Part 2 - Down Payment Assistance Rescue H.R. 6694

By
Real Estate Agent with Coldwell Banker Residential Brokerage

With the melt down of Lehman Brothers Holdings Inc., once the fourth-largest investment bank in the US, the buy out of Merrill Lynch by Bank of America, Insurance Giant AIG looking for $40 Billion in "shore up money", and over 117 banks on the FDIC Watch List (source www.cnbc.com), the negative impact to the real estate industry, particularly the conventional lending arena, could be legendary... perhaps more dynamic and life changing than the events of the Great Depression. These turns of events simply reinforce the need to do all we can to convince congress to pass H.R. 6694 before they adjourn for the year on September 26th 2008.

H.R. 6694 provides unprecedented control over how DPA loans are granted to borrowers. H.R. 6694, the DPA reform bill, eliminates all of the concerns HUD stated with DPA during their court hearing in 2007... including any potential impact on the FHA fund.  Brian D. Montgomery, Assistant Secretary Housing - Federal Housing Commissioner attempted to alarm congress and the public during his press conference with the National Press Club when he said, "We had to book an additional $4.6 billion in unanticipated long-term losses, mostly due to the increased number of certain types of seller-funded loans in the FHA portfolio".  No one is certain where Mr. Montgomery is sourcing his number as he never tabled even one verifiable event.  He  might have been suggesting that "unrealized revenue" would be  $4.6, said another way is, if DPA was eliminated HUD could have made that much more in revenue.  However, HUD does not reduce any loan volume due to the elimination of DPA.  What is certain and verifiable is that the most recent independent review on FHA's fund (The Brill Report and The George Town University Report) found that HUD will make a billion dollars a year even with a high concentration of DPA and be at a 6% solvency ratio which is three times the required ratio of 2%.

Remember too that FHA loan limits vary from state to state and sometimes from county to county within each state.  For example the current FHA loan limit in Maricopa County Arizona is $346,250 but in Alaska it is $362,790 and in Hawaii ranging from $618,750 to $793,750.  FHA loans will become the corner stone of home loans, allowing Americans to continue to capture a piece of the American Dream... Home Ownership. 

A final point to be made is that the sponsors of H.R. 6694 along with the many supporters of DPA voted for H.R. 3221 because of the larger and broader impact the comprehensive bill is intended to have on housing.  Their vote for H.R. 3221 was coupled with a recognition and frequent statement that they will come back to fix DPA.  Most notably Barney Frank, Congressman for the 4th District of Massachusetts and Maxine Waters, U.S. Congresswoman for the 35th District of California had a colloquy preceding the passage of H.R. 3221 memorializing in the congressional record that DPA is a good program, was not able to be accomplished in this housing bill but would introduce a bill to reform DPA before Oct. 1.  To that end, they along with Al Green, U.S. Congressman for the 9th District of Texas, Gary G. Miller, U.S. Congressman for the 42nd District of California, and Christopher Shays, U.S. Congressman for the 4th District of Connecticut sponsored H.R. 6694 even before the ink was dry on H.R. 3221.

We have only 11 days left before Congress adjourns for the year.  We MUST do all we can to encourage both the House and the Senate to pass H.R. 6694 and that President Bush signs the bill into law.

BLOG Part 1 - Down Payment Assistance Rescue H.R. 6694

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Anonymous
John

Is this the GAO study you reference?

Title: MORTGAGE FINANCING Seller-Funded Down-Payment Assistance Changes the Structure of the Purchase Transaction and Negatively Affects Loan Performance (June 22, 2007)

Where does GAO make the claim that FHA will be at a 6% solvency rate?

The GAO report states, "GAO made recommendations designed to better manage the risks of loans with down-payment assistance generally and from seller-funded nonprofits in particular. Consistent with our recommendations, HUD recently issued a proposed rule that would prohibit the use of seller-funded down-payment assistance with FHA-insured loans"

 

Sep 17, 2008 12:43 AM #1
Anonymous
Jovan

Saving DPA is one step closer to being a reality!  Join me TODAY in calling some congress people to let them know how important this bill is to the American people and our economy.  We have less than two weeks to make this our voices heard.  Here are 3 very influential congress people that can have an impact on our progress. 

Congressman Steny Hoyer of Maryland:      202-225-4131

Congressman Roy Blunt of Southwest Missouri:       202-225-6536

Congressman John Boehner of Ohio:         202-225-6205 

Let's make this happen!!!

Sep 17, 2008 06:40 AM #2
Rainer
12,332
G-II Varrato II
Coldwell Banker Residential Brokerage - Luke AFB, AZ

Jovan,  Here's an update...  Please send us your eMail address and let us know where else you are posting your comments.

Congressman Steny Hoyer of Maryland:      202-225-4131
Spoke with Rachel who said she would pass our request for support of H.R.6694 to Congressman Hoyer. Rachel also told us that the bill was on the House floor again today and an ammendment to the bill was offered, and a voice vote taken.  She had no more intel than this.

Congressman Roy Blunt of Southwest Missouri:       202-225-6536
Spoke with Maggie who said she would pass our request for support of H.R.6694 to Congressman Blunt

Congressman John Boehner of Ohio:         202-225-6205
Spoke with Erin who said she would pass our request for support of H.R.6694 to Congressman Boehner
Also left a voice mail for Congressman Boehner asking for his support of support of H.R.6694

G-II

Sep 17, 2008 07:50 AM #3
Rainer
12,332
G-II Varrato II
Coldwell Banker Residential Brokerage - Luke AFB, AZ

Hello John... on 09/17/2008 07:43 AM you posted your question, in response to our BLOG and to a GAO report we referenced.  We apologize for the mischaracterization of the sentence you refered to.  We have corrected our BLOG.  I think our revision will help clarify your question and spread a wealth of light on how the IOG and GAO's reports were conducted.  G-II

Sep 19, 2008 12:02 PM #4
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Rainer
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