Search for San Diego Real Estate – One of the main focuses of the U.S. Department of Housing and Urban Development is to help first time homebuyers get their piece of the American dream by finding a quality home they can afford. To that end, HUD recently unveiled their latest effort: a counseling program for first time homebuyers that serves the express purpose of helping lower mortgage insurance premiums for those making their first purchase.
It’s being called HAWK, Homeowners Armed with Knowledge.
National Association of REALTORS® React
While HUD clearly knows their stuff, another organization with an opinion that matters is The National Association of REALTORS®. After reviewing the pilot program, their reaction was mostly positive, although they did submit a letter that expressed some lingering concerns. Foremost amongst them was that they don’t believe HAWK will actually meet its goal of reducing costs.
FHA Premium Reductions and Other Problems
Their main point of contention seems to be that the program will not adequately help reduce costs because FHA fees are still left intact. As it stands, close to 20% of a homeowner’s monthly mortgage goes to pay off their FHA fees. As the National Association of Realtors was quick to point out, FHA is already in line to both meet and exceed their own capital reserve requirements by the end of the next fiscal year.
This, then, begs the question, why not reduce those costs? It would both save homeowners money and wouldn’t have a deleterious effect on the FHA as they’ve already proven they don’t have any financial concerns at the moment.
Aside from sticking buyers with unnecessary costs, the Association also pointed out that these challenging fees could also dissuade would-be buyers from making their first purchase.
Plus, the program calls for counseling which will cost money as well. So a first time homebuyer needs to pay an unnecessary premium plus submit to at least 90 days of counseling they need to pay for. This is on top of any other classes or fees they may need to pay just to get their mortgage in the first place.
Furthermore, NAR pointed out that programs should also be offered or extended to repeat buyers. They need Carlsbad homes too and probably present a far greater risk in terms of being able to complete counseling and pay any costs.
Time Requirements of the Program
Another concern NAR had was about how much time it would take for buyers to get through the counseling program. One huge issue would be renters who discontinue their lease because they have a targeted move in date for their new Carlsbad home. If they find out they can’t see a counselor until after their lease is up, they’ll be stuck with quite the dilemma.
While the program certainly seems to come with the best of intentions, the NAR clearly points out some glaring problems that will occur if it were rolled out tomorrow. Hopefully, HUD takes their advice seriously and refines the HAWK program. Otherwise, it could end up doing more harm than good.
~ Cherie Young ~