WASHINGTON – The U.S. House of Representatives approved a bill this week that would cut the cost of upfront mortgage insurance fees on Federal Housing Administration (FHA) loans for first-time home buyers who take part in housing counseling. The bill requires first-time buyers to complete a housing counseling program about sustaining homeownership to be eligible for a 25-basis-point discount on their FHA mortgage insurance loan.
The Housing Financial Literacy Act of 2019, H.R. 2162, will next go before the Senate for a vote. If passed there, it would then need the president’s signature to become law.
The thrust of the bill is to have first-time homebuyers improve their financial literacy through a counseling course certified by the Department of Housing and Urban Development (HUD).
“Whether you are managing your credit, creating a budget, saving for retirement or purchasing a home, understanding the basic principles of planning, saving, and investing for the future is vitally important,” Rep. Joyce Beatty, D-Ohio, said in a statement. Beatty co-sponsored the bill with Rep. Steve Stivers, R-Ohio.
“Studies show that pre-purchase housing counseling equips first-time homebuyers with the much-needed financial skills and tools to make informed financial decisions that ultimately benefit not only their families but also the surrounding neighborhood and our entire economy,” says Beatty.
The National Association of Realtors® issued a statement saying it supports the bill. “NAR strongly supports efforts to reduce FHA premiums. H.R. 2161 will promote affordable and sustainable homeownership for American families,” NAR President John Smaby said in the statement
The Mortgage Bankers Association (MBA) also supports the bill, saying the association has long advocated for increased access to housing counseling to support first-time home buyers. The MBA, however, cautioned that any changes to the FHA insurance premiums should be carefully made to preserve the health of the FHA insurance fund and not negatively impact it.
Source: “New Bill Slashes FHA Mortgage Insurance for First-Time Homebuyers,” HousingWire (July 10, 2019)
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