Support H.R. 6694 to Reform and Save DPA!
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Support H.R. 6694 to Reform and Save DPA
FYI From the Nehemiah meeting today, here a couple of points that we should all be aware of - the massive affect this H.R. 3221 rule can create on top of the issues and crisis we are already in!
1. HUD is trying to get the minimum down payment to 3.5%
2. As of October 1st - if this bill is not destroyed - there will be no down payment assistance programs left. The language is such that it will include elimination of assistance from: Individuals, Corporations, DPA programs,County, State programs and Seller assist programs, etc.
3. There is a new bill that can revive the DPA programs (H.R. 6694) but it does need all of our support- and quick!
What affect will this have?
1. If you have pending escrows that have the Nehemiah DP - it will be canceled on October 1 so you will not be able to continue with the closing. UNLESS... the buyer's LO obtains a number from HUD prior to October 1st -- so this should be done now - you know how slow HUD works. Even if you think you'll be close prior to October 1st it might make sense to get the number so you won't be canceled out -- should you have to extend for any reason.
2. Since a large number of the buyers are first time homeowners.... this will affect so many (buyers, agents, sellers, etc). It will have a huge impact on the REO business. It will also affect the market because a large number of the REOs are financed by FHA with the Nehemiah program. So it will obviously slow the REO sales down a bit. This is not just an buyer/loan officer/ lender/ agent problem. This is a Bank Owned problem, along with all other DP assisted loans.
This is major!
Will it solve the foreclosure crisis - Nope! It will just stop middle/lower class from being able to purchase a home. And it will put the market and this foreclosure crisis in a worse situation with all the bank owned homes sitting and growing weeds and vanderlism rate will go up. Do what you can to support the HR 6694 bill to reform and save DPA!
a> to get updates on this horrible DPA elimination rule: http://www.getdownpayment.com/updates/legislativeinfo.asp
Support H.R. 6694 to Reform and Save DPA!
Contact Your Elected Officials Today! |
| |
President Bush signed H.R. 3221 Housing and Economic Recovery Act of 2008 into law on July 30, 2008. Included in this bill was the elimination of downpayment assistance (DPA) programs. Borrowers who are credit approved prior to October 1, 2008 can receive downpayment assistance and have their loan FHA-insured.
While H.R. 3221 was intended to "rescue" the housing industry, the elimination of the DPA program will have the exact opposite effect of its intended purpose. Not only did it eliminate DPA programs, it also instituted a downpayment requirement increase from 3 percent to 3.5 percent. This combination is a recipe for disaster and will further hurt the already crippled housing market.
Preserve downpayment assistance programs for families who are credit-worthy, but lack the savings necessary to fulfill their homeownership goals, protect the already fragile economy, improve the current housing market, and save jobs.
Currently, roughly 40 percent of the monthly FHA loan origination volume utilizes downpayment assistance to help lower-income Americans meet the previously mandated 3 percent downpayment requirement. It is estimated that 10-25% of potential homebuyers (approximately 50,000 nationwide) will have no way of securing homeownership with DPA programs. With the stroke of the president's pen, millions of deserving Americans are now left with zero alternatives for attaining homeownership.
In order to save downpayment assistance programs, we need to come together NOW to convince Congress to pass H.R. 6694 that allows downpayment assistance to continue indefinitely.
On July 31, 2008, a new bill, the FHA Seller-Financed Downpayment Reform and Risk-Based Pricing Authorization Act of 2008 (H.R. 6694) was introduced by several members of Congress. Representatives Maxine Waters, Gary Miller, Al Green and Christopher Shays sponsored the bill that if passed and signed into law will allow downpayment assistance to continue indefinitely.
Act Now! Contact your elected officials and urge them to support H.R. 6694 that allows downpayment assistance to endure. Failure to act now will ensure the death of all private downpayment assistance programs.
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The real estate industry has always had a bad reputation when it comes to honesty and ethics (see historical annual Gallup Poll rankings on honesty and ethics in professions surveys).
A program where buyers are told they are getting a gift and then have to pay for that gift in the form of a higher price and inflated mortgage balance is simply not honest.
Now I often see how some argue that prices are raised when sellers pay for recurring and non-recurring closing costs and that those are built into the price of the home also; so what's the difference? The difference is that there is no certification of a gift with those concessions. There is no representation to the home buyer that he/she will be given the closing cost assistance free and without charge. That's not the same as the "gift" programs. They are certified to be free!
Also, you see the "nonprofits" argue that the appraisal "comes in" so that makes it okay. What they don't tell you is that appraisals are not exact. Appraisals are opinions of market value defined as "estimates" in HUD handbooks.
Existing anti-flipping regulations and more recently, a 2008 FHA Mortgagee Letter state that under certain circumstances, such as the quick resale of a home at an increased price, the underwriting of an FHA loan requires that a second appraisal be obtained to verify the property value. As long as the second appraisal is not more than 5% below the first appraisal, the first appraisal is acceptable. Effectively, HUD has declared that the permissible tolerance between two appraisals is 5%.
The "gift" programs distort sales prices by the 3% down payment requirement plus the "gift" fee charged by the "charity." Now you can see that the sales price inflation can live like a virus within the acceptable range between two appraisals. Like a computer virus, just because it can find a place to hide in the system, doesn't make it legal.
The problem is not with the appraisers. How can HUD discipline an appraiser for an "error" of less than 5% when HUD itself has committed to 5% as an acceptable tolerance? So when the "charities" send you after a red herring that "the appraisal comes in" so all is well, - think twice. The problem is that there are two different prices on the home. The appraisal issue is a distraction used by Nehemiah and its clones to get you off the subject of the illegal price inflation.
Let me suggest a mental exercise to see if you think making someone pay for their gift is honorable or ethical. Let's say it's your birthday party, and some character shows up that you have never met before. Strangely, this character has brought with him a $4,000 gift (big screen, vacation package, fill in the blank of what $4,000 gift you would like for your birthday) and makes a "big todoo" about it. Kind of odd since not even your parents or other family members, people who actually know you, could come up with such a gift. After all the fanfare, and the OMG thank you so muchs, the stranger leaves ... and leaves you wondering who was that man who gave me so much and why would he?
A little time goes by and one day, after work, you go home get the mail and are stunned to see that that nice man had charged that "gift" to your credit card. But it doesn't end there, he also charged you a $500 fee for getting you the gift! Now what do you think of him? Welcome to Nehemiah.
I have to stop typing now because I ran out of quotation marks.