FHA to offer Mortgage Insurance discount to first-time-buyers
Carol Galante, FHA commissioner, announced on Tuesday that FHA would offer discounts on mortgage insurance premiums to first-time buyers who completed housing counseling.
FHA mortgages have been an important sources of loans for many low-income and middle class home buyers for years. During the housing meltdown, FHA became the preferred lender when traditional banks pulled back on mortgage lending. However, the FHA target market also were some of the most at risk home owners and many lost their homes during the meltdown. FHA came under fire from Congressional leaders for poor lending standards, as millions of Americans lost their homes during the meltdown. In an effort to shore up their financial base, FHA raised mortgage insurance levels over the last few years and now carry the highest insurance levels in the market place. This rise in mortgage insurance premiums has caused many buyers to abandon the program for more conventional financing.
During her speech on Tuesday at the NCSHA The Affordable Housing Opportunity conference, Ms. Galante told the audience that first-time buyers who complete HUD-approved home buying counseling will get a discount on their mortgage insurance. According to HUD Secretary, Shaun Donovan, evidence is showing that home buying counseling actually lowers the risk of default for borrowers.