HUD and Congress ban Down Payment Assistance
Update 08/13/2008
Nehemiah Corporation of America announced the launch of www.DPAGroundSwell.org, a web-based community established to mobilize the growing industry opposition to the October 1 ban on seller-funded downpayment assistance (SF-DPA).
This site enables visitors to directly contact local representatives and offer support for a bill introduced by Representatives Maxine Waters, Gary Miller, Al Green and Christopher Shays on July 31, 2008, that would reinstate SF-DPA. If passed and signed into law, the FHA Seller-Financed Downpayment Reform and Risk-Based Pricing Authorization Act of 2008 (H.R. 6694) will allow downpayment assistance to continue indefinitely.
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UPDATE, 07/31/08
a new bill, The FHA Seller-Financed Downpayment Reform and Risk-Based Pricing Authorization Act of 2008 was introduced by several members of Congress on Thursday, July 31, 2008. Representatives Maxine Waters, Gary Miller, Al Green and Christopher Shays sponsored this bill that if passed and signed into law will allow downpayment assistance to continue indefinitely. “Maxine Waters, Gary Miller, Al Green and Christopher Shays have demonstrated the willingness to understand all sides of this issue and the courage and leadership to follow their conscience. All those who understand the importance of working class American’s having their shot at homeownership, need to work together to encourage our elected officials to pass this bill.”
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Click here to help and contact your local elected officials, http://capwiz.com/nehemia/issues/alert/?alertid=11598811
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Go to this website:
http://www.rallyforhomeownership.org/
..form will go to your local Congressmen and Senators.
CONGRESS MET ABOUT THIS JULY 23rd
HUD has reissued its rule to ban seller-assisted downpayment assistance programs and the charitable organizations that make homeownership a reality for thousands of families across the United States.
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Many Americans would be unable to buy a home
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The government would spend your taxpayer dollars to replace DPAs
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There would be fewer homeowners to add to the tax base and improve communities
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No mortgage options for people who can afford a monthly mortgage payment but do not have enough saved for a downpayment
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The struggling housing market would be negatively impacted
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Sellers would suffer from a smaller pool of potential buyers
MORE ON THIS STORY IN THE WASHINGTON POST
July 23rd, 2008 at 8:54 pm
I hear a part of the bill is a temporary $7500 first time home buyer tax credit for the purchase of any home, and used between April of this year through June of 2009.
July 23rd, 2008 at 9:01 pm
The FHA downpayment is expected to go from the current 2.25% to a minimum of 3.5% and seller funded down payment assistance will be prohibited.
July 29th, 2008 at 12:07 pm
Down payment assistance should be banned when it comes from the seller. HUD discovered that borrowers getting down payment assistance (with no “skin in the game”) were several times more likely to blow off their mortgages than those (with similar demographics) who had to save a little and make a down payment. That hurts their neighborshoods and is unfair to those neighbors who put their own money into property and lost value due to the foreclosures down the street. Some people just should not become homeowners, and if you can’t demonstate the discipline to save even a little you should probably keep renting.
But if the Nehemiah down payment assistance is still allowed HUD should be able to price its loans accordingly, since the addition of down payment assistance makes the loan riskier. Those loans are a big part of why FHA is for the first time unable to cover its losses with the insurance premiums it charges. So now taxpares get to bail out the mess created so home sellers could generate more profits. This is so wrong on so many levels.
July 29th, 2008 at 4:09 pm
With the housing market in such a mess, i don’t mind helping out buyers and sellers with the Assistance programs.
Help save them here,
http://capwiz.com/nehemia/issues/alert/?alertid=11598811July 29th, 2008 at 5:01 pm
First of all I want to make sure that you’re all familiar with the term Hard Money.
Hard Money is Money Loaned to you by private investors, these private investors can be from anywhere but normally the Hard Money lenders would want to work within their own state, so if you’re from California than you want to find an investor in California.
So what type of Hard money loans the Hard Money Lenders will do?
The First type of Hard Money Loans lenders are offering is Construction Hard Money Loan.
In construction Hard Money Loan the Hard Money Lender will loan the borrower the money in stages, example: You own a land in Los Angeles California, on that Land you want to build a house, you have the Plans approved by the city of Los Angeles and you’re all ready to go, now you need a Hard Money Loan because it will be easier to qualify and get the money you need for the construction.
You will call a Hard Money Lender and give your information, the approved plans, your financials, your budgets for the construction(you can get it from your contractor), then lets say the Hard money Lender agrees to Loan you the money you need, but the way the Hard Money Lender will Loan you the money is by stages, and the stages are:
When your Contractor will finish the foundation, the contractor will get paid after inspection that is done by the Hard Money Lender $10,000 for the foundation work. Than when your electrician finishes the electricity in the house, than the electrician will get paid after inspection done by the Hard Money Lender another $7000.
You understand the concept?
Everybody by the completion of the construction will get paid by the Hard Money Lender.
Why the Hard Money Lender do that?
Because he want to have control of the money, private investors know the risks they’re taking but they’re still willing to take these risks only if they have 100% control of the money.
Why Hard Money Lender will choose to Loan money to Investors and not Homeowners?
This is a very good question that a lot of people should know the answer for.
The Hard money Lenders wouldn’t want to have to take a homeowner out from his home because he didn’t make the payments, but with investors it’s different, it’s 100% business and that’s what the Hard money Lenders want- Business.
What type of properties Hard money Lenders will Loan money on?
A Hard money Lender will Loan money to many type of properties: Single Family Residents, Condos, Townhouses, Apartment Buildings, Hotels, Motels, Office Buildings, Shopping Centers and many others.
What hard money Lenders don’t like, it’s Land. It will be very hard to find a Hard Money Lender that will Loan you money on a Land, and the reason is because there is no income to Lands, maybe you can get a Hard money Loan on a Golf Course or maybe a Land that you about to develop something on, but raw Land- Forget about it.
Today Hard money Lenders Loan more money to Commercial Real Estate investors rather then to residential investors and the reason is Less risk.
Today the Residential market is not going up, Values of Homes are actually going down by more than 30%, and every day more foreclosures are coming out on the market, so the Hard money Lenders are smart enough not to participate in taking risks with homeowners.
Commercial Real Estate is still very competitive, investors are still buying properties, remodel properties and build new properties.
The Commercial Real Estate market is still alive just like it was in the residential market 3 years ago, and Hard money Lenders are still in the game, and now they’re busy more than ever because the Banks don’t Loan money that easy to borrowers.
So it’s Commercial Properties rather than residential properties, and Construction Loans.
Good Luck
September 2nd, 2008 at 8:01 pm
[…] by the seller. Example<Ameridream> This new law does not mean that the seller may not provide downpayment assistance to borrowers obtaining FHA insured home loans. Contributions by the sellers will not count as the […]