WASHINGTON, D.C. — In a letter sent to the U.S. Department of Housing and Urban Development, the National Association of Realtors offered support for the Federal Housing Administration’s efforts to reduce mortgage insurance premiums for first-time buyers through its Homeowners Armed with Knowledge, or HAWK, housing counseling pilot program but is concerned the program won’t significantly reduce premiums or reach enough qualified buyers.
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First-time home buyers who participate in the four-year pilot program will benefit at closing from a 50 basis points reduction in the upfront mortgage insurance premium and a 10 basis points reduction in the annual premium. If buyers complete post-closing housing counseling and do not have delinquencies greater than 90 days in the first 18 months after closing, they will receive an additional 15 basis points reduction on the annual premium starting the loan’s 25th month.
In its letter, NAR said HAWK fees could be prohibitive to buyers if lenders or counseling agencies aren’t able to pay a portion of fees and encouraged FHA to allow for coordination with other pre-purchase counseling programs, which also typically include fee-based education. It could take buyers two years to offset the cost of counseling with the premium reductions offered under the HAWK program and even longer if buyers have to satisfy other financial programs separately. NAR also urged for future expansion of the program to repeat buyers.
For more on NAR’s opinion visit realtor.org.