Obama Cut the Fees Americans Pay for This Popular Mortgage Program. President Trump Just Raised Them.

It’s a long four years ahead.

John Angelillo/Reuters

Donald Trump seems to have started off his presidency with a small but telling reminder that, for all his populist rhetoric, he’s fundamentally heading a conservative Republican administration.

Earlier this month, the Obama administration announced that it would cut the fee that the Federal Housing Administration charges to mortgage borrowers by a modest quarter of a percentage point. FHA loans tend to be popular with first-time homebuyers, as well as lower-income households, because they don’t require a high credit rating, and you can qualify for one with as little as a 3.5 percent down payment. In return for those lenient terms, borrowers pay an annual insurance premium to the government, which covers losses incurred by lenders. The Obama administration’s move would have saved your average borrower $500 per year—not huge, but enough to be cheered by the industry as a “parting gift to the housing market” at a moment when interest rates seem to be headed upward.

Republicans were not happy about this, in part, perhaps, because it’s taken FHA’s finances a while to recover from the housing collapse. Rep. Jeb Hensarling, who chairs the House Financial Services Committee, released a pretty apoplectic statement:

It seems the Obama administration’s parting gift to hardworking taxpayers is to put them at greater risk of footing the bill for yet another bailout. Just three years ago the taxpayers had to spend $1.7 billion to bail out the FHA. Lowering premiums to below market rates now only puts the FHA in a more precarious financial condition. Playing politics with the FHA through cynical, surprise 11th hour rule changes is irresponsible and endangers the integrity and success of the FHA.

Nonetheless, Housing and Urban Development Secretary Julián Castro insisted he “had no reason to believe” Trump would reverse the change once in office. Really, he seemed to be setting up a little political test. FHA backs about 18 percent of all new mortgages on single-family homes; would the new Trump administration raise costs for all those buyers in order to appease conservative budget hawks?

Yes. Yes, it would. At his confirmation hearing, HUD secretary nominee Ben Carson said he hadn’t been consulted on the change, and that he would “really examine” the cut. He also grumbled that he was “surprised to see something like this done on the way out.” Soon, it was being reported that the Trump administration would delay the reduction, which was scheduled to take effect on Jan. 27.  And Friday, shortly after the inauguration ceremony, the Department of Housing and Urban Development announced it would be “suspended indefinitely.”

Liberal Trump critics, of course, are pouncing. Per Bloomberg:

“This action is completely out of alignment with President Trump’s words about having the government work for the people,” said John Taylor, president of the National Community Reinvestment Coalition, through a spokesman. “Exactly how does raising the cost of buying a home help average people?”

Sarah Edelman, director of housing policy for the left-leaning Center for American Progress, in an e-mail wrote, “On Day 1, the president has turned his back on middle-class families— this decision effectively takes $500 out of the pocketbooks of families that were planning to buy a home in 2017. This is not the way to build a strong economy.”

To be entirely frank, I do not know enough about the health of FHA’s finances to judge whether reducing premiums was a fiscally responsible move. But it seems obvious that the easy, popular—and even populist!—approach would be to leave the reductions in place. In that sense, this incident is a useful illustration of how traditionally conservative priorities will likely carry the day on important but low-profile administrative decisions during the Trump years, which we are now surreally living in (God help us).