Trump's first executive action - FHA Mortgages

[StormRichards]

There is no shortage of divide on here regarding our 45th President, but please keep your comments to this specific action. Do you think he did the right thing? Why or why not?

http://www.msn.com/en-us/money/realestate/what-trump%E2%80%99s-order-on-mortgages-means-for-you/ar-AAm5YpW?li=BBnb7Kz

Donald Trump blocked an Obama administration policy Friday that would have reduced the cost of mortgages for millions of home buyers.

Here’s a look at what Trump’s first executive action means for your mortgage:

What happened?

In the first hour of Trump's presidency, the U.S. Department of Housing and Urban Development sent a letter to lenders, real estate brokers and closing agents suspending the 0.25 percentage point premium rate cut for Federal Housing Administration-backed loans. The new rates, announced on Jan. 9, would have gone into effect on Friday.

Who does the cut affect?

The order will affect millions of homeowners with an FHA-backed mortgage. FHA backs about 16% of the country's new mortgages. FHA loans offer easier credit requirements, lower down payments and smaller closing costs, attractive perks for lower-income home buyers.

William E. Brown, the president of the National Association of Realtors, said the cut allowed more people to qualify for a mortgage because more borrowers could meet the debt-to-income ratio required to borrow money.

How much will it cost homeowners?

That cut would have saved home buyers about $29 a month on a $200,000 mortgage. U.S. Sen. Chuck Schumer, a Democrat from New York, said the cut equaled an average of $500 per year.

[StormRichards]

My answer to this question is yes, I think it was the right decision.

I do not support subsidizing the home purchase of people that would otherwise not qualify for a loan. I believe the debt-to-income ratio to qualify is already to lenient and just results in a higher percentage of defaults.

[disneysteve]

That cut would have saved home buyers about $29 a month on a $200,000 mortgage.

My answer to this question is yes, I think it was the right decision.

I do not support subsidizing the home purchase of people that would otherwise not qualify for a loan. I believe the debt-to-income ratio to qualify is already to lenient and just results in a higher percentage of defaults.

I have not studied the issue in any detail, but on the surface, I agree with you.

First of all, saying it would save buyers $29/month on a 200K mortgage is an odd statistic to choose when talking about low income folks and their ability to afford a home. Someone who is truly low income certainly shouldn't be looking at a 200K mortgage. Let's say they earn 40K which is below the median. They are (or should be) looking at a home costing no more than about 100K. So the change in policy would only amount to about $15/month or less difference. If $15/month is going to impact your ability to afford the house, that's a clear sign that you shouldn't be buying it.

The government focus on home ownership is a problem. Subsidizing people to get into houses that they can't really afford isn't doing them any favors. We do need more affordable housing in this country but I don't think this accomplishes that.

[Nutria]

Was any justification given for ordering the rescission?

[StormRichards]

I have not studied the issue in any detail, but on the surface, I agree with you.

First of all, saying it would save buyers $29/month on a 200K mortgage is an odd statistic to choose when talking about low income folks and their ability to afford a home. Someone who is truly low income certainly shouldn't be looking at a 200K mortgage. Let's say they earn 40K which is below the median. They are (or should be) looking at a home costing no more than about 100K. So the change in policy would only amount to about $15/month or less difference. If $15/month is going to impact your ability to afford the house, that's a clear sign that you shouldn't be buying it.

The government focus on home ownership is a problem. Subsidizing people to get into houses that they can't really afford isn't doing them any favors. We do need more affordable housing in this country but I don't think this accomplishes that.

Excellent point Steve.

Also, as a disclaimer I have not studied this issue in any detail as well. I am going solely on what I read in the article copied into the original post.

If anyone has any more facts regarding the Obama policy that was blocked, then please add them to the discussion.

[StormRichards]

Was any justification given for ordering the rescission?

If the President made a statement regarding this, it wasn't included in the article.

[Fishindude77]

This was a good move.
Federal government needs to keep their nose out of this stuff, and home mortgage interest rates are dirt cheap anyway.

[disneysteve]

This was a good move.
Federal government needs to keep their nose out of this stuff, and home mortgage interest rates are dirt cheap anyway.

And the government needs to accept that fact that not everyone can or should become a homeowner. If you can't afford it, don't do it.

[bigdaddybus]

Trump stopped something that was going into effect later this week. I support the move.

[GoodSteward]

I agree this was a good move. How long before all these subsidized homes recreate another 2008 housing market crash.

William E. Brown, the president of the National Association of Realtors, said the cut allowed more people to qualify for a mortgage because more borrowers could meet the debt-to-income ratio required to borrow money.

The bigger this gap gets in any one area of lending(subsidized or not), the more potential for a bubble and a burst. This also indicates people are being approved that shouldn't be. If you need help to pay for something, you can't really afford it. I have a friend who is in this spot right now. He has had to request his payments be put on hold more than once due to income issues, and it really all falls back to him not being able to afford it.

We keep talking about the government spending is too high. Well, these are the things that have to be cut to fix that. You can't keep all the freebies and subsidies and cut spending.

[creditcardfree]

We keep talking about the government spending is too high. Well, these are the things that have to be cut to fix that. You can't keep all the freebies and subsidies and cut spending.

Yes, I agree with the legislation. Because of GoodSteward's point above.

[disneysteve]

What a surprise that the head of the Realtors assoc. would come out in support of something that allows more people to buy homes. He doesn't care if they can afford them. All he cares about is the realtor getting their 6% commission. When the buyer defaults, that doesn't impact the realtor at all. They've already made their money and moved on.

[StormRichards]

What a surprise that the head of the Realtors assoc. would come out in support of something that allows more people to buy homes. He doesn't care if they can afford them. All he cares about is the realtor getting their 6% commission. When the buyer defaults, that doesn't impact the realtor at all. They've already made their money and moved on.

I agree except that it often does have an impact on realtors. They end up with another listing and commission when the bank takes ownership.

[disneysteve]

Folks, I must say I'm impressed that this thread is staying on topic and not devolving into yet another political debate.

Let's keep it that way.

[cypher1]

So if I understand this correctly,that person(s) paying another $29 per month of the mortgage (IE 200k), is going to stop them from being able to afford the payment? I gotta agree, it doesn't sound like they're in a decent financial situation to purchase a house. Unless I'm missing more details.