For many buyers, the process of purchasing a home can seem complicated and overwhelming. There are also buyers who feel ready to purchase a home but in reality may not be financially ready. Time spent in a homebuyer education class or with a HUD certified housing counselor can help a buyer understand the process and reach a position of being mortgage-ready. REALTORS® can refer the potential buyer to a HUD certified housing counselor who has the tools and expertise to help the client resolve financial, problems, determine actual household needs, and work on a budget and spending plan and an action plan that begins to prepare the buyer to meet the financial requirements of his or her new home. After working with a housing counselor, the client can return to the REALTOR® and begin looking in earnest for the right home.
Docket ID: HUD-2014-0037-0001
Federal Register Number: 2014-11152
What is the fundamental issue?
There are some who believe that housing counseling can help to ensure that first-time buyers are adequately prepared for homeownership. There has been movement toward creating programs that incentivize borrowers with a reduction in mortgage insurance if they complete a series of housing counseling requirements.
I am a real estate professional. What does this mean for my business?
Homeownership education and counseling provides potential buyers with tools and information to help them make housing choices that are affordable and sustainable. Studies suggest that buyers who participate in education and counseling programs are less likely to experience mortgage delinquencies and foreclosures. In addition an educated buyer can help make the home buying process go more smoothly for the REALTOR® and the lender. Potential buyers may be more likely to opt-into counseling programs if they are offered a financial incentive to do so.
NAR does not have written policy related to housing counseling and incentives; however, NAR is supportive of voluntary home buyer education and counseling programs.
In May 2014, the U.S. Department of Housing & Urban Development (HUD) published a notice for Homeowners Armed with Knowledge (HAWK) for New Homebuyers. The HAWK for New Homebuyers pilot was designed to provide FHA insurance pricing incentives to first-time home buyers who participate in housing counseling and education that covered how to evaluate housing affordability and mortgage alternatives, to better manage their finances, and to understand the rights and responsibilities of homeownership. In December 2014, it was announced that efforts to fund the HAWK for New Homebuyers pilot program fell short as the 2015 Omnibus Appropriations Legislation explicitly prohibited implementation funding.
Housing Opportunity Committee