WASHINGTON (12/23/14)--Eighteen senators have written to U.S. Department of Housing and Urban Development Secretary Julian Castro asking for lower fees on Federal Housing Administration (FHA) loans.
The legislators cite the agency's most recent Mutual Mortgage Insurance Fund (MMIF) report, which shows the fund has seen a $21 billion improvement over the last two years, and is on target to meet the congressionally mandated 2% excess reserve by fiscal year 2016.
The improved outlook of the fund has led the legislators to believe that this is the right time to examine premium levels, saying appropriately priced fees may produce greater revenue and restore the capital ratio more quickly.
"While preserving the solid footing of the reserve fund is essential, reducing fees does not necessarily conflict with this goal," the letter reads. "As any business knows, just as a price that is set too high will lead to less profit, not more, lowering the premium on qualified borrowers may actually produce greater revenue and fully restore the capital ratio more quickly."
The FHA has increased the annual premium paid by borrowers for FHA guaranty by 145% since 2010, meaning a borrower taking out a $200,000 loan pays $1,600 more per year in fees.
According to the National Association of Realtors, these higher fees may have priced out as many as 375,000 potential homebuyers from buying a mortgage in 2013.
The letter was signed by Sens. Barbara Boxer (D-Calif.), Robert Menendez (D-N.J.), Charles Schumer (D-N.Y.), Jeff Merkley (D-Ore.), Elizabeth Warren (D-Mass.), Barbara Mikulski (D-Md.), Dianne Feinstein (D-Calif.), Patty Murray (D-Wash.), Richard Durbin (D-Ill.), Ben Cardin (D-Md.), Bernie Sanders (I-Vt.), Jeanne Shaheen (D-N.H.), Kirsten Gillibrand (D-N.Y.), Richard Blumenthal (D-Conn.), Chris Murphy (D-Conn.), Mazie Hirono (D-Hawaii), Edward Markey (D-Mass.) and Cory Booker (D-N.J.).