Bipartisan “Housing Financial Literacy Act of 2014” Introduced in U.S. Congress

Building on strong momentum sweeping across the United States for regulatory changes that help increase the level of financial literacy in the country, the Housing Financial Literacy Act of 2014 (H.R. 4462) was introduced in the U.S. Congress as a legislative effort to incentivize those seeking to buy their first home to increase their understanding of personal financial matters.

The introduction of this bipartisan measure coincided with Financial Literacy Month, which occurs in the U.S. every April, and is very incentive-based, as the bill would discount the Federal Housing Administration’s up-front mortgage insurance premium for first-time homebuyers by 25 basis points is those individuals are able to show that they have completed a housing counseling program certified by the U.S. Department of Housing and Urban Development (HUD), which includes a financial education component.

Many market observers have argued that past houses crises in the U.S. could have been mitigated if homebuyers were better equipped to understand and effectively evaluate the mortgages they were committing to when buying a home. The high levels of financial illiteracy across many socioeconomic groups exacerbated other issues sparking large-scale mortgage and housing troubles that not only had major economic impacts, but that also caused many to lose their homes and their financial nest eggs. A primary objective of the Act is to boost financial literacy and thereby arm more Americans with the information, education and tools they need to be successful homeowners.

Congressman Hinojosa (D-TX) and Congressman Stivers (R-OH), who serve as the respective Democratic and Republican Co-Chairs of the Financial Literacy Caucus, have both co-signed this legislation, underscoring the bipartisan nature of financial literacy and the fast-growing support among both liberal and conservative legislators of financial education to best position individuals to make more informed decisions regarding their personal financial affairs.

This development in Congress also coincides with the introduction of legislation in many U.S. states over the last twenty-four months, including some measures that would require the completion of financial education courses in order for students to graduate high school. Many financial literacy enthusiasts are thrilled by these legislative developments, as they underscore the depth and breadth of the financial literacy movement that is taking place on the local, national, and indeed, international levels, which should bode very well for boosting financial education and financial decision-making among individuals and families in the months and years ahead.