Trump scraps FHA fee reduction for poor homebuyers

New HUD Secretary Ben Carson had criticized Obama's move
January 20, 2017 04:30PM

Ben Carson and Donald Trump (Credit: Getty Images)

Shortly after being sworn into office, Donald Trump’s administration overturned the Obama administration’s decision to lower the cost of buying a home for low-income Americans.

Last week, the outgoing Obama administration had announced that the Federal Housing Administration, which insures mortgages for those with a weak credit score, would lower its fees from 0.85 to 0.6 percent as of Jan. 27.

The U.S. Department of Housing and Urban Development, which oversees the FHA, announced the reversal in a letter to lenders Friday. It didn’t explain the move. The incoming HUD Secretary Ben Carson said during his confirmation hearing last week that he hadn’t been consulted about the fee reduction and wasn’t happy about it.

Republicans have criticized FHA fee reductions in the past, arguing that they lower the agency’s capital buffer to deal with losses. [Bloomberg]Konrad Putzier