First-time homebuyers could save with proposed HAWK program

The Federal Housing Administration (FHA) will end its public comment period in mid-August on a proposed program that would offer first-time homebuyers certain incentives to educate themselves on the mortgage process.

Homeowners Armed with Knowledge (HAWK) was introduced in May by the FHA as way to lower homebuyers’ mortgage insurance premium costs by attending housing counseling classes. FHA is operating under the assumption that the more borrowers understand about homeownership, the less likely they are to default on their loans.

To be eligible for the discount, borrowers must take several courses before and after closing. FHA says consumers could save an average of $325 a year or nearly $10,000 over the life of the loan.

The courses will be taught by agencies approved by the U.S. Department of Housing and Urban Development. FHA hopes that borrowers will be able to apply for the program by the end of the year.

While backing HAWK, however, the National Association of Realtors^® (NAR) recently issued a statement that FHA still needs to do more to help first-time homebuyers.

“As the leading advocate for homeowners, Realtors® are concerned about FHA’s high annual mortgage insurance premiums and the insurance requirement for the life of the loan,” says Steve Brown, president of NAR. “FHA fees make up nearly 20 percent of a monthly mortgage payment today and are making it more difficult for qualified buyers to purchase a home.”

According to NAR, 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 must pay other financial programs separately.

NAR also urged for expansion of the program to repeat buyers.

Brown said NAR also has concerns about the amount of time it will take buyers to access and complete the counseling program. If renters decide not to renew at the end of their lease and contact a real estate agent to begin the home search process, they could be pushed beyond their target move-out date if the next available counseling class isn’t for 30 to 60 days.

NAR plans to work with FHA to educate members and consumers about the availability and benefits of the HAWK counseling program, and it recommends that FHA heavily market the program to lenders, real estate professionals and consumers.