The Fed starts its two-day meeting today, and that will grab the headlines this week. But a story from last Thursday may matter more to your monthly budget.
That's when the President signed an executive order called "Decreasing Housing Costs for the American People." I read the whole thing, because headlines about orders like this tend to run ahead of what they actually do. Here's the plain-English version.
What the order actually says
It's a set of directions to federal agencies, not a rule change. Four pieces matter to homeowners:
Mortgage insurance. If the FHFA Director decides it's in the best interest, Fannie Mae and Freddie Mac would set up a pilot that reviews loans using automated home values and cancels mortgage insurance on its own once a borrower meets the equity rules based on today's value. It would only apply to loans made after the pilot is set up.
Title costs on refinances. Again, if the Director signs off, the title acceptance pilot would become an ongoing nationwide program. On eligible refinances, an automated title review could stand in for the lender's title insurance policy.
Manufactured housing. A HUD and FHFA task force has 180 days to recommend ways to lower the cost of factory-built homes.
USDA and VA direct loans. Both agencies are told to lower rates on loans they make directly. That's not the VA or USDA guaranteed loans most buyers get through a lender like me.
Nothing changes on a loan today. Every piece depends on follow-up from FHFA, Fannie Mae, Freddie Mac, USDA or VA, and the order sets no start dates.
The part you can use right now
Here's the part that's easy to miss. If your conventional loan is owned by Fannie Mae, you can already ask to drop mortgage insurance based on your home's current value. You don't have to wait for any pilot.
Under Fannie Mae's rules, for a one-unit primary home or second home:
If the loan is two to five years old, Fannie Mae requires your balance to be 75% or less of today's value.
If it's more than five years old, Fannie Mae's limit is 80% or less.
Fannie Mae also requires a clean payment history: no payment 30 days late in the last 12 months, and none 60 days late in the last 24.
The servicer orders a valuation through Fannie Mae that includes an inside and outside inspection.
And since September 16, Fannie Mae has allowed servicers to reach out to borrowers who may be close. Before that, servicers weren't allowed to bring it up. So the new pilot would build on a door that's already open. The difference is that the servicer would do the checking for you.
Freddie Mac has its own rules, and your servicer can tell you who owns your loan.
Separately, federal law already lets you request cancellation once your balance is scheduled to reach 80% of your home's original value, and PMI generally ends on its own when it's scheduled to reach 78%, as long as you're current.
Run the math before you call
Say your loan is owned by Fannie Mae and your balance is $360,000. To get to Fannie Mae's 75%, the home has to be worth $480,000 or more. At 80%, it's $450,000.
Here in the Valley, that matters. Prices are running a little below where they were a year ago. If you bought in the last two or three years, today's value may not be much above what you paid, or it may be below it. A valuation isn't free, so look at recent sales near you before you ask for one. If you're close, a few extra principal payments can close the gap.
One more thing: FHA mortgage insurance runs on its own rules, and this order doesn't touch it. If you have an FHA loan and real equity, the way out of FHA mortgage insurance is often a refinance into a conventional loan, and that only makes sense if the full numbers work.
Title savings: real, but small for now
When the title pilot launched in 2024, FHFA estimated it could save homeowners $500 to $1,500 in closing costs on a refinance. Today it's limited to certain refinances under 80% loan-to-value, with participating lenders in select areas. Going nationwide would be a real cut in refinance costs, but it won't turn a bad refinance into a good one.
My take
On the numbers, this is a step in the right direction. Mortgage insurance and closing costs are real money, and letting today's value count is fair to people whose homes have gained value. But the order comes with conditions and no start dates, and the mortgage insurance piece only helps loans made after the pilot exists. I wouldn't time a purchase or a refinance around it.
If you're paying mortgage insurance in Phoenix or anywhere in Arizona and want to know how close you are to dropping it, start at themcdteam.com. Send me your loan balance and a rough idea of your home's value, or schedule a call and we'll run the numbers together.
This article is general information, not a loan offer or commitment. Program rules can change, and all loans are subject to credit approval and underwriting guidelines.
Michael McDermott, NMLS 184065 | NEXA Lending, NMLS 1660690 | AZBK 2006218 | Equal Housing Opportunity
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