If there was ever a time to applaud the government and FHA (Federal Housing Administration) it is now. After making record profits from Mortgage Insurance Premium increases, which nearly doubled, FHA decided to cut those fees by 50%. The change has not only increased the number of FHA originations but also increased the number of refinances, which increases bottom line profit.
Another positive sign of recovery will be the increase in new home starts nationwide, despite the severe cold weather for us and the east coast! Now, the next big step that the FHA should do is increase it’s loan limits. New home prices are on the rise, which is a good thing, I promise! If FHA raised their loan limits back to last year’s numbers or better yet, increased them by 10%, the economy would roar back to life. Raised limits would create sales of new homes, which would create jobs, which would create home ownership, which would increase sales of goods (furniture, appliances etc.) and further perpetuate the economy.