Administration is concerned about risk to $1.3T portfolio of federally insured mortgages
The Trump administration is toughening up rules on national affordable housing programs due to concerns over risk to the roughly $1.3 trillion portfolio the government has in federally insured mortgages.
The crackdown focuses on lenders for people who can’t afford the typical 3.5 percent down payment that Federal Housing Administration loans normally require, according to Bloomberg. The assistance enables four out of 10 FHA loans, and borrowers in these assistance programs become delinquent about twice as often as borrowers putting up their own money.
One of the largest down-payment programs in the country is the Chenoa Fund, and this new rule would be particularly harmful to it. The company provides roughly $100 million per month in loans to borrowers who are unable to meet the standard down-payment requirements through FHA.
The fund is run on behalf of a Utah tribal government known as the Cedar Band of the Paiutes. Cedar Band’s mortgage company views the move by the Trump administration as discriminatory against Native Americans and plans to challenge it in court. [Bloomberg] – Eddie Small