Teachers will be required to live in a home purchased under the initiative for at least three years. Teachers must use a real estate broker to arrange the sale. Alternatively, a local government or school district can purchase the house from HUD and then sell it to the teacher. Teachers can contact their local HUD office for information on the availability of properties in their area. When coupled with reductions announced earlier, the upfront FHA insurance premium for first-time homebuyers in central cities who receive housing counseling will be 1.25 percent.
Central cities are cities that are the major communities in a metropolitan area.
Cost-saving management improvements will allow FHA to reduce its mortgage insurance premiums, Cuomo said. Homeowners who complete homebuyer counseling programs are less likely to default on their mortgage payments. FHA insured about 1 million home mortgages in 1998, and has insured about 5.5 million home mortgages since 1993. Without FHA insurance, many families would be unable to get mortgages to become homeowners. The initiative is expected to stimulate millions of dollars in new mortgage loans by private lenders.