[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.

                          ____________________