Former President Obama’s “parting gift” to first-time homeowners fell 90 minutes after President Trump’s swearing-in.
The Department of Housing and Urban Development immediately canceled the rate cut on mortgage insurance premiums for Federal Housing Administration-backed loans announced earlier in January.
The letter suspending the rate cut was signed by General Deputy Assistant Secretary for Housing Genger Charles. Ben Carson, Trump’s choice for HUD secretary, has not been confirmed by the Senate.
“Beachhead teams” for the Trump administration were scheduled to take over at federal agencies immediately following the inauguration. Phone calls to HUD’s press office and Charles’ office Friday were not answered.
Former HUD secretary Julian Castro had called for the rate cut, which would have been effective at the end of the month, on the basis that it would save borrowers. For people with new loans, it was supposed to save an average of $500 a year, according to the Obama HUD.
But Republicans had opposed the cut, the second in as many years, on the grounds that it would increase riskiness at the FHA and undercut the private sector.
Loans backed by the FHA, popular among low-income and first-time home loan borrowers, are available with down payments as low as 3.5 percent.
The National Association of Realtors criticized Friday’s move, saying that would result in 30,000 to 40,000 fewer home purchases this year.
Speaking on the Senate floor later Friday afternoon, Democratic leader Chuck Schumer of New York denounced the move “What a terrible thing to do to American homeowners,” he said, trying to draw a contrast between canceling the premium cut and Trump’s populist rhetoric.
This post has been updated.
