HUD recently issued a notice in the Federal Register soliciting public comment on a proposed four-year, two-phase housing counseling pilot, HAWK for New Homebuyers. HAWK (Homeowners Armed With Knowledge) is linked to HUD’s Housing Counseling program with FHA-insured mortgage origination and servicing. The HAWK pilot is consumer-driven and designed to expand the benefits of housing counseling not only to consumers but also to lenders, investors, and the FHA Mutual Mortgage Insurance Fund (MMIF). HUD strongly encourages those interested to submit comments electronically through the Federal eRulemaking Portal by July 14, 2014.

The goal of the HAWK pilot is to assess program designs involving:

• Improving the loan performance of participants and reducing claims paid by MMIF
• Expanding the number of families who improve their budgeting skills and housing decisions through access to HUD-approved housing counseling agency services
• Increasing access to sustainable home mortgages for homebuyers underserved by the current market

The pilot will provide FHA insurance pricing incentives to first-time homebuyers who participate in housing counseling and education focused on evaluating housing affordability and mortgage alternatives, managing borrower finances, and understanding the rights and responsibilities of homeownership. Housing counseling and education will occur at the points in time determined to be most useful to first-time buyers, i.e., before signing the home purchase contract, before the loan closes, and during the first year of homeownership. FHA-insured borrowers, consumers in general, originators, servicers, and other parties expected to benefit from the housing counseling will fund the program.

The pilot has two phases. Phase One is the start-up period, where a limited number of borrowers working with HUD-selected housing counseling agencies, FHA-approved lenders, and servicers will participate to test the program. HUD will assess the sufficiency of communication, operations, systems, and coordination of the pilot processes. In Phase Two, participation will expand to all first-time homebuyers using FHA-insured financing, up to a capped number of loans in each of the four years.

In addition to describing the pilot, the notice describes how HUD intends to select housing counseling, lender, and servicer participants for Phase One in accordance with certain selection criteria and procedures. Finally, the notice solicits comments and suggestions on:

• The marketing of the pilot to real estate professionals and consumers
• How to coordinate or leverage the pilot with other non-FHA benefits for HAWK homebuyers, such as local down payment assistance programs or mortgage products with reduced credit overlays
• The content, duration, and timing of housing counseling and education
• How to pay for housing counseling and education
• The sufficiency of pilot incentives to attract homebuyers to obtain housing counseling services
• The mitigation of fraud and risk in the pilot
• Program coordination, operations, and systems requirements.