As some of you know the Down Payment Assistance programs offered by FHA were on the verge of being shut down. Something like 30% of all FHA government loans were done with downpayment assistance programs. The two most popular non-for-profit’s, Nehemia and Ameridream, were in question of whether or not they actually were non-for-profits and if they deserved to stay afloat.
Well i’ll just copy and paste the email I recieved the other day…
August 1, 2008 Last night, Congress introduced bipartisan legislation, H.R. 6694 <https://www.ameridream.org/Documents/Congress/HR6694.pdf> that would reauthorize and reform charitable downpayment assistance. This bill would remedy a harmful provision in the new housing law which limits homeownership opportunities for low and middle-income Americans. The legislation, sponsored by U.S. Reps. Al Green (D-TX), Gary Miller (R-CA), Maxine Waters (D-CA), and Christopher Shays (R-CT) reauthorizes and reforms charitable downpayment assistance funded in part by sellers, which has helped over one million families and individuals become homeowners since 1999. The program was eliminated by legislation signed by President Bush on July 30, 2008. The Green-Miller-Waters-Shays plan would re-authorize and reform non-profit downpayment assistance and secure it as an allowable source for FHA borrowers. The bill seeks to ensure that providers of the downpayment assistance operate in a transparent manner to guard against conflicts of interest. The bill also includes language to ensure that FHA maintains its financial stability by permanently authorizing the Secretary to assess higher premiums to higher risk borrowers. It is important that you contact your elected officials in Congress and tell them that you support downpayment assistance and urge them to support H. R. 6694. To reach your elected officials, please call the US Capitol Switchboard at 202.224.3121. To learn how you can support it, visit http://www.supporthomeownership.com <http://takeaction.supporthomeownership.com/ahaa/issues/alert/?alertid=11521436> . AmeriDream continues to be your trusted advisor, bringing timely and accurate information when you need it most. Thank you for your continued support and confidence.
We at Ford Financial pledge to always give you the real deal, up to date information about your home mortgage and the benefits/downfalls that come with it. Contact us today if you have any questions!!
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September 8, 2008 at 8:24 pm
Mike
Can you explain why it is a good thing to get people into homes at artificially inflated prices with DPA? Wouldn’t it be much better for those same people if home prices were allowed to settle to more affordable prices, to price levels they would have been at had it not been for the frenzy of buying that risky loans created. You aren’t doing anybody a favor by keeping home affordability low by keeping prices high. Sure, it helps some people to get into a home now, but it doesn’t necessarily help them or anybody else get into an affordable home.
September 8, 2008 at 11:47 pm
fordfinancial
Mike, I definitely appreciate the comment!
Technically speaking there really is no difference in what Down Payment Assitance programs do and say if the seller were to give the buyer the money to put down on a mortgage. To help you understand whats happening better, the DPA program (nehemia or ameridream) gifts the down payment anywhere between 3-9% of the value. Then the seller takes the profit from the sale of the house and gives it back into the ameridream/nehemia “pool”. It is made for people that just dont have the money saved up (ex. people that pay high rent)
It is controversial because you really should have money of your own to put down and that DPA programs really aren’t Non-Profit. They collect 500 dollars on every transaction.
An example for why DPA is good.. I helped a lady renting a home from her landlord who wanted to sell the home. She had no money saved up. But her monthly income was good. DPA allowed the landloard to get the money he wanted and he didn’t have to kick out his tenant. Her monthly mortgage payments came out to the same amount of money she was paying in rent after she recieved her tax returns (as you might know there are tax breaks for actually being a home owner). So now she stays in the home AND shes building equity.
September 18, 2008 at 10:07 pm
First time homebuyer
Plus for a person like me. So instead of talking the seller down on the price of the home I offer what they are asking but for a downpayment instead. In this instance for my $270.000 home I pay about $50 extra a month. Which is well worth it to not throw my money away to the landlord, I get a tax break and I no longer have to share a bathroom with my two kids and they no longer have to share a bedroom. The seller gets his home sold so everyone is happy!!