Home : Blogs : Richard Smith Mortgages Home Loans FHA TN GA AL : Richard's Real Estate Thoughts

Seller Funded Downpayment Assistance not done yet?

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."

Quote taken from Ameridream email - in italics.

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.

Posted by Richard Smith Mortgages Home Loans FHA TN GA AL on 08/03/2008 07:17 AM

Comments (14)

housing bill, housing counseling, down payment assistance, downpayment assistance, nehemiah, ameridream

Originally posted at: Richard's Real Estate Thoughts: Seller Funded Downpayment Assistance not done yet?

Post is included in group: Realtors®
Post is included in group: Mortgages
Post is included in group: The FHA Mortgage Group
Post is included in group: Tennessee Realtors - Join Hands
Post is included in group: Internet Empowered Consumer

14 Comments on Seller Funded Downpayment Assistance not done yet?

AUG

2008

Like playing peek-a-boo.

Richard,

Thanks for the post. This legislation is needed to provide assistance to many potential buyers. However, I agree that seller concessionsit should be done with credit scoring and homebuyer education components. This is my opinion, is the first real piece of legislation that has components that demonstrate that these members of congress understand the issue at hand. Unlike the bill signed by the president, which was a rush job lacking in so many ways.

One of my pet peeves is that the focus on the mortgage industry crisis has been myopic at best. The national economy had tanked some eight years ago, real estate was the only game in town for the last five years. There is no comprehensive effort to rebuild our faltering economy.

Many of my short sale clients have 30 year fixed mortgages. However, their companies have been acquired through members and acquisitions, jobs outsourced overseas or hours drastically cut. Not one has an option arm. What a travesty to portend that the mortgage meltdown is limited to sub-prime financing. My clients were able to pay their mortgages and now they can't. The newly signed bill does not offer them assistance because they did not have a sub-prime loan. Victims of the failed economic policies of the last eight years have been shut out of their homes and barred from the opportunity to regain their footing.

Thanks for the information this is very good. I for one am keeping my fingers crossed. Happy Sunday

William,

Great points. I have asked several times - why are FNMA and FreddieMac struggling? They did not do loans for people with credit risks, with neg amortization, with high margin adjustables rates.

These loan defaults are not caused by faulty loan programs or questionable underwriting.

They are caused by weakening economy. At least that is my opinion.

To look at mortgage lending practices for the blame is to miss an opportunity to look at the truth. It is easy though and makes for a good photo op if we can find a villain - real or imagined.

Richard

Dennis,

It is not over yet. Hope you enjoy playing. :)

Richard

Jeff,

I am with you. We will see how things go. If you have time use the links above to send a comment to your elected officials.

Richard

Good info! I've always said it was in need of serious reform and not useless. I wonder if this is a politcal stunt to say "oh well we tried"?

It really appears that this sitation with lending revitalizing itself is not over yet. We'll just have to wait and see what is going to happen.

Richard, I am glad you posted this information. I just wish Congress was not so hasty to make legislation that they only have to go back and "fix". Of course the real question is that their fault or ours (the public) for not being more engaged in the process before legislation gets to be a bill.

Maybe they do actaully listen to their constituents?

I'm anxious and suspitious. Some of the loans I saw using DPAs were obvious mistakes prone to hurt our system. It's got it's purpose if run with some common sense.

Richard, That is good news!! I closed with a Nehemiah last week and have another one waiting to close. These DPAs are HUGE in my area. I'm glad they are taking another look at these programs. I've always the thought the best solution was to just make it credit score driven.

HI RICHARD!

You do such a wonderful job at always keeping us informed about the $$$ & cents!

Thank you,

Hi Richard, this is a wonderful post and very useful information for the consumer and our group. Well done!

It seems that a big part of the mortgage problem was easy money and buyers with no equity. I do not see how these assistance programs benefit this. They seem to inflate prices artificially and do not encourage people to save. In the short run getting rid of these programs will not help, but in the long run we would all be better off without them.

Leave a response…

Name:

Email:
(optional)

Comment:

What does the graphic say?