To bring you up to speed, the Department of Housing and Urban Development (HUD) hates seller-funded down payment assistance programs. These programs basically allow the seller to pay for part or all of the required 3% down payment on FHA loans, and in the current lending environment it represents the last remaining way to get 100% financing. Unfortunately, loans that utilized seller-funded DAPs have a historical default rate that is almost 3 times the default rate for FHA loans where the buyer walked in with his or her own down payment. So, this is why HUD wants them to go away. In fact, HUD already tried once earlier this year to make DAPs go away – but a judge overturned the rule just the day before it was to take effect.
Anyway, back to the point of this post. HUD has done its homework this time, and down payment assistance will almost assuredly go bye-bye as of October 1, 2008. In fact, some lenders are already coming out and saying the last day to submit a loan requiring use of a DAP will be earlier in September, to allow adequate processing & closing time. The loan must be closed and funded by September 30.
In a time where almost 70% of lending activity today is FHA, it’s really a sad thing to see this assistance program go away. A lot of great first-time buyers will be sitting high and dry for lack of down payment, and now the only source of “assistance” will be through a qualified family member. If you are interested in purchasing a house with 0% down, please contact me right away to become pre-approved. I will point you to any of my great Realtor associates, and we’ll do everything we legally can to get you into a house and closed before the sun sets on this great program.
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As a single mom with a great job but no fat savings account, I am a firm supporter of downpayment assistance. Don’t believe everything you read … it is NOT too late to get your downpayment assistance! I’ve been reading up on this issue and have found some great information from Nehemiah’s website. Members of Congress recently introduced The FHA Seller-Financed Downpayment Reform and Risk-Based Pricing Authorization Act of 2008 (H.R. 6694). If passed and signed into law, this will allow downpayment assistance to continue INDEFINITELY. These programs need our help to get the word out. Visit http://www.DPAGroundSwell.org, a web-based community established to mobilize the growing industry opposition to the October 1 ban on seller-funded downpayment assistance.
Great news for DPA!
According to a recent article by: Matt Carter, Inman News, September 10, 2008:
“HR 6694 … is certain to pass the House of Representatives and has the blessing of the Department of Housing and Urban Development, Rep. Barney Frank, D-Mass., said at a hearing on foreclosures this weekend. The influential chairman of the House Financial Services Committee urged those attending a committee field hearing in Stockton Saturday to lobby the Senate — which shoehorned language banning seller-funded gifts into HR 3221, the sweeping housing bill signed into law July 30 — in support of the bill. Frank said the bill that would give seller-funded gifts a reprieve, HR 6694, has the support of HUD Secretary Steve Preston because it also addresses an issue near and dear to the department’s heart — risk-based pricing. HR 6694 … will pass the House, I can guarantee you. What you want to do now obviously is talk to your senators. We think it will go through there — it has the approval now of the Secretary of HUD.”
We’re making progress here. Don’t give up. Let’s do what Rep. Barney Frank suggested … Contact your Senators TODAY!