Do some research. DAP borrowers default at three times the rate as other down payment sources (borrower, family etc.) And on top of that they pay 3-4% over what other borrowers pay for the homes. Something about this program stinks.

Nancy is correct.  This program is good for few and abused by most.  With values declining, it's not as good a tool anyway.

Nancy, I still contend that it is not the program but the way that the program is used. I do not doubt the numbers of foreclosures and I do not need to do some research. I know what they are. With that said, the program works.

Rebecca, I do not doubt that it is abused. I even stated that in the post. With that said, killing the program all together is not right. I believe that there needs to be some guidelines to it and maybe even a qualifing phase.

I am all over this one. It is  much needed service for the buyers that do not havr the werewithal to fund their own down payment. Passing this will create a huge void in a much serviced market. Post and repost and repost this one Danny!

Bo

Bo, I have blasted this through every service that I can. It is up to serval thousand's of others to help spread the word.

I do think that DPA can be a good tool for many people. It seems ironic that the government would want to remove useful tools used in home ownership while touting whatever they are supposedly doing to help homeowners. There will always be people who find ways to take advantage of everything and they should be rooted out and dealt. But to remove an entire program that helps people, seems like another over reaction.

Rich, that is exactly what it is.

They helped people that lacked ALL financial responsibility, therefore they had NO money at all saved, then our new borrowers started missing payments - go figure!

Not all deals were bad risks, but it looks like MANY were bad.  It may be too far gone to fix now.

Rebecca, I think that the loans that went bad were people that were on the edge of approval to begin with. That is why if you institute and approval process for DPA and not just allow for anyone to get it, then it might be a better program.

Hi Bo,

I also posted information on this subject on July 23rd.  I am not the greatest writer, but the content should have been enough for some comments; I only received two. 

It is sad that the "deserving" will continue to rent, throwing their money out the window; without the Joy of Home Ownership!

Shelly, who is Bo?

As for people renting, there needs to be a way for people to work out buying a home and DPA did that. i just hate that people abused it and now we are all effected.

Hi Danny,

Thanks for your comments. 

Bo Hussung, replied to your Blog on 7/23/08 at 12:55pm.  Take care, see you in the "Rain"!

Shelly, ok.

Danny,

Thanks for the opportunity to share some much needed information that HUD has misinformed the public with.  It seems that alot of your bloggers have been fed by HUD.

DPA is a much needed opportunity for alot of homebuyers here in America.  Of all of the FHA loans in process right now, 40% are being financed with DPA.  In the past 5 years, DPA and FHA was virtually unused by the industry due to the 80/20 SISA loans that were available.  These 80/20 loans are what is causing the foreclosure rates to skyrocket.  DPA accounts for a 6% default rate, which is a 94% success rate...they get an A in my book.  Most all DPA is with FHA loans that are full doc, qualified loans. 

Abuse comes in all forms.  I have heard that Agents have increased the sales price to offset the gift by DPA or even a credit for closing costs.  This is where the abuse stemmed from.  A good question is that if the appraiser was able to get the extra dollars out of the property to absorb the credit, then did the Realtor actually do their fiduciary duty in posting a sales price that was below market value?  The blame can be place on a multitude of factors.  The bottom line is that you as a professional have a fiduciary duty to your client.  If you truly believe that DPA should be banned, then please advise your clients that you would rather have them continue to rent, or they should drain their checking and savings and 401K to buy the home and leave no reserves.  It takes $15K for a $250K FHA loan to close the deal.  Not everyone has wealthy parents.  Especially now with the high cost of living. 

The economic disaster that has been caused by banks that funded useless sub-prime loans will be felt for some time to come.  Our children will be stuck with the bill for this bail out of Fannie and Freddie and various banks.  I say, let the banks feel the pinch.  What did they do with all of the billions that they made during the last 5 years?  Now they cant bail themselves out, but their investors made a ton.  Lets have those same investors invest back into our economy since they gutted it.

Jovan, I would have to agree with you. Thanks for stopping in and commenting.

I blogged about this in June Danny here is another link to state your protest!

thanks for rallying the troops - they were vacationing at the time of my post :)

Sincerely,

Grace

Grace, unfortunately I think they are still vacationing.