A $1.1 trillion congressional spending bill proposed this week may avoid another government shutdown, but Biniam Gebre, acting commissioner of the Federal Housing Administration (FHA), is disappointed that certain FHA programs were not included in that spending plan.
The plan omitted FHA's proposed lender fee and the agency's Homeowners Armed with Knowledge (HAWK) program, which were created as part of an ongoing effort by the agency to expand credit access and move the economy toward recovery.
"We are deeply disappointed programs that could have served millions of families will not be permitted under the bill," Gebre said. "In today’s difficult economic times, we know congress has to make tough choices, yet the decision to not support FHA’s administrative fee for lenders and preventing implementation of the Homeowners Armed with Knowledge (HAWK) program that could have saved borrowers thousands of dollars stands in contrast to the rhetoric of wanting to support America’s hard-working families."
According to FHA, the proposed lender fee would have clarified the rules for lenders, thus giving them more confidence to loan to more FHA-eligible borrowers, at a cost of about $40 for every $10,000 over the life of the loan. FHA would have been able to use more up-to-date technology in order compete more effectively in an environment in which financing and risk management are constantly becoming more complex.
Under the HAWK program, homeowners who attend housing counseling would be eligible for tangible savings on their FHA-insured loans totaling an average of about $9,800 over the life of the loan. FHA proposed reductions of 50 basis points in the upfront mortgage insurance premium (MIP) and 10 basis points in the annual MIP for homeowners who either complete housing counseling or sign a contract committing them to housing counseling prior to closing on the house. Homeowners who participate in post-closing counseling and accumulate a record of two years with no serious delinquencies on payments can receive an additional reduction of 15 basis points from the annual MIP.
The HAWK program, according to FHA, is "a strong step toward integrating housing counseling into the home buying process and ensuring broad access to housing counseling services." Gebre believes that the housing market will suffer as a result of congress excluding the HAWK program from its recently-proposed spending plan.
"This decision means that many families will continue to be locked out of the mortgage market, unable to buy a home or build wealth that often results from home ownership," Gebre said.