DPA's Down Payment Assistance Programs - Are they Good?

Our appraisals are so tight I can't get one through anyway.

Richard Baggett

I am not a fan of DPA's they allow people who in many cases should not be buying homes to buy without the investment that will force them to fight for the home if things go bad. That said I do see some value in helping those with their first home...but an investment needs to be made.

DPA's have been abused of late.  Helping people receive the American Dream before they were really ready for it.  You give a man a fish, he eat for a day . . .

They served a great purpose for some and ruined others.  You can't be blamed.

Oh, by the way, these programs will be outlawed in September by the sound of it.

Yup they are good for us but are they the right thing?  I think people need to take the personal responsibility of saving before they own a home.  Owning a home requires that one must be able to budget and plan, these are both lost skills of the now generation.

Take care!

RJH

Hey Steve and Kim - Welcome to Active Rain and congrats on your first post.  Be sure to spend some time looking around at what and how others are blogging here.  It is a great education and lots of fun.  Looks like you're off to a great start...keep it up!

Steve, I believe that there are good programs out there, but I generally do not like the concept since it typically requires that the buyer add the down payment (plus a "cushion") to the sales price which can put our buyers in an upside down position from the time they close on their new home.  I recently blogged about a bad experience with one of the companies you listed above.  You can click on my name, then my blog if you want to read about it.

Richard had a good point as well... it would be hard to get the home to appraise with a significant amount added to the sale price with today's market conditions!

Welcome to Active Rain!!!

Life is GOOD!
Michelle

Welcome to Active Rain. I hope you will enjoy it and learn from it as much as I do. Happy blogging.

Hello, welcome to Active Rain! This seems like a wonderful environment to network as well as learn from others. I hope you enjoy yourself and participate often in the Active Rain environment!

They helped people that lacked ALL financial responsibility, therefore they had NO money at all saved, then our new borrowers started missing payments - go figure!

Not all deals were bad risks, but it looks like MANY were bad.

Welcome to ActiveRain. Congratulations on your first post. Get around and check out the community, you'll quickly figure out how to supercharge your blogging skills. 

 Read this blog post: http://www.activerain.com/blogsview/535552/Three-Mistakes-Newbies-to

Steve and Kim,

As a fellow Northern Ohio person, let me share some of my perspective and opinions.   First, I have used the DPA's Programs and have not had the issues you site regarding the buyers now being in Financial Stress.   Possibly that is because I call myself a more conservative lender.   I let the facts of a buyers credit and income speak for themself and do not try to force things.   With that said, I do support you in not liking the programs but in todays market so many buyers have little or no cash and no sources available to them for the needed downpayments.   In my wishes and dreams, I would like to see congress and HUD authorize 100% financing.   This has been proposed many times and has always stalled.   If you would like to know what it has stalled consider that the DPA Programs charge or collect a fee for their services.   One place I read that over 600,000 buyers were assisted by the DPA programs.   They also estimated the cost on each transcation was only $500.00 on each.   On the Ameridream site they quote they have assisted over 200,000 people.  Now lets look at why the DPA programs are against the elimination of the 501C3 Loophole.     Doing some math, Ameridream has recieved approx $1,000,000,000 (ONE BILLION) dollars and all DPA Programs have recieved approx $3,000,000,000 (THREE BILLION).   Seeing those numbers do you understand why the DPA Companies are against the changes. 

If you can encourage buyers, sellers and other Real Estate Professionals to encourage Congress to allow 100% Financing that would be a good thing.   I believe the changes to the FHA upfront MIP and Monthly fees to create a Risked Based Structure was a move in that direction.   Unfortunatly the bill also put that on hold for about a year. 

Here in OHIO we do have the option to use the OHFA program.  Buyers that qualify for that program can recieve a gift/grant for 3% of the sales price that they can use towards the down payment. (They will have a slightly higher rate, but they still have the funds). 

One final thing, there is speculation that buyers using programs like the OHFA (State Tax Free Mortgage Revenue Bonds - I believe) will not be eligible for the $7,500 Tax Credit/Loan.