In a recent blog post we discussed the FHA/HUD announcement to help give help and offer credit to home buyers who are under served by the mortgage industry. The FHA and HUD issued a press release, HUDNo.14–048–to announce a pilot program called Homeowners Armed With Knowledge or HAWK.
This pilot program is designed to encourage eligible borrowers to get housing counseling in exchange for discounts on mortgage insurance that could result in a substantial savings over the lifetime of the mortgage.
According to HUD, “Under the four-year HAWK for New Homebuyers pilot program notice, homebuyers who commit to housing counseling will qualify for tangible savings on their FHA-insured loans. The average buyer would save approximately $325 a year – or almost $9,800 over the life of their loan.”
Furthermore, the FHA has proposed “…that homeowners who complete housing counseling before signing a contract to purchase a home and who complete additional pre-closing housing counseling will receive a 50 basis point reduction in the upfront FHA mortgage insurance premium (MIP) and a 10 basis point reduction in the annual FHA MIP.”
But that is not all, according to the FHA/HUD publication Blueprint For Access, which says the counseling, combined with a long-term record of responsible loan payments will bring HAWK participants even more savings. “Choosing to participate in post-closing counseling and a track record of timely mortgage payments will bring even greater benefits. After two years with no serious delinquencies, participants receive an additional 15 basis point reduction in annual MIP. The HAWK program is a strong step toward integrating housing counseling into the home buying process and ensuring broad access to housing counseling services.”
The emphasis on housing counseling is because of statistics which show lower delinquency rates for those who took part in such counseling. According to Blueprint For Access, “Delinquency rates for borrowers who have received counseling are 29 % lower for first-time homebuyers and 15% lower overall. Consumers who participate in housing counseling get individualized, objective advice on understanding the rights and responsibilities of homeownership, addressing credit and savings barriers, and meeting their overall housing and financial goals.”
Phase One of the HAWK pilot program is currently scheduled for Fall 2014. Until then the program is open for public comment on the Federal Register.
Do you have questions about FHA home loans? Ask us in the comments section. You can get information about applying or getting pre-approved for an FHA loan at FHA.com, a private company and not a government website.