President Barack Obama is expected Thursday to announce a reduction in mortgage insurance premiums on loans from the Federal Housing Administration that will enable 250,000 Americans to become first-time homebuyers. The White House announced the new policy on Wednesday, but the president’s appearance Thursday in Phoenix will be his first effort to tout the benefits of the changes to the administration program. The housing policy is also expected to be mentioned when Obama gives the State of the Union address in two weeks.
Premiums on FHA mortgage insurance will drop from 1.35 percent to 0.85 percent, which means new borrowers will save an average of $900 a year, the White House said, adding that the lowered premiums will help 800,000 homeowners and allow up to 250,000 new homebuyers to purchase their first house.
“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,” the White House said. “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.”
The administration said the new policy will stimulate more home buying “and help create new jobs in the housing sector.”
Obama’s Phoenix appearance is also expected to include details on home buying, according to the Arizona Republic. While the White House didn’t get into specifics, it said that cutting red tape “so responsible families can get a mortgage” is a priority for the administration, but that Obama “will not tolerate a return to shoddy underwriting or unsustainable mortgage lending" that led to the mortgage crisis.
“[T]here are too many middle-class families with good credit by historical standards who remain shut out in today’s tight market and deserve a chance to buy their own home,” the White House said.
Choosing to make the announcement in Phoenix was no coincidence. Obama was in the area five years ago to announce an ambitious $75 billion housing policy that was seen as a failure, even though foreclosures in Phoenix are back to pre-recession levels and home prices have made a comeback.