Secretary
of
the


U.S.
Department
of
Housing
and
Urban
Development
(HUD)

Marcia
Fudge
suggested
to
a
congressional
committee
that
the
department
could
consider
eliminating
life-of-loan
premium
requirements
for
mortgages
backed
by
the


Federal
Housing
Administration
(FHA),
but
did
not
offer
any
indication
about
the
issue’s
priority
level
at
HUD.

Sitting
for
a
HUD
oversight
hearing
conducted
by
the


U.S.
House
of
Representatives
Financial
Services
Committee
on
Jan.
11,
Rep.
Brad
Sherman
(D-Calif.)
first
brought
the
issue
up
by
saying
it
is
an
important
element
to
address
for
the
kinds
of
people
who
most
commonly
make
use
of
FHA
mortgage
programs.

“I
don’t
have
to
tell
you,
that’s
working
people,
people
of
color
[and]
first-time
homebuyers,”
Sherman
said.
“They
have
to
pay
the
mortgage
insurance
premiums,
[which]
raises
their
costs.
Are
you
willing
to
look
at
not
requiring
them
to
make
these
payments
through
the
life
of
the
loan,
but
rather
to
eliminate
the
payments
when
they
get
a
certain
loan
to
value
as
the
value
of
the
house
goes
up?”

“Yes,
I’m
willing
to
look
at
it,”
Fudge
responded.

Nearly
an
hour
after
that
exchange,
Rep.
Gregory
Meeks
(D-N.Y.) brought
the
topic
up
again.

“My
question
would
be
do
you
think
there
could
be
a
scenario
where
FHA
mortgage
insurance
premiums
could
follow
a
model
that
is
similar
to
the
private
mortgage
insurance
[market]
where,
after
a
period
of
time
you
get
equity
in
the
home
[that
then]
drops
the
monthly
cost?
Is
that
something
you
think
we
could
work
on,
and
that
HUD
could
do?”

“I
would
love
to
see
it
happen,”
Fudge
responded.

When
interviewed
in
December,
leaders
at
multiple
housing
advocacy
organizations
including
the

Mortgage
Bankers
Association
(MBA)
and
the

National
Housing
Conference
(NHC)
cited
the
life
of
loan
requirement
as
a

key
affordability
issue
in
2024.

“We
think
that
FHA
should
consider
further
changes
to
the
mortgage
insurance
premium,
perhaps
including
the
elimination
of
the
life
of
loan
premium
requirement,”
said
Bob
Broeksmit
president
and
CEO
of
MBA
to
HousingWire
in
December.
“On
an
FHA
loan,
you
keep
paying
the
mortgage
insurance
premium
until
you
pay
the
loan
off
whereas
in
a
conventional
loan,
once
your
equity
reaches
a
certain
point,
you
can
get
the
mortgage
insurance
dropped.”

When
asked
about
an
MIP
cut,
NHC
President
and
CEO
David
Dworkin
said
the
“bigger
issue”
is
the
life
of
loan
requirement,
and
that
the
MIP
is
currently
“at
a
reasonable
level.”

“[Life
of
loan]
makes
FHA
a
much
more
negative
execution
for
the
consumer,”
Dworkin
said
last
month.
“Let’s
say
I
have
more
than
20
or
25%
equity
in
my
house.
I
shouldn’t
be
paying
mortgage
insurance
to
FHA;
I
would
not
have
to
be
doing
it
if
I
had
a
loan
that
was
bought
by

Fannie
Mae
or

Freddie
Mac.
And
so
I
think
that
I’d
like
to
see
that
addressed
before
we
talk
about
another
MIP
cut.”

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