As an alumni of Villanova University, the phrase “The HAWK is Dead! The “HAWK is Dead! I heard countless times during the annual basketball game between Villanova University (the Wildcats) and their Big Five rival St. Joseph’s University (the Hawks). This game typically proved to be a great match-up no matter what the rankings of the two teams and this tradition will (and should) carry on for the foreseeable future.
Now, however, this term (The HAWK is dead) can be applied to a much talked-about HUD program that was aimed toward providing homeowner assistance to first-time homebuyers. This was a pilot program called “Homeowners Armed with Knowledge” or HAWK.
Under this program, homebuyers that completed HUD Approved Housing Counseling would qualify for savings in the form of reduced upfront Mortgage Insurance Premiums (in the amount of a 50 basis point reduction) and a 10 basis point reduction in the annual MIP. Congress, however, has failed to provide funding for this pilot program and it will not be implemented as planned this year.
Looking on the bright side, HUD did recently lower the annual MIP by .5% for most new borrowers and Fannie Mae implemented a 3% down payment for first-time buyers. Of course, the VA continues to offer 0% down payment loans for eligible veterans.
The lack of a HAWK program should not have a measurable impact of the number of FHA loans being originated this year. The reduced annual MIP combined with low interest rates and their low down payment requirement (only 3.5%) and effective Loss Mitigation program for homeowners that experience financial difficulties subsequent to loan closing are all positive factors that will keep FHA insured loans viable with a modest share of the overall market.
As far as chances for funding and implementation of the HAWK program for next year – I give it the same chance that St. Joseph’s has in beating the Villanova Wildcats next year in basketball which is very slim.