ORLANDO, Fla. — President Donald Trump signed an executive order Thursday aimed at reducing mortgage costs, making refinancing less expensive and expanding manufactured housing.
The changes could eventually save some homeowners money, but they do not automatically lower existing mortgage payments.
The executive order directs federal housing officials to pursue several initiatives involving Fannie Mae and Freddie Mac. Some provisions require further decisions before borrowers could see savings.
Mortgage-insurance changes would cover future loans
The order calls for a pilot program that would use updated property valuations and other information to identify eligible borrowers for mortgage-insurance cancellation.
The proposed pilot would apply only to mortgages originated after the program is established. Cancellation would depend on equity, payment history and other requirements.
Andrew Yoerger, an area manager with Local Bank, said the potential savings vary widely.
“Mortgage insurance is tied to a borrower’s specific risk. So, for some homeowners, it might be $30. For others, it might be $400,” Yoerger said.
Existing borrowers already have cancellation rights
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Homeowners with conventional loans may already qualify to have private mortgage insurance removed.
According to the Consumer Financial Protection Bureau, borrowers generally can request cancellation when their principal balance reaches 80% of the home’s original value, subject to certain conditions.
Automatic termination generally occurs when the balance is scheduled to reach 78% of the original value, provided the borrower is current on payments.
Those thresholds use the home’s original value, rather than simply its current market value. FHA loans have different mortgage-insurance requirements.
Refinancing costs could fall
The order also targets expenses that can make refinancing costly.
It directs federal officials to consider expanding appraisal and income-verification waivers for certain refinances that lower monthly payments. It also seeks to expand an alternative to lender’s title insurance for eligible transactions.
Those provisions do not amount to an immediate waiver of every borrower’s refinancing costs.
Yoerger estimated potential savings for an average Central Florida homeowner could reach $3,000 to $4,000, depending on the transaction.
Manufactured housing also included
The order establishes a federal task force to examine ways to expand factory-built housing and reduce overlapping requirements.
It also directs the Agriculture and Veterans Affairs departments to pursue lower interest rates on eligible single-family loans made directly by those agencies.
Homeowners considering refinancing should ask their lender which programs are available, what costs remain and how long it would take monthly savings to offset those expenses.
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