New White House Mortgage Order Targets PMI, Refi Closing Costs and Manufactured Housing; What Actually Changes — and What Doesn’t
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And unlike a lot of broad housing proposals, this one reaches into very specific parts of the mortgage process.
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The order directs federal housing agencies to work on:
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Automatic mortgage-insurance cancellation for certain future Fannie Mae and Freddie Mac loans.
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Lower refinance closing costs through expanded title-insurance alternatives.
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Potentially easier documentation on certain limited cash-out refinances.
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Lower rates on certain direct USDA and VA housing loans.
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And expanded use of manufactured and factory-built housing. The White House
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Those are meaningful ideas.
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But there is an important distinction:
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Most of these changes are NOT immediate benefits that every homeowner can use today.
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They still have to be implemented.
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I. PMI CANCELLATION COULD BECOME MORE AUTOMATIC
One of the most interesting pieces involves private mortgage insurance.
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Today, homeowners with conventional loans can often request PMI removal after reaching certain equity requirements, subject to applicable rules, payment history, property-value requirements and loan terms.
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But many homeowners do not know when they become eligible.
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Others may have to request cancellation and potentially pay for a new valuation.
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The new executive order directs the Federal Housing Finance Agency to establish a pilot program under which Fannie Mae and Freddie Mac could periodically review eligible loans using automated valuation models and other property data. The White House
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If the borrower appears to meet the required equity and other conditions, mortgage insurance could potentially be canceled proactively.
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That could eventually eliminate a monthly expense without requiring the homeowner to discover the opportunity on their own.
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But there is a major limitation:
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The order says the pilot would apply only to mortgages made AFTER the pilot program is established. The White House
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So this is not an automatic PMI-removal program for every existing conventional borrower.
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II. REFINANCING COULD GET CHEAPER
The second major mortgage piece deals with title insurance and refinance costs.
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The order directs FHFA to expand the existing title-acceptance pilot into an ongoing nationwide program for eligible Fannie Mae and Freddie Mac refinances. The White House
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Instead of requiring a traditional lender’s title-insurance policy in every eligible transaction, the Enterprises could accept an automated title review or another approved title-risk assessment.
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Why does that matter?
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Because title work is part of refinance closing costs.
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Reducing or eliminating that expense on eligible loans could make a refinance more attractive when the rate improvement itself is not enormous.
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The order also tells FHFA to consider expanding eligibility beyond the current loan-to-value limits and to consider appraisal waivers, reduced income re-verification and fewer fees on certain limited cash-out refinances that lower the borrower’s monthly payment. The White House
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Again:
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Those are directions to build or expand programs.
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They are not blanket rule changes that take effect for every refinance today.
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III. THIS COULD MATTER A LOT IF RATES EVENTUALLY IMPROVE
Here is why I think the refinance piece is interesting.
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Millions of homeowners currently have mortgage rates they are not thrilled about.
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But refinancing is not free.
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There are title costs.
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Lender costs.
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Potential appraisal costs.
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And other settlement expenses.
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If mortgage rates improve modestly rather than dramatically, closing costs can determine whether the refinance actually makes financial sense.
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Reducing some of those costs could lower the break-even point.
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That means a homeowner might not need as large a rate improvement for the refinance to be worthwhile.
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But I would still evaluate the numbers the same way I always do:
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How much is the payment reduction?
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What are the total costs?
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How long will you keep the loan?
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How quickly do you recover those costs?
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And are we resetting the loan term in a way that creates more long-term interest?
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Cheaper closing costs help.
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They do not automatically make every refinance a good refinance.
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IV. THE ORDER ALSO TARGETS MANUFACTURED HOUSING
Another major piece is housing supply.
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The order creates a Task Force on Manufactured Housing Innovation.
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Its goal is to make it easier for manufactured and factory-built housing to participate in federal housing and mortgage programs. The White House
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That includes looking at standardized approvals, inspections, certifications and permitting.
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This matters because one of the biggest housing problems in California and nationally is not simply mortgage rates.
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It is the cost of producing housing.
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Factory-built construction can potentially reduce cost and construction time.
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But zoning, local permitting, financing and program eligibility can still create obstacles.
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The task force has 180 days to develop recommendations. The White House
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So this is a longer-term housing-supply issue rather than something that changes a buyer’s mortgage this morning.
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V. BE CAREFUL WITH THE “VA AND USDA RATES ARE DROPPING” HEADLINE
The executive order also directs the Departments of Agriculture and Veterans Affairs to reduce interest rates on single-family loans made directly by those departments, consistent with existing law and available funding. The White House
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That wording matters.
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It does not mean every standard VA-guaranteed mortgage or every USDA-guaranteed loan suddenly gets a government-mandated lower rate.
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So I would be very careful with headlines suggesting that all VA mortgage rates were just reduced.
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We need to see exactly how the agencies implement this provision and which direct-loan programs are affected.
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VI. POLICY IS ONE THING. IMPLEMENTATION IS ANOTHER.
This is probably the most important takeaway.
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The executive order gives federal agencies direction.
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Now those agencies have to develop programs, rules, eligibility requirements and operational systems.
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FHFA has to determine how the PMI pilot works.
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Fannie Mae and Freddie Mac have to build processes.
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Servicers need procedures.
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Title alternatives need eligibility rules.
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The manufactured-housing task force needs recommendations.
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And USDA and VA have to determine how their direct-loan provisions will be implemented.
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That means borrowers should not assume every headline equals an immediately available mortgage product.
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The details will determine who actually benefits.
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THE BOTTOM LINE
The new housing executive order contains several ideas that could eventually reduce mortgage and homeownership costs.
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The most interesting to me are:
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More automatic PMI cancellation on certain future conventional loans.
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Lower refinance closing costs.
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Potentially streamlined refinance documentation.
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And greater support for manufactured and factory-built housing. The White House
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Those could make a real difference.
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But today, most of this is still implementation work.
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So if you currently have PMI, do not assume it disappeared yesterday.
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If you are considering a refinance, do not assume title insurance or appraisal requirements automatically went away.
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And if you have a VA loan, do not assume your mortgage rate was just reduced by executive order.
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The right move is the same as always:
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Look at the actual loan.
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The actual eligibility.
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The actual costs.
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And the actual savings.
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Housing policy can create opportunities.
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But the numbers still have to work for the person sitting at the closing table.
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ABOUT MICHAEL BELFOR
Michael Belfor is a Branch Manager and Loan Originator with American Pacific Mortgage, bringing approximately 24 years of mortgage lending experience.
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An APM President's Club and Top 1% originator since 2017, Michael helps homebuyers, homeowners, and real estate investors navigate conventional, jumbo, FHA, VA, Non-QM, DSCR, TIC, condo, construction and other mortgage financing solutions.
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Michael Belfor | American Pacific Mortgage
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Direct: 415-233-4235 | Orange County: 949-577-6449
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Website: www.mikebelfor.com
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