Housing Financial Literacy Act of 2019

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.

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. 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.

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. 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.

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.

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.

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.

Mr. Speaker, I reserve the balance of my time.

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.

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.

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

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.