Trump Signs Order to Cancel Mortgage Insurance Premiums on Government Backed Loans
The executive order also makes a title insurance waiver permanent and pushes USDA and VA to cut their own loan rates, but it does not touch the 7 percent mortgage rates actually keeping buyers out of the market.
Trump signed an executive order this week that directs the Federal Housing Finance Agency to cancel mortgage insurance premiums on government backed loans once a borrower has built up enough equity. The order, signed October 22, also makes permanent a pilot letting borrowers use cheaper alternatives to title insurance, and it tells the Agriculture and Veterans Affairs secretaries to lower rates on the home loans their own departments issue. None of that touches the number that actually decides whether people buy: the 30-year mortgage rate is still above 7 percent, and pending home sales fell 7.3 percent from August to September because of it.
What the Order Actually Changes
The order directs FHFA Director Bill Pulte to build a pilot program that cancels insurance premiums on government backed mortgages once a borrower has satisfied equity requirements. It also creates a task force to lower home construction costs and improve housing quality by, in the White House's words, facilitating the use of modern manufacturing methods for units eligible for federal programs.
“Homeownership is a vital pillar of our great Nation, and President Trump and his Administration are working tirelessly to cut burdensome costs and red tape to make the American dream of homeownership more affordable for all Americans,” the White House said in a fact sheet on the order.
Separately, the order expands FHFA's title insurance waiver pilot into a permanent program, meant to let more borrowers use cost-friendly alternatives to title insurance and lower refinancing costs. Trump also ordered Agriculture Secretary Brooke Rollins and Veterans Affairs Secretary Doug Collins to lower interest rates on the single-family home loans their departments issue directly.
Why Rates, Not Paperwork, Are the Real Problem
Mortgage rates climbed above 7 percent as the Iran war pushed up bond yields and oil prices, raising borrowing costs for anyone shopping for a house. The average 30-year rate did dip this week, from 7.4 percent to 7.32 percent per Freddie Mac, and the 15-year rate fell from 6.71 percent to 6.68 percent. That is the first weekly drop since mid-August, but it is a small move against a big problem.
The damage shows up in the sales numbers. Pending home sales dropped 7.3 percent from August to September and are down 11.3 percent year over year, according to the National Association of Realtors. “Market conditions weakened in September due to fast-rising mortgage rates,” said NAR chief economist Lawrence Yun. “Although job growth and income gains can support home purchases, housing affordability is more affected by changes in mortgage rates.”
Pulte called the order the greatest housing action ever taken and said it would save Americans thousands of dollars.
NAR executive vice president Shannon McGahn praised the order too, saying it addresses the costs of homeownership and makes it more sustainable. Both takes can be true and still miss the point: canceling a premium or waiving a title insurance requirement saves a borrower money on the margins, but it does not move a 7 percent rate.
How a Premium Cancellation Like This Actually Works
I run an insurance agency, and the logic behind canceling mortgage insurance once equity is met is the same logic that runs through every line I write. A lender or a carrier prices a premium to match risk. Mortgage insurance exists because a borrower with little equity is a bigger risk to the lender if the loan goes bad. Build up equity, and that risk drops, so the premium should drop with it. That is exactly how it works on a homeowners or flood policy when a property's risk profile changes: the price follows the risk, not the other way around.
The catch is in the word pilot. A pilot program means FHFA is testing eligibility rules, documentation and timing before this becomes standard. Until those rules are published, nobody should assume their premium disappears the day they hit a certain equity number. Underwriting details like that are where programs like this either deliver or quietly stall.
What This Means for Construction Jobs and Small Contractors
The task force on construction costs and modern manufacturing methods is the part of this order with the most upside for jobs, if it goes anywhere. Lower construction costs and more manufactured housing eligible for federal programs would mean more building, and more building means more work for the trades that build it. My marketing company works with home-service contractors, roofers, pressure washing crews, lawn care operators, and all of that work depends on homes getting built and changing hands. Fewer closings because of high rates means less work flowing to those businesses right now, regardless of what a task force decides to study.
That is the honest read for anyone starting or running a small contracting business: a task force is a direction, not a contract. It is worth watching, but it will not change your pipeline this quarter.
What Buyers and Business Owners Should Watch For
Nothing in this order lowers your rate today. Treat it as a set of programs still being built, not cash in hand.
- Watch for FHFA's published rules on the mortgage insurance cancellation pilot before counting on it, including what equity level qualifies
- Ask your lender when title insurance alternatives under the new permanent waiver program are actually available in your state
- If you have a USDA or VA loan, check with those agencies directly once Rollins and Collins issue new rate guidance
- Contractors: track the construction cost task force for manufactured housing contracts, but keep building your pipeline on today's market, not a future one
- Don't delay a purchase decision waiting on this order. Base it on the rate you can lock now, from Freddie Mac's weekly numbers, not on promised savings