On Wednesday, Jan. 7, Senator Bernie Sanders welcomed President Barack Obama’s announcement that the Federal Housing Administration (FHA) will cut mortgage-insurance premiums as part of an effort to expand opportunities for first-time homebuyers.
Annual fees the agency charges to guarantee mortgages will be cut by 0.5 percentage points from the current rate of 1.35 percent.
Sanders and 17 other senators had signed a letter urging Housing and Urban Development Secretary Julian Castro to take the action announced by the White House. In their Dec. 18 letter the senators noted that the FHA has regained a firm financial footing after the housing market meltdown in 2007.
“I am very pleased that President Obama announced this step, which will make homeownership more affordable at a time when traditional credit through the private market remains extremely tight and the housing market is still weak.”
In Vermont, FHA loans have provided affordable homeownership opportunities for as many as 2,000 borrowers in a single year. The lower rate will mean that a borrower with a $200,000 mortgage will save $1,000 a year in fees. “That is a significant amount of money,” Sanders noted. “The savings will mean many more families across the country will be able to afford to buy a house, and enjoy all of the benefits that homeownership brings.”
The move to lower the cost of home ownership is the second action by the Obama administration in as many months to expand affordable housing. Last month, federal housing officials decided to fund the National Housing Trust Fund, which will provide approximately $500 million a year for states to fund housing construction and rehabilitation projects that benefit low-income families.
Sanders first proposed the Housing Trust Fund in 2001 while serving in the House of Representatives. While the Trust Fund became law in 2008, it had never received any funding until now.