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Have we seen the end of non profit down payment assistance?

Based on the below referenced article it appears that the NAR doesn't support non profit organizations such as Nehemiah & Home Ownership Providers from providing down payment assistance to potential home buyers.

http://www.realtor.org/fedistrk.nsf/currwklyrpt/government+affairs+weekly#report_4_07_23_2007

NAR Submits Comments on HUD Proposed Standards for Mortgagor's Downpayment Assistance

On July 17, 2007, NAR submitted comments to HUD on Standards for Mortgagor's Investment in Mortgaged Property, 72 Federal Register 91, 27048-27051. NAR supports downpayment assistance programs to help borrowers purchase a home. Downpayment programs take many different forms. For example, NAR has been a strong supporter of the American Dream Downpayment Initiative (ADDI). Another way buyers receive downpayment assistance is through the help of non-profit organizations. Certain non-profits have raised concern because they were taking contributions from property sellers, subtracting a fee, and then granting the remaining money to buyers of the same property. In essence these non-profits created a "seller-funded" downpayment program, which NAR believes can result in home price inflation and risks for increased delinquency and foreclosure. In an effort to preserve qualified downpayment programs, NAR strongly urges HUD to construe the limits on non-profit downpayment assistance as narrowly as possible.

Posted by John Gay on 07/25/2007 09:51 AM

Comments (7)

mortgage

7 Comments on Have we seen the end of non profit down payment assistance?

JUL

2007

The best "non-profit" down payment assistant for home buyers would be a "ZERO" down payment FHA program. Why not do that? Then we wouldn't need the folks in the middle.

It's so easy, it can't possibly work.

John

A really interesting development. I would have guessed the NAR a staunch supporter of legitimate down payment assistance programs. I do, however, understand their perspective.

We are in a social blacklash against any and all thing not mainstream

expect more of this type of stuff

these types of things mark the bottom

With forclosures and delinquency at an all time high, why not have another avenue or source.

I see their rationale. Home prices do not need to be inflated more than they already are.

In Georgia, don't you still have the Georgia bond loans and associated non profits through the community? Nehemiah has always had the wrath of someone who disliked the program viewing it as a program that inflated the sales price so that the seller still ?netted" what they wanted. Most non profit DPAs are tied closely with median income and out of 10 potential borrowers only 2 or 3 would fall inside "the box" of requirements. Take a look at the various My Community loans. there are still 100% deals there, some with CRA credits too for a lower rate. It's not the catch all for all borrowers, but with the changes in the industry - what we could do six months ago we are finding we can't do today.

One of my buyers just closed on a home which used the ADDI program and FHA Financing. The contract had 6% in seller concessions, 3% of which was the ADDI gift funds. The closing costs were less that the 6% total concessions, so the balance was used to buy down the interest rate. This got my first time home buyers into a 30 year fixed rate mortgage at 6.25% with zero down. As far as risk of delinquency and foreclosure, there would be a much greater risk if they had used an ARM program such as a 2/28. It was the first time that one of my clients had used the ADDI program, and after using it, I strongly support the use of the program. It got them into their first home with a great fixed interest rate, with no prepayment penalty, while staying within their budget.

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