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Is the New FHA program Still happening?
Last year there was a lot of news about a new FHA program called HAWK. It was supposed to start this year and save first-time buyers big money, so when will it begin?
Yes, absolutely, there was a lot of news about the proposed HAWK program. The great attraction of the program was that first-time buyers could save perhaps $9,800 over the life of the loan, money that comes from a reduction of FHA mortgage insurance premiums.
Why would the FHA reduce its fees? Because to qualify for the HAWK program borrowers would have to take housing counseling and have a steady record of good payments for at least two years. In other words, with better-educated borrowers who performed as promised the FHA would have fewer claims against its reserves, thus everyone wins. Borrowers would have lower costs and the FHA would pay out fewer dollars.
This sounds like a sensible idea, one that parallels auto insurance: If you take driver’s ed classes and don’t have accidents, you get insurance at a lower cost. The HAWK program was supposed to start this year, but then Congress became involved. If you take a look at the $1.1 trillion budget passed in December you can find this curious provision:
“SEC. 235. None of the funds made available by this Act nor any receipts or amounts collected under any Federal Housing Administration program may be used to implement the Homeowners Armed with Knowledge (HAWK) program.”
Why would members of Congress be against the HAWK program? It’s hard to know. Are members of Congress opposed to lower costs for first-time homebuyers? Do they oppose less risk for the FHA? You might want to ask your senator or representative.
First-time buyers used to represent about 40 percent of all purchasers. That constant influx of new buyers made it possible for existing homeowners to readily sell their properties and created demand which helped stabilize and often increase home prices. However, according to the National Association of Realtors, in 2014 “the share of first-time buyers fell to its lowest point in nearly three decades and is preventing a healthier housing market from reaching its full potential.”
The reality is that the housing market remains fragile and while values have been rising nationwide that’s hardly the case in all markets. It’s hard to imagine why more first-time homebuyers and additional demand would not cause home values to strengthen – or why members of Congress would be opposed.
Peter G. Miller is the author of The Common-Sense Mortgage and a veteran real estate columnist. Have a question? Please write to firstname.lastname@example.org.View Foreclosure Article Archives
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