[Congressional Record Volume 165, Number 114 (Tuesday, July 9, 2019)]
[House]
[Pages H5278-H5280]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
HOUSING FINANCIAL LITERACY ACT OF 2019
Ms. WATERS. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 2162) to require the Secretary of Housing and Urban
Development to discount FHA single-family mortgage insurance premium
payments for first-time homebuyers who complete a financial literacy
housing counseling program, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 2162
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Housing Financial Literacy
Act of 2019''.
SEC. 2. DISCOUNT ON MORTGAGE INSURANCE PREMIUM PAYMENTS FOR
FIRST-TIME HOMEBUYERS WHO COMPLETE FINANCIAL
LITERACY HOUSING COUNSELING PROGRAMS.
The second sentence of subparagraph (A) of section
203(c)(2) of the National Housing Act (12 U.S.C.
1709(c)(2)(A)) is amended--
(1) by inserting before the comma the following: ``and such
program is completed before the mortgagor has signed an
application for a mortgage to be insured under this title or
a sales agreement''; and
(2) by striking ``not exceed 2.75 percent of the amount of
the original insured principal obligation of the mortgage''
and inserting ``be 25 basis points lower than the premium
payment amount established by the Secretary under the first
sentence of this subparagraph''.
The SPEAKER pro tempore. Pursuant to the rule, the gentlewoman from
California (Ms. Waters) and the gentleman from Kentucky (Mr. Barr) each
will control 20 minutes.
The Chair recognizes the gentlewoman from California.
General Leave
Ms. WATERS. Mr. Speaker, I ask unanimous consent that all Members may
have 5 legislative days within which to revise and extend their remarks
on this legislation and to insert extraneous material thereon.
The SPEAKER pro tempore. Is there objection to the request of the
gentlewoman from California?
There was no objection.
Ms. WATERS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise to support H.R. 2162, the Housing Financial
Literacy Act, a bipartisan bill authored by Representative Beatty, the
chairwoman of the Subcommittee on Diversity and Inclusion, and
cosponsored by Representative Stivers. This bill will make
homeownership more affordable for FHA borrowers who complete a housing
counseling program from a HUD-approved housing counseling agency.
While HUD currently has the authority to provide premium discounts to
incentivize housing counseling, HUD is not taking advantage of this
opportunity to help borrowers and strengthen the FHA. Research has
consistently demonstrated that loans made to borrowers who have
received prepurchase counseling perform better than loans made to
comparable borrowers who did not receive prepurchase counseling.
And when borrowers avoid delinquencies, lenders save money, too. A
2013 study by Freddie Mac found that, when 90-day delinquencies were
lowered by 29 percent, lenders saved an average of $1,000 per loan.
{time} 1715
So this bill would not only benefit consumers; it would also help
increase the financial health of FHA.
Mr. Speaker, I thank Representative Beatty and Representative Stivers
for their work on this commonsense, data-driven bill, and I urge my
colleagues to vote ``yes'' on H.R. 2162.
[[Page H5279]]
Mr. Speaker, I reserve the balance of my time.
Mr. BARR. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I want to thank the gentlewoman from Ohio (Mrs. Beatty)
for her leadership and her work on H.R. 2162, the Housing Financial
Literacy Act of 2019.
The Federal Housing Administration currently provides government-
backed mortgage insurance to more than $1.3 trillion in loans. FHA
insurance allows a wide array of borrowers to qualify for mortgages,
including many low- and moderate-income families who might not
otherwise have access to credit through traditional underwriting.
In fiscal year 2018, the FHA endorsed over 1 million forward
mortgages, including over 775,000 purchase loans, nearly 83 percent of
which were to first-time home buyers.
Given the large population of first-time home buyers using the FHA,
it makes sense to encourage those individuals to seek out ways to
strengthen their financial knowledge and better prepare themselves for
the challenges of homeownership.
Right now, current law states that FHA has the ability to provide
first-time homeowners with a discount on their FHA upfront premiums if
they complete an approved homeownership financial counseling course--
makes a lot of sense. However, the statute is drafted in such a way
that the provision only applies in particular circumstances when FHA
upfront premiums exceed 2.75 percent.
Since FHA upfront premiums are currently set at 1.75 percent, a rate
that has not been exceeded in a decade, FHA does not currently provide
an upfront premium discount to first-time homeowners who complete a
financial counseling course.
This bill, H.R. 2162, would amend current law to require FHA to
provide a 0.25 percent upfront premium discount from the prevailing
rate in effect at the time for other borrowers to first-time home
borrowers. This equates to a $625 savings off the current premium
structure on a $250,000 mortgage.
The hope is, by making such a discount mandatory, more first-time
homeowners will seek out financial literacy counseling and produce
better outcomes for a traditionally at-risk group of homeowners.
The bottom line is that FHA is a valuable tool to help expand the
universe of mortgage credit in our housing system, and we ought to be
doing all that we can to make sure that we are using our limited public
resources to encourage all borrowers to be well-prepared for the
commitment of homeownership through financial counseling or any other
effective means of creating more stable and reliable borrowers.
Mr. Speaker, I reserve the balance of my time.
Ms. WATERS. Mr. Speaker, I yield as much time as she may consume to
the gentlewoman from Ohio (Mrs. Beatty), the chair of the Subcommittee
on Diversity and Inclusion and the sponsor of H.R. 2162.
Mrs. BEATTY. Mr. Speaker, first I would like to thank Chairwoman
Waters for all of her leadership and her support.
Mr. Speaker, for a majority of American families, buying a home will
be the biggest financial purchase in their lifetime. That is why this
bill we are considering today is so important.
My bill, the Housing Financial Literacy Act, H.R. 2162, would provide
a 25-basis point discount on an FHA upfront mortgage insurance premium
to first-time home buyers who complete a HUD-approved housing
counseling program.
One of the main barriers to homeownership is saving up for the
downpayment. This bill would reduce that barrier by roughly $500.
The FHA has been utilized by everyday American families to achieve
the American Dream of homeownership. Eighty-two percent of all FHA-
insured mortgages are used by first-time home buyers, likely since
consumers only need to put down 3.5 percent as a downpayment. The
downpayment is the number one barrier to homeownership for many first-
time home buyers.
This bipartisan bill would incentivize those prospective first-time
home buyers to take ahold of their financial futures by taking a
financial literacy class, while making it easier and a little cheaper
for them to purchase that first home.
These classes are already available across the country, from Homeport
and Homes on the Hill in Columbus, Ohio, to Kentucky's Housing
Corporation, to the Kenosha Housing Authority in Wisconsin, and the
list goes on. These classes are available to first-time home buyers to
purchase a home in urban, suburban, and rural areas.
Not only is this bill a good deal for first-time home buyers, but it
is also a good deal for the American taxpayer. There have been several
studies over the past few years that prove not only does prepurchase
housing counseling lead to improved mortgage literacy, greater
appreciation for communications with lenders, and improved underwriting
qualifications, such as higher credit scores, but there are also
studies that show, as we have heard, that first-time home buyers who
have received housing counseling are nearly one-third, Mr. Speaker,
less likely to face delinquencies or foreclosures.
When you consider the average cost to the taxpayer for default within
FHA's portfolio is greater than $65,000, this bill could actually save
the taxpayers money. That is something that both my Republican and
Democratic colleagues were interested in during the debate on this bill
in committee, and both sides of the aisle will be happy to know that,
according to the Congressional Budget Office's initial analysis, this
bill would not have a cost to the U.S. taxpayer.
Mr. Speaker, I would like to close by thanking my colleague and
friend from Ohio, Congressman Steve Stivers, for cosponsoring this
important bill. Steve and I have served as the co-chairs of the
Financial and Economic Literacy Caucus for the past two Congresses.
This is an issue that we care about deeply.
Mr. Speaker, I would also like to thank the organizations that came
out in support of this bill. I think it is very important for people to
know that the National Association of REALTORS, the National Housing
Resource Center, the National Association of Real Estate Brokers, the
Leadership Conference for Civil and Human Rights, the League of United
Latin American Citizens, Credit Unions National Association, National
Association of Federally-Insured Credit Unions, Public Citizen, and
National Association of Hispanic Real Estate Professionals all support
this bill.
Mr. Speaker, I think you get my point. People want this bill. It is
the right thing to do.
Mr. Speaker, I want to also thank Congressman Barr for his support.
I urge my colleagues to join us in support of this bill, H.R. 2162,
to allow more Americans to reach for that dream of homeownership in a
financially responsible way. Please support this bill.
Mr. BARR. Mr. Speaker, I yield such time as he may consume to the
gentleman from Ohio (Mr. Stivers), my Republican colleague, who is the
co-chairman of the Financial Literacy Caucus in Congress and someone
who has worked in a bipartisan way very productively with Congresswoman
Beatty on this important initiative.
Mr. STIVERS. Mr. Speaker, I would like to begin by congratulating my
good friend and colleague, Congresswoman Joyce Beatty, for advancing
the Housing Financial Literacy Act, H.R. 2162. It is an effort she has
championed for years. As co-chair of the Financial Literacy Caucus, I
am proud to cosponsor this legislation with her.
Mr. Speaker, for many folks across this country, owning a home is
quintessential to the American Dream. While not everyone will always be
able to afford a single-family home, we should work to encourage the
American Dream of homeownership and make sure that we help people along
the way. It is good for individuals, and it is good for communities.
Not only does it help individuals build equity over time, but reducing
the disparities in homeownership by race has the potential to reduce
the racial wealth gap in this country.
However, we must work to ensure consumers are informed and encourage
responsible homeownership, and the Housing Financial Literacy Act does
just that. By providing a discount of 25 basis points on the upfront
FHA insurance premiums for borrowers who complete HUD-approved
prepurchase financial counseling, what we are doing is
[[Page H5280]]
making those homes more affordable; we are empowering those people with
knowledge; and we are helping build the dream of homeownership.
This financial counseling is so important for first-time buyers. It
helps them understand the costs associated with homeownership, like
taxes, insurance, and maintenance costs. It also helps them factor in
household budgeting and recognize high-risk financial products to make
sure they can make informed decisions.
For people across this country, including in my district, having a
place to raise their family is the American Dream, and I encourage my
colleagues to support this bill to help make homeownership a reality
for more people.
Mr. Speaker, again, I want to acknowledge my colleague, Congresswoman
Joyce Beatty, for her incredible leadership on H.R. 2162, the Housing
Financial Literacy Act. I encourage all of my colleagues to support the
bill.
Mr. BARR. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, again, I would like to commend and applaud my friend,
the gentlewoman from Ohio (Mrs. Beatty), for her leadership on this.
What an outstanding list of endorsements of this legislation. It goes
to show how much work she has put into this and that Congressman
Stivers and others have put into this bipartisan legislation.
Mr. Speaker, I thank the chairwoman of the full committee,
Congresswoman Waters, for bringing this forward.
In conclusion, as we look at this legislation, it is really a win-
win-win:
It is a win because first-time home buyers are now going to be able
to have a more affordable downpayment.
It is a win, in addition, because those first-time homeowners, as the
gentlewoman from Ohio and the gentleman from Ohio pointed out, will be
more prepared for the responsibility of homeownership, which is what is
typically the most significant investment anyone makes in their entire
lifetime.
And, finally--and I think this is a point that we do need to
underscore as well--when you are talking about federally insured,
federally backed, taxpayer-insured, taxpayer-supported mortgages, it is
good for the American taxpayer that we make sure that homeowners are
prepared for that very important responsibility.
Mr. Speaker, I urge all of my colleagues--for homeowners, for
taxpayers--to support this legislation, and I yield back the balance of
my time.
Ms. WATERS. Mr. Speaker, I yield myself the balance of my time.
Mr. Speaker, I thank the gentlewoman and gentleman from Ohio for
pushing this bill forward. This bill incentivizes financial literacy
that will help avoid delinquencies and may have an impact well beyond
the housing area.
Mr. Speaker, I urge all of my colleagues to join me in supporting
this important piece of legislation, and I yield back the balance of my
time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentlewoman from California (Ms. Waters) that the House suspend the
rules and pass the bill, H.R. 2162, as amended.
The question was taken; and (two-thirds being in the affirmative) the
rules were suspended and the bill, as amended, was passed.
A motion to reconsider was laid on the table.
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