FHA’s HAWK (Homeowners Armed with Knowledge) program, which was designed to help home buyers receive reduced mortgage insurance premiums, has been delayed for at least one year as the program was excluded from the 2015 budget.
“Over the last few years FHA has proposed a number of steps to better serve borrowers and lenders in an ongoing effort to expand credit access and ultimately continue moving the economy in a positive direction,” said Biniam Gebre, Acting FHA Commissioner and Assistant Secretary for Housing. “We are disappointed programs that could have served many families will not be permitted under the bill.”
Under the program, homebuyers who committed to housing counseling would have qualified for tangible savings on their FHA-insured loans. The average buyer would have saved approximately $9,800 over the life of their loan. HUD continues to believe the HAWK program is a strong step toward integrating housing counseling into the home buying process and ensuring broad access to housing counseling services.
Some members of Congress are pushing HUD to reduce the current FHA mortgage insurance premiums. This from Senator Boxer’s office:
“With the improved outlook of the MMIF, we believe now is an appropriate time for the FHA to reexamine its premium levels to determine whether they can be reasonably and safely lowered,” the Senators wrote. “While preserving the solid footing of the reserve fund is essential, reducing fees does not necessarily conflict with this goal. As any business knows, just as a price that is set too high will lead to less profit, not more, lowering the premium on qualified borrowers may actually produce greater revenue and fully restore the capital ratio more quickly.”
FHA mortgage insurance premiums ARE expensive compared to what what is available with conventional financing. Typically the only times I am originating an FHA loan is when the borrower has had a short sale or foreclosure as FHA has a shorter wait period than conventional (3 years). Conventional programs such as Home Advantage and Home Possible offer reduced pmi rates and are often more attractive to home buyers when compared to an FHA loan.
If HUD wants FHA to more than a lender for those with lower credit scores or be temporary financing for those who have had a short sale or foreclosure, they need to offer reduced mortgage insurance premiums.