It was a busy week for the House Financial Services Committee who, among other things, passed bills that addressed the cost of FHA loans, countered a recent HUD proposal on DACA borrowers and once again renewed The National Flood Insurance Program.

Yesterday, the House Committee on Financial Services overwhelmingly passed U.S. Congresswoman Joyce Beatty’s (OH-03) bill, the Housing Financial Literacy Act of 2019H.R. 2162. If enacted, the bill would give first-time homebuyers who complete a Department of Housing and Urban Development (HUD)-certified housing counseling course a discount on their Federal Housing Administration (FHA) mortgage insurance premium of 25 basis points (or 0.25 percent).

“Motivating first-time homebuyers to seek vital pre-purchase counseling and equipping them with the much-needed financial skills and tools to make informed financial decisions benefits their families, the surrounding neighborhood, and our entire economy,” Beatty said. “I am pleased to see my bill move one step closer to becoming law, and many thanks to my Democratic and Republican colleagues for their support.”

Studies confirm that homebuyers who receive pre-purchase housing counseling are nearly one-third less likely to fall behind on their mortgage and thereby face a reduced risk of foreclosure. The bill now moves out of Committee to the House Floor for full consideration by the entire U.S. House of Representatives.

The second bill affecting FHA was  The FHA Loan Affordability Act (H.R. 3141), introduced by Dean Phillips (D-MN). This would repeal the requirement that borrowers with FHA loans pay premiums on FHA mortgage insurance for the life of their loan. The bill would reinstate the previous policy which allowed borrowers to drop the insurance when the outstanding balance of their loan is reduced to 78 percent of the original value of the home.  The wording of the bill appears to specifically disallow consideration of equity accrued through home price appreciation. The bill passed the committee 34 to 25.

A third bill, H.R.3167, The National Flood Insurance Program Reauthorization Act of 2019,  reauthorizes the NFIP for five years and also includes a number of reforms to increase affordability, improve mapping, enhance mitigation, and modernize the NFIP.This bill was introduced by Rep. Maxine Waters (D-CA), Chairwoman of the House Financial Services Committee. It was passed unanimously by a bipartisan vote of 59 to 0.

Finally, The Homeownership for DREAMers Act, legislation was passed to clarify that Deferred Action for Childhood Arrivals (DACA) recipients cannot be denied mortgage loans backed by FHA, Fannie Mae, Freddie Mac or the U.S. Department of Agriculture (USDA) solely on the basis of their DACA status.This bill was introduced by Rep. Juan Vargas (D-CA). It was passed by a bipartisan vote of 33 to 25.

This bill was passed in response to a recent HUD clarification in a letter sent to Representative Pete Aguilar (D-CA) that stated that “DACA recipients remain ineligible for FHA loans.” HUD policy, currently reflected in HUD Handbook 4000.1, provides that “[n]on-U.S. citizens without lawful residency in the U.S. are not eligible for FHA-insured Mortgages.”

These bills will now move to the full house for further consideration.