Down Payment Assistance Rescue H.R. 6694

By
Real Estate Agent with Coldwell Banker Residential Brokerage

By now, everyone, or almost everyone, is aware that the Housing and Economic Recovery Act of 2008 was signed into law by President Bush on July 30th, 2008.  The bill was strongly supported by the NATIONAL ASSOCIATION OF REALTORS® (NAR).  What many don't know is that NAR did not oppose SEC. 2113. CASH INVESTMENT REQUIREMENT AND PROHIBITION OF SELLER-FUNDED DOWN PAYMENT, a component of this bill that ripped away Down Payment Assistance Programs and increased the minimum down payment requirement of FHA buyers.  I have searched everywhere to try and find an answer to why NAR would not take a stand on this very important issue but with little or no success. Now... here's a bit of trivia for you.  It has been suggested that it was President Bush 1 who made DPA available to FHA buyers in 1999.  And while it is true that it was his son, President Bush 2 who embezzled DPA from the FHA buyers on July 30th 2008, in an attempt to place blame for the current mortgage crisis on DPA type loans, DPA actually got it's birth in 1996 when... reportedly... Nehemiah's founder, Don Harris, who is also a real estate lawyer, found a mechanism within the statutes, that let charitable organizations make such gifts.

Section 2113 was inserted into H.R. 3221 at the eleventh hour, by the "Good O'l Boy's network on Capital Hill" just days before the President was to sign the bill into law; a typical underhanded trick perpetrated by many Washington "me first... you last" politicians.

To their credit, a group of honorable men and women, in the House of Representatives, launched an attack on Section 2113 of H.R. 3221.  Less than 24 hours after President Bush signed H.R. 3221 into law and barely allowing the ink to dry, Al Green, U.S. Congressman for the 9th District of Texas along with Gary G. Miller, U.S. Congressman for the 42nd District of California, Maxine Waters, U.S. Congresswoman for the 35th District of California and Christopher Shays, U.S. Congressman for the 4th District of Connecticut sponsored H.R. 6694H.R. 6694 is a bill intended to revise the requirements for seller-financed down payment assistance for mortgages for single-family housing insured by the Secretary of Housing and Urban Development.  The bill does not address the increased down payment requirement but the bill does take an enormous step toward overturning the Down Payment Assistance regulation set forth in H.R. 3221.

H.R. 6694, FHA borrowers would need to meet a set of criteria that would help lay to rest the concerns expressed by the HUD over loans being granted to borrowers who have not demonstrated the necessary credit skills to maintain a mortgage payment. For example, the borrower would have to have a FICO credit score of not less than 680.  However there are provisions where the buyer/borrower could have a FICO score as low as 620. You can read more about H.R. 6694 by CLICKING HERE.

There has been a lot of dispute leveled at the DPA programs, alleging that FHA DPA loans have a higher rate of foreclosure than those FHA loans that did not contain a DPA component.  These allegations are simply not true. In fact a GAO (U.S. Government Accounting Office) study found that 91% DPA homebuyers were successful homeowners and were not in default on their mortgage!  Contrast the DPA statistic with the current Fannie/Freddie crisis.  Since late 2006 over 282 major lenders have gone bankrupt due to failed conventional Freddie/Fannie hybrid loans using either 80/20, 80/15/5, 80/10/10 and/or 100% LTV mortgages.  Now... you tell me... which program has a better track record-the goofy NINJA (No Income, No Job, No Asset) loans of yesteryear or the FHA DPA loans?  It really isn't rocket science!

When Brian D. Montgomery, the F.H.A. commissioner made the claim that FHA had to withdraw $4.6 Billion from it's $21 Billion capital reserve fund in May to cover the costs of losses, claiming that those losses were primarily due to the agency's seller-financed down payment assistance mortgage program, he would not and could not assign any figures to sustain his claim. One can only conclude that Mr. Montgomery was simply pandering to the fears of Congress and to the National Press Club he spoke to in June 2008.

There have been allegations that DPA loan programs placed an unrealistic and over-burdensome strain on our economy.  In fact, this is far from the truth.  DPA programs helped to add over $24 billion to the economy from 2000 through 2005.  Additionally, DPA composes over 40% of FHA business and uses NO tax-payer dollars to fund their programs. In reality, tax revenues generated to State and local governments by new home construction bought with DPA: 150,000 x $82,269 (amount in tax revenue generated from an average single family unit) was in excess of $12.3 Billion (that's BILLION with a "B") between 2000 and 2005. Now... contrast that track record with the multi-trillion dollar bailout of Freddie Mac and Fannie Mae, that will use your/our tax dollars.  Where is the logic to strike at the very heart of the buyer pool who has demonstrated the most stable and responsible component of our mortgage economy? Over 1 million home owners have been created through the use of DPA FHA loans since its inception.

Between January 1st 2008 and August 31st 2008, the real estate industry saw record sales, depleting the swollen reservoirs of unsold inventory.  According to ARMLS (Arizona Regional Multiple Listing System) over 80% of the closed transactions, in this time period, occurred in the price range under $346,250. Lenders who processed FHA loans reported that over 80% of their pipe line was DPA type FHA loans.  If this is any kind of bell weather for the rest of the nation then the end of DPA can only spell a resurgence of unsold inventory and a depletion of the buyer pool.  It has been projected, by AmeriDream, that the real estate market could lose 25,000 buyers per month from the national real estate landscape.

In 2008, two different federal courts took the rare step of striking down the HUD regulation which would have banned seller-funded down payment assistance (DPA). The courts' decisions were NOT made on technical grounds, but for fundamental substantive reasons-the courts ruled that the HUD regulation violated the most basic principles of the Administrative Procedures Act (APA), that is, that an agency which issues a regulation must present at least some "reasoned decision-making" in support of its position.

The APA sets a very low threshold for an agency to meet for a regulation to be valid if it is challenged in court. An agency does not need to convince a court that a regulation is correct. An agency merely needs to present a plausible rationale and minimal evidence supporting the regulation. Yet the courts held that HUD failed to articulate any plausible policy rationale or provide verifiable data in support of its position.

The courts ruled in the Civil Action No. 07-1282 (PLF), AMERIDREAM, INC., Plaintiff, v. ALPHONSO JACKSON, Secretary, United States Department of Housing and Urban Development, Defendant. that;

"HUD's reliance on such flimsy anecdotal evidence ‘is not sufficient to enable [the Court] to conclude that the [Final Rule] was the product of reasoned decision-making.' Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co.,

After HUD had it's head handed to them by the courts, HUD again proposed a rule to ban charitable DPA, but this time sought legislation which would impose a ban without HUD having to present any rationale or data supporting that policy.

The choice is clear.  We all must rally to the aid of the DPA programs. The data, presented by HUD and all pundents who are proponents of stealing DPA from FHA buyers, is flawed... and twisted to strike fear in the hearts of the American tax payers and congress.

Please help put DPA back on-line for worthy and qualified FHA home buyers.  CLICK HERE to locate your state House Representative and CLICK HERE to locate your US Senator and tell him or her that you want them to support and vote for H.R. 6694 before September 26th 2008... before Congress adjourns for the rest of the year.

You have our permission to copy and paste this BLOG post into the eMail body of any post you send to your representatives.  You also have our permission to republish this BLOG or any portion of the BLOG to your own BLOG, as long as you do not alter our text.  If you wish to add your own text to our copy, please feel free to do so.

Thanks for your support... you can copy and paste the following text into the representatives eMail section of each of their web sites.

*********************************************

Dear (Enter Name of Representative here)

I ask your support of H.R. 6694.  Please pass this bill before you adjourn on September 26th 2008.  The passage of H.R. 3221, this past July 30th 2008, included a component that disallowed Down Payment Assistance for FHA buyers.  This was, I trust, an inadvertant oversight on the part of our legislaters.

There has been a lot of dispute leveled at the DPA programs, alleging that FHA DPA loans have a higher rate of foreclosure than those FHA loans that did not contain a DPA component.  These allegations are simply not true. In fact a GAO (U.S. Government Accounting Office) study found that 91% DPA homebuyers were successful homeowners and were not in default on their mortgage!  Contrast the DPA statistic with the current Fannie/Freddie crisis.  Since late 2006 over 282 major lenders have gone bankrupt (source www.mortgageimplode.com) due to failed conventional Freddie/Fannie hybrid loans using either 80/20, 80/15/5, 80/10/10 and/or 100% LTV mortgages.  Now... you tell me... which program has a better track record, the goofy NINJA (No Income, No Job, No Asset) loans of yesteryear or the FHA DPA loans?  It really isn't rocket science!

There have been allegations that DPA loan programs placed an unrealistic and over-burdensome strain on our economy.  In fact, this is far from the truth.  DPA programs helped to add over $24 billion to the economy from 2000 through 2005.  Additionally, DPA composes over 40% of FHA business and uses NO tax-payer dollars to fund their programs. In reality, tax revenues generated to State and local governments by new home construction bought with DPA: 150,000 x $82,269 (amount in tax revenue generated from an average single family unit) was in excess of $12.3 Billion (that's BILLION with a "B") between 2000 and 2005. Now... contrast that track record with the multi-trillion dollar bailout of Freddie Mac and Fannie Mae, that will use your/our tax dollars.  Where is the logic to strike at the very heart of the buyer pool who has demonstrated the most stable and responsible component of our mortgage economy? Over 1 million home owners have been created through the use of DPA FHA loans since its inception.

Between January 1st 2008 and August 31st 2008, the real estate industry saw record sales, depleting the swollen reservoirs of unsold inventory.  According to ARMLS (Arizona Regional Multiple Listing System) over 80% of the closed transactions, in this time period, occurred in the price range under $346,250. Lenders who processed FHA loans reported that over 80% of their pipe line was DPA type FHA loans.  If this is any kind of bell weather for the rest of the nation then the end of DPA can only spell a resurgence of unsold inventory and a depletion of the buyer pool.  It has been projected, by AmeriDream, that the real estate market could lose 25,000 buyers per month from the national real estate landscape.

Additionally, with the aftermath of the devastation reaped upon the America by the past three hurricanes, Hanna, Gustov & Ike, FHA DPA, as modified by H.R. 6694, could become a logical and pivotal real estate purchase tool as our communities rebuild.

I appreciate your support in passing H.R. 6694 before Congress adjourns on September 26th 2008.

YOUR NAME
REALTOR

*********************************************

Lori & G-II are REALTORS® with Coldwell Banker Residential Brokerage in Phoenix, Arizona.

Lori & G-II can be reached for comment at Lori.and.G-II@RealEstateInPhoenix.net or send a text message to their cell phone by CLICKING HERE or by cell phone at (602) 796-5674.

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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Richard Smith 09/18/2008 01:58 PM
  2. Fred Chamberlin 09/18/2008 02:09 PM
Topic:
Mortgage / Finance
Location:
Arizona
Tags:
down payment assistance
fha
downpayment assistance
dpa
hr 3221
hr3221
hr 6694
hr6694

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Anonymous
Marc Richie

Great information...your information and support is very much appreciated

Sep 10, 2008 05:41 PM #1
Anonymous
Ted Kunda - NW Area Manager Nehemiah Corp.

Couldn't have said it any better myself.  Glad to see you did your research! 

Thanks for your support!

Sep 12, 2008 06:22 AM #2
Anonymous
James Hillman

FINALLY, an article that is right on point. Well said and well written. Anyone who does not GET IT now, never will. DPA is a vital part of our ecomomy and is presently the only true STIMULUS PACKAGE working for the people. Please continue with the support. DPA is a viable entity that must be reinstated in order to preserve the American Dream of Homeownership. Time is of the essence....19 Days and counting.......

Sep 12, 2008 06:26 AM #3
Anonymous
Jovan

Good Afternoon,

 

I have GREAT NEWS! Down Payment Assistance (DPA) is one step closer to being preserved thanks to all of your efforts. HR 6694 was passed by the House Financial Services Committee earlier today, positioning the Bill for a floor vote in the next couple of days.

 

Our fight is far from over. It is more critical now than ever before that we continue the charge to preserve DPA. Therefore, I am calling on you once again to assist with our collective efforts. We must make contact with some key individuals to voice our profound support of Down Payment Assistance. Failure to do so at this point in time could result in adversity to HR 6694 thus making all of our previous efforts a moot point.

 

I am respectfully requesting that you call, email, and / or personally visit the following individuals:

 

Congressman Steny Hoyer of Maryland

202-225-4131

http://hoyer.house.gov/

Congressman Roy Blunt of Southwest Missouri                        

202-225-6536

http://www.blunt.house.gov/Contact.aspx

Congressman John Boehner of Ohio (Minority Leader of the United States House of Representatives)

202-225-6205 

http://johnboehner.house.gov/Contact/

  

Thank you in advance for your ongoing support of DPA and The Nehemiah Corporation. We will be victorious!

Sep 16, 2008 10:43 AM #4
Rainmaker
224,885
Richard Smith
Sierra Pacific Mortgage - Chattanooga, TN
FHA VA Rural Development in TN GA

G-II,

Excellent survey of the events and causes and impacts. Very balanced presentation. I hope you will accept my reblog of your post and my link to your subsequent post.

 

Thanks,

Richard

Sep 18, 2008 01:57 PM #5
Anonymous
Jovan

I have been reading some blogs regarding HR 6694 and where it sits today. It is the 11th hour and it still needs support from us to make it happen. Lets ensure that if the government is going to bail out Wall Street that it at least gives something back to Main Street. One congressman that needs a phone call is David Obey from Wisconsin. Let his office know that you want their support when HR6694 is introduced. 202-225-3365. Call them today! We dont have time to waste.

Sep 26, 2008 03:46 AM #6
Anonymous
Jovan

DPA Reform makes sense because:

* losing DPAQ will cost the economy $150B in housing sales in next 12 months.  Why infuse $300B + $700B and then lose $150B out the backdoor.

* since risk based pricing suggested by the CBO would pay for any losses so....

* it doesn't cost the taxpayers anything

* we have and will spend $1 Trillion on this housing crisis and I am not aware of any other program in either H.R. 3221 or the bailout that doesn't cost the taxpayers anything

* so if we can keep $150B in the economy at no cost to taxpayers and allow low-to-moderate income people to buy at today's low home prices, why wouldn't this be a part of the bailout solution package?

 

Main Street is asking "What's in it for us?" And Congress should make sure that working Americans see some direct benefit from this bill.

 

Contact Barney Frank at 202-225-5931, and Nancy Pelosi at 202-225-4965 today and tell them to include the DPA Reform H.R. 6694 language to the ‘Bail out Bill' and give something back to Main Street.

Sep 30, 2008 05:27 AM #7
Anonymous
Jovan

This report puts alot of negative comments about the cost of DPA to rest. See for yourself the reality of why the program needs to be saved!

http://www.cbo.gov/search/sitesearch.cfm?criteria=H.R.6694

Sep 30, 2008 10:21 AM #8
Rainmaker
275,041
Ken Cook
Content, coding, marketing, host. - Marietta, GA
Content Marketer/Creator

Excellent! I followed a long trail to get here - glad I did. Keep up the fantastic work, sir.

Oct 04, 2008 04:53 PM #9
Rainer
760
Joe Freeman
La Home Inspection Toronto & GTA - Toronto, ON

Ben Engineering  provides consulting engineering services for condominiums and for building owners and help them fulfill their legal obligations and maintain proper condition of their property.

Services that we provide for condominiums include preparing Performance Audit reports and Reserve Fund Studies, which every condominium must do every three years.

Services that we provide for building owners include:

·         Property Condition Assessment – before purchasing or renewing a mortgage for a commercial, industrial or multiplex apartment building;

·         Energy Audit reports for solving energy loss issues in buildings;

·         and Building Science services for consulting about methods of solving problems such as water penetration, moisture, or structural problems.

 

Feb 10, 2009 01:35 AM #10
Rainer
225
krishna kashyap

Very useful inforamtion..

thanks for the post..

Idaho Real Estate

Jul 02, 2009 02:48 AM #11
Anonymous
bloomsoft1


For different programs to earn money

www.earnglobalmoney.info

May 24, 2010 01:06 AM #12
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