program: Are Downpayment Assistance Programs Bad?
- 10/03/08 07:49 AM
So were (are?) Downpayment Assistance Programs bad? I don't think DAPs are bad in and of themselves. But coupled with additional items from the lender's bags-of-tricks, they likely contributed to a number of defaulted mortgages, including some that will continue to default as adjustment dates and balloons come due. (Click Here to read How a Downpayment Assistance Program Works) Here's why: In many cases, those who got this "help" from down payment assistance programs, unfortunately also bought more home than they should have. They went for the big new home instead of the more traditional "starter" home. In order to buy … (0 comments)
program: Downpayment Assistance Programs (DAPs) or, The "Money-Go-Round"
- 10/03/08 07:37 AM
Downpayment Assistance Programs are being allowed less and less. One "stated" reason is that they likely helped contribute to the breakdown of the real estate market. Here's how a downpayment assistance program (DAP) usually worked: The Seller would give 3% plus some "administration fee"... (sometimes 1% of the Purchase Price) to a "neutral" third party "non-profit corporation"... (Did I mention they sometimes took up to 1% of the Purchase price in exchange for providing a paper and money shuffle?) who would then "gift" that money (well, just the exact amount needed) to the Buyer to use as a Down Payment. … (0 comments)
So were (are?) Downpayment Assistance Programs bad? I don't think DAPs are bad in and of themselves. But coupled with additional items from the lender's bags-of-tricks, they likely contributed to a number of defaulted mortgages, including some that will continue to default as adjustment dates and balloons come due.
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