Nehemiah/AmeriDream Down Payment Assistance Programs (DPA's) - Are they that bad?.....

Chuck, again...... You are making my point and not answering my questions.  Read my comments from 6/19.

1.  Gov't DAPs are paid by taxpayers... As a taxpayer, I don't want to pay for this.  Let Mom, Dad, and the seller help.

2.  As I said, those DAPs usually have income and geographical restrictions that don't cover 90% of my clients.

3.  I am all for helping FTHB...its 75% of my business right now.  I am not the one that is a recommending the elimination of a DAP program.

4.  I am not a mortgage broker, nor I have ever been a mortgage broker.

5.  While I would consider using a DAP if the seller was not willing to help and the client qualified, I would NEVER use your company.  Nor, will I inquire about your company.

6.  Lastly, again, it still sounds like you have a problem with unethical lending.  At my company, the LO doesn't even select the appraiser and we never have contact with them.  The LO does not have the ability to inflate with our process.  Sounds like you need to lobby on who can do FHA loans.   

Going forward, can you read my comments and address them?  I don't know why you go off on these little tangents, but they don't address my questions.  I feel like I am typing the same stuff over and over and you don't come back with anything new.

You are the one not considering the affect on FTHB if we lost this program.  I think I am done responding to your meaningless comments.  Where the heck did the NIV and subprime comment come from?

You really should stop categorizing people and putting others down.  Seller DAPs are not the evil here....only the misuse of them.

Yes, Netoriginator said it best over two weeks ago, and I quote:

 "Chuck those grapes must be a little sour... as a 20 year mortgage veteran I have used the grant programs and I have also worked with a major DPA that was a faith based charity with a drug rehab center and a homeless shelter whose primary support was provided by the DPA activities.

 I have to tell you that you are way off the mark both with your comments and your history.

 Down Payment Gifts (DPA) existed prior to the 80/20 stated loan. The program was developed by Nehemiah specifically for an FHA loan not for a sub prime loan. It took years before sub prime investors would allow a loan with DPA gift or grant into their loan pools.

 They have their place just like the DPA grants do.. with the income restrictions placed on most grants and the liens placed on the property that are due and payable if certains covenents are not followed they (what you call "true down payment assistance") many time do not work in real life.

 They both provide assistance with a down payment. One is a gift with no restrictions and one is a grant with a lot of restrictions.

 I applaud Jeff for leaving your post intact."

Saw this on a recent blog...

Respect the ActiveRain Community

Being a part of any community requires a certain level of trust. Don't abuse the site or your fellow members. By joining the ActiveRain community you are given a platform to present your ideas and opinions to a large number of people. We trust you to be responsible with that platform; thousands of other ActiveRain members are also counting on your trustworthiness.

• Do not advertise yourself or your services in the comment section of another members blog post.
• Do not personally attack another person.
• Do not slander another person. 
• Do not send unsolicited emails, or faxes, or make unsolicited phone calls to another member.
• Respect the public that this community serves and derives its living from.

Jeff, excellent article.

I left Washington Mutual Home Loans for the very reason that they do not offer FHA, and that is ALL I have in my pipeline.  I would be selling cars now if it were not for FHA, and I think DPA is the only thing left to help first-time buyers acheive their homeownership dream.

Good plug.  Keep up the good work

Paul Thompson

Wells Fargo Home Mortgage

Vancouver, WA

Here's an opinion from someone in the trenches who actually has access to some of the real statistics and not the inaccurate one's used in that much touted GAO study.

http://www.ajc.com/opinion/content/opinion/stories/2008/07/23/mortgaged.html

I'm gonna have to call BS on Denied and Lied to Homebuyer without hearing specifics on that. You don't identify yourself and you're sounding suspiciously like Chuck from earlier in the comment thread. There aren't many areas where the FHA limits have been high enough for a 3%-5% higher loan amount to have made "hundreds of dollars" difference in the payments at any interest rate that's been available since 2005. In addition, your moniker seems to indicate that your loan was denied?

Now let me give you my view of all those other down payment assistance programs. Most are government funded and a few are charity sponsored. First, 99% of them can't possibly deliver the funds to a closing in a time period which would have been acceptable to any seller until recently. Second, if you qualify for a payment "hundreds of dollars" more, that would mean you are already fairly financially well off. A person who could pay the whole down payment amount over time by using DPA should be ashamed to accept money that was either taken from the mouths of other people's children by the government or donated by good people who expected it to help the truly needy. If you can't save the downpayment, and you're not willing to pay more since you didn't, you should rent and not sponge off other people to pay for your house.

Loan officers don't make enough extra money by using seller assisted down payment programs to make it worthwhile to use them if another program would better benefit the buyer more and could possibly meet the deadlines imposed on the loan officer by the sales contract. Your argument that "pocketbooks get in the way!" makes no sense whatsoever. If you think it does, please provide some meaningful rationale for the statement.

Further, these programs don't "need" to be eliminated. Some political appointees that run HUD "want" them eliminated because certain influential parties want some of their competition taken out. To top that off, many politicians from both parties need a scapegoat for the fact that FHA is beginning to lose money as a result of their economic policies creating a serious crack in the foundation of our economy. They want to misdirect us by enacting useless regulations and massive "rescue" programs that will only delay paying the price of our mistakes until after they get re-elected.

If you want us to give your comments any weight, at least make up some specifics about loan amount, sales price, interest rate etc. to make your accusations believable instead of just rashly insulting a well respected professional like Jeff when you don't know him and clearly don't understand what he's talking about.

Thanks Jeff.

I appreciate the info since I am farely new to FHA.

I come from the portfolio world as you know.

Denied and lied seems to have a beef with you.

Ron

Down Payment Assitance programs have a place in thehousing market.  I think if they perhaps limit it to first time home buyers that they may see the default rate drop.  Getting rid of them, to me, seems like an over correction to the bad times we are experiencing.

Chuck,

If you're going to try to carry on a rational discussion, it would behoove you to learn how to use the word processing features of the system you are working in so that you don't have to rudely "yell" to try to make your points. ;) We are here to reason and discuss, not browbeat.

"CHUCK RESPONSE:  CARL, THERE ARE ACTUALLY MANY FIRST TIME HOMEBUYERS OUT THERE THAT HAVE BEEN DUPED BY THESE SELLER FINANCED DPA "FAITH BASED" ORGANIZATIONS WHETHER YOU WANT TO BELIEVE IT OR ADMIT IT...OR NOT. THIS "LIED TO DENIED" HOMEBUYER IS TYPICAL OF THE TYPE OF ABUSE THAT THESE PROGRAMS PERPETRATE ON UNKNOWING, UNSAVVY FIRST TIME HOMEBUYERS.  I FIND IT VERY INTERESTING THAT YOU (SEE BELOW) ADMIT THAT YOUR COMPENSATION AS A LOAN OFFICER IMPACTS WHETHER OR NOT YOU AND YOUR CONSTITUENTS WILL PROVIDE THE PROMISED "PROFESSIONAL" GUIDANCE YOU PRETEND TO OFFER UNSUSPECTING/UNKNOWING CLIENTS!  I SAID IT BEFORE AND LET ME REPEAT WHAT YOU YOURSELF HAVE REVEALED, "THERE IS NO SHORTAGE OF SELF-PROCLAIMED PROFESSIONALS THAT WILL TAKE SHORT-CUTS AT THE EXPENSE OF THEIR HOMEBUYER CLIENTS.""

You have never once shown or explained how these programs are harmful to these people in any way or how even one person was "duped". You just keep repeating that the buyers are abused and then insulting people who are responding to you with reasoned and documented or documentable arguments. I responded specifically to the original poster's assertion that using a seller assisted DPA cost them hundreds of extra dollars per month. To simplify it for you: Even at a very high FHA interest rate of 7.5% the borrower's payment would only go up by $6.99 per thousand dollars of increased loan amount on a 30 year fixed loan. To cost the borrower "hundreds of dollars too much every month", the loan amount would have to be increased by $28,612 due to seller assisted DPA. Not likely.

Second, I questioned the use of the word "Denied" in the borrower's description of themselves. The borrower would have to have been "approved" in order for the loan to cost them anything monthly. Simple reasoning. Simple request for an explanation such as normally occurs when people are having a conversation and not simply trying to browbeat each other out of the argument.

For further information on this see syndicated columnist David Reed's columns from way back in 2005 and 2006 entitled "Down Payment Assistance Programs" and also "Non-profits and No Down Payment: A Second Opinion".

Then you specifically misrepresent what I said to indicate it meant the exact opposite of what I did say. I said that a buyer using a DPA program does not make a significant difference in a loan officer's pay. Since I guess that wasn't clear enough, I'll break it down to basics.

A loan officer gets paid on a base loan amount that is 3% higher when a borrower uses seller assisted DPA. So for instance, on my average $175000 FHA loan amount a loan officer would make $105 more if they charged 1% origination and got 1 point YSP. Most loan officers would split this with their employer so even at a 75% commission split they would end up with $78.75 extra. I'm sure there is someone, somewhere who would be more motivated by by making 0.03% of the loan amount in extra income, but reason would suggest there aren't many. People use these programs for speed, reliability and because they don't involve coercing money out of someone who isn't a party to the transaction.

CHUCK RESPONSE:  I BELIEVE IT IS VERY PRESUMPTIVE & ARROGANT OF YOU TO THINK THAT JUST BECAUSE YOU COULD QUALIFY A HOMEBUYER FOR HUNDREDS OF DOLLARS MORE THAN THEY CAN TRULY AFFORD (emphasis added by CP)...THIS WOULD EXCUSE YOU FROM INFORMING THEM OF AFFORDABLE OPTIONS THROUGH THE USE OF GOVERNMENT FUNDED DPA (YOU OBVIOUSLY ARE AWARE OF THESE PROGRAMS PER ABOVE)!  I'LL BET YOU WOULD RE-WORK YOUR ENTIRE PHILOSOPHY IF YOU WERE HELPING YOUR SON OR DAUGHTER PURCHASE THEIR FIRST HOME, CARL.  AS FAR AS HOMEBUYERS ABUSING THE DPA SYSTEM AND TAKING MONEY "FROM THE MOUTHS OF OTHER PEOPLE'S CHILDREN", THERE ARE INCOME GUIDELINES IN THE GOVERNMENT SPONSORED DPA PROGRAMS THAT BY DESIGN PROVIDE A SYSTEM OF CHECKS AND BALANCES PROHIBITING SUCH ABUSE.  THERE ARE NO SUCH CHECKS AND BALANCES WITH YOUR FAVORED SELLER FINANCED DPA PROGRAMS, CARL (just one of many negatives of Seller Funded DPA programs).  ALSO, WITH THE GOV'T SPONSORED DPA PROGRAMS, SINGLE MOMs WITH CHILDREN STAND TO RECEIVE THE MOST DPA HELP BECAUSE OF THEIR HOUSEHOLD SIZE AND PER PERSON INCOME.  I AM SORRY YOU FEEL THAT THAT SINGLE MOM WITH 2 CHILDREN IS "SPONGING" OFF OF YOU.  INSTEAD OF BLOGGING THAT FACT...WHY DON'T YOU JUST PROVIDE A WRITTEN DISCLOSURE TO ALL OF YOUR PROSPECTIVE CLIENTS OF HOW YOU FEEL ABOUT THEIR DPA PROGRAM ENTITLEMENTS.  I AM SURE YOUR ATTITUDE WOULD LOOSE YOU MORE BUSINESS THAN IT WOULD KEEP...AND RIGHTFULLY SO.  I BELIEVE THAT IF YOU ARE WILLING TO CUT CORNERS ON ANY CLIENT, YOU WILL CUT CORNERS ON ALL CLIENTS AT EVERY OPPORTUNITY!

First, I never once said "more than they can truly afford". If they can't afford it, they shouldn't agree to pay it. There is no law or regulation requiring them to buy a house.

Second, if I were advising my child (if I had one) or any member of my family about buying a home, I would advise them against buying that home if they couldn't keep their spending far enough below their income to allow them to save a down payment. That's my personal view. People who can't save haven't developed the personal habits they need in order to be a successful homeowner. I would push those views very, very strongly on a member of my family. I have also always issued the same advice to buyers I dealt with. However, they are not obligated to follow that advice.

Given that people who don't have such personal views are still buying homes, I think it is entirely appropriate that they should buy a home they can afford the payment on even considering they need a higher loan amount thus forcing them to pay over time the amount they should have saved to begin with.

In addition, my political views regarding the government taking money from one person just to give it to another are very well known to all around me. I don't hide those views from borrowers I've dealt with and I haven't lost any business I wanted to have. Stealing doesn't become moral just because you got a government bureaucrat to do it for you. In my view any "entitlement" received from the government was stolen from someone else. I don't care what pitiful situation the borrower is in or what kind of "income guidelines" the government places on giving the money, stealing is still wrong. I'm not aganst charity whatsoever.  But if I hold a gun on my neighbor, take $100 and then give it to a homeless man down the road, I still robbed my neighbor. It doesn't become alright to rob my neighbor just because some other people agreed with me that the homeless man needed $100 either. If I want to give that homeless man money I should give them my own money or I must convince my neighbors to give theirs voluntarily.

Charity must be consensual. Thus, I support foundations like Nehemiah where all parties voluntarily agree to the taking of the money and the giving of the money. In addition, Nehemiah takes some of the difference and has helped put more poor people in housing than your group ever will. Check out their financial disclosures and you can plainly see what they do in that area.

BTW, BET YOU DIDN'T KNOW THAT HUD/FHA IS WORKING ON A BLANKET DISCLOSURE (NOAH IS PROVIDING INPUT ON THESE DISCLOSURES) FOR ALL FHA FIRST TIME HOMEBUYERS THAT WILL REQUIRE THE LENDER CERTIFY ALONG WITH THE HOMEBUYERS THAT INFORMATION ABOUT SPECIFIC STATE, LOCAL GOVERNMENT DPA PROGRAMS ARE SHARED WITH THE HOMEBUYER?  CARL, IT JUST KEEPS GETTING WORSE FOR LENDERS/REALTORS THAT DO NOT DO THE RIGHT THING ON BEHALF OF THEIR CLIENTS, DOESN'T IT?  GOOD FOR HUD/FHA!

I had heard that and consider it just another step toward embedding the belief in everyone that politicians need to protect them and solve their problems for them. I only support and use the FHA program now because it doesn't yet and isn't designed to put people in houses by leaching off the rest of society. It has been self supporting. People with imperfect situations pay a price in upfront mortgage insurance, more regulations, a higher loan amount etc. and get a helping hand without becoming a dependent.

IF ANYONE IS GUILTY OF TAKING MONEY "FROM THE MOUTHS OF OTHER PEOPLE'S CHILDREN" THAT WOULD DEFINITELY PERTAIN TO THOSE LOAN OFFICERS/REALTORS THAT DENY THEIR CLIENTS THE INFORMATION ABOUT THE TRUE DPA PROGRAMS THAT PROMOTE MAXIMUM AFFORDABILITY...AND WE KNOW WHO THOSE FOLKS MIGHT BE, DON'T WE, CARL?

Now, as we've already seen, this is just silly and baseless. If I were inclined to throw out ridiculous aspersions in such a manner, I might accuse you of having some hidden agenda. You keep making unsubstantiated and specious attacks on seller assisted down payment and when asked for an example, you cite NACA. Even ignoring its checkered past for the sake of at least some brevity, NACA couldn't meet the contract time requirements of 1 out of a thousand of the buyers who come to loan officers looking a home. Since you must need to eat and pay for your own home, I assume you must expect to get paid for something, so is that why you have not, when challenged above, revealed your recommendations on other grant programs for which you might make money somehow? Do you realize that every time you use one of those government programs for one of those disadvantaged should be renters you keep bringing up, you are using money that was taken from someone who worked hard to earn it? Owning a home isn't a right. It's a privilege that comes with sacrifice and responsibility.

CHUCK RESPONSE:  THEN I SUGGEST THEY FIND ANOTHER OCCUPATION IF THEY FEEL THEY HAVE TO LIE TO AND DENY HOMEBUYER CLIENTS THE "PROFESSIONAL" SERVICE THEY PRETEND TO OFFER.

This statement in no way addresses the point I made in my original response and also above in this one that those who can't save their own down payment are well served by seller assisted down payment programs. You have still presented no reasonable argument otherwise. Only baseless allegations.

CHUCK RESPONSE:  THE IRONY IS, CARL, THAT EVEN OUR POLITICIANS RECOGNIZED THE PROBLEM WITH SELLER FUNDED DPA PROGRAMS AND YOU, BEING IN THE "BUSINESS", LIKE SO MANY OF YOUR CONSTITUENTS BLOGGING ON THIS SITE ARE TOTALLY CLUELESS AND CHASING CONSPIRACY THEORIES FOR A SCAPEGOAT.  YOU MUST HAVE USED THOSE SELLER FUNDED DPA PROGRAMS A LOT, CARL!  TOO, BAD.

It isn't a conspiracy theory to expect politicians and political appointee bureaucrats to act the way they do. As a group, they always have different motives and agendas than appear to be the case at first glance. The activities of the mortgage insurance lobbyists are documented.  FHA's skewed statistics and flawed studies are documented. Take a look at where a nationally syndicated columnist picked up on my blog entry about the issue - Arguments vs. Evidence. Look at the whole housing bill Congress just passed. Read it carefully and you'll see the true effect of it is to protect the investment community while appearing to be doing something to help homeowners. Why do you think HUD changed the definition of an FHASecure loan to cover any conventional to FHA refinance? This has saddled many people with a significantly higher interest rate just so the politicians can quote higher figures on how many people they have "saved" from foreclosure.

Further, given that most Democrats actually wholeheartedly support seller assisted down payment programs and only agreed to banning them in this housing bill because they needed some Republican votes to make this bill veto proof yet they expect to control the government completely after the upcoming elections, don't be at all surprised to see a new bill this November putting the programs back in business.

CHUCK RESPONSE:  CARL, I DON'T THINK THAT "LIED TO & DENIED HOMEBUYER" NEEDS TO ARGUE WITH YOU OVER SPECIFICS WHEN YOUR GENERALIZATIONS ILLUMINATE YOUR MISSING LINKS.  IT'S ALL ABOUT KARMA, KARL.

Unlike you or the original poster, I didn't make generalizations. I answered specific issues with specific reasoned arguments. It was the original poster who made statements that didn't make any sense when doing the math. Therefore, I was only informing that poster that what they said would and should be taken with a grain of salt since it did not make sense. Karma is about people paying the price for their bad decisions in life so that they learn not to make the same mistakes in their next life. That would more appropriately apply to those who don't save money for their down payment having a higher loan amount to pay the price for that.

OK, I am probably going to be persecuted for this viewpoint, but maybe it is this viewpoint that makes me feel alright about the slow down in the market.  I just feel like the programs that are still available for buyers to buy with little or no down payment should be enough to allow for those people that just can't save enough for 3% down.  The shell game that is DPA is over, and I think that it is way over due...Here is a link to my blog that illustrates a more positive spin than we were hearing from Chuck...

My blog

Thanks for the post, Jeff...Lively discussion for sure...

Oh, who needs Days of Our Lives when you've got Active Rain?! There's so bad blood in the water. I initially just wanted to comment on the good original article, but it's just taken it up a notch to pure entertainment.

To "Denied & Lied to Homebuyer":

I almost feel the desire to apologize that you had such a terrible experience. It's unfortunate that you do not feel the full realm of financing options were presented to you when you bought your home.  This seems like a big option that was left out, but I won't comment on that.  I think this is third time I've said this on Active Rain, but it's so true--"You did then what you knew how to do, and when you knew better, you did better." -Maya Angelou.  Now that you know about the programs, hopefully you are more confident about the process.

I am confident that I am not a crook or bad loan officer. I've worked very hard to learn as much as possible and provide the most up-to-date information to my clients and referral partners.  In every profession, there are those 'bad apples' that spoil the bucket, but we can't control that. 

It really comes down to TRUST!  I will even tell my clients this.  They can get a loan anywhere and in every state...but that's why it's so important to trust the person or people with whom you choose to work.

Hopefully giving you some validation for your concerns is some relief.  The down payment assistance programs as a whole is a wonderful program. It's how my husband and I were able to buy our first home, and I'm sad for those people who want to buy a new home but for whatever can't or don't want to save up the money for the down payment.  In many cases, they can afford the monthly payments, they just don't have a lot of extra money to save up every month!

God Bless!