Revived Plan Could Boost Home Sales
With a new administration at the helm, a Texas congressman aims to revive seller-funded housing down-payment assistance -- a campaign that, if successful, could jump-start stalled sales and offer ailing home builders a glimmer of hope.
Rep. Al Green, D-Texas, is championing HR 600 to reinstate a program that the government, concerned about default rates, halted in the fall. "We didn't have to end it; we could have amended it and maintained it," Rep. Green said.
Prior attempts to rescue down-payment assistance, or DPA, have failed. But as the housing market's pain worsens, DPA supporters say a return is necessary.
It is a "cornerstone to strengthening a crumbling housing market," said Scott Syphax, president and chief executive of Nehemiah Corp. of America, which had been the largest DPA provider.
Until Oct. 1, a third party, typically a nonprofit such as Nehemiah, could fund a buyer's down payment and be paid back by the seller. That let buyers take advantage of mortgages backed by the Federal Housing Administration, which previously required a 3% down payment. (It is now 3.5%, but still lower than the 20% some lenders require.)
Critics have argued the programs contributed to the real-estate bust by helping people buy homes with little or none of their own money, fueling defaults.
Write to Dawn Wotapka at dawn.wotapka@dowjones.com
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I hope the DPA does come back in some form. It has severly limited the buyer pool that is able to purchase the huge inventory of listings that are sitting on the market.
Maybe in order to help buyers seeking DPA, mortgage brokers and Realtors should have to take a class on how to help these people. It wouldn't be the answer to everything, but maybe help up better educate people before they get into what is considered a high risk loan.
Better yet, lets make the buyers take the class too before they can close.