The new FHA HAWK (Homeowners Armed With Knowledge) Program designed to give homebuyers a discount on the FHA Mortgage Insurance Premium (MIP) in exchange for them taking approved Homebuyer Education Classes has been getting a lot of attention and press. Real estate professionals and homebuyers are beginning to inquire about how to apply for the HAWK Program.
The most important major detail that many of the articles and news reports are not making very clear is that the HAWK Program has not yet landed its final approval status and IS NOT available!
HUD’s current estimate is that phase one of the four-year, four-phase program should roll out winter of 2014 or spring of 2015.
Below are the basic program details if the program rolls out without any changes to the current program proposal:
- Savings of 0.50% on the Upfront MIP and .25% on Annual MIP if the borrower completes the first 2 out of 3 Homebuyer Education classes.
- Additional MIP savings of .15% on the Annual MIP after two years of on-time payments and completion of the 3rd Post-Closing Homebuyer Education class.
Let’s compare the MIP costs for a $100,000 loan without HAWK and with HAWK savings:
- Upfront MIP factor: 1.75% of the loan amount
- Annual MIP factor: 1.35% of the loan amount
- Monthly MIP payment without HAWK discount: $112.50
HAWK Full Approval
- Upfront MIP factor: 1.25% of the loan amount
- Upfront MIP savings: $500 less
- Annual MIP factor: 1.10% of the loan amount (before completing Phase 3)
- Annual MIP savings: $20.84 per month
- Monthly MIP payment with Total HAWK discount: $91.66
One of the many details not yet worked out is what agencies will be approved to provide the required three-step housing counseling and education classes, and who will pay for these services. The three education elements are:
- Pre-Contract Housing, Counseling & Education – 6 hours and must include 1.5 hours of individual counseling specific to that borrower. Pre-Contract Certificate of Completion must be issued to the buyer 10 days prior to the sales contract acceptance date in order for the buyer to be eligible for the HAWK discount benefits.
- Pre-Closing Housing Counseling – 1 hour minimum and cover 17 specific topics. Pre-Closing Counseling Certificate must be issued from the day of Loan Application and no later than 3 days prior to closing.
- Post-Closing Housing Counseling – 1 hour minimum and cover 12 specific topics. 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.
The most important thing to remember is that this program has not been approved or rolled out yet and many of the proposed details could change upon final approval and implementation.
With the increases of MIP rates over the past 3 years, it’s a very good thing that HUD is working on a program that allows buyers to receive a discount if they’re better prepared to be i
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