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A Call to Arms to Save DPA.

Yesterday I received an email from my corporate office concerning DPA and the likelihood of Congress stepping in and limiting the access to this program. They wanted us to spread the word to all that we knew, so I thought that the best way to do that is to post it here.

Now, if you follow me at all, you know I am against Congress getting involved in DPA and limiting it at all. With that said, I do think that some limitations need to be made. I offer this example to you. A customer wanted to buy a home. They asked about DPA because the Realtor instructed them too. They did not divulge all their assets and so the loan officer told them that they should have no problem getting the money for DPA.

The loan went to processing and it was discovered that the customer had a 401k. The customer did not want to provide the mortgage lender with the 401k statement and the loan officer did their job and convinced the customer that they must divulge all information. Once the statement was provided, it was found that the customer had almost $100k in 401k. In my books, they should not need nor qualify for DPA. DPA should be saved for people that truly need the product to make the deal work and not someone that just does not want to pull out of the 401k or other assets.

Read this story:

Congress Is Set to Limit Down-Payment Assistance

With that being said here is the letter from the President and CEO of Nehemiah Corporation of America, Scott C. Syphax:

Dear Friend,

I am turning to you in the 11th hour, urging you to take action to oppose a housing bill that will eliminate downpayment assistance. The Senate and House of Representatives are fast-tracking this bill. See the Washington Post article below. Upon the President's signature, downpayment assistance will be shut down in the United States. Failure to act now will ensure the immediate death of downpayment assistance.

In recent weeks, I have come to you requesting your help in defeating HUD in their attempt to eliminate downpayment assistance. HUD and the Senate are now attempting to circumvent the rule making process by going after downpayment assistance via legislation. This course of action is being pursued in spite of the strong support of the Congressional Black Caucus, the Congressional Hispanic Caucus, the U.S. Conference of Mayors and Congresswoman Maxine Waters.

The consequences will be devastating! By FHA's own estimates, DPA comprises nearly 40% of FHA's volume. This means more than 300,000 working class families will be locked out of homeownership in the next year alone. Communities across America will take the brunt of the $50 billion in lost real estate sales, not to mention the indirect impact on the real estate, mortgage and building sectors that will be forced to shed tens of thousands of jobs due to this dangerous legislation.

Act now! Please call your Congressional Representative, Senators, trade associations and community groups IMMEDIATELY to voice your support for downpayment assistance and your opposition to this bill. Urge your legislators to oppose these provisions that would ravage your local economy by bringing the housing sector to a screeching halt.

Locate your elected officials.
1. Enter Your Zip Code and click "Go".
2. Click on the link of the Representative you would like to call and then click on the Contact tab to find their Washington D.C. office phone number.

Sincerely,

Scott C. Syphax
President & CEO
Nehemiah Corporation of America

About the Author

If you are in the market to purchase a home or even refinance an existing loan and you want a loan officer that will walk with you every step of the way, then contact Danny or Rich of the Thornton Team at Home America Mortgage today. We can have you pre-approval in as little as 4 hours. You can visit our website or send an email to thorntonteam@homeamericamortgage.com or call us @ 865-951-0522.

Posted by Danny Thornton on 07/23/2008 08:51 AM

Comments (18)

dpa

Originally posted at: : A Call to Arms to Save DPA.

Post is included in group: Realtors®
Post is included in group: Mortgages
Post is included in group: Realtors Needing the services of the Lending Powers
Post is included in group: True Mortgage Professionals
Post is included in group: Dedicated Bloggers

18 Comments on A Call to Arms to Save DPA.

JUL

2008

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, 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.

JUL

2008

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.

JUL

2008

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.

JUL

2008

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.

AUG

2008

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.

FEB

Representative Henry Fincher (D) of TN has completed the draft of House legislation to implement employer tax credits for participation in employer assisted housing. Rep. Fincher is a practicing attorney from Cookeville, TN. Fincher had a very short window of opportunity to research the federal legislation from 2007: Housing America's Workforce Act that outlines the benefits to communities, employers, and states that adopted the tax credits as a means of stabilizing and revitalizing housing markets. He reviewed similar legislation from others states like Massachusetts and Illinois before fashioning the TN version. Fincher will sponsor this in the TN House and work with Senate sponsors to further support both TN employers and rebuild the TN housing market. Economic Development experts hail this as a viable tool for economic growth in TN. Employers seeking an inviting home to place their companies place a great deal of consideration on state's that assist in homeownership programs. Fincher's work is truly a reflection of the Monday evening call for innovative solutions between government and the private sector by President Obama.

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