HUD has recently ruled that DPAOs (Down Pay Assistance Organizations) such as Ameridream are no longer welcome in FHA deals. Now I have read the entire ruling (Read it right before bedtime if you are an insomniac, it'll put you right to sleep) and I clearly understand HUD's position. But could the timing be any worse?
For those of you not familiar, DPA programs such as Ameridream allow an FHA buyer to purchase a home with little to no money down. This is accomplished by negotiating a down payment assistance grant from the seller to Ameridream. In turn Ameridream agrees to grant a Down Payment Grant to the buyer. If you've also negotiated seller paid closing costs into the deal, your buyer can essentially purchase at zero down with FHA financing. Yes I see how the waters can get a bit murky here.
In defense of the DPAOs, I can tell you that these programs have helped many renters turn into first time buyers. I've had many of these deals over the last year and a half here in Tacoma and I can tell you that all of my clients are still paying their mortgages. We're not dealing with non owner occupied stated income loans here! We're dealing with folks on the lower end of the pay grade and helping them get a rung up on the equity ladder.
We now have until Oct 31 to close any outstanding DPA contracts in escrow, unless Ameridream wins an injunction, they are effectively out of business come Nov 1.
I'd be interested in others comments positive or negative about this latest HUD ruling. What's your 2 cents on this subject?
You can read about the struggle here on Ameridream's website.
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