Order directs FHFA to pursue proactive PMI cancellation and lower-cost refinancing; BAC estimates average closing cost savings of $2,390 on a $500,000 refinance.
WASHINGTON, D.C. — The Broker Action Coalition (BAC) applauds President Trump’s executive order, “Decreasing Housing Costs For the American People,” as a major opportunity to lower costs for American homeowners. The order directs federal housing officials to pursue proactive private mortgage insurance (PMI) cancellation and less expensive refinancing options for eligible mortgages backed by Fannie Mae and Freddie Mac.
These benefits are not available immediately. The order directs the Federal Housing Finance Agency (FHFA) and the two government-sponsored enterprises to develop or expand programs, subject to applicable law, eligibility requirements, operational considerations, and safety-and-soundness standards. Several additional refinance reforms are for FHFA to consider, rather than changes that take effect automatically.
Proactive mortgage insurance cancellation
FHFA would direct Fannie Mae and Freddie Mac to periodically review the mortgages they back using automated property valuations and other data. Where homeowners satisfy current-value equity thresholds and all other applicable cancellation requirements, the envisioned program would allow PMI to be removed proactively. Servicers would notify eligible borrowers and reduce unnecessary documentation and appraisal costs.” For eligible mortgages originated after the pilot is established, the program would proactively cancel PMI when applicable requirements are met, reducing the burden on homeowners to initiate and navigate the cancellation process.”
“Homeowners should not have to navigate unnecessary hurdles to stop paying mortgage insurance when they meet the requirements for cancellation. These costs have a direct impact on household budgets. By putting borrowers first and modernizing outdated processes, this order creates an opportunity to deliver meaningful relief.”
— Jamie Cavanaugh, CEO, Broker Action Coalition
Lower-cost refinancing
The order calls on FHFA to expand its 2024 title acceptance pilot into an ongoing, nationwide program at both Fannie Mae and Freddie Mac, permitting approved automated title reviews or other title-risk assessments in place of a lender’s title insurance policy on eligible refinances. FHFA is also directed to consider waiving appraisals, income re-verification, and other documentation requirements for limited cash-out refinances that reduce borrowers’ monthly payments, where existing Enterprise data support doing so, and to reduce or eliminate loan-level price adjustments and other Enterprise fees on those refinances.
BAC estimates that on an illustrative $500,000 refinance, the combined potential savings could total approximately $2,390: $1,290 in lender’s title insurance, $600 for an appraisal, and $500 in reduced underwriting fees from streamlined processing. Title costs vary significantly by state and can reach $2,835 for a loan of that size. Actual savings would depend on the borrower's eligibility and the changes FHFA ultimately implements.
The executive order also establishes an interagency task force to recommend ways to streamline federal requirements and expand production of manufactured and other factory-built homes.
“This is a massive win for American homeowners. We’re talking about reforms that could cut refinancing costs by nearly $2,400 on an illustrative $500,000 loan, as well as a new pilot that would proactively cancel mortgage insurance once appropriate equity thresholds have been met. That’s real money. It also means more Americans could take advantage of lower interest rates when they arrive. FHFA now has the opportunity to turn this executive order into one of the most significant reductions in mortgage costs in years.”
— Brendan McKay, Chief Advocacy Officer, Broker Action Coalition
About the Broker Action Coalition
The Broker Action Coalition (BAC) is a 501(c)(4) nonprofit and a grassroots advocacy organization uniting independent mortgage brokers and their supporters to advance policies that benefit mortgage professionals and the consumers they serve. BAC advocates for affordable homeownership, consumer choice, and the needs of veterans and underserved communities. Learn more at www.brokeractioncoalition.com.