Federal Housing Administration (FHA): Homeowners Armed With Knowledge (HAWK) for New Homebuyers, 27896-27904 [2014-11152]

Agencies

• DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[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.

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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.
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    \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

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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).
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    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

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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.
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    \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.
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    \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.
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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 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).
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    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

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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.
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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.
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    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\
---------------------------------------------------------------------------

    \19\ E.g., 12 CFR parts 1024 and 1026.
---------------------------------------------------------------------------

    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