Donald Trump blocked an Obama administration policy Friday that would have reduced the cost of mortgages for millions of home buyers.
Here’s a look at what Trump’s first executive action means for your mortgage:
In the first hour of Trump's presidency, the U.S. Department of Housing and Urban Development sent a letter to lenders, real estate brokers and closing agents suspending the 0.25 percentage point premium rate cut for Federal Housing Administration-backed loans. The new rates, announced on Jan. 9, would have gone into effect on Friday.
Who does the cut affect?
The order will affect millions of homeowners with an FHA-backed mortgage. FHA backs about 16% of the country's new mortgages. FHA loans offer easier credit requirements, lower down payments and smaller closing costs, attractive perks for lower-income home buyers.
William E. Brown, the president of the National Association of Realtors, said the cut allowed more people to qualify for a mortgage because more borrowers could meet the debt-to-income ratio required to borrow money.
How much will it cost homeowners?
That cut would have saved home buyers about $29 a month on a $200,000 mortgage. U.S. Sen. Chuck Schumer, a Democrat from New York, said the cut equaled an average of $500 per year.
The timing of the Trump administration action was dictated more by the procedural requirements that govern such changes, said David Stevens, a former Federal Housing Commissioner in the Obama administration.
"If they stop a fee that hasn't been implemented, then it’s no-harm, no-foul," said Stevens, who now heads the Mortgage Bankers Association. "Today was really the last day to do it in order not to disrupt a whole lot of mortgage closings."
"The Trump team coming into office, they haven't had their own chance to look at the state of the reserves, the strength of the fund and make their own analysis," he said. "My view of this is that it is not ideological whatsoever. It is a technical decision."
Dr. Ben Carson has not been confirmed as HUD secretary. Until he's confirmed, the department is being run by Acting Secretary Craig Clemmensen, an Obama holdover.