HUD BOOSTS HOMEOWNERSHIP
WITH FAST LOAN PROCESSING
AND $10 MILLION IN GRANTS

PHILADELPHIA -- The Clinton Administration is dramatically speeding up processing of home mortgage insurance and is awarding $10.1 million in counseling grants to increase homeownership, Housing Secretary Henry Cisneros announced today.

The quick action on Federal Housing Administration mortgage insurance will cut loan processing costs for the Department of Housing and Urban Development and for mortgage lenders, eventually leading to reductions in closing costs for homebuyers, Cisneros said. FHA efficiency moves and programmatic reforms since 1993 have already cut the average homebuyer's closing costs for an FHA-insured mortgage by about $1,000.

The HUD grants expanding mortgage counseling programs will benefit an estimated 107,000 individuals and families. Counseling will make people aware of homeownership opportunities and give them the knowledge to choose the best available financing and avoid borrowing beyond their means, Cisneros said.

"President Clinton has asked us to boost homeownership to record levels, and the steps we're announcing today will bring us closer to reaching that goal," Cisneros said. "We're doing our work better, faster, more efficiently and at less cost to taxpayers, as we successfully reinvent government."

"Our efforts have already helped increase the number of American homeowners by 4.4 million families since 1993 to a record high of 66.1 million," Cisneros said. "The percentage of Americans owning homes -- 65.4 percent -- is at its highest level in over 15 years and near a record high."

Cisneros announced the new HUD actions in Philadelphia, at the opening of a new HUD Regional Homeownership Center. The center -- and another center that opened today in Atlanta -- will use the latest technology to cut average processing time for an FHA mortgage insurance certificate from the current time of four to six weeks to just two days.

Within a year, the new Homeownership Centers -- along with a similar center that opened in Denver in August of 1994 -- will process about 60 percent of the 500,000 to 750,000 FHA mortgage insurance certificates filed each year around the nation.

Two more regional centers are planned by the end of the decade, allowing a typical FHA mortgage insurance certificate anywhere in the United States to be processed in just two days.

HUD Assistant Secretary Nicolas P. Retsinas, who heads the FHA, said the lessons learned in Denver can be applied in other regions to improve the FHA nationwide.

"The FHA is becoming more responsive to the needs of homebuyers," Retsinas said. "The Homeownership Centers will enable us to provide better and quicker service at lower cost."

The Philadelphia Homeownership Center will begin its operations by serving the southern New Jersey and eastern Pennsylvania areas. Over the next year, the Philadelphia Center will add all the states from Maine to Virginia.

The Atlanta Homeownership Center will initially serve Georgia and the Orlando, FL area. It will add the rest of Florida, South Carolina, North Carolina, Tennessee, Kentucky, Mississippi and Alabama over the next year.

Cisneros also announced a new Homebuyer Education Program to inform first-time buyers on the essentials of locating, negotiating, buying, financing, owning and maintaining a home. First-time homebuyers who complete the program will be eligible for a reduction in their FHA mortgage insurance premium by about $200. A new Marketing and Outreach Division is promoting the Homebuyer Education.

HUD's outreach efforts are targeting first-time, minority, women, multi-cultural and immigrant homebuyers.

Cisneros said the $10.1 million in new counseling grants will enable non-profit groups to offer counseling to first-time homebuyers and to homeowners and renters who have financial problems or other housing-related difficulties.

Four HUD-approved national organizations will receive a total of $3.5 million in the grants: Acorn Housing Corporation; the National Association of Housing Partnerships, Inc.; the Neighborhood Reinvestment Corporation, and Catholic Charities USA.

Additional grants totalling $6.5 million will go to 184 HUD- approved local housing counseling agencies, which are non-profit and local government groups.

Both initiatives announced by Cisneros today are designed to help achieve President Clinton's goal of 8 million new homeowners by the year 2000. The National Partners in Homeownership, an alliance of 58 housing industry, non-profit and government groups, are working to make homebuying easier and less expensive. One of the Partners' goals is to make housing counseling available nationwide.

A list of the organizations receiving housing counseling grants is available.