, full documentation and continued strong underwriting means lending will remain prudent and sustainable – benefitting both homeowners and FHA.
This step is part of the President’s broader effort to expand responsible lending to creditworthy borrowers and increase access to sustainable rental housing for families not ready or wanting to buy a home. In the coming months the Administration will be taking additional steps to cut red tape and clarify lending standards to build on the measures announced today. And the Administration will continue to urge bipartisan progress in Congress to pass comprehensive housing finance reform legislation that will secure a stable and resilient housing finance system – one that will ensure broad access to mortgages at affordable rates and better serve future generations.
Making Homeownership More Accessible and Sustainable
Ø Reduce FHA Premiums to Help Make Mortgages More Affordable:
Ø FHA is reducing annual FHA mortgage insurance premiums by 0.5 percentage point from 1.35 percent to 0.85 percent, an average savings of $900 annually for new borrowers.
Ø Lowered premiums will help more than 800,000 homeowners save on their monthly mortgage costs and enable up to 250,000 new homebuyers to purchase a home.
Ø These steps will help support home sales, lower housing expenses for affected households, and help bring more balance to the housing market.
Ø Build on Successful Policies that Have Helped Lead the Housing Recovery:
Ø Today’s action builds on the successful steps the Administration started taking immediately after the President took office – actions that helped create today’s strong recovery in housing.
Ø The Administration’s mortgage modifications, private modifications, and other federal mortgage assistance have helped over 8 million borrowers, more than twice the number of foreclosure completions; more than 3 million borrowers have saved money through refinancing; and the Administration has invested billions in neighborhood stabilization and anti-blight initiatives.
Ø Today, the housing market continues to strengthen: house prices are up nearly 30 percent from crisis lows; 10 million fewer borrowers are underwater with homes worth less than their mortgages; and new foreclosures are at a 9-year low.
Ø The President continues to strongly support long-term housing finance reform through legislation that requires private capital to take the risks and rewards in mortgage lending while preserving broad and affordable access for all creditworthy families.
Ø Preserve Sound Underwriting and Strong Consumer Protections:
Ø FHA will continue to preserve sound underwriting standards with full documentation requirements and a prudent evaluation of a borrower’s ability to sustain payments.
Ø CFPB and others will continue to monitor and enforce important consumer protections that helped eliminate the worst lending practices of the past so that mortgages are underwritten in a more sustainable manner.
Ø Continue to Strengthen FHA’s Financial Health:
Ø Even after today’s reduction, FHA annual mortgage insurance premiums will remain at 0.85 percent, higher than historic norms.
Ø Even with this reduction, FHA is projected to add $7 to $10 billion annually in new capital reserves – in part due to improved risk management and credit policies – and maintain a positive financial trajectory for the Mutual Mortgage Insurance (MMI) Fund.
Reduce FHA Premiums to Help Make Mortgages More Affordable
o Prohibited lenders from paying bonuses for putting borrowers into more expensive loans.
o Created rules to ensure borrowers understand their loans and receive timely and useful information about their monthly payments and any upcoming changes to their loan.
o Set additional protections for those borrowers who are offered riskier, higher-cost mortgages.
o Established a consumer help hotline that has already addressed more than [175,000] complaints and helps keep CFPB informed of new problems facing families so it can better address new challenges.
o Required servicers to make good faith efforts to contact delinquent borrowers and inform them of their options to avoid foreclosure as well as ensure certain other borrower protections are followed.
Continue to Strengthen FHA’s Financial Health
o Housing wealth is growing again, with owners’ equity up more than $4 trillion since hitting a low at the beginning of 2009.
o Homebuilding continues to come back, leading to an upswing in construction jobs. The annual rate of housing starts has recently been more than double its April 2009 low of 478,000, while the number of residential construction jobs continues to rebound.
o Existing single-family home sales have increased as much as 50 percent from their crisis low and are close to historical norms of about 5.0 million units.
o The number of mortgages more than 90 days delinquent has decreased by more than 50 percent to under 2 million loans, the lowest level since 2008.
o Worked with regulators to create refinancing opportunities for millions of underwater borrowers through the Home Affordable Refinancing Program (HARP), with more than 3.2 million families helped through September 2014, and helped additional borrowers refinance underwater mortgages through FHA’s Short Refinance Program.
o Established the Hardest Hit Fund (HHF) and committed $7.6 billion in resources to states to develop locally-tailored programs that reduce blight and assist struggling homeowners in their communities, helping over 200,000 borrowers with programs that reduce principal or help them bridge unemployment.
o Allocated $7 billion through HUD’s Neighborhood Stabilization Program (NSP) to address foreclosed and abandoned homes in thousands of neighborhoods. NSP is projected to support close to 90,000 jobs and treat over 100,000 properties – including those with affordable rental and homeownership units – creating a positive ripple effect throughout communities.
o Negotiated the National Mortgage Servicing Settlement with 49 state Attorneys General to hold banks accountable and assist struggling homeowners. The Settlement has provided over 600,000 homeowners more than $50 billion in committed relief.
o In FY 2014, the Department of Justice filed more than 150 mortgage fraud cases, and obtained convictions of more than 600 defendants. The Department's mortgage fraud efforts in that same period also resulted in recoveries of more than $3 billion.
o Other key efforts included launching an Office of Housing Counseling at HUD that has assisted more than 9 million families, and rehousing or providing assistance to remain housed to 1.3 million homeless or at-risk Americans – including veterans – through the Homeless Prevention and Rapid Rehousing Program (HPRP). In the last four years, veteran homelessness is down 33 percent nationwide, and unsheltered veteran homelessness has been reduced by 43 percent.
Source: White House
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