Two weeks ago a bill was introduced to reinstate seller-funded downpayment assistance. With all the focus on the stimulus package, it's important to keep our eyes on some of the other bills being introduced that can also work towards stimulating the economy, especially in the key area of housing. The FHA Seller-Financed Downpayment Reform Act of 2009 (H.R. 600) is a bi-partisan bill that would reform seller-funded downpayment assistance (DPA). H.R. 600 is the 2009 version of last year's bill H.R. 6694. This bill would restore downpayment assistance programs for qualified homebuyers who need just a little bit of help to buy a home.
A report issued by the Congressional Budget Office (CBO) confirms that H.R. 600 would not cost the federal government or taxpayers any money. In fact, the Congressional Budget Office estimates that seller-financed DPA will generate $65 million over the next five years and save taxpayers $13 million next year.
Reinstating DPA could help ensure continued liquidity in the stagnating housing market by providing aid to an estimated 600,000 working-class people for home purchases next year, generating $150 billion in home sales. The latest version of DPA has toughened credit requirements, increased mortgage insurance premiums and made other improvements to safeguard against unqualified homebuyers.
Having been in real estate for many years, we have seen first-hand the benefit of seller funded downpayment assistance programs such as Nehemiah. Many credit worthy first time home buyers can afford a home, but have trouble coming up with such a large amount upfront for their downpayment. This program has helped many buy a home and succeed at homeownership.
Click here to view HR 600.
Labels: downpayment assistance, DPA, hr 600, nehemiah
If you are struggling to save for a down payment, there are two government-run programs that are designed to help. The Federal Housing Administration (FHA) offers mortgage insurance that allows qualified buyers to purchase a home with a 3% down payment, and that down payment may be entirely a gift. Also, the U.S. Department of Veterans Affairs has a home-loan guarantee program that will help military veterans buy a home with no down payment. You may also be able to find a down payment program that offer grants and low-interest deferred-payment loans and are run by state or local housing authorities.
There are also down payment assistance programs offered by private organizations, such as Nehemiah Corp. and AmeriDream, two of the largest. These organizations convert money contributed by the seller into the buyer’s down payment and assist with seller concessions. They use the seller’s equity to fund a grant which allows the buyer to buy with no money down.
The FHA has tried, unsuccessfully so far, to ban using private down payment assistance programs in conjunction with FHA loans, since FHA-insured loans that used these programs had a higher rate of default and foreclosure than loans that didn’t use private assistance, according to an FHA study. “FHA loans made to borrowers relying on ‘seller-funded down payment assistance’ go to foreclosure at three times the rate of loans made to borrowers who make their own down payments,” stated FHA Commissioner Brian Montgomery in a May 2008 speech. Alternatively, the private down payment assistance industry believes strongly that the government shouldn’t restrict access to home ownership.
Talk to your bank or lender today to find out which programs or loans are right for you. You may be surprised at what you can do. There are some great homes at great prices on the market today, and we'd love to help you start looking for the right home today!
Labels: ameridream, assistance programs, down payment, FHA, nehemiah, VA
Seller-funded downpayment assistance on Federal Housing Administration loans could get a second life under a bill introduced by Rep. Al Green, D-Texas, that also authorizes the FHA to charge risk-based premiums. The Green bill would repeal sections of the recently passed housing bill that bans seller-funded downpayment assistance and institutes a 12-month moratorium on risk-based pricing starting Oct 1. The bill (H.R. 6694) would require the FHA to charge higher mortgage insurance premiums for homebuyers with credit scores below 680 that receive seller-funded downpayment assistance from nonprofit groups, such as Nehemiah Corporation of America and AmeriDream. Borrowers with credit scores below 620 would be charged risk-based premiums. "I have introduced this bipartisan bill to revive this critical program under new standards that will effectively balance the risk of potential foreclosures with the goal of increasing homeownership," Rep. Green said. The Texas congressman introduced the bill on July 30 just before the House adjourned for the August recess. (source: National Mortgage News)
Labels: ameridream, downpayment assistance, FHA, hr 6694, nehemiah, seller funded
Excerpt from Washington Post Article below. To read the full article click on following link:
Congress Is Set to Limit Down-Payment AssistanceBy Dina ElBoghdady
Washington Post Staff Writer
Mortgage programs that helped nearly 79,000 people buy homes using government-insured loans last year would be eliminated as part of a broader housing package that Congress expects to pass this week, key lawmakers said.
Under these programs, nonprofit groups provide buyers with money for down payments. Home sellers then reimburse the organizations and pay an administrative fee. More than half a million people have bought homes this way in the past decade using loans insured by the Federal Housing Administration.
But the FHA said seller-funded down payments present the single biggest challenge to its solvency. Borrowers who take part in these arrangements go to foreclosure at nearly three times the rate of borrowers who put their own money down, according to the agency.
Labels: congress, fannie mae, freddie mac, limit down payment assistance, nehemiah
