Federal Housing Administration (FHA): Homeowners Armed With Knowledge (HAWK) for New Homebuyers, 27896-27904 [2014-11152]
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Federal Register / Vol. 79, No. 94 / Thursday, May 15, 2014 / Notices
DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT
[Docket No. FR–5786–N–01]
Federal Housing Administration (FHA):
Homeowners Armed With Knowledge
(HAWK) for New Homebuyers
Office of the Assistant
Secretary for Housing—Federal Housing
Commissioner, HUD.
ACTION: Notice.
AGENCY:
This notice solicits public
comment on a proposed four-year, twophase, housing counseling pilot,
‘‘HAWK for New Homebuyers.’’ HAWK
stands for Homeowners Armed With
Knowledge, and serves as an umbrella
term for several initiatives to link HUD’s
Housing Counseling program with FHAinsured mortgage origination and
servicing. The HAWK for New
Homebuyers pilot will provide FHA
insurance pricing incentives to firsttime homebuyers who participate in
housing counseling and education that
covers how to evaluate housing
affordability and mortgage alternatives,
to better manage their finances, and to
understand the rights and
responsibilities of homeownership. The
goals of the HAWK for New
Homebuyers pilot (HAWK Pilot) are to
test and evaluate program designs that
meet these objectives:
• To improve the loan performance of
participants and reduce claims paid by
FHA’s Mutual Mortgage Insurance Fund
(MMIF);
• To expand the number of families
who improve their budgeting skills and
housing decisions through access to
HUD-approved housing counseling
agency services; and
• To increase access to sustainable
home mortgages for homebuyers
underserved by the current market.
The SUPPLEMENTARY INFORMATION
section of this notice provides the
details of the pilot. HUD welcomes
public comment, and all comments will
be taken into consideration by HUD.
DATES: Comment Due Date: July 14,
2014.
ADDRESSES: Interested persons are
invited to submit comments responsive
to this request for information to the
Office of General Counsel, Regulations
Division, Department of Housing and
Urban Development, 451 7th Street SW.,
Room 10276, Washington, DC 20410–
0001. Communications must refer to the
above docket number and title and
should contain the information
specified in the ‘‘Request for
Comments’’ of this notice.
Electronic Submission of Comments.
Interested persons may submit
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SUMMARY:
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comments electronically through the
Federal eRulemaking Portal at https://
www.regulations.gov. HUD strongly
encourages commenters to submit
comments electronically. Electronic
submission of comments allows the
commenter maximum time to prepare
and submit a comment, ensures timely
receipt by HUD, and enables HUD to
make them immediately available to the
public. Comments submitted
electronically through the https://
www.regulations.gov Web site can be
viewed by interested members of the
public. Commenters should follow
instructions provided on that site to
submit comments electronically.
Submission of Hard Copy Comments.
Comments may be submitted by mail or
hand delivery. To ensure that the
information is fully considered by all of
the reviewers, each commenter
submitting hard copy comments, by
mail or hand delivery, should submit
comments or requests to the address
above, addressed to the attention of the
Regulations Division. Due to security
measures at all federal agencies,
submission of comments or requests by
mail often result in delayed delivery. To
ensure timely receipt of comments,
HUD recommends that any comments
submitted by mail be submitted at least
2 weeks in advance of the public
comment deadline. All hard copy
comments received by mail or hand
delivery are a part of the public record
and will be posted to https://
www.regulations.gov without change.
No Facsimile Comments. Facsimile
(Fax) comments are not acceptable.
Public Inspection of Comments. All
comments submitted to HUD regarding
this notice will be available, without
charge, for public inspection and
copying between 8 a.m. and 5 p.m.
weekdays at the above address. Due to
security measures at the HUD
Headquarters building, an advance
appointment to review the documents
must be scheduled by calling the
Regulations Division at 202–708–3055
(this is not a toll-free number). Copies
of all comments submitted will also be
available for inspection and
downloading at https://
www.regulations.gov.
FOR FURTHER INFORMATION CONTACT:
Email specific program questions to
counseling@hud.gov and include
‘‘HAWK Notice Question’’ in the subject
line. You may also send inquiries to the
attention of: Charlene Young, Office of
Housing Counseling, Department of
Housing and Urban Development, 451
7th Street SW., Room 9278, Washington,
DC 20410; or call (202) 708–0317 (this
is not a toll-free number). Persons with
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hearing or speech impairments may
access this number via TTY by calling
the toll-free Federal Relay Service at
800–877–8339.
SUPPLEMENTARY INFORMATION:
I. Background
Through its Office of Housing
Counseling, HUD administers the
Housing Counseling Program,
established pursuant to section 106 of
the Housing and Urban Development
Act of 1968 (12 U.S.C. 1701x) (1968
Act). Under the Housing Counseling
Program, HUD provides grants, and
oversees a broad range of nonprofit
organizations, government agencies, and
their branches and affiliates, to educate
homeowners and renters so they may
improve their housing conditions and
meet the responsibilities of
homeownership and tenancy. Housing
counseling and education for first-time
homebuyers, pursuant to HUD
standards,1 addresses topics that
include the decision to own or rent;
budgeting and credit; financing a home;
the home buying process; maintaining a
home; managing mortgage payments;
managing the financial investment; and
avoiding delinquency and default.
Research 2 has shown that housing
counseling for first-time homebuyers by
HUD-approved housing counseling
agencies assists homebuyers in
homeownership, arming them with
information that improves their chances
of success.
Through the Federal Housing
Administration (FHA) and under
authority of the National Housing Act
(12 U.S.C. 1701 et seq.), HUD provides
mortgage insurance on single family
loans made by FHA-approved lenders
for 1–4 unit single family properties.
FHA mortgage insurance provides
lenders with protection against losses
incurred as the result of single family
borrowers defaulting on their mortgage
loans. By insuring loans made by FHAapproved lenders, FHA facilitates the
availability of mortgage financing, helps
to expand affordable housing, and
assists in meeting the housing needs of
borrowers.3 FHA is also charged with
ensuring the financial soundness of the
MMIF, and making programmatic or
1 See HUD’s regulations at 24 CFR part 214, and
HUD’s Housing Counseling Program Handbook
(7610.1) at https://portal.hud.gov/hudportal/
HUD?src=/program_offices/administration/
hudclips/handbooks/hsgh/7610.1.
2 See footnotes 5–8.
3 See 12 U.S.C. 1708(a)(7)(B), (including low and
moderate income borrowers, borrowers from
underserved areas, central city areas, rural areas,
and minority borrowers (12 U.S.C. 1709(w)).
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premium adjustments as necessary to
reduce risk to the MMIF.4
Some studies show that properly
structured and delivered housing
counseling and education provides a
significant benefit to consumers and
investors of residential mortgages.5
Several major studies have recently
noted a correlation between counseled
first-time homebuyers and reductions in
serious delinquencies by up to 30%
compared to borrowers with similar
credit profiles who are not counseled.6
HUD-approved housing counseling
agencies reach consumers who are
lower income and more likely to be
racial and ethnic minorities.7 Studies
estimate that housing counseling saves
lenders and investors approximately
$1,000 per counseled loan.8 While HUD
expects positive results from this
initiative, actual outcomes can only be
determined after pilot implementation.
The HAWK Pilot is consumer-driven,
designed to expand the benefits of
housing counseling not only to
consumers but also to lenders, investors
and the FHA Mutual Mortgage
4 See
12 U.S.C. 1708(a)(3) and (6).
research summary available at https://
portal.hud.gov/hudportal/documents/
huddoc?id=counselingworks060412.pdf.
6 See for example: Mayer, Neil S. and Kenneth
Temkin. (2013). Pre-Contract Counseling Impacts
on Mortgage Performance: Empirical Analysis of
NeighborWorks® America’s Experience. Albany,
CA: Neil Mayer & Associates; Agarwal, Sumit, Gene
Amromin, Itzhak Ben-David, Souphala
Chomsisengphet, and Douglas D. Evanoff. 2010.
‘‘Learning to Cope: Voluntary Financial Education
and Loan Performance during a Housing Crisis,’’
American Economic Review: Papers & Proceedings
100: 495–500, May. See also Hirad, Abdighani, and
Peter M. Zorn, Joint Center for Housing Studies,
Harvard University, Cambridge, MA. ‘‘A little
Knowledge Is a Good Thing: Empirical Evidence of
the Effectiveness of Pre-Contract Homeownership
Counseling.’’ Low-Income Homeownership
Working Paper Series LIHO–01.4 (May 22, 2001);
Gabriela Avila et. al., The Benefits of Pre-contract
Homeownership Counseling (working paper) (April
12, 2013), https://www.freddiemac.com/news/blog/
pdf/benefits_of_pre_purchase.pdf (updating the
2001 findings on benefits of homeownership);
Michael J. Collins and Collin O’Rourke, Research
Institute of for Housing America & Mortgage
Bankers Association, ‘‘Homeownership Education
and Counseling: Do We Know What Works? ’’ (April
26, 2011) https://www.housingamerica.orp/RIHA/
Publications/76378_10544_Research_RIHA_
Collins_Report.pdf. Additional smaller studies find
benefits from interventions after the loan is closed
for first time homebuyers. See J. Michael Collins et
al., ‘‘Effects of Monitoring on Mortgage
Delinquency: Evidence from a Randomized Field
Study’’ (working paper) (2013), https://
www.fdic.gov/news.conferences/2013ResearchConf/
Papers/Moulton.pdf.
7 Jennifer Turnham & Anna Jefferson,
‘‘Prepurchase Housing Counseling Outcome Study:
Research Brief (May 2013), https://www.huduser.org/
publications/pdf/pre_purchase_counseling.pdf.
HUD housing counseling reporting data shows
similar results. See https://portal.hud.gov/
hudportal/HUD?src=/program_offices/housing/sfh/
hcc/ohcqrpt.
8 See Avila supra note 6.
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5 See
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Insurance Fund. ‘‘HAWK
Homebuyers’’—those described below
who take the initiative to complete a
series of housing counseling and
education elements and meet payment
requirements on their FHA-insured
mortgages—will receive substantial
reductions in the pricing of the upfront
and annual FHA mortgage insurance on
their loan. Housing counseling and
education for the HAWK pilot will
occur at the points in time that have
been determined most useful to firsttime homebuyers. These points in time
are: Before the home purchase contract
is signed, before the loan closes, and
during the first year of homeownership.
Housing counseling and education will
be paid by the parties who benefit from
the counseling. These parties include
FHA-insured borrowers, consumers in
general, originators, and servicers,
through improved loan performance.
Additional sources of funding for
housing counseling and education will
be encouraged and implemented during
the pilot.
The HAWK Pilot is proposed to be a
four-year pilot and the maximum
number of FHA-insured loans under the
pilot will be limited based upon the size
and scope of premium reductions given
to borrowers. The pilot will be
implemented in two phases. Phase One
constitutes a start-up period where
participation will be limited to a small
number of borrowers working with
FHA-approved lenders, servicers, and
housing counseling agencies selected by
HUD in order to test the systems and
operations required for the pilot. During
Phase One, HUD will assess the
sufficiency of communication,
operations, systems and coordination of
pilot processes. Phase Two will expand
the participation opportunities to all
first-time homebuyers using FHAinsured financing up to a capped
number of loans in each of the four
years. All FHA-approved mortgagees
and servicers and all HUD-approved
housing counseling agencies whose
work plan permits pre-contract housing
counseling will be eligible to participate
in Phase Two of the pilot.
Implementation of Phase Two will be
announced in a subsequent notice
issued during the first year of the pilot.
Changes made by HUD to the pilot will
be announced through subsequent
notices. HUD will evaluate the HAWK
Pilot to assess the results of the pilot in
terms of consumer behavior, consumer
outcomes, lender behavior, loan
outcomes, claim results, and other
measures.
In addition to describing the pilot,
this notice also advises of HUD’s intent
to select housing counseling, lender and
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servicer participants for Phase One in
accordance with the selection criteria
and process described herein. Finally,
this notice solicits comments and
suggestions on the following topics:
• Marketing the pilot to real estate
professionals and consumers;
• How to coordinate or leverage the
pilot with other non-FHA benefits for
HAWK homebuyers such as local down
payment assistance programs or
mortgage products with reduced credit
overlays;
• The content, duration and timing of
housing counseling and education;
• Paying for housing counseling and
education;
• Sufficiency of the pilot incentives
to attract homebuyers to obtain housing
counseling services;
• Ways to mitigate fraud and risk in
the pilot; and
• Program coordination, operations
and systems requirements.
II. HAWK for New Homebuyers
Consumer Obligations and Benefits
A. Initial Responsibilities and Benefits
of the Program
The HAWK pilot will provide
incentives to eligible first-time
homebuyers who participate in housing
counseling and education as described
in this notice.9 HUD may adjust the
criteria for housing counseling and
education, program eligibility
requirements or the amount of the
mortgage insurance premium (MIP)
incentives at any time by subsequent
notice. Although the exact amount of
the incentives and housing counseling
and education may change, for the
initial year of the pilot, HUD expects
that homebuyers who complete precontract and pre-closing housing
counseling and education prior to the
contract of sale of the home (precontract) and prior to the loan closing
(pre-closing) will receive a one-time 50
basis points reduction in the upfront
MIP and a permanent reduction of 10
basis points on the annual MIP at loan
closing. After the homebuyer completes
post-closing housing counseling and
avoids any incidence of a 90-day
delinquency on the mortgage payments
during the first 18 months post-closing,
the homebuyer will receive an
9 Prospective homebuyers who are enrolled in the
HUD Pre-Purchase Homeownership Counseling
Demonstration and Impact Evaluation
(‘‘Demonstration’’), also known as the ‘‘HUD FirstTime Homebuyer Study’’, will not participate in the
standard HAWK program. See https://
www.huduser.org/portal/hud_firsttime_hmbyr_
study.html. However, participants will be eligible to
participate in an alternative program and are
eligible to receive the HAWK mortgage insurance
premium incentives. See participant eligibility
Section II.B.1.
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additional permanent reduction of 15
basis points on the annual MIP
beginning on the second anniversary
from the beginning amortization date
(the 25th month). The period between
the completion of the borrower’s
obligation under the HAWK Pilot and
the effective date of the permanent
reduction is a processing period for the
servicer and FHA. HUD reserves the
right during the course of the pilot to
change the timing, content and
standards for housing counseling and
education, and the amount and timing
of the upfront and annual MIP
incentives. Such changes will be
announced in a notice prior to
implementation.
B. Eligibility
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1. Eligible Borrowers. Borrower
participants are limited to first-time
homebuyers 10 who qualify for FHAmortgage insurance. Borrowers who
meet those requirements and are
participants in HUD’s Pre-Purchase
Homeownership Counseling
Demonstration and Impact Evaluation
(‘‘Demonstration’’) 11 will be eligible to
participate in an alternative HAWK
program. To preserve the integrity of the
Demonstration, prevent contamination
of the Demonstration’s participant pool,
and provide additional data for the
HAWK pilot, HUD will provide the
same MIP incentives to Demonstration
participants as provided to HAWK
participants, but with alternative
responsibilities for Demonstration
participants rather than the standard
HAWK program. All other borrowers
participating in the pilot must complete
the housing counseling and education
requirements according to the standards
set forth in this pilot in order to qualify
for the HAWK MIP incentives.
10 FHA defines a first-time homebuyer as an
individual who has not been an owner in a primary
residence for at least three years leading up to the
purchase. See ML 2008–22, for updated FHA
definitions of first-time homebuyer.
11 In response to the foreclosure crisis, the
subsequent tightening of lender underwriting
standards, and the desire to mitigate borrower risk,
HUD implemented the Pre-Purchase
Homeownership Counseling Demonstration and
Impact Evaluation (‘‘Demonstration’’) to measure to
what extent housing counseling for potential
homebuyers with mid-range credit scores and lower
incomes can mitigate that risk. HUD is working
with a contractor, three national lenders, and three
national pre-purchase counseling intermediaries to
design a randomized experiment using a sample of
6,000 prospective low- to moderate- and middleincome first-time homebuyers across 28 U.S. cities.
The demonstration will test the effectiveness and
impact of two types of pre-purchase
homeownership counseling on mortgage
preparedness, homebuyer outcomes, and loan
performance. Information on Demonstration
participants is found in the Evaluation section of
this notice.
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HUD will not insure more than a
certain number of mortgages under the
HAWK Pilot in any single year based
upon the size and scope of premium
reductions given to borrowers. HUD will
notify counseling agencies and lenders
as the pilot cap approaches through
various methods of communication
including Web site postings and email
communication.
2. Eligible Housing Counseling
Agencies—Phase One. HUD will select
HUD-approved counseling agencies for
participation in Phase One of this pilot,
in accordance with the criteria
described in the Selection Criteria for
Participating Housing Counseling
Agencies. Borrowers participating
during Phase One of the pilot must use
the same HUD-approved housing
counseling agency for all of the housing
counseling and education received
during Phase One in order to qualify for
the HAWK MIP incentives. The housing
counseling and education delivered to
the borrower during Phase One of the
pilot will be valid for Phase Two in the
event that Phase One is complete before
the borrower has finished all of the
HAWK requirements.
3. Eligible Counseling Agencies—
Phase Two. Any HUD-approved housing
counseling agency, including branches,
affiliates and subgrantees of approved
housing counseling agencies, whose
approved work plan includes prepurchase housing counseling and
education, is eligible to provide housing
counseling and education under this
program. The list of HUD-approved
housing counseling agencies that offer
pre-purchase housing counseling and
education is available at www.hud.gov/
findacounselor or 800–569–4287.
Participation by HUD-approved housing
counseling agencies in the HAWK Pilot
is voluntary. Housing counseling
agencies that wish to participate in the
HAWK Pilot must be registered in the
Federal Housing Administration’s
Connection (FHAC) system and be
qualified to issue certificates from
FHAC evidencing the completion of
housing counseling and education as
described in this notice. HUD will seek
to identify and publish a list of HAWKparticipating housing counseling
agencies periodically.
4. Eligible lenders—Phase One. HUD
will select FHA-approved lenders and
servicers for participation in Phase One
of this pilot in accordance with the
criteria described in the Selection
Criteria for Participating Lenders and
Servicers. Borrowers in Phase One must
use an FHA-approved Phase One lender
to access the HAWK mortgage
incentives.
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5. Eligible lenders—Phase Two. Any
FHA-approved lender that originates
home purchase mortgages is eligible to
participate in the HAWK Pilot.
Participation is voluntary. HUD will
seek to identify and publish a list of
HAWK-participating lenders
periodically.
C. Housing Counseling and Education
Basic Requirements
1. Definitions. HUD defines housing
counseling to be counseling-to-client
assistance that addresses unique
financial circumstances and housing
issues and focuses on overcoming
unique obstacles to achieving a housing
goal. Education is defined as formal
classes with established curriculum and
instructional goals provided in a group
or classroom setting or other formats
approved by HUD (including on-line
education that is acceptable to the
housing counseling agency issuing the
certificate and meets HUD standards for
education).12
2. General requirements. All housing
counseling and education must be
delivered by a HUD-approved housing
counseling agency in accordance with
HUD regulations, directives, handbooks,
and as applicable, the requirements of
the Notices of Funding Availability
under which housing counseling
agencies were provided grants. All
housing counseling and education must
comply with National Industry
Standards 13 for housing counseling and
education, including but not limited to
requirements to discuss options and
alternatives to help the client meet
housing goals, disclose financial
relationships between the housing
counseling agency and financial
institutions, list all fees at the time of
intake, and obtain authorization from
the consumer to share information with
third parties. In addition to these basic
program standards, minimum duration
and content standards are described
below for each housing counseling and
education element of the HAWK Pilot.
The time-in requirements for education
and counseling and content standards in
this notice were developed after
consultation with industry experts and
align with the education and counseling
requirements of successful programs.
Housing counseling agencies have the
flexibility to provide the level of
services that they think appropriate to
12 See HUD Handbook 7610.1 rev 5, Section 1.4
(B) and (G).
13 National Industry Standards for
Homeownership Education and Counseling,
National Industry Standards for Homeownership
and Counseling (July 2012), https://
www.homeownershipstandards.com/Uploads/NW912%20Standards-FINALv02112013.pdf.
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meet the needs of the consumer or
potential borrower and may set housing
counseling and education standards that
exceed the minimum requirements
outlined in this section. Housing
counselors may not give legal advice
and should refer consumers to
appropriate experts for specific issues.
3. Completion of Required Housing
Counseling Elements. All borrowers on
the loan are required to complete each
of the required housing counseling and
education elements in order to qualify
for the maximum MIP incentives under
the HAWK Pilot. Demonstration
participants will follow different
Demonstration protocol. Housing
counseling agencies must disclose at
intake whether the fees for services are
on a per person or per household basis.
Housing counseling and education may
be conducted in person, via telephone
or internet, or delivered by other
methods mutually agreeable to the
potential borrower and the housing
counseling agency, as provided in the
24 CFR 214.300 and the HUD Housing
Counseling Program Handbook (7610.1
rev 5).14
4. Housing Counseling and Education
Elements for the HAWK Pilot. Each
borrower must complete three elements
as prescribed in this notice in order to
be eligible for all of the MIP incentives
offered herein. The three elements are:
(1) Pre-contract housing counseling and
education; (2) pre-closing housing
counseling; and (3) post-closing housing
counseling. Each element must meet at
a minimum the duration and content
standards described below and must be
completed separately within the
prescribed timeframes.
a. Pre-Contract Housing Counseling and
Education Element
i. Duration. Potential borrowers are
required to receive a minimum of 6
hours of housing education and
counseling to complete the pre-contract
housing counseling and education
element and receive a counseling
certificate. The services can include a
combination of individual counseling
and education as long as at least 1.5
hours of individual counseling is
provided.
ii. Content and Delivery. Individual
housing counseling or education may be
utilized to cover general topics,
including, but not limited to:
Understanding the home shopping,
home buying and mortgage application
process; how to evaluate mortgage
products; the role of various real estate
professionals, including, the real estate
agent, lender, title company, appraiser
14 See
HUD Handbook 7610.1 rev 5.
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and home inspector, and considerations
when selecting from among possible
firms or individuals to perform in these
capacities; rights and responsibilities of
homeowners in comparison to those of
renters; how to evaluate neighborhoods
and home location; how housing and
transportation costs vary depending on
the type and location of the home and
the terms of the mortgage loan and
contract of sale; federal, state and local
resources to assist with homeownership
affordability including down payment
and closing cost assistance programs
and affordable mortgage products;
responsibilities of repair and
maintenance; the importance of the
home inspection; avoidance of mortgage
delinquency and default; the costs
associated with homeownership;
avoiding fraud and scams; and
information on discriminatory housing
and mortgage lending practices and the
rights and remedies available under
federal, state, and local fair housing
laws. Housing counseling agencies may
identify acceptable online or published
education materials that comply with
these content and duration requirements
and comply with HUD standards for
education as long as they obtain
evidence that the borrower has
completed them to the housing
counseling agency’s satisfaction.
Individual counseling must, at a
minimum, cover the following topics:
Analysis of homeownership readiness;
household budget development;
analysis of credit and debt; affordability
analysis; and an explanation of the
HAWK Pilot, including MIP incentives,
housing counseling requirements, and
payment of counseling costs.
iii. Timing. The pre-contract housing
counseling and education certificate
must be issued 10 days prior to
ratification of a contract to purchase a
home. It is the housing counseling
agency’s responsibility to ensure that
education obtained from third parties
(such as on-line education) meets the
requirements of the pilot before it issues
the pre-contract certificate of
completion.
b. Pre-Closing Housing Counseling
i. Duration. Potential borrowers are
required to have a minimum of 1 hour
of pre-closing individual housing
counseling.
ii. Content and Delivery. At a
minimum, this counseling must cover:
A review of the mortgage loan
information that has been provided by
the lender; re-assessment of the costs of
homeownership based on the particular
home and loan; general expectations for
the closing process in the borrowers’
state including: Review of the Good
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27899
Faith Estimate, Truth-in-lending
statement, loan disclosures, and other
mortgage and closing documents;
annual percentage rate (APR) and
interest rate; earnest money; the
appraisal; title insurance; property and
casualty insurance; inspections; and
escrow.
iii. Timing. The pre-closing
counseling certificate must be issued no
earlier than the date of the loan
application and no later than three days
prior to settlement.
c. Post-Closing Housing Counseling
i. Duration. Borrowers are required to
have a minimum of 1 hour of postclosing individual housing counseling.
ii. Content and delivery. The content
of the housing counseling must include:
The new household budget reflecting
expenses of home ownership including
savings for planned and unplanned
expenses; how to maintain and improve
the home; recognizing home repair
scams; delinquency prevention and
resources available to intervene in the
event of a risk of delinquency or default;
federal, state and local laws relating to
homeownership and mortgage servicing;
maintaining good credit; taxes; reserves;
home equity; refinancing and
alternatives; utility costs; energy
efficiency; and selling the home.
iii. Timing. The post-closing
counseling certificate must be issued no
earlier than 30 days following loan
closing and no later than the one year
anniversary from loan closing.
d. Documentation of completion. The
housing counseling agency will certify
that each consumer has completed the
counseling and/or education
requirements for each element of the
HAWK pilot by issuing a counseling
certificate, form HUD–9911, for that
element within 24 hours of the
consumer’s completion of counseling. A
copy of the certificate, signed by the
consumer and the housing counseling
agency, must be kept in the housing
counseling agency file in addition to
FHAC. The completion of each required
element will be evidenced by a separate
certificate of completion issued in
FHAC and signed by an authorized
representative of the HUD-approved
agency that provided the housing
counseling and education. Each
certificate will also be signed by the
borrower. The housing counseling
agency representative will certify that
housing counseling and education was
provided in accordance with the HAWK
Pilot and HUD housing counseling
program rules. The certificate will
document the fee charged and received
for each element. Lenders will access
certificates in FHAC to validate that
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borrowers have met the pilot
requirements and to validate the fees
paid by the borrower. A total of three
certificates will be filed in FHAC for
each borrower before the borrower(s)
may receive the maximum incentives
under the HAWK Pilot. Demonstration
participants will be asked to identify
their status in the Demonstration
through self-identification/notification
to HUD and their FHA-approved lender
of their status as a Demonstration
participant. HUD will then apply a
Demonstration participant code in
FHAC, if participants have met the
Demonstration protocols.
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D. Borrower FHA Mortgage Insurance
Incentives
First-time homebuyers who have
completed pre-contract and pre-closing
elements as evidenced by the respective
certificates will receive a reduction in
the FHA upfront MIP of 50 basis points
and a permanent reduction of 10 basis
points on the annual MIP.
First-time homebuyers who have
completed post-closing housing
counseling and education as evidenced
by the certificate and who have made 18
months of mortgage payments with no
instances of 90-day delinquencies will
receive an additional permanent
reduction in the FHA annual MIP of 15
basis points beginning with the 25th
month from the beginning amortization
date. Any delinquencies caused by or as
a result of a transfer of servicing will not
be counted as a delinquency for
purposes of loan repayment
performance. The period between the
completion of the borrower’s obligation
under the HAWK Pilot and the effective
date of the permanent reduction is a
processing period for the servicer and
FHA. The borrower will continue to pay
the full amount owed on the mortgage
and note until notified that the
permanent reduction will take effect.
E. Consumer Benefits From the HAWK
for New Homebuyers Pilot
1. Benefits from Housing Counseling
and Education. HAWK participants will
benefit from practical skills and
acquired knowledge gained from
housing counseling and education,
whether or not they choose to purchase
a home and whether or not they choose
an FHA-insured mortgage loan. HAWK
participants will receive education and
customized housing counseling
according to HUD standards, described
in Section II.C.4, above including but
not limited to a customized budget,
review of income, expenses, use of
credit and debt, the benefits and
responsibilities of homeownership
versus renting, and an analysis of home
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affordability for their situation. HAWK
participants will also obtain information
on how to shop for a home,
opportunities for down payment and
closing cost assistance, how to compare
mortgage products, recognize scams,
understand their rights with respect to
fair housing and fair lending, and know
what to look for when selecting
professionals involved in buying a home
(e.g., the real estate agent, the financial
institution, the home inspector). These
HAWK participants may choose to
proceed to home purchase or not. HUD
will work with the real estate industry
to identify products and services that
may be targeted to HAWK participants
in recognition of their commitment to
becoming knowledgeable in these areas.
Some HAWK participants will choose
to proceed to homeownership. Those
who do will learn through the housing
counseling process a basic
understanding of mortgage and closing
documents; a reassessment of the budget
based on the actual costs of the home
and the loan; strategies to plan for costs
associated with homeownership; home
maintenance; and various forms of
insurance. Under existing HUD rules,
housing counselors are required to
avoid steering clients to any particular
provider or service, so the HAWK
participant may choose a mortgage other
than an FHA-insured loan. HUD
recognizes that real estate professionals
may develop products tailored for
HAWK consumers and that consumers
are under no obligation to choose an
FHA loan or any other product. Postclosing housing counseling provides
homeowners with information about
saving for maintenance and repairs;
maintaining good credit; recognizing
home repair scams; energy efficiency;
property taxes; the importance of
communicating with the servicer; and
laws governing mortgage servicing. Postclosing housing counseling will also
provide information and resources in
the event the borrower experiences
difficulty paying the mortgage.
2. Benefits for FHA-Insured Mortgage
Borrowers. HAWK Homebuyers who
participate in the pilot and select an
FHA-insured loan will receive monetary
savings from MIP reductions. While the
actual amount in savings depends on
several factors, including the
homebuyer’s loan amount, whether the
upfront MIP is financed, the interest
rate, and the decision to refinance out
of the FHA portfolio in the future,
homebuyer participation in this
initiative will result in a savings. Those
homebuyers who successfully fulfill all
requirements for a reduction in the
upfront MIP and permanent annual MIP
will have the most monetary savings.
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They will benefit from a 50 basis points
reduction in the upfront MIP and a total
permanent reduction of 25 basis points
in the annual MIP. Homebuyers who
only complete pre-contract housing
counseling and education and preclosing housing counseling will
experience a savings of the 50 basis
points on the upfront MIP and a
permanent reduction of 10 basis points
on the annual MIP. Those homebuyers
who complete all three housing
counseling and education sessions per
the program but experience a
delinquency of 90 days or more will not
receive the 15 basis point reduction on
the annual MIP.
F. The Cost of Housing Counseling and
Education and Sources of Payment
1. Fees for Services. Housing
counseling agencies incur costs to
provide housing counseling and
education and are permitted to charge
for services under HUD rules.15 Fees
must be commensurate with the level of
services provided and must be
reasonable and customary for the area.
Housing counseling must be provided
without charge to consumers who do
not have an ability to pay as defined in
HUD rules and regulations. The HAWK
for New Homebuyers pilot will benefit
many stakeholders and is designed so
that those who benefit from the program
will participate in paying for it.
Multiple sources of funding are
permitted as long as HUD and other
rules and regulations are met. HUD
prohibits housing counseling agencies
steering clients to one particular
product or settlement service;
counselors must provide three referrals
if they provide any referrals at all. All
fees and agreements must be disclosed
by the housing counseling agency to the
consumer in advance. Fees must comply
with applicable rules and regulations,
including HUD and CFPB mortgage
rules.16
2. Cost of Providing Housing
Counseling and Education. HUD
distinguishes between the cost of
providing housing counseling and
education services and fees charged for
the provision of those services. HUD
regulates fees as described in Section
II.F.1 above, but HUD does not cap the
cost of each HAWK element beyond
existing regulatory and handbook
requirements. Therefore, housing
counseling agencies have the flexibility
to provide the level of services and the
modes of delivery that they think
appropriate to meet the needs of the
15 24 CFR part 214.303 and 313; HUD Handbook
7610.1 rev 5.
16 See, e.g., 12 CFR parts 1024 and 1026.
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consumer. Consumers should shop for
the best value and quality housing
counseling and education program that
meet their needs. HUD used the
following estimates of average cost to
provide the minimum services required
by each HAWK element: Individual
counseling—$100 per hour; education—
$150 per 4.5 hour session including the
cost of materials and a credit report, if
any. Housing counseling agencies
should document their actual costs to
provide HAWK services in accordance
with HUD guidelines.
3. Reasonable Fees for Housing
Counseling and Education. Housing
counseling agencies may choose not to
charge any fees if they have sufficient
other resources. HUD deems fees of
$300 for the pre-contract element; $100
for the pre-closing element; and $100 for
the post-closing element to be
reasonable and customary for agencies
providing the minimum required
counseling and education for each
element. Maximum fees that are
permitted to be charged to consumers
and lenders are described below.
4. Sources to Pay for Housing
Counseling and Education. HUD
believes that the parties that benefit
from the HAWK Pilot should contribute
to the cost of housing counseling and
education, in particular the consumer,
the originating lender, the servicer,
HUD, and the public. HUD recognizes
that resources for paying for housing
counseling and education are limited
and has designed the HAWK Pilot to
accommodate multiple sources of
revenue. FHA is prohibited from using
the MMIF as a source of funding for precontract housing counseling and
education. FHA expects that the MIP
reductions benefiting the borrower will
offset any costs of HAWK counseling
and education paid by the borrower.
Housing counseling agencies who wish
to subsidize the homebuyer’s counseling
and education costs have the option of
using HUD’s Housing Counseling grant
for counseling and education associated
with the pilot. However, grant funding
from HUD is insufficient and cannot be
relied upon exclusively. Therefore,
payment for counseling is expected
from parties who will benefit from the
implementation of this pilot, including
participants in housing counseling who
become borrowers, FHA-approved
lenders, servicers, and other government
entities. HUD will work to identify other
sources of funding for housing
counseling and education associated
with the HAWK Pilot. The payment
structure below is recommended and
will be considered to be ‘‘reasonable
and customary’’ for purposes of HUD’s
housing counseling and education
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program requirements. Should other
resources become available in the
future, HUD will announce their
availability by subsequent Federal
Register notice. Housing counseling
agencies may seek additional sources of
payment for pre-closing and postclosing housing counseling and
education but may not charge the
borrower or the lender more than the
value of the services actually provided
to the borrower. Paying for counseling
and education for Demonstration
participants opting into the HAWK Pilot
will be handled differently.
a. Pre-Contract Housing Counseling and
Education Element
All borrowers on the loan are required
to complete pre-contract housing
counseling and education and are
expected to pay a portion of the cost of
the pre-contract housing counseling and
education element.17 Housing
counseling agencies may cover the cost
of housing counseling and education for
the borrower from HUD’s grant funding
or other resources available to them
from other government agencies, private
individuals and corporations, or
foundations. The cost to the housing
counseling agency to provide the
minimum required pre-contract housing
counseling and education is estimated
at $150 for counseling and $150 for
education including (if utilized by the
housing counseling agency) the cost of
materials and a credit report with a
credit score. Fees to the consumer in
excess of these amounts must have
documentation to establish that they are
reasonable and customary under HUD
regulations.
b. Pre-Closing and Post-Closing Housing
Counseling Elements
Housing counseling agencies may
elect to cover the cost of providing preclosing and post-closing housing
counseling by the HUD housing
counseling grant, other government
sources, foundations, or other private
sources of funding that comply with
existing rules and regulations relating to
HUD counseling and mortgage fees. Preclosing and post-closing housing
counseling elements paid in part by
17 HUD Handbook 7610.1rev5 Chapter 7–6: If an
agency chooses to charge fees, the agency must
confirm to the following guidelines: (1) Provide
counseling without charge to persons who cannot
afford the fees. (2) Fees must be commensurate with
the level of services provided, and be reasonable
and customary for the area. (3) Agencies may not
impose fees upon clients for the same portion of or
for an entire service that is already funded with
HUD grant funds. (4) The agency must disclose all
fees that will or may be charged to the client, prior
to the beginning of counseling services.
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borrowers and lenders are governed by
the rules below.
The cost of pre-closing and postclosing housing counseling will be
reimbursed at closing by the originating
FHA-approved lender through a
payment by the lender to the housing
counseling agency at loan closing (or to
the borrower at loan closing if the
borrower paid for the counseling at the
time it was delivered prior to loan
closing). Borrowers who take housing
counseling and do not close on an FHAinsured loan will not be reimbursed by
the lender for pre-closing and postclosing housing counseling. Part of the
lender payment will be used to pay the
borrower for pre-closing housing
counseling that the homebuyer
completed as evidenced by the preclosing counseling certificate. The
certificate will also serve as proof of
payment for this service at loan closing
in order for the borrower to receive
reimbursement. The amount of the
borrower’s payment to the counseling
agency and the subsequent lender
reimbursement to the borrower at loan
closing for pre-closing counseling must
be the same, must reflect the value of
the services rendered by the housing
counseling agency to the borrower, and
must not exceed $250. The housing
counseling agency may use other
sources of funds in an amount greater or
less than $250 to pay for the pre-closing
counseling including a payment directly
from the lender to the housing
counseling agency, so long as the
method and amount of the payment
meet applicable rules and regulations,
including HUD and CFPB mortgage
requirements.18
At loan closing, the originating lender
must issue a voucher to the borrower in
the amount of $100 for the borrowers’
post-closing housing counseling ($150 if
multiple borrowers are on the loan),
which can only be redeemed by the
borrower after the borrower completes
the post-closing housing counseling and
pays the housing counseling agency for
services rendered. The cost and
payment for the post-closing housing
counseling will be evidenced on the
post-closing counseling certificate. To
redeem the voucher, the borrower is
required to submit the voucher to the
originating lender along with the
certificate of completion of post-closing
housing counseling demonstrating proof
of payment for the service. The
originating lender will provide the
borrower with the actual amount paid
for post-closing housing counseling and
education not to exceed $100 ($150 if
multiple borrowers are on the loan). The
18 E.g.,
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originating lender does not have the
option to provide the borrower with an
amount less than what the borrower
actually paid for post-closing housing
counseling and education. The housing
counseling agency may use other
sources of funds in an amount greater or
less than $100 to pay for the postclosing counseling including a payment
directly from the lender or servicer to
the housing counseling agency, so long
as the method and amount of the
payment meet applicable rules and
regulations including HUD and CFPB
mortgage requirements.19
The lender is not obligated to pay the
pre-closing or post-closing fees if the
borrower does not close on an FHAinsured loan. The lender is obligated to
pay the post-closing fee if the borrower
completes the post-closing housing
counseling and closes on the FHAinsured loan even if the borrower is
delinquent on the loan or does not
ultimately qualify for a permanent MIP
reduction. Reasonable costs incurred by
housing counseling agencies associated
with the HAWK pilot in excess of fees
paid by other parties including the
consumer and the lender are eligible for
reimbursement through the HUD
Housing Counseling Grant program in
accordance with the grant agreement
and HUD regulations.
G. Requirements of HUD-Approved
Housing Counseling Agencies
Housing counseling agencies that
participate in this pilot are required to
be HUD-approved and must provide the
content for each housing counseling and
education session as described in the
content of the Housing Counseling and
Education Elements for the HAWK Pilot
section of this notice for the duration
specified. See Section II.C. Housing
counseling agencies and lenders
selected for Phase One of the pilot are
also required to provide the consumer
with a complete list of HUD-approved
housing counseling agencies and FHAapproved lenders who have been
selected to participate in Phase One of
this pilot. The list of FHA-approved
lenders and Housing Counseling
Agencies participating in Phase One
will be provided by HUD to Phase One
participants and posted on a Web site.
Housing counseling agencies are
required to register and use FHAC.
Housing counselors are required to issue
the appropriate housing counseling
certification, Form HUD–9911, to the
homebuyer when the homebuyer
completes the required housing
counseling and education. To populate
FHAC with the fee charged for that
19 E.g.,
12 CFR parts 1024 and 1026.
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service and the consumer’s information
and certificate number.
When the housing counseling agency
uses HUD’s grant funds to pay for the
homebuyer’s housing counseling and
education, applicable grant agreement
and other requirements, such as
reporting and cost documentation,
apply. All activity under the HAWK
Pilot must be reported to HUD on Form
9902.
H. Requirements of FHA-Approved
Lenders and Servicers
Lenders and servicers that elect to
participate in this pilot initiative are
required to be FHA-approved and
follow existing FHA guidance and
regulations except where that guidance
is superseded in this notice. FHAapproved lenders that close FHAinsured loans under this pilot are
required to pay for the borrowers’ preclosing and post-closing housing
counseling costs in accordance with the
Sources to Pay for Housing Counseling
and Education section of this notice.
The maximum lender fee covering preclosing and post-closing housing
counseling is $350 ($400 if multiple
borrowers are on the loan) except where
lenders and housing counseling
agencies have a specific written
agreement for a different fee structure
that complies with applicable rules and
regulations, including HUD and CFPB
mortgage rules. FHA-approved lenders
and servicers will make adjustments to
their systems to implement the MIP
reduction in accordance with the
guidance herein. Furthermore, servicers
will submit MIP payments to HUD and
report delinquencies in a timely manner
as required by current guidelines.
III. Selection Criteria and Process for
Phase One
A. Selection Criteria for Participating
FHA-Approved Lenders and Servicers
The selection of lenders and servicers
to participate in Phase One of the pilot
will be based on the following noncompetitive selection criteria. HUD’s
selection will also seek to minimize the
effect of Phase One on the
Demonstration.
• FHA-approved lenders who have a
written agreement with one or more
HUD-approved housing counseling
agencies to provide pre-contract housing
counseling and education.
• FHA-approved lenders that
originate but do not transfer servicing.
Also, FHA-approved lenders willing to
participate in this pilot that do transfer
servicing but are willing to do work
with only one or two servicers on this
pilot in order to test servicing transfer.
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• FHA-approved lenders that agree to
identify originators (mortgagees) they
work with that are FHA-approved and
work with housing counseling agencies.
• FHA-approved lenders originating
the loan that agree to pay a lender fee
to reimburse the homebuyers preclosing and post-closing housing
counseling and education as described
in the Sources to Pay for Housing
Counseling and Education section in
this notice. See Section II.F.
B. Selection Criteria for Participating
Housing Counseling Agencies
The selection of housing counseling
agencies who participate in Phase One
of the pilot will be based on the
following non-competitive selection
criteria. HUD seeks participating
housing counseling agencies with no
unresolved findings in their
performance reviews and unconditional
approval status. Neither the housing
counseling agency nor any of its board
members or principals may be debarred
or subject to an investigation for
debarment on the publication date of
this notice or any time prior to selection
of participants. In addition, housing
counseling agencies must evidence:
• Previous agreements with an FHAapproved lender(s) in a pre-purchase
housing counseling initiative;
• Previous agreements and program
arrangements with different types of
lending institutions that finance
mortgages and explain how prepurchase housing counseling is
delivered through these partnerships;
• Experience providing pre-purchase
housing counseling to diverse
populations and markets, identifying
the experience and number of housing
counselors with pre-purchase
counseling experience;
• Existing relationships (at least one
year) with real estate agents in different
markets; and
• Adoption of national industry
standards in the pre-purchase housing
counseling curriculum delivered to
consumers.
C. Selection Process for Participating
Lenders and Servicers and Housing
Counseling Agencies
FHA-approved lenders and servicers
who wish to be considered for
participation in Phase One must submit
a letter to HUD, addressed to the Deputy
Assistant Secretary of Housing
Counseling, that expresses interest in
participating in Phase One of the pilot
and demonstrates how they satisfy the
Selection Criteria for Participating FHAApproved Lenders and Servicers.
Housing counseling agencies who wish
to be considered for participation in
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Phase One must also submit a letter to
HUD, addressed to the Deputy Assistant
Secretary of Housing Counseling, that
expresses interest in participating in
Phase One of the pilot and demonstrates
how they satisfy the criteria for
selection in the Selection Criteria for
Participating Housing Counseling
Agencies.
FHA-approved lenders and servicers
and housing counseling agencies must
submit the letter and documentation on
the criteria to HUD by a date announced
in a separate Federal Register notice.
HUD will review all submissions, and
submissions that do not address all the
criteria will not be considered for Phase
One. In addition to the criteria here,
HUD selection will also ensure a
balance among types of lender,
counseling agencies, populations
served, and service delivery in order to
achieve the Phase One goal of testing
systems and processes associated with
the HAWK pilot. HUD will notify via
letter housing counseling agencies,
FHA-approved lenders and servicers
selected to participate. HUD will also
issue a notice announcing the housing
counseling agencies and FHA-approved
lenders and servicers selected for
participation in Phase One.
Interested FHA-approved lenders and
servicers and housing counseling
agencies are invited to notify HUD of
their expression of interest in
participating in the pilot program, prior
to the formal date of applications being
announced. Expressions of interest may
be sent to housing.counseling@hud.gov
with the subject line reading ‘‘HAWK
Pilot Phase One.’’
IV. Evaluation
HUD will conduct an evaluation of
the HAWK Pilot to assess the goals of
improving loan performance, impact on
the MMI Fund, and household and
consumer outcomes. It will also include
an evaluation of the pilot process,
demographics and credit profile of
HAWK borrowers compared to historic
FHA first-time homebuyers, capacity
and delivery of housing counseling,
impact on lenders, and the sufficiency
of MIP incentives.
Participating FHA-approved lenders,
servicers, housing counseling agencies
and consumers will be required to
cooperate with HUD to evaluate the
effectiveness of the HAWK program.
HUD will use administrative data for the
evaluation from FHA and other sources,
as well as data collected by housing
counseling agencies and lenders under
existing agreements with HUD.
HUD will evaluate the pilot program
in several ways: (i) A process
evaluation, (ii) comparisons of HAWK
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participants to other groups using
administrative data, and (iii)
comparison of HAWK information with
information from the Demonstration.
(i) Through a multi-method approach,
a process evaluation is expected to
provide information about how the
HAWK Pilot is being implemented. The
process study is expected to use an
analysis of administrative data to
develop the sampling frame of
counseling agencies who conduct a high
volume of pre-purchase counseling. The
sampling frame will include both
agencies that are expected to conduct
high volume of FHA HAWK for New
Homebuyers counseling and those that
are not. The process study is expected
to include: Site visits to a significant
number of agencies; interviews with
their staff to understand the viability of
the service delivery model; how the
program implementation is proceeding
from the counseling agency perspective,
including capacity and sustainability for
housing counseling agencies; content;
take-up rates; and cost of counseling
provided. Counseling agency interviews
are expected to occur at three stages:
Prior to program implementation,
during the early stages, and at a later
stage when HAWK for New Homebuyers
is fully implemented.
The process evaluation is expected to
include focus groups or surveys with
FHA HAWK for New Homebuyers
counselees to ascertain program
implementation, viability, homebuyer
decision-making, and program
participation from the perspective of
new homebuyers. The last component of
the process evaluation is expected to
include an analysis of administrative
data to present descriptive statistics of
the Pilot implementation and an
analysis of the influence of HAWK on
the pre-purchase counseling industry’s
overall service provision.
(ii) HUD will also compare HAWK
participants to historic housing
counseling participants and FHA firsttime homebuyers in order to observe
differences in demographics, credit
profiles, risk, housing counseling
participation and mortgage outcomes.
HUD will use information in its FHA
systems and Housing Counseling
System to identify the effects of the
mortgage insurance premium incentives
on take-up of the counseling by
comparing profiles of historic and
current FHA first-time homebuyers to
HAWK participants.
(iii) The pilot will be informed by the
results of the Demonstration conducted
by HUD’s Office of Policy Development
& Research. The Demonstration tests the
impact of different pre-purchase
housing counseling modalities on
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mortgage preparedness, homebuyer
outcomes, and loan performance. In
order to implement the Demonstration
successfully, the research team offered
free counseling and incentive payments
to Demonstration participants to
encourage participation and completion
of milestones throughout the
Demonstration, which indirectly makes
the Demonstration a test of the
combination of free counseling and
incentive payments. (Note that these are
cash incentive payments staged to
coincide with the completion of
different Demonstration protocols.)
Demonstration participants are
randomly assigned into three groups; (1)
A treatment group of participants who
receive online education and telephone
counseling, (2) a treatment group of
participants who receive in-person
education and in-person counseling,
and (3) a control group of participants
who are not provided any counseling
services.
Because HAWK will be implemented
in the middle of the Demonstration’s
enrollment period, the Demonstration
will also assess the impact of different
types of counseling with and without
HAWK incentives. While the HAWK
pilot is not the focus of the
Demonstration, it will be possible to do
an analysis of homebuyer outcomes and
loan performance for Demonstration
participants in both treatment groups—
providing valuable data for the HAWK
pilot to compare.
To provide the valuable
Demonstration data to the HAWK pilot
and to protect the Demonstration from
contamination, attrition, and the
potential for dissatisfied borrowers by
excluding them from the HAWK
incentives, HUD will offer the same
HAWK MIP incentives to Demonstration
participants who select an FHA-insured
loan. To be eligible for the same HAWK
MIP incentives, Demonstration
participants will be required to meet
alternative responsibilities rather than
the standard HAWK program.
Specifically, Demonstration participants
will follow the Demonstration protocols
(counseling treatment or no treatment).
Demonstration participants randomly
assigned to either of the two treatment
groups must complete the treatment
protocol in order to be eligible for the
HAWK MIP incentives. Demonstration
participants will be asked to identify
their status in the Demonstration
through self-identification/notification
to HUD and their FHA-approved lender
of their status as a Demonstration
participant. HUD will then apply a
Demonstration participant code in
FHAC.
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V. Marketing, Outreach and Capacity
Building Plan
Marketing, outreach and building the
capacity of participants implementing
the pilot will play an important role in
the success of the pilot. In the past,
HUD has used conference calls, written
communications, the Internet, question
and answer sessions and roundtables to
expand operations and communicate
guidance to its partners. HUD expects to
augment these efforts with additional
training and capacity building toolkits,
especially in the areas of revenues for
housing counseling, post-purchase
housing counseling content, and
marketing the program by real estate
professionals. With this notice, HUD
solicits comments and suggestions on
the methods HUD should use to
promote marketing, outreach and
capacity building.
VI. Environmental Review
This notice does not direct, provide
for assistance or loans and mortgage
insurance for, or otherwise govern or
regulate, real property acquisition,
disposition, leasing, rehabilitation,
alteration, demolition, or new
construction, or establish, revise or
provide for standards for construction or
construction materials, manufactured
housing, or occupancy. Accordingly,
under 24 CFR 50.19(c)(1), this notice is
categorically excluded from
environmental review under the
National Environmental Policy Act of
1969 (42 U.S.C. 4321).
Dated: May 9, 2014.
Carol J. Galante,
Assistant Secretary for Housing—Federal
Housing Commissioner.
[FR Doc. 2014–11152 Filed 5–14–14; 8:45 am]
BILLING CODE 4210–67–P
DEPARTMENT OF THE INTERIOR
Fish and Wildlife Service
endangered and threatened species
unless a Federal permit allows such
activities. Both the Act and the National
Environmental Policy Act require that
we invite public comment before
issuing these permits.
DATES: To ensure consideration, written
comments must be received on or before
June 16, 2014.
ADDRESSES: Wendy Brown, Chief,
Recovery and Restoration Branch, by
U.S. mail at Division of Classification
and Recovery, U.S. Fish and Wildlife
Service, P.O. Box 1306, Albuquerque,
NM 87103; or by telephone at 505–248–
6920. Please refer to the respective
permit number for each application
when submitting comments.
FOR FURTHER INFORMATION CONTACT:
Susan Jacobsen, Chief, Division of
Classification and Restoration, by U.S.
mail at P.O. Box 1306, Albuquerque,
NM 87103; or by telephone at 505–248–
6665.
SUPPLEMENTARY INFORMATION:
Public Availability of Comments
The Act (16 U.S.C. 1531 et seq.)
prohibits activities with endangered and
threatened species unless a Federal
permit allows such activities. Along
with our implementing regulations in
the Code of Federal Regulations (CFR) at
50 CFR part 17, the Act provides for
permits, and requires that we invite
public comment before issuing these
permits. A permit granted by us under
section 10(a)(1)(A) of the Act authorizes
applicants to conduct activities with
U.S. endangered or threatened species
for scientific purposes, enhancement of
survival or propagation, or interstate
commerce. Our regulations regarding
implementation of section 10(a)(1)(A)
permits are found at 50 CFR 17.22 for
endangered wildlife species, 50 CFR
17.32 for threatened wildlife species, 50
CFR 17.62 for endangered plant species,
and 50 CFR 17.72 for threatened plant
species.
[FWS–R2–ES–2013–N069;
FXES11130200000–145–FF02ENEH00]
Applications Available for Review and
Comment
Endangered and Threatened Species
Permit Applications
We invite local, State, Tribal, and
Federal agencies, and the public to
comment on the following applications.
Please refer to the appropriate permit
number (e.g., Permit No. TE–123456)
when requesting application documents
and when submitting comments.
Documents and other information the
applicants have submitted with these
applications are available for review,
subject to the requirements of the
Privacy Act (5 U.S.C. 552a) and
Freedom of Information Act (5 U.S.C.
552).
AGENCY:
Fish and Wildlife Service,
Interior.
Notice of receipt of applications;
request for public comment.
TKELLEY on DSK3SPTVN1PROD with NOTICES
ACTION:
We, the U.S. Fish and
Wildlife Service, invite the public to
comment on the following applications
to conduct certain activities with
endangered or threatened species. The
Endangered Species Act of 1973, as
amended (Act), prohibits activities with
SUMMARY:
VerDate Mar<15>2010
18:18 May 14, 2014
Jkt 232001
PO 00000
Frm 00068
Fmt 4703
Sfmt 4703
Permit TE–053083
Applicant: Julie Kutz, Albuquerque,
New Mexico.
Applicant requests a renewal to a
current permit for research and recovery
purposes to conduct presence/absence
surveys of southwestern willow
flycatcher (Empidonax traillii extimus)
within New Mexico.
Permit TE–30430B
Applicant: University of Houston—
Clear Lake, Houston, Texas.
Applicant requests a new permit for
research and recovery purposes to
conduct presence/absence surveys of
Rio Grande silvery minnow
(Hybognathus amarus) and collect leaf
clippings of Texas wild-rice (Zizania
texana) within Texas.
Permit TE–71870A
Applicant: Western Area Power
Administration, Phoenix, Arizona.
Applicant requests an amendment to
a current permit for research and
recovery purposes to conduct presence/
absence surveys for southwestern
willow flycatcher (Empidonax traillii
extimus) and Yuma clapper rail (Rallus
longirostris yumanensis) within
California and Nevada.
Permit TE–060125
Applicant: Salt River Project, Phoenix,
Arizona.
Applicant requests a renewal to a
current permit for research and recovery
purposes to conduct presence/absence
surveys of southwestern willow
flycatcher (Empidonax traillii extimus),
Yuma clapper rail (Rallus longirostris
yumanensis), and Gila topminnow
(Poeciliopsis occidentalis occidentalis)
within Arizona.
Permit TE–071287
Applicant: Bruce Christman,
Albuquerque, New Mexico.
Applicant requests a renewal to an
expired permit for research and
recovery purposes to conduct presence/
absence surveys of Jemez Mountains
salamander (Plethodon neomexicanus)
within New Mexico.
Permit TE–037155
Applicant: Bio-West, Inc., Round Rock,
Texas.
Applicant requests a renewal to a
current permit for research and recovery
purposes to conduct presence/absence
surveys of the following species in
various States, including California,
Colorado, Nevada, New Mexico, Texas,
and Utah (where appropriate):
• Colorado pikeminnow
(Ptychocheilus lucius).
E:\FR\FM\15MYN1.SGM
15MYN1
Agencies
[Federal Register Volume 79, Number 94 (Thursday, May 15, 2014)]
[Notices]
[Pages 27896-27904]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-11152]
[[Page 27896]]
=======================================================================
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-5786-N-01]
Federal Housing Administration (FHA): Homeowners Armed With
Knowledge (HAWK) for New Homebuyers
AGENCY: Office of the Assistant Secretary for Housing--Federal Housing
Commissioner, HUD.
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: This notice solicits public comment on a proposed four-year,
two-phase, housing counseling pilot, ``HAWK for New Homebuyers.'' HAWK
stands for Homeowners Armed With Knowledge, and serves as an umbrella
term for several initiatives to link HUD's Housing Counseling program
with FHA-insured mortgage origination and servicing. The HAWK for New
Homebuyers pilot will provide FHA insurance pricing incentives to
first-time homebuyers who participate in housing counseling and
education that covers how to evaluate housing affordability and
mortgage alternatives, to better manage their finances, and to
understand the rights and responsibilities of homeownership. The goals
of the HAWK for New Homebuyers pilot (HAWK Pilot) are to test and
evaluate program designs that meet these objectives:
To improve the loan performance of participants and reduce
claims paid by FHA's Mutual Mortgage Insurance Fund (MMIF);
To expand the number of families who improve their
budgeting skills and housing decisions through access to HUD-approved
housing counseling agency services; and
To increase access to sustainable home mortgages for
homebuyers underserved by the current market.
The Supplementary Information section of this notice provides the
details of the pilot. HUD welcomes public comment, and all comments
will be taken into consideration by HUD.
DATES: Comment Due Date: July 14, 2014.
ADDRESSES: Interested persons are invited to submit comments responsive
to this request for information to the Office of General Counsel,
Regulations Division, Department of Housing and Urban Development, 451
7th Street SW., Room 10276, Washington, DC 20410-0001. Communications
must refer to the above docket number and title and should contain the
information specified in the ``Request for Comments'' of this notice.
Electronic Submission of Comments. Interested persons may submit
comments electronically through the Federal eRulemaking Portal at
https://www.regulations.gov. HUD strongly encourages commenters to
submit comments electronically. Electronic submission of comments
allows the commenter maximum time to prepare and submit a comment,
ensures timely receipt by HUD, and enables HUD to make them immediately
available to the public. Comments submitted electronically through the
https://www.regulations.gov Web site can be viewed by interested members
of the public. Commenters should follow instructions provided on that
site to submit comments electronically.
Submission of Hard Copy Comments. Comments may be submitted by mail
or hand delivery. To ensure that the information is fully considered by
all of the reviewers, each commenter submitting hard copy comments, by
mail or hand delivery, should submit comments or requests to the
address above, addressed to the attention of the Regulations Division.
Due to security measures at all federal agencies, submission of
comments or requests by mail often result in delayed delivery. To
ensure timely receipt of comments, HUD recommends that any comments
submitted by mail be submitted at least 2 weeks in advance of the
public comment deadline. All hard copy comments received by mail or
hand delivery are a part of the public record and will be posted to
https://www.regulations.gov without change.
No Facsimile Comments. Facsimile (Fax) comments are not acceptable.
Public Inspection of Comments. All comments submitted to HUD
regarding this notice will be available, without charge, for public
inspection and copying between 8 a.m. and 5 p.m. weekdays at the above
address. Due to security measures at the HUD Headquarters building, an
advance appointment to review the documents must be scheduled by
calling the Regulations Division at 202-708-3055 (this is not a toll-
free number). Copies of all comments submitted will also be available
for inspection and downloading at https://www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: Email specific program questions to
counseling@hud.gov and include ``HAWK Notice Question'' in the subject
line. You may also send inquiries to the attention of: Charlene Young,
Office of Housing Counseling, Department of Housing and Urban
Development, 451 7th Street SW., Room 9278, Washington, DC 20410; or
call (202) 708-0317 (this is not a toll-free number). Persons with
hearing or speech impairments may access this number via TTY by calling
the toll-free Federal Relay Service at 800-877-8339.
SUPPLEMENTARY INFORMATION:
I. Background
Through its Office of Housing Counseling, HUD administers the
Housing Counseling Program, established pursuant to section 106 of the
Housing and Urban Development Act of 1968 (12 U.S.C. 1701x) (1968 Act).
Under the Housing Counseling Program, HUD provides grants, and oversees
a broad range of nonprofit organizations, government agencies, and
their branches and affiliates, to educate homeowners and renters so
they may improve their housing conditions and meet the responsibilities
of homeownership and tenancy. Housing counseling and education for
first-time homebuyers, pursuant to HUD standards,\1\ addresses topics
that include the decision to own or rent; budgeting and credit;
financing a home; the home buying process; maintaining a home; managing
mortgage payments; managing the financial investment; and avoiding
delinquency and default. Research \2\ has shown that housing counseling
for first-time homebuyers by HUD-approved housing counseling agencies
assists homebuyers in homeownership, arming them with information that
improves their chances of success.
---------------------------------------------------------------------------
\1\ See HUD's regulations at 24 CFR part 214, and HUD's Housing
Counseling Program Handbook (7610.1) at https://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/hsgh/7610.1.
\2\ See footnotes 5-8.
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Through the Federal Housing Administration (FHA) and under
authority of the National Housing Act (12 U.S.C. 1701 et seq.), HUD
provides mortgage insurance on single family loans made by FHA-approved
lenders for 1-4 unit single family properties. FHA mortgage insurance
provides lenders with protection against losses incurred as the result
of single family borrowers defaulting on their mortgage loans. By
insuring loans made by FHA-approved lenders, FHA facilitates the
availability of mortgage financing, helps to expand affordable housing,
and assists in meeting the housing needs of borrowers.\3\ FHA is also
charged with ensuring the financial soundness of the MMIF, and making
programmatic or
[[Page 27897]]
premium adjustments as necessary to reduce risk to the MMIF.\4\
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\3\ See 12 U.S.C. 1708(a)(7)(B), (including low and moderate
income borrowers, borrowers from underserved areas, central city
areas, rural areas, and minority borrowers (12 U.S.C. 1709(w)).
\4\ See 12 U.S.C. 1708(a)(3) and (6).
---------------------------------------------------------------------------
Some studies show that properly structured and delivered housing
counseling and education provides a significant benefit to consumers
and investors of residential mortgages.\5\ Several major studies have
recently noted a correlation between counseled first-time homebuyers
and reductions in serious delinquencies by up to 30% compared to
borrowers with similar credit profiles who are not counseled.\6\ HUD-
approved housing counseling agencies reach consumers who are lower
income and more likely to be racial and ethnic minorities.\7\ Studies
estimate that housing counseling saves lenders and investors
approximately $1,000 per counseled loan.\8\ While HUD expects positive
results from this initiative, actual outcomes can only be determined
after pilot implementation.
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\5\ See research summary available at https://portal.hud.gov/hudportal/documents/huddoc?id=counselingworks060412.pdf.
\6\ See for example: Mayer, Neil S. and Kenneth Temkin. (2013).
Pre-Contract Counseling Impacts on Mortgage Performance: Empirical
Analysis of NeighborWorks[supreg] America's Experience. Albany, CA:
Neil Mayer & Associates; Agarwal, Sumit, Gene Amromin, Itzhak Ben-
David, Souphala Chomsisengphet, and Douglas D. Evanoff. 2010.
``Learning to Cope: Voluntary Financial Education and Loan
Performance during a Housing Crisis,'' American Economic Review:
Papers & Proceedings 100: 495-500, May. See also Hirad, Abdighani,
and Peter M. Zorn, Joint Center for Housing Studies, Harvard
University, Cambridge, MA. ``A little Knowledge Is a Good Thing:
Empirical Evidence of the Effectiveness of Pre-Contract
Homeownership Counseling.'' Low-Income Homeownership Working Paper
Series LIHO-01.4 (May 22, 2001); Gabriela Avila et. al., The
Benefits of Pre-contract Homeownership Counseling (working paper)
(April 12, 2013), https://www.freddiemac.com/news/blog/pdf/benefits_of_pre_purchase.pdf (updating the 2001 findings on benefits of
homeownership); Michael J. Collins and Collin O'Rourke, Research
Institute of for Housing America & Mortgage Bankers Association,
``Homeownership Education and Counseling: Do We Know What Works? ''
(April 26, 2011) https://www.housingamerica.orp/RIHA/Publications/76378_10544_Research_RIHA_Collins_Report.pdf. Additional
smaller studies find benefits from interventions after the loan is
closed for first time homebuyers. See J. Michael Collins et al.,
``Effects of Monitoring on Mortgage Delinquency: Evidence from a
Randomized Field Study'' (working paper) (2013), https://www.fdic.gov/news.conferences/2013ResearchConf/Papers/Moulton.pdf.
\7\ Jennifer Turnham & Anna Jefferson, ``Prepurchase Housing
Counseling Outcome Study: Research Brief (May 2013), https://www.huduser.org/publications/pdf/pre_purchase_counseling.pdf. HUD
housing counseling reporting data shows similar results. See https://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hcc/ohcqrpt.
\8\ See Avila supra note 6.
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The HAWK Pilot is consumer-driven, designed to expand the benefits
of housing counseling not only to consumers but also to lenders,
investors and the FHA Mutual Mortgage Insurance Fund. ``HAWK
Homebuyers''--those described below who take the initiative to complete
a series of housing counseling and education elements and meet payment
requirements on their FHA-insured mortgages--will receive substantial
reductions in the pricing of the upfront and annual FHA mortgage
insurance on their loan. Housing counseling and education for the HAWK
pilot will occur at the points in time that have been determined most
useful to first-time homebuyers. These points in time are: Before the
home purchase contract is signed, before the loan closes, and during
the first year of homeownership. Housing counseling and education will
be paid by the parties who benefit from the counseling. These parties
include FHA-insured borrowers, consumers in general, originators, and
servicers, through improved loan performance. Additional sources of
funding for housing counseling and education will be encouraged and
implemented during the pilot.
The HAWK Pilot is proposed to be a four-year pilot and the maximum
number of FHA-insured loans under the pilot will be limited based upon
the size and scope of premium reductions given to borrowers. The pilot
will be implemented in two phases. Phase One constitutes a start-up
period where participation will be limited to a small number of
borrowers working with FHA-approved lenders, servicers, and housing
counseling agencies selected by HUD in order to test the systems and
operations required for the pilot. During Phase One, HUD will assess
the sufficiency of communication, operations, systems and coordination
of pilot processes. Phase Two will expand the participation
opportunities to all first-time homebuyers using FHA-insured financing
up to a capped number of loans in each of the four years. All FHA-
approved mortgagees and servicers and all HUD-approved housing
counseling agencies whose work plan permits pre-contract housing
counseling will be eligible to participate in Phase Two of the pilot.
Implementation of Phase Two will be announced in a subsequent
notice issued during the first year of the pilot. Changes made by HUD
to the pilot will be announced through subsequent notices. HUD will
evaluate the HAWK Pilot to assess the results of the pilot in terms of
consumer behavior, consumer outcomes, lender behavior, loan outcomes,
claim results, and other measures.
In addition to describing the pilot, this notice also advises of
HUD's intent to select housing counseling, lender and servicer
participants for Phase One in accordance with the selection criteria
and process described herein. Finally, this notice solicits comments
and suggestions on the following topics:
Marketing the pilot to real estate professionals and
consumers;
How to coordinate or leverage the pilot with other non-FHA
benefits for HAWK homebuyers such as local down payment assistance
programs or mortgage products with reduced credit overlays;
The content, duration and timing of housing counseling and
education;
Paying for housing counseling and education;
Sufficiency of the pilot incentives to attract homebuyers
to obtain housing counseling services;
Ways to mitigate fraud and risk in the pilot; and
Program coordination, operations and systems requirements.
II. HAWK for New Homebuyers Consumer Obligations and Benefits
A. Initial Responsibilities and Benefits of the Program
The HAWK pilot will provide incentives to eligible first-time
homebuyers who participate in housing counseling and education as
described in this notice.\9\ HUD may adjust the criteria for housing
counseling and education, program eligibility requirements or the
amount of the mortgage insurance premium (MIP) incentives at any time
by subsequent notice. Although the exact amount of the incentives and
housing counseling and education may change, for the initial year of
the pilot, HUD expects that homebuyers who complete pre-contract and
pre-closing housing counseling and education prior to the contract of
sale of the home (pre-contract) and prior to the loan closing (pre-
closing) will receive a one-time 50 basis points reduction in the
upfront MIP and a permanent reduction of 10 basis points on the annual
MIP at loan closing. After the homebuyer completes post-closing housing
counseling and avoids any incidence of a 90-day delinquency on the
mortgage payments during the first 18 months post-closing, the
homebuyer will receive an
[[Page 27898]]
additional permanent reduction of 15 basis points on the annual MIP
beginning on the second anniversary from the beginning amortization
date (the 25th month). The period between the completion of the
borrower's obligation under the HAWK Pilot and the effective date of
the permanent reduction is a processing period for the servicer and
FHA. HUD reserves the right during the course of the pilot to change
the timing, content and standards for housing counseling and education,
and the amount and timing of the upfront and annual MIP incentives.
Such changes will be announced in a notice prior to implementation.
---------------------------------------------------------------------------
\9\ Prospective homebuyers who are enrolled in the HUD Pre-
Purchase Homeownership Counseling Demonstration and Impact
Evaluation (``Demonstration''), also known as the ``HUD First-Time
Homebuyer Study'', will not participate in the standard HAWK
program. See https://www.huduser.org/portal/hud_firsttime_hmbyr_study.html. However, participants will be eligible to participate in
an alternative program and are eligible to receive the HAWK mortgage
insurance premium incentives. See participant eligibility Section
II.B.1.
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B. Eligibility
1. Eligible Borrowers. Borrower participants are limited to first-
time homebuyers \10\ who qualify for FHA-mortgage insurance. Borrowers
who meet those requirements and are participants in HUD's Pre-Purchase
Homeownership Counseling Demonstration and Impact Evaluation
(``Demonstration'') \11\ will be eligible to participate in an
alternative HAWK program. To preserve the integrity of the
Demonstration, prevent contamination of the Demonstration's participant
pool, and provide additional data for the HAWK pilot, HUD will provide
the same MIP incentives to Demonstration participants as provided to
HAWK participants, but with alternative responsibilities for
Demonstration participants rather than the standard HAWK program. All
other borrowers participating in the pilot must complete the housing
counseling and education requirements according to the standards set
forth in this pilot in order to qualify for the HAWK MIP incentives.
---------------------------------------------------------------------------
\10\ FHA defines a first-time homebuyer as an individual who has
not been an owner in a primary residence for at least three years
leading up to the purchase. See ML 2008-22, for updated FHA
definitions of first-time homebuyer.
\11\ In response to the foreclosure crisis, the subsequent
tightening of lender underwriting standards, and the desire to
mitigate borrower risk, HUD implemented the Pre-Purchase
Homeownership Counseling Demonstration and Impact Evaluation
(``Demonstration'') to measure to what extent housing counseling for
potential homebuyers with mid-range credit scores and lower incomes
can mitigate that risk. HUD is working with a contractor, three
national lenders, and three national pre-purchase counseling
intermediaries to design a randomized experiment using a sample of
6,000 prospective low- to moderate- and middle-income first-time
homebuyers across 28 U.S. cities. The demonstration will test the
effectiveness and impact of two types of pre-purchase homeownership
counseling on mortgage preparedness, homebuyer outcomes, and loan
performance. Information on Demonstration participants is found in
the Evaluation section of this notice.
---------------------------------------------------------------------------
HUD will not insure more than a certain number of mortgages under
the HAWK Pilot in any single year based upon the size and scope of
premium reductions given to borrowers. HUD will notify counseling
agencies and lenders as the pilot cap approaches through various
methods of communication including Web site postings and email
communication.
2. Eligible Housing Counseling Agencies--Phase One. HUD will select
HUD-approved counseling agencies for participation in Phase One of this
pilot, in accordance with the criteria described in the Selection
Criteria for Participating Housing Counseling Agencies. Borrowers
participating during Phase One of the pilot must use the same HUD-
approved housing counseling agency for all of the housing counseling
and education received during Phase One in order to qualify for the
HAWK MIP incentives. The housing counseling and education delivered to
the borrower during Phase One of the pilot will be valid for Phase Two
in the event that Phase One is complete before the borrower has
finished all of the HAWK requirements.
3. Eligible Counseling Agencies--Phase Two. Any HUD-approved
housing counseling agency, including branches, affiliates and
subgrantees of approved housing counseling agencies, whose approved
work plan includes pre-purchase housing counseling and education, is
eligible to provide housing counseling and education under this
program. The list of HUD-approved housing counseling agencies that
offer pre-purchase housing counseling and education is available at
www.hud.gov/findacounselor or 800-569-4287. Participation by HUD-
approved housing counseling agencies in the HAWK Pilot is voluntary.
Housing counseling agencies that wish to participate in the HAWK Pilot
must be registered in the Federal Housing Administration's Connection
(FHAC) system and be qualified to issue certificates from FHAC
evidencing the completion of housing counseling and education as
described in this notice. HUD will seek to identify and publish a list
of HAWK-participating housing counseling agencies periodically.
4. Eligible lenders--Phase One. HUD will select FHA-approved
lenders and servicers for participation in Phase One of this pilot in
accordance with the criteria described in the Selection Criteria for
Participating Lenders and Servicers. Borrowers in Phase One must use an
FHA-approved Phase One lender to access the HAWK mortgage incentives.
5. Eligible lenders--Phase Two. Any FHA-approved lender that
originates home purchase mortgages is eligible to participate in the
HAWK Pilot. Participation is voluntary. HUD will seek to identify and
publish a list of HAWK-participating lenders periodically.
C. Housing Counseling and Education Basic Requirements
1. Definitions. HUD defines housing counseling to be counseling-to-
client assistance that addresses unique financial circumstances and
housing issues and focuses on overcoming unique obstacles to achieving
a housing goal. Education is defined as formal classes with established
curriculum and instructional goals provided in a group or classroom
setting or other formats approved by HUD (including on-line education
that is acceptable to the housing counseling agency issuing the
certificate and meets HUD standards for education).\12\
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\12\ See HUD Handbook 7610.1 rev 5, Section 1.4 (B) and (G).
---------------------------------------------------------------------------
2. General requirements. All housing counseling and education must
be delivered by a HUD-approved housing counseling agency in accordance
with HUD regulations, directives, handbooks, and as applicable, the
requirements of the Notices of Funding Availability under which housing
counseling agencies were provided grants. All housing counseling and
education must comply with National Industry Standards \13\ for housing
counseling and education, including but not limited to requirements to
discuss options and alternatives to help the client meet housing goals,
disclose financial relationships between the housing counseling agency
and financial institutions, list all fees at the time of intake, and
obtain authorization from the consumer to share information with third
parties. In addition to these basic program standards, minimum duration
and content standards are described below for each housing counseling
and education element of the HAWK Pilot. The time-in requirements for
education and counseling and content standards in this notice were
developed after consultation with industry experts and align with the
education and counseling requirements of successful programs. Housing
counseling agencies have the flexibility to provide the level of
services that they think appropriate to
[[Page 27899]]
meet the needs of the consumer or potential borrower and may set
housing counseling and education standards that exceed the minimum
requirements outlined in this section. Housing counselors may not give
legal advice and should refer consumers to appropriate experts for
specific issues.
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\13\ National Industry Standards for Homeownership Education and
Counseling, National Industry Standards for Homeownership and
Counseling (July 2012), https://www.homeownershipstandards.com/Uploads/NW9-12%20Standards-FINALv02112013.pdf.
---------------------------------------------------------------------------
3. Completion of Required Housing Counseling Elements. All
borrowers on the loan are required to complete each of the required
housing counseling and education elements in order to qualify for the
maximum MIP incentives under the HAWK Pilot. Demonstration participants
will follow different Demonstration protocol. Housing counseling
agencies must disclose at intake whether the fees for services are on a
per person or per household basis. Housing counseling and education may
be conducted in person, via telephone or internet, or delivered by
other methods mutually agreeable to the potential borrower and the
housing counseling agency, as provided in the 24 CFR 214.300 and the
HUD Housing Counseling Program Handbook (7610.1 rev 5).\14\
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\14\ See HUD Handbook 7610.1 rev 5.
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4. Housing Counseling and Education Elements for the HAWK Pilot.
Each borrower must complete three elements as prescribed in this notice
in order to be eligible for all of the MIP incentives offered herein.
The three elements are: (1) Pre-contract housing counseling and
education; (2) pre-closing housing counseling; and (3) post-closing
housing counseling. Each element must meet at a minimum the duration
and content standards described below and must be completed separately
within the prescribed timeframes.
a. Pre-Contract Housing Counseling and Education Element
i. Duration. Potential borrowers are required to receive a minimum
of 6 hours of housing education and counseling to complete the pre-
contract housing counseling and education element and receive a
counseling certificate. The services can include a combination of
individual counseling and education as long as at least 1.5 hours of
individual counseling is provided.
ii. Content and Delivery. Individual housing counseling or
education may be utilized to cover general topics, including, but not
limited to: Understanding the home shopping, home buying and mortgage
application process; how to evaluate mortgage products; the role of
various real estate professionals, including, the real estate agent,
lender, title company, appraiser and home inspector, and considerations
when selecting from among possible firms or individuals to perform in
these capacities; rights and responsibilities of homeowners in
comparison to those of renters; how to evaluate neighborhoods and home
location; how housing and transportation costs vary depending on the
type and location of the home and the terms of the mortgage loan and
contract of sale; federal, state and local resources to assist with
homeownership affordability including down payment and closing cost
assistance programs and affordable mortgage products; responsibilities
of repair and maintenance; the importance of the home inspection;
avoidance of mortgage delinquency and default; the costs associated
with homeownership; avoiding fraud and scams; and information on
discriminatory housing and mortgage lending practices and the rights
and remedies available under federal, state, and local fair housing
laws. Housing counseling agencies may identify acceptable online or
published education materials that comply with these content and
duration requirements and comply with HUD standards for education as
long as they obtain evidence that the borrower has completed them to
the housing counseling agency's satisfaction. Individual counseling
must, at a minimum, cover the following topics: Analysis of
homeownership readiness; household budget development; analysis of
credit and debt; affordability analysis; and an explanation of the HAWK
Pilot, including MIP incentives, housing counseling requirements, and
payment of counseling costs.
iii. Timing. The pre-contract housing counseling and education
certificate must be issued 10 days prior to ratification of a contract
to purchase a home. It is the housing counseling agency's
responsibility to ensure that education obtained from third parties
(such as on-line education) meets the requirements of the pilot before
it issues the pre-contract certificate of completion.
b. Pre-Closing Housing Counseling
i. Duration. Potential borrowers are required to have a minimum of
1 hour of pre-closing individual housing counseling.
ii. Content and Delivery. At a minimum, this counseling must cover:
A review of the mortgage loan information that has been provided by the
lender; re-assessment of the costs of homeownership based on the
particular home and loan; general expectations for the closing process
in the borrowers' state including: Review of the Good Faith Estimate,
Truth-in-lending statement, loan disclosures, and other mortgage and
closing documents; annual percentage rate (APR) and interest rate;
earnest money; the appraisal; title insurance; property and casualty
insurance; inspections; and escrow.
iii. Timing. The pre-closing counseling certificate must be issued
no earlier than the date of the loan application and no later than
three days prior to settlement.
c. Post-Closing Housing Counseling
i. Duration. Borrowers are required to have a minimum of 1 hour of
post-closing individual housing counseling.
ii. Content and delivery. The content of the housing counseling
must include: The new household budget reflecting expenses of home
ownership including savings for planned and unplanned expenses; how to
maintain and improve the home; recognizing home repair scams;
delinquency prevention and resources available to intervene in the
event of a risk of delinquency or default; federal, state and local
laws relating to homeownership and mortgage servicing; maintaining good
credit; taxes; reserves; home equity; refinancing and alternatives;
utility costs; energy efficiency; and selling the home.
iii. Timing. The post-closing counseling certificate must be issued
no earlier than 30 days following loan closing and no later than the
one year anniversary from loan closing.
d. Documentation of completion. The housing counseling agency will
certify that each consumer has completed the counseling and/or
education requirements for each element of the HAWK pilot by issuing a
counseling certificate, form HUD-9911, for that element within 24 hours
of the consumer's completion of counseling. A copy of the certificate,
signed by the consumer and the housing counseling agency, must be kept
in the housing counseling agency file in addition to FHAC. The
completion of each required element will be evidenced by a separate
certificate of completion issued in FHAC and signed by an authorized
representative of the HUD-approved agency that provided the housing
counseling and education. Each certificate will also be signed by the
borrower. The housing counseling agency representative will certify
that housing counseling and education was provided in accordance with
the HAWK Pilot and HUD housing counseling program rules. The
certificate will document the fee charged and received for each
element. Lenders will access certificates in FHAC to validate that
[[Page 27900]]
borrowers have met the pilot requirements and to validate the fees paid
by the borrower. A total of three certificates will be filed in FHAC
for each borrower before the borrower(s) may receive the maximum
incentives under the HAWK Pilot. Demonstration participants will be
asked to identify their status in the Demonstration through self-
identification/notification to HUD and their FHA-approved lender of
their status as a Demonstration participant. HUD will then apply a
Demonstration participant code in FHAC, if participants have met the
Demonstration protocols.
D. Borrower FHA Mortgage Insurance Incentives
First-time homebuyers who have completed pre-contract and pre-
closing elements as evidenced by the respective certificates will
receive a reduction in the FHA upfront MIP of 50 basis points and a
permanent reduction of 10 basis points on the annual MIP.
First-time homebuyers who have completed post-closing housing
counseling and education as evidenced by the certificate and who have
made 18 months of mortgage payments with no instances of 90-day
delinquencies will receive an additional permanent reduction in the FHA
annual MIP of 15 basis points beginning with the 25th month from the
beginning amortization date. Any delinquencies caused by or as a result
of a transfer of servicing will not be counted as a delinquency for
purposes of loan repayment performance. The period between the
completion of the borrower's obligation under the HAWK Pilot and the
effective date of the permanent reduction is a processing period for
the servicer and FHA. The borrower will continue to pay the full amount
owed on the mortgage and note until notified that the permanent
reduction will take effect.
E. Consumer Benefits From the HAWK for New Homebuyers Pilot
1. Benefits from Housing Counseling and Education. HAWK
participants will benefit from practical skills and acquired knowledge
gained from housing counseling and education, whether or not they
choose to purchase a home and whether or not they choose an FHA-insured
mortgage loan. HAWK participants will receive education and customized
housing counseling according to HUD standards, described in Section
II.C.4, above including but not limited to a customized budget, review
of income, expenses, use of credit and debt, the benefits and
responsibilities of homeownership versus renting, and an analysis of
home affordability for their situation. HAWK participants will also
obtain information on how to shop for a home, opportunities for down
payment and closing cost assistance, how to compare mortgage products,
recognize scams, understand their rights with respect to fair housing
and fair lending, and know what to look for when selecting
professionals involved in buying a home (e.g., the real estate agent,
the financial institution, the home inspector). These HAWK participants
may choose to proceed to home purchase or not. HUD will work with the
real estate industry to identify products and services that may be
targeted to HAWK participants in recognition of their commitment to
becoming knowledgeable in these areas.
Some HAWK participants will choose to proceed to homeownership.
Those who do will learn through the housing counseling process a basic
understanding of mortgage and closing documents; a reassessment of the
budget based on the actual costs of the home and the loan; strategies
to plan for costs associated with homeownership; home maintenance; and
various forms of insurance. Under existing HUD rules, housing
counselors are required to avoid steering clients to any particular
provider or service, so the HAWK participant may choose a mortgage
other than an FHA-insured loan. HUD recognizes that real estate
professionals may develop products tailored for HAWK consumers and that
consumers are under no obligation to choose an FHA loan or any other
product. Post-closing housing counseling provides homeowners with
information about saving for maintenance and repairs; maintaining good
credit; recognizing home repair scams; energy efficiency; property
taxes; the importance of communicating with the servicer; and laws
governing mortgage servicing. Post-closing housing counseling will also
provide information and resources in the event the borrower experiences
difficulty paying the mortgage.
2. Benefits for FHA-Insured Mortgage Borrowers. HAWK Homebuyers who
participate in the pilot and select an FHA-insured loan will receive
monetary savings from MIP reductions. While the actual amount in
savings depends on several factors, including the homebuyer's loan
amount, whether the upfront MIP is financed, the interest rate, and the
decision to refinance out of the FHA portfolio in the future, homebuyer
participation in this initiative will result in a savings. Those
homebuyers who successfully fulfill all requirements for a reduction in
the upfront MIP and permanent annual MIP will have the most monetary
savings. They will benefit from a 50 basis points reduction in the
upfront MIP and a total permanent reduction of 25 basis points in the
annual MIP. Homebuyers who only complete pre-contract housing
counseling and education and pre-closing housing counseling will
experience a savings of the 50 basis points on the upfront MIP and a
permanent reduction of 10 basis points on the annual MIP. Those
homebuyers who complete all three housing counseling and education
sessions per the program but experience a delinquency of 90 days or
more will not receive the 15 basis point reduction on the annual MIP.
F. The Cost of Housing Counseling and Education and Sources of Payment
1. Fees for Services. Housing counseling agencies incur costs to
provide housing counseling and education and are permitted to charge
for services under HUD rules.\15\ Fees must be commensurate with the
level of services provided and must be reasonable and customary for the
area. Housing counseling must be provided without charge to consumers
who do not have an ability to pay as defined in HUD rules and
regulations. The HAWK for New Homebuyers pilot will benefit many
stakeholders and is designed so that those who benefit from the program
will participate in paying for it. Multiple sources of funding are
permitted as long as HUD and other rules and regulations are met. HUD
prohibits housing counseling agencies steering clients to one
particular product or settlement service; counselors must provide three
referrals if they provide any referrals at all. All fees and agreements
must be disclosed by the housing counseling agency to the consumer in
advance. Fees must comply with applicable rules and regulations,
including HUD and CFPB mortgage rules.\16\
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\15\ 24 CFR part 214.303 and 313; HUD Handbook 7610.1 rev 5.
\16\ See, e.g., 12 CFR parts 1024 and 1026.
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2. Cost of Providing Housing Counseling and Education. HUD
distinguishes between the cost of providing housing counseling and
education services and fees charged for the provision of those
services. HUD regulates fees as described in Section II.F.1 above, but
HUD does not cap the cost of each HAWK element beyond existing
regulatory and handbook requirements. Therefore, housing counseling
agencies have the flexibility to provide the level of services and the
modes of delivery that they think appropriate to meet the needs of the
[[Page 27901]]
consumer. Consumers should shop for the best value and quality housing
counseling and education program that meet their needs. HUD used the
following estimates of average cost to provide the minimum services
required by each HAWK element: Individual counseling--$100 per hour;
education--$150 per 4.5 hour session including the cost of materials
and a credit report, if any. Housing counseling agencies should
document their actual costs to provide HAWK services in accordance with
HUD guidelines.
3. Reasonable Fees for Housing Counseling and Education. Housing
counseling agencies may choose not to charge any fees if they have
sufficient other resources. HUD deems fees of $300 for the pre-contract
element; $100 for the pre-closing element; and $100 for the post-
closing element to be reasonable and customary for agencies providing
the minimum required counseling and education for each element. Maximum
fees that are permitted to be charged to consumers and lenders are
described below.
4. Sources to Pay for Housing Counseling and Education. HUD
believes that the parties that benefit from the HAWK Pilot should
contribute to the cost of housing counseling and education, in
particular the consumer, the originating lender, the servicer, HUD, and
the public. HUD recognizes that resources for paying for housing
counseling and education are limited and has designed the HAWK Pilot to
accommodate multiple sources of revenue. FHA is prohibited from using
the MMIF as a source of funding for pre-contract housing counseling and
education. FHA expects that the MIP reductions benefiting the borrower
will offset any costs of HAWK counseling and education paid by the
borrower. Housing counseling agencies who wish to subsidize the
homebuyer's counseling and education costs have the option of using
HUD's Housing Counseling grant for counseling and education associated
with the pilot. However, grant funding from HUD is insufficient and
cannot be relied upon exclusively. Therefore, payment for counseling is
expected from parties who will benefit from the implementation of this
pilot, including participants in housing counseling who become
borrowers, FHA-approved lenders, servicers, and other government
entities. HUD will work to identify other sources of funding for
housing counseling and education associated with the HAWK Pilot. The
payment structure below is recommended and will be considered to be
``reasonable and customary'' for purposes of HUD's housing counseling
and education program requirements. Should other resources become
available in the future, HUD will announce their availability by
subsequent Federal Register notice. Housing counseling agencies may
seek additional sources of payment for pre-closing and post-closing
housing counseling and education but may not charge the borrower or the
lender more than the value of the services actually provided to the
borrower. Paying for counseling and education for Demonstration
participants opting into the HAWK Pilot will be handled differently.
a. Pre-Contract Housing Counseling and Education Element
All borrowers on the loan are required to complete pre-contract
housing counseling and education and are expected to pay a portion of
the cost of the pre-contract housing counseling and education
element.\17\ Housing counseling agencies may cover the cost of housing
counseling and education for the borrower from HUD's grant funding or
other resources available to them from other government agencies,
private individuals and corporations, or foundations. The cost to the
housing counseling agency to provide the minimum required pre-contract
housing counseling and education is estimated at $150 for counseling
and $150 for education including (if utilized by the housing counseling
agency) the cost of materials and a credit report with a credit score.
Fees to the consumer in excess of these amounts must have documentation
to establish that they are reasonable and customary under HUD
regulations.
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\17\ HUD Handbook 7610.1rev5 Chapter 7-6: If an agency chooses
to charge fees, the agency must confirm to the following guidelines:
(1) Provide counseling without charge to persons who cannot afford
the fees. (2) Fees must be commensurate with the level of services
provided, and be reasonable and customary for the area. (3) Agencies
may not impose fees upon clients for the same portion of or for an
entire service that is already funded with HUD grant funds. (4) The
agency must disclose all fees that will or may be charged to the
client, prior to the beginning of counseling services.
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b. Pre-Closing and Post-Closing Housing Counseling Elements
Housing counseling agencies may elect to cover the cost of
providing pre-closing and post-closing housing counseling by the HUD
housing counseling grant, other government sources, foundations, or
other private sources of funding that comply with existing rules and
regulations relating to HUD counseling and mortgage fees. Pre-closing
and post-closing housing counseling elements paid in part by borrowers
and lenders are governed by the rules below.
The cost of pre-closing and post-closing housing counseling will be
reimbursed at closing by the originating FHA-approved lender through a
payment by the lender to the housing counseling agency at loan closing
(or to the borrower at loan closing if the borrower paid for the
counseling at the time it was delivered prior to loan closing).
Borrowers who take housing counseling and do not close on an FHA-
insured loan will not be reimbursed by the lender for pre-closing and
post-closing housing counseling. Part of the lender payment will be
used to pay the borrower for pre-closing housing counseling that the
homebuyer completed as evidenced by the pre-closing counseling
certificate. The certificate will also serve as proof of payment for
this service at loan closing in order for the borrower to receive
reimbursement. The amount of the borrower's payment to the counseling
agency and the subsequent lender reimbursement to the borrower at loan
closing for pre-closing counseling must be the same, must reflect the
value of the services rendered by the housing counseling agency to the
borrower, and must not exceed $250. The housing counseling agency may
use other sources of funds in an amount greater or less than $250 to
pay for the pre-closing counseling including a payment directly from
the lender to the housing counseling agency, so long as the method and
amount of the payment meet applicable rules and regulations, including
HUD and CFPB mortgage requirements.\18\
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\18\ E.g., 12 CFR parts 1024 and 1026.
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At loan closing, the originating lender must issue a voucher to the
borrower in the amount of $100 for the borrowers' post-closing housing
counseling ($150 if multiple borrowers are on the loan), which can only
be redeemed by the borrower after the borrower completes the post-
closing housing counseling and pays the housing counseling agency for
services rendered. The cost and payment for the post-closing housing
counseling will be evidenced on the post-closing counseling
certificate. To redeem the voucher, the borrower is required to submit
the voucher to the originating lender along with the certificate of
completion of post-closing housing counseling demonstrating proof of
payment for the service. The originating lender will provide the
borrower with the actual amount paid for post-closing housing
counseling and education not to exceed $100 ($150 if multiple borrowers
are on the loan). The
[[Page 27902]]
originating lender does not have the option to provide the borrower
with an amount less than what the borrower actually paid for post-
closing housing counseling and education. The housing counseling agency
may use other sources of funds in an amount greater or less than $100
to pay for the post-closing counseling including a payment directly
from the lender or servicer to the housing counseling agency, so long
as the method and amount of the payment meet applicable rules and
regulations including HUD and CFPB mortgage requirements.\19\
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\19\ E.g., 12 CFR parts 1024 and 1026.
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The lender is not obligated to pay the pre-closing or post-closing
fees if the borrower does not close on an FHA-insured loan. The lender
is obligated to pay the post-closing fee if the borrower completes the
post-closing housing counseling and closes on the FHA-insured loan even
if the borrower is delinquent on the loan or does not ultimately
qualify for a permanent MIP reduction. Reasonable costs incurred by
housing counseling agencies associated with the HAWK pilot in excess of
fees paid by other parties including the consumer and the lender are
eligible for reimbursement through the HUD Housing Counseling Grant
program in accordance with the grant agreement and HUD regulations.
G. Requirements of HUD-Approved Housing Counseling Agencies
Housing counseling agencies that participate in this pilot are
required to be HUD-approved and must provide the content for each
housing counseling and education session as described in the content of
the Housing Counseling and Education Elements for the HAWK Pilot
section of this notice for the duration specified. See Section II.C.
Housing counseling agencies and lenders selected for Phase One of the
pilot are also required to provide the consumer with a complete list of
HUD-approved housing counseling agencies and FHA-approved lenders who
have been selected to participate in Phase One of this pilot. The list
of FHA-approved lenders and Housing Counseling Agencies participating
in Phase One will be provided by HUD to Phase One participants and
posted on a Web site. Housing counseling agencies are required to
register and use FHAC. Housing counselors are required to issue the
appropriate housing counseling certification, Form HUD-9911, to the
homebuyer when the homebuyer completes the required housing counseling
and education. To populate FHAC with the fee charged for that service
and the consumer's information and certificate number.
When the housing counseling agency uses HUD's grant funds to pay
for the homebuyer's housing counseling and education, applicable grant
agreement and other requirements, such as reporting and cost
documentation, apply. All activity under the HAWK Pilot must be
reported to HUD on Form 9902.
H. Requirements of FHA-Approved Lenders and Servicers
Lenders and servicers that elect to participate in this pilot
initiative are required to be FHA-approved and follow existing FHA
guidance and regulations except where that guidance is superseded in
this notice. FHA-approved lenders that close FHA-insured loans under
this pilot are required to pay for the borrowers' pre-closing and post-
closing housing counseling costs in accordance with the Sources to Pay
for Housing Counseling and Education section of this notice. The
maximum lender fee covering pre-closing and post-closing housing
counseling is $350 ($400 if multiple borrowers are on the loan) except
where lenders and housing counseling agencies have a specific written
agreement for a different fee structure that complies with applicable
rules and regulations, including HUD and CFPB mortgage rules. FHA-
approved lenders and servicers will make adjustments to their systems
to implement the MIP reduction in accordance with the guidance herein.
Furthermore, servicers will submit MIP payments to HUD and report
delinquencies in a timely manner as required by current guidelines.
III. Selection Criteria and Process for Phase One
A. Selection Criteria for Participating FHA-Approved Lenders and
Servicers
The selection of lenders and servicers to participate in Phase One
of the pilot will be based on the following non-competitive selection
criteria. HUD's selection will also seek to minimize the effect of
Phase One on the Demonstration.
FHA-approved lenders who have a written agreement with one
or more HUD-approved housing counseling agencies to provide pre-
contract housing counseling and education.
FHA-approved lenders that originate but do not transfer
servicing. Also, FHA-approved lenders willing to participate in this
pilot that do transfer servicing but are willing to do work with only
one or two servicers on this pilot in order to test servicing transfer.
FHA-approved lenders that agree to identify originators
(mortgagees) they work with that are FHA-approved and work with housing
counseling agencies.
FHA-approved lenders originating the loan that agree to
pay a lender fee to reimburse the homebuyers pre-closing and post-
closing housing counseling and education as described in the Sources to
Pay for Housing Counseling and Education section in this notice. See
Section II.F.
B. Selection Criteria for Participating Housing Counseling Agencies
The selection of housing counseling agencies who participate in
Phase One of the pilot will be based on the following non-competitive
selection criteria. HUD seeks participating housing counseling agencies
with no unresolved findings in their performance reviews and
unconditional approval status. Neither the housing counseling agency
nor any of its board members or principals may be debarred or subject
to an investigation for debarment on the publication date of this
notice or any time prior to selection of participants. In addition,
housing counseling agencies must evidence:
Previous agreements with an FHA-approved lender(s) in a
pre-purchase housing counseling initiative;
Previous agreements and program arrangements with
different types of lending institutions that finance mortgages and
explain how pre-purchase housing counseling is delivered through these
partnerships;
Experience providing pre-purchase housing counseling to
diverse populations and markets, identifying the experience and number
of housing counselors with pre-purchase counseling experience;
Existing relationships (at least one year) with real
estate agents in different markets; and
Adoption of national industry standards in the pre-
purchase housing counseling curriculum delivered to consumers.
C. Selection Process for Participating Lenders and Servicers and
Housing Counseling Agencies
FHA-approved lenders and servicers who wish to be considered for
participation in Phase One must submit a letter to HUD, addressed to
the Deputy Assistant Secretary of Housing Counseling, that expresses
interest in participating in Phase One of the pilot and demonstrates
how they satisfy the Selection Criteria for Participating FHA-Approved
Lenders and Servicers. Housing counseling agencies who wish to be
considered for participation in
[[Page 27903]]
Phase One must also submit a letter to HUD, addressed to the Deputy
Assistant Secretary of Housing Counseling, that expresses interest in
participating in Phase One of the pilot and demonstrates how they
satisfy the criteria for selection in the Selection Criteria for
Participating Housing Counseling Agencies.
FHA-approved lenders and servicers and housing counseling agencies
must submit the letter and documentation on the criteria to HUD by a
date announced in a separate Federal Register notice. HUD will review
all submissions, and submissions that do not address all the criteria
will not be considered for Phase One. In addition to the criteria here,
HUD selection will also ensure a balance among types of lender,
counseling agencies, populations served, and service delivery in order
to achieve the Phase One goal of testing systems and processes
associated with the HAWK pilot. HUD will notify via letter housing
counseling agencies, FHA-approved lenders and servicers selected to
participate. HUD will also issue a notice announcing the housing
counseling agencies and FHA-approved lenders and servicers selected for
participation in Phase One.
Interested FHA-approved lenders and servicers and housing
counseling agencies are invited to notify HUD of their expression of
interest in participating in the pilot program, prior to the formal
date of applications being announced. Expressions of interest may be
sent to housing.counseling@hud.gov with the subject line reading ``HAWK
Pilot Phase One.''
IV. Evaluation
HUD will conduct an evaluation of the HAWK Pilot to assess the
goals of improving loan performance, impact on the MMI Fund, and
household and consumer outcomes. It will also include an evaluation of
the pilot process, demographics and credit profile of HAWK borrowers
compared to historic FHA first-time homebuyers, capacity and delivery
of housing counseling, impact on lenders, and the sufficiency of MIP
incentives.
Participating FHA-approved lenders, servicers, housing counseling
agencies and consumers will be required to cooperate with HUD to
evaluate the effectiveness of the HAWK program. HUD will use
administrative data for the evaluation from FHA and other sources, as
well as data collected by housing counseling agencies and lenders under
existing agreements with HUD.
HUD will evaluate the pilot program in several ways: (i) A process
evaluation, (ii) comparisons of HAWK participants to other groups using
administrative data, and (iii) comparison of HAWK information with
information from the Demonstration.
(i) Through a multi-method approach, a process evaluation is
expected to provide information about how the HAWK Pilot is being
implemented. The process study is expected to use an analysis of
administrative data to develop the sampling frame of counseling
agencies who conduct a high volume of pre-purchase counseling. The
sampling frame will include both agencies that are expected to conduct
high volume of FHA HAWK for New Homebuyers counseling and those that
are not. The process study is expected to include: Site visits to a
significant number of agencies; interviews with their staff to
understand the viability of the service delivery model; how the program
implementation is proceeding from the counseling agency perspective,
including capacity and sustainability for housing counseling agencies;
content; take-up rates; and cost of counseling provided. Counseling
agency interviews are expected to occur at three stages: Prior to
program implementation, during the early stages, and at a later stage
when HAWK for New Homebuyers is fully implemented.
The process evaluation is expected to include focus groups or
surveys with FHA HAWK for New Homebuyers counselees to ascertain
program implementation, viability, homebuyer decision-making, and
program participation from the perspective of new homebuyers. The last
component of the process evaluation is expected to include an analysis
of administrative data to present descriptive statistics of the Pilot
implementation and an analysis of the influence of HAWK on the pre-
purchase counseling industry's overall service provision.
(ii) HUD will also compare HAWK participants to historic housing
counseling participants and FHA first-time homebuyers in order to
observe differences in demographics, credit profiles, risk, housing
counseling participation and mortgage outcomes. HUD will use
information in its FHA systems and Housing Counseling System to
identify the effects of the mortgage insurance premium incentives on
take-up of the counseling by comparing profiles of historic and current
FHA first-time homebuyers to HAWK participants.
(iii) The pilot will be informed by the results of the
Demonstration conducted by HUD's Office of Policy Development &
Research. The Demonstration tests the impact of different pre-purchase
housing counseling modalities on mortgage preparedness, homebuyer
outcomes, and loan performance. In order to implement the Demonstration
successfully, the research team offered free counseling and incentive
payments to Demonstration participants to encourage participation and
completion of milestones throughout the Demonstration, which indirectly
makes the Demonstration a test of the combination of free counseling
and incentive payments. (Note that these are cash incentive payments
staged to coincide with the completion of different Demonstration
protocols.) Demonstration participants are randomly assigned into three
groups; (1) A treatment group of participants who receive online
education and telephone counseling, (2) a treatment group of
participants who receive in-person education and in-person counseling,
and (3) a control group of participants who are not provided any
counseling services.
Because HAWK will be implemented in the middle of the
Demonstration's enrollment period, the Demonstration will also assess
the impact of different types of counseling with and without HAWK
incentives. While the HAWK pilot is not the focus of the Demonstration,
it will be possible to do an analysis of homebuyer outcomes and loan
performance for Demonstration participants in both treatment groups--
providing valuable data for the HAWK pilot to compare.
To provide the valuable Demonstration data to the HAWK pilot and to
protect the Demonstration from contamination, attrition, and the
potential for dissatisfied borrowers by excluding them from the HAWK
incentives, HUD will offer the same HAWK MIP incentives to
Demonstration participants who select an FHA-insured loan. To be
eligible for the same HAWK MIP incentives, Demonstration participants
will be required to meet alternative responsibilities rather than the
standard HAWK program. Specifically, Demonstration participants will
follow the Demonstration protocols (counseling treatment or no
treatment). Demonstration participants randomly assigned to either of
the two treatment groups must complete the treatment protocol in order
to be eligible for the HAWK MIP incentives. Demonstration participants
will be asked to identify their status in the Demonstration through
self-identification/notification to HUD and their FHA-approved lender
of their status as a Demonstration participant. HUD will then apply a
Demonstration participant code in FHAC.
[[Page 27904]]
V. Marketing, Outreach and Capacity Building Plan
Marketing, outreach and building the capacity of participants
implementing the pilot will play an important role in the success of
the pilot. In the past, HUD has used conference calls, written
communications, the Internet, question and answer sessions and
roundtables to expand operations and communicate guidance to its
partners. HUD expects to augment these efforts with additional training
and capacity building toolkits, especially in the areas of revenues for
housing counseling, post-purchase housing counseling content, and
marketing the program by real estate professionals. With this notice,
HUD solicits comments and suggestions on the methods HUD should use to
promote marketing, outreach and capacity building.
VI. Environmental Review
This notice does not direct, provide for assistance or loans and
mortgage insurance for, or otherwise govern or regulate, real property
acquisition, disposition, leasing, rehabilitation, alteration,
demolition, or new construction, or establish, revise or provide for
standards for construction or construction materials, manufactured
housing, or occupancy. Accordingly, under 24 CFR 50.19(c)(1), this
notice is categorically excluded from environmental review under the
National Environmental Policy Act of 1969 (42 U.S.C. 4321).
Dated: May 9, 2014.
Carol J. Galante,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 2014-11152 Filed 5-14-14; 8:45 am]
BILLING CODE 4210-67-P