President Obama's budget reveals that the FHA has the flexibility to lower premiums, according to the Community Home Lenders Association.
The projected 9 percent profitability over the life of a FHA-insured loan for fiscal year 2015 is "excessive," says CHLA executive director Scott Olson. He believes the agency could reduce its 1.35 percent annual premium, which has historically averaged 55 basis points. The CHLA is proposing a reduction of the fee to 75 basis points, which would still allow for a 7.25 percent profit as well as make FHA loans more affordable for home buyers, says Olson.
Realtors and lenders view the high fees charged by the FHA, Fannie Mae, and Freddie Mac as obstacles for the housing recovery, adds mortgage consultant Brian Chappelle.