Thinking of buying a home? A new executive order out of Washington could eventually shave a real monthly cost off a mortgage, but the relief is aimed at future buyers, not current homeowners, and it still needs a federal regulator to act.

President Trump on Thursday signed an executive order aimed at decreasing housing costs, packaging several measures meant to make buying, building, and refinancing a home cheaper. The piece most relevant to buyers: a proposed pilot program that would cancel private mortgage insurance (better known as PMI) proactively once a borrower qualifies, instead of forcing the borrower to chase the cancellation.

PMI is the insurance lenders typically require when a buyer puts down less than 20 percent. It protects the lender, not the borrower, and it gets tacked onto the monthly payment until enough equity is built up. Under current practice, borrowers generally have to request cancellation themselves once they reach the required equity, a process that can involve paperwork and, at times, paying for an appraisal.

Under the order, the director of the Federal Housing Finance Agency would, if he determines it is in the best interests of Fannie Mae and Freddie Mac, the agency, and the public, direct the mortgage giants to create a pilot program that periodically reviews the single-family loans they own, guarantee, or securitize. Using automated valuation models to estimate current market values, the program would flag borrowers who appear to meet the equity and other requirements for cancellation, and cancel the PMI proactively. Servicers would be required, where permitted and feasible, to notify borrowers promptly and to cut unnecessary documentation requests, appraisal costs, and other administrative barriers.

Before anyone counts savings, three important caveats:

• The pilot does not exist yet. The order conditions the program on the FHFA director’s determination, and Fannie and Freddie would still need to set it up.
• It covers future mortgages only. By its terms, the pilot would apply only to mortgages made after the program is established. If you are paying PMI now, nothing in this order changes your payment.
• Cancellation is not automatic for everyone. Borrowers would still need to meet equity requirements based on current market value, payment-history standards, and other statutory, contractual, and regulatory requirements.

The order goes beyond PMI. It directs the FHFA to expand a pilot letting lenders use automated title reviews instead of a traditional lender’s title insurance policy on eligible refinances into a permanent nationwide program, with the savings required to be passed through to borrowers. It creates a Task Force on Manufactured Housing Innovation, co-chaired by HUD and the FHFA, which has 180 days to recommend ways to make factory-built homes cheaper and easier to approve. And it directs the Agriculture and Veterans Affairs departments to lower interest rates on the single-family home loans they make directly.

So what does this mean locally? For anyone in the Lakewood area planning to buy with a conventional Fannie Mae- or Freddie Mac-backed mortgage and less than 20 percent down, the proposal is worth watching: if the FHFA sets up the pilot, future borrowers could see their PMI removed automatically once their home’s value and payment history qualify, with no application and no appraisal fight. For now, nothing is in effect, and buyers should not budget around it.