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House OKs bill to lower FHA premiums for first-time homebuyers

The U.S. House of Representatives has passed a bill designed to help first-time homebuyers by discounting 25 basis points from the upfront mortgage insurance premium on Federal Housing Administration loans.

FHALoanThe bill, known as the Housing Financial Literacy Act of 2019, was introduced by Reps. Joyce Beatty, D-Ohio, and Steve Stivers, R-Ohio. It stipulates that first-time buyers can earn eligibility for the discount by completing a homeownership counseling class that is certified by the U.S. 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,” Beatty said. “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.”

The House Financial Services Committee advanced the bill to the full House last month. Now, with the House’s approval, the measure heads to the Senate for its vote.

“I urge the Senate to support this common-sense bill that incentivizes first-time homebuyers to take greater control of their financial futures and provides greater opportunity for more Americans to realize the dream of homeownership in a financially responsible way,” Beatty said.

The bill has the support of the Mortgage Bankers Association (MBA), which expressed in a statement that “MBA has long advocated for increased access to housing counseling as a means to provide a more positive experience for first-time homebuyers unfamiliar with the homeownership process, as well as for other underserved communities.”

The MBA, however, added a caveat, cautioning that changes to insurance premiums should be made carefully to preserve the health of the FHA’s insurance fund.

"While MBA conceptually supports the goals of this bill, including improving financial literacy and making homeownership more attainable, MBA also recommends that any legislative change to FHA's premium structure maintain HUD's discretion to set insurance premiums that are consistent with actuarial evidence accepted by HUD," the statement read.


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