MGIC Investment Corp. President and CEO Patrick Sinks during an earnings call said he is not "anti-FHA," but the executive does have an issue with the Federal Housing Administration's decision to cut insurance premiums on most mortgages and the agency's overall role in the housing market.
In announcing the premium cut, U.S. Housing and Urban Development Secretary Julián Castro said it would save FHA-insured homeowners an average of $500 in 2017. But Sinks said the reduction, which takes effect Jan. 27, will only hurt borrowers and lenders as it could lead to permanent loss of equity.
"We don't believe that it makes sense to change FHA pricing without first addressing the larger question of the government's role in housing," Sinks said. "Simply put, another price reduction would likely shift business away from private capital and expose the taxpayer to increased risk at a time when private capital, primarily in the form of mortgage insurance, is ready, willing and able to take this risk."
Sinks noted that Ben Carson, President-elect Donald Trump's pick to lead the Department of Housing and Urban Development, promised to look into the premium cut if he secures confirmation.
Citing "multiple sources," Housing Wire reported that the Trump administration will delay the premium cut, and then subsequently work on repealing the pricing change.
Sinks acknowledged that the FHA has "a very important role" in the U.S. housing market, but said that private mortgage insurers had been unsuccessful in pushing for collaboration with the agency. As such, he called on Carson to consider "a comprehensive housing policy that includes the proper role for the FHA, the GSEs [government-sponsored enterprises] and private capital."