Homeownership Assistance Act of 1989

Homeownership Assistance Act of 1989 - Amends the National Housing Act to create a special mortgage insurance program for first-time homebuyers, including homebuyers of manufactured homes.

Authorizes the Secretary of Housing and Urban Development to insure a mortgage loan of up to 97 percent of appraised value for the first $50,000 (currently $25,000) of a home's value.

Repeals the current dollar cap on FHA insured mortgages in high cost areas.

Authorizes the Federal Housing Administration (FHA) to insure adjustable rate mortgages with annual interest rate increases of up to two percent (currently one percent). Repeals the aggregate annual limit on such insured loans.

Defines "first-time homebuyer" as an individual who or whose spouse has not owned a principal residence during the 18 months prior to an FHA insured home purchase.

Authorizes an FHA demonstration program to insure mortgages for first-time homebuyer downpayments where the purchase is primarily financed or assisted by tax-exempt or other government assistance.

Amends the Federal National Mortgage Association Charter Act to authorize the Government National Mortgage Association to create a secondary market for first-time homebuyer downpayment loans.

Authorizes an FHA demonstration program to insure 100 percent of a home's value for a first-time homebuyer provided that the downpayment will be paid within three years by an additional monthly payment. Requires participants to receive financial counseling.

Amends the Deficit Reduction Act of 1984 to empower the Internal Revenue Service to confiscate defaulting taxpayers' tax refunds.

Requires the Secretary to submit annual program reports to the Congress.