Evidently the final word on seller funded down payment assistance for FHA purchases has not be said. It had surprised me that this week had passed with not word from any of the DPA programs after the Housing Bill had passed Congress and eliminated seller funded DPA.

Friday night I received an email from Ameridream announcing somewhat optimistically "Congress to Reauthorize DownPayment Assistance."

Last night, Congress introduced bipartisan legislation, H.R. 6694 that would reauthorize and reform charitable downpayment assistance. This bill would remedy a harmful provision in the new housing law which limits homeownership opportunities for low and middle-income Americans. The legislation, sponsored by U.S. Reps. Al Green (D-TX), Gary Miller (R-CA), Maxine Waters (D-CA), and Christopher Shays (R-CT) reauthorizes and reforms charitable downpayment assistance funded in part by sellers, which has helped over one million families and individuals become homeowners since 1999. The program was eliminated by legislation signed by President Bush on July 30, 2008.

The new legislation which is linked in the italicized quote above (HR6694) has a credit score requirement and a provision for counseling.

This legislation also seems to bring back the tiered pricing for FHA premiums. This is probably a give and take to satisfy HUD which did not appreciate losing the tiered MIP and threatened to increase MIP for everyone. Additionally, HUD does not like seller funded DPA. Allowing tiered MIP makes sense to me. If they restore DPA, tiered pricing along with score requirements for DPA might go a long way to a good balance between concerns about deliquency and the housing market.

The Housing Bill was rushed legislation and left open many details. Judging from this very quick new legislation, members of Congress are aware of inadequacies in the Housing Bill. They achieved their political requirement to pass something and to be able to state "we are helping families with foreclosure, we are acting to stabilize financial markets, and we are strenghtening FNMA and FreddieMac."

Now, maybe they can take some time an correct the errors in their bill.

It will be interesting, and I hope encouraging, to see what they think the errors are.

If you want to speak in favor of the reinstatement of tiered MIP and of seller funded DPA, you can send an email to your elected officials here page provided by Ameridream.

Nehemiah has a similar page to contact officials here.

Richard Smith
Home financing in Tennessee, Georgia, and Alabama.
Experience matters when it is your home loan.