Home : Blogs : Ron Brown FHA & VA Home Loan Specialist : Ron Brown's Blog

The end of FHA Down Payment Assistance?

Breaking News:

I just heard that there is some serious trouble looming for Seller funded Down Payment Assistance! It appears the House will be accepting language from the Senate Bill effectively permitting HUD's termination of these existing programs. While DPA programs will not be completely eliminated, it seems that the days of Seller participation may be coming to an end.

Based on a letter that Chairman Frank sent to Ranking Member Spencer Bachus yesterday, the House will entertain the housing legislation early next week . There is genuine concern in Washington DC regarding the Treasury Plan for supporting Fannie and Freddie. It looks like the House will need to hold a hearing on the plan before the House vote.

FHA staff have stated that they believe the passage of the moratorium on Seller funded Down Payment Assistance is now a likelihood. At this time the implications for any loans in the pipeline is a complete unknown, but it is possible we will see a temporary shutdown of the system while a changeover takes place.

The Senate Bill also places a moratorium on risk based pricing. Given the language of the Bill, HUD would need to end its risk based premium (those just implemented July 14th) policy when the President signs the bill. Should the legislation be passed, FHA could eliminate this program sooner based on the inevitability of termination at that point. The only allowable risk based charges would no longer be based on borrower credit score, but rather product based instead, such as the FHASecure program.

I'll let you know as soon as I hear anything further.

Ron Brown

Sr. Loan Officer

First Mortgage Company of Washington

Posted by Ron Brown FHA & VA Home Loan Specialist on 07/17/2008 09:49 AM

Comments (5)

down payment assistance, fha, fhasecure, mortgage lending, congress, legislation

This post has been included in Washington Information Pierce County, WA Information
Post is included in group: Mortgage Financing, Market Data & Forecast
Post is included in group: MortgageEducation
Post is included in group: MortgageInterestRates

5 Comments on The end of FHA Down Payment Assistance?

Interesting conundrum, Ron. I dislike the seller paid downpayment concept, but realize that some people need it to qualify for a home. I do understand the elimination of risk based pricing, as it probably shows up in some statistic as being discriminatory. Great post.

07/17/2008 09:57 AM

by Ray Nelson (Century 21 Battlefield)

Hey Ron. Good to see you on here. I have not had a buyer use down payment assistance programs, but I think it has value and it's place in the market. Are they finding many of the buyers using these programs foreclosing? If not, I see this as backward step, slowing down home sales, hurting sellers, and thus the market. Feedback?

07/17/2008 10:46 AM

by Trey Affolter (Keller Williams Realty)

Ron... I just wrote more about this earlier this afternoon. I wanted to talk about why so many are against it and how they aren't looking at this clearly, through aglass full of muddy water.

@@ Ray.... please take a look at my post please and talk about why you dislike these? And the reasons that I wrote about, and that I countered these reasons.

Overall, this type of addition to FHA mortgages is huge. You think that we are in a real estate crisi now? Take these and then find out... more lenders and realtors out of business.... period.... And Ron, just let me know if you wouldn't mind if I could like mire in the comments. thanks

jeff belonger

07/17/2008 03:31 PM

by Jeff Belonger -- The FHA Expert.com -- FHA Loans -- FHA mortgages -- Mortgages (Infinity Home Mortgage Company, Inc)

Jeff,

Your opinion is always welcome, and valued on any of my blogs.

The good produced by these programs far outweighs the bad in my opinion. Today's underwriting standards are much higher (the way they used to be) so the potential for abuse is very limitied.

Ron Brown

First Mortgage Company of Washington

07/17/2008 07:37 PM

by Ron Brown FHA & VA Home Loan Specialist (First Mortgage Company of Washington)

As predicted, the final version of the Housing and Economic Recovery Act of 2008 has killed Seller Funded Down Payment Assistance Programs effective October 1, 2008.

If you would like to see the final wording of the Bill, here is the link:

http://www.rules.house.gov/110/text/110_atostohto3221.pdf

You may have to cut & paste this to your browser. The section prohibiting these programs can be found on page 479.

Regretfully,

Ron Brown

First Mortgage Company of Washington

07/29/2008 01:16 PM

by Ron Brown FHA & VA Home Loan Specialist (First Mortgage Company of Washington)

Leave a response…

Name:

Notify me of new comments:

Comment:

What does the graphic say?