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One Hour After Taking Office, Trump Suspends FHA Mortgage Fee Cut



zerohedge.com / by Tyler Durden / Jan 21, 2017 2:33 PM

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In a move that has sparked controversy among some economists, within an hour of being sworn in, Trump undid one of Barack Obama’s last-minute actions, a mortgage-fee cut under a government program catering to first-time home buyers and low-income borrowers. The cut, which would become effective on January 27, would have reduced the annual premium for someone borrowing $200,000 by $500 in the first year, however exposing taxpayers to further losses in case of a spike in defaults.

Last week, as part of a scramble of 11th hour actions by the outgoing president, Obama’s Housing and Urban Development secretary, Julian Castro, said the FHA would cut its fees. In addition to the morgage-fee cut, in the last days of Obama’s administration, the White House announced new Russia sanctions, a ban on drilling in parts of the Arctic and many other regulations. The administration didn’t consult Trump’s team before any of these announcements.

While nominal, Republicans have argued that fee reductions put taxpayers at risk by lowering the funds the FHA has to deal with mortgage defaults even though the net impact of such a fee cut is negligible in the grand scheme of things, once the next housing downturn arrives and the FHA is in need of another bailout.

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