Tomorrow’s Mortgage Industry March on Washington, to save the seller-contributed down payment assistance programs, may be for naught. It looks like the deal’s been cut already.
If you're interested in the new minimum loan guidelines, we expect the saved down payment assistance programs to have, you might attend our free teleconference next week. Sean Purcell and I will discuss these developments next Monday, at 4PM PST, on Bloodhound Blog Radio. We’ll give you a heads-up on what the credit-score minimums and debt-to-income requirements might look like.
Here's the rest of the story from Bloodhound Blog:
Last month, I explained that House Financial Services Commmitee Chair, Barney Frank, was maneuvering to save the seller-contributed down payment assistance program. Chairman Frank wanted to restore these programs and held risk-based pricing (higher upfront MIP) as his leverage. HUD Secretary Preston wanted risk-based pricing and held the seller-assisted DPA programs hostage. Apparently, the HUD Secretary flinched this past weekend and signaled that he would bless the restoration if he got what he wanted.
Rumor has it that Chairman Frank is working with Central California Congressman Dennis Cardoza, and his builder buddies, to green light this prior to the October 1, 2008 deadline. The deadline was part of Chairman Frank’s original compromise in the last enacted housing law. Frank made a stink about risk-based pricing, defeated it, and held it as a chit.
The new program appears to be exactly what I thought it might be; tiered credit scoring for pricing and qualification. What we learned two weeks ago was that the default risk, associated with 100% financing, can be mitigated through strict adherence to published underwriting guidelines. In layman’s terms, that means if you’re getting a break on the down payment, you better have good credit and a strong ability to repay the loan. That’s logical; it’s true risk-layering and is the cornerstone of “make sense underwriting”.
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