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JanSchrader
84 Posts |
 Posted - 07/24/2008 : 3:30:23 PM
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The Latest On Down Payment Assistance
July 24, 2008
From Jan Schrader:
As you probably know, the House of Representatives passed the housing bill on Wednesday, July 23rd. The bill puts an end to FHA down payment assistance programs (DPAs). It now goes to the Senate for a vote on Friday or Saturday, where it is expected to pass without difficulty. The DPAs were counting on a pledge from President Bush to veto the bill; but in fact, after the addition of the Fannie/Freddie “bailout” provisions promoted by Treasury Secretary Paulson, the President stated he would sign the bill, thus causing the subsequent vote by the House.
IS THIS THE END OF FHA DOWN PAYMENT ASSISTANCE?
DPA has proven to be hard to kill after 3 attempts and two “dates certain” for it to end in the past two or three years. Just like an 11:59 PM death-row reprieve, it has been given added life in each of those situations. There are still many on Capital Hill who understand the value of this important program, including members of the Black and Hispanic Congressional Caucuses as well as others.
What is being learned about the House vote is that some congressmen who were initially against it, voted for it after the addition of the Fannie/Freddie provisions, and felt it was expedient vis-à-vis current market conditions. They realized it was less than desirable in some aspects (like ending DPA), but felt legislative corrections can be made after the fact. As evidence, look at the following quotations:
From C-Span this after noon, some direct quotes form Pelosi, Maxine Waters, and Barney Franks;
· · Pelosi: Regretted that seller funded down payment was not in this bill but would support new legislation to include it.
· · Maxine Waters (Congress woman from California) : Applauded the Fannie and Freddie Bailouts and said, "We did not get the Seller Funded DPA program but my Subcommittee on Housing will start immediately to work on this legislation that we can come back in a few months with a stand alone piece of legislation to do what needs to be done. This is an important Program. This program has helped over 730,000 homeowners between 2000-2007. It is extremely important to helping those who can afford to pay the mortgage every month that cannot afford the down payment to get into the home. It works! it works well and it needs to be understood. We need to put in the Law and do it correctly!
· · Barney Franks Committee Chairman (who issued the compromise to get downpayment assistance removed from HR 3221): Immediately followed Maxine and said, "We were able to postpone the deadline for DPA until Oct. 1, there was also an issue on Risk Based Pricing. I believe we will have both of those resolved in a more flexible way before Oct. 1st so that Seller Financing and risk based pricing appropriately done will not go out of existence".
So it appears DPA has support at some very senior and influential levels. The current bill will likely pass in it’s current form and be signed by the President, so at least on paper, DPAs new execution date will be slated for midnight September 30, 2008. However, with proper support in Congress, there is some likelihood (perhaps in the form of an amendment to some other unrelated bill coming up for a vote soon) that the program will live to fight another day.
The second possibility is that new legislation will not save DPA prior to October 1st, but ultimately get approved in subsequent months. So this would mean a temporary hiatus of DPA for some undetermined period of time, but an eventual come back.
But we can’t be complacent; we need to contact our Representatives and Senators to create as much pressure as possible to keep DPA going. It is a critical tool in a market devoid of creative financing products. In June of this year nearly one-half of all FHA purchase business included a down payment gift. The demise of DPA would have an incredibly detrimental affect on FHA originations. So turn up the heat, and keep the program alive.
That being said, don’t assume your marketing efforts have been in vain; the final chapter of this story is yet to be written. Until it is, I’ll keep you posted.
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mojojojo_1
845 Posts |
Posted - 07/24/2008 : 3:43:58 PM
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| my father is a case study of that bought with dpa in 97 |
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monarchdad
1811 Posts |
Posted - 07/24/2008 : 3:56:08 PM
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| No skin in the game = high default rate, it's a fact. |
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JanSchrader
84 Posts |
Posted - 07/24/2008 : 4:38:59 PM
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| Actually, unlike the subprime zero down programs, statistically the FHA program with down payment assistance was shown to have no higher default than the over all FHA program. When HUD was forced to finally reveal the actual statistics earlier this year is when the federal judge ordered the injunction against the Secretary of HUD so that the DPA programs continued beyond the sunset date of March 2008. Check the facts. |
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tammym
60 Posts |
Posted - 07/24/2008 : 4:51:34 PM
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| " A recent GAO study found that loans with seller-funded downpayment assistance experienced more than double the risk of delinquency than loans with other types of downpayment assistance, and almost three-times the risk of loans with no downpayment assistance. (Additional Action Needed to Manage Risks of FHA-Insurance Loans with Downpayment Assistance, United States Government Accountability Office, November 2005.) " |
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JanSchrader
84 Posts |
Posted - 07/25/2008 : 08:41:40 AM
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| Look at the date of the study you cited 2005. The statistics I'm quoting are from the Federal hearing in March of 2008! |
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Kevin1loan
137 Posts |
Posted - 07/25/2008 : 09:03:58 AM
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The fact of the matter is that if Fannie Mae still backs the loan and gives an approve e on the loan, The CLIENT TODAY IS PROBABLY A MUCH SAFER THAN THE CLIENT FROM YESTERDAY!!!
Think about it,
The person BUYING THE HOME is probably in DECENT SHAPE...
TODAYS Approve Eli is MUCH MORE tougher to get than the FREE WILLINGNESS of it a year ago+...
Doesn't anyone understand that there are DECENT PEOPLE OUT THERE with DECENT CREDIT that just don't make a lot of money...
SURE EASY RESPONSE IS TO GIVE ME THE THAT's THE REASON WE're in this mess to begin with!!! (response)(ok Senator Dodd, you IDIOT!!!)
and my response to something like that is NO... Not just NO but a Hellll NO!!!
here's why...
how many 540 credit scores a 2+ years ago could you get 100% financing.... ohhh yeah, you could get them a home with NO MONEY DOWN...
Well, that's where lies the problem, we gave loans to individuals whom don't pay bills to ANYONE... soooo why is everyone soooo surprised at the HIGH FORECLOSURE RATE....
Fast forward today... NOPE, you can't even come close to getting that same person a loan today... the RESTRICTIONS ARE IN PLACE(not going to happen,
SOOOOOOOOOO If there is a person that DOES PAY THERE BILLS, but doesn't have money to put down.....(are you following me here???)THINK ABOUT IT!!
(LOOK AT THE BIG PICTURE)Because WE NEED THESE CLIENTS TODAY MORE NOW THAN EVER!!!!!
yes, i do understand DPA is nothing more than Smoke and Mirrors, and in Reality, they should just go a strait 100%(on first time buyers) on it and get rid of it all together IF THEY GO 100%!!! If not, KEEP IT...
anywhoo, I'm sure you haters(Dodd Believers... the idiot!!) will be more than happy to bash me, sooo BRING IT!!! |
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tammym
60 Posts |
Posted - 07/25/2008 : 09:31:04 AM
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quote:
Originally posted by JanSchrader
Look at the date of the study you cited 2005. The statistics I'm quoting are from the Federal hearing in March of 2008!
I also read the judges ruling :
http://www.ameridream.org/Documents/HUDRule/HUD-Rule-Vacated-Court-Order-Opinion-3-5-08.pdf
The FHA didn't not come up with the facts to support its case (specifically:
"In conjunction with the FY 2006
Actuarial Review of the Mutual Mortgage Insurance Fund, FHA’s
independent actuaries estimated that the ultimate claim rate for 30-
year fixed-rate purchase loans endorsed in FY 2008 would be
11.04 percent if they did not have seller-funded downpayment
assistance, but 23.06 percent if they did. . . . The difference
between these rates represents the difference between acceptable
and unacceptable levels of risk to the FHA insurance fund.")
The judge said they violated procedural rules in disallowing DPA and that they needed to provide independent review of the statistics in order for them to be relied on by the court. But nowhere do I see that the FHA showed that DPA had no higher risk of default. Maybe you can point me where that might be.
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bestbet123
1577 Posts |
Posted - 07/25/2008 : 09:35:56 AM
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Kevin,
I'm 100% with you on this,it can't go away.It needs to be governed better than in the past , but to just get rid of it will be the last nail in the coffin for all of us.I urge anyone who wants to keep making money in this business to write or call their local senator and give em hell.If we don't lobby to keep it , we are gonna be in serious trouble.Refi's are dead,all we have is purchase money.Not everyone with decent credit has 20% down.
quote:
Originally posted by Kevin1loan
The fact of the matter is that if Fannie Mae still backs the loan and gives an approve e on the loan, The CLIENT TODAY IS PROBABLY A MUCH SAFER THAN THE CLIENT FROM YESTERDAY!!!
Think about it,
The person BUYING THE HOME is probably in DECENT SHAPE...
TODAYS Approve Eli is MUCH MORE tougher to get than the FREE WILLINGNESS of it a year ago+...
Doesn't anyone understand that there are DECENT PEOPLE OUT THERE with DECENT CREDIT that just don't make a lot of money...
SURE EASY RESPONSE IS TO GIVE ME THE THAT's THE REASON WE're in this mess to begin with!!! (response)(ok Senator Dodd, you IDIOT!!!)
and my response to something like that is NO... Not just NO but a Hellll NO!!!
here's why...
how many 540 credit scores a 2+ years ago could you get 100% financing.... ohhh yeah, you could get them a home with NO MONEY DOWN...
Well, that's where lies the problem, we gave loans to individuals whom don't pay bills to ANYONE... soooo why is everyone soooo surprised at the HIGH FORECLOSURE RATE....
Fast forward today... NOPE, you can't even come close to getting that same person a loan today... the RESTRICTIONS ARE IN PLACE(not going to happen,
SOOOOOOOOOO If there is a person that DOES PAY THERE BILLS, but doesn't have money to put down.....(are you following me here???)THINK ABOUT IT!!
(LOOK AT THE BIG PICTURE)Because WE NEED THESE CLIENTS TODAY MORE NOW THAN EVER!!!!!
yes, i do understand DPA is nothing more than Smoke and Mirrors, and in Reality, they should just go a strait 100%(on first time buyers) on it and get rid of it all together IF THEY GO 100%!!! If not, KEEP IT...
anywhoo, I'm sure you haters(Dodd Believers... the idiot!!) will be more than happy to bash me, sooo BRING IT!!!
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bladewig
1 Posts |
Posted - 07/25/2008 : 10:25:27 AM
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The industry needs DPAs.
Instead of closing DPAs down the better solution would be raise minimum scores. |
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