H. R. 600: A New Bill To Restore FHA Seller Assisted Down Payments
Advertisements
On January 19, Scott Syphax of the Nehemiah Foundation announced that Congressman Al Green has introduced HR 600, a bill to restore seller assisted down payment programs to the FHA loan universe. Here is a link to the press release. I haven’t seen the final bill. It seems to be a “lite” version of H.R .6694 introduced in the last Congress. It reintroduces tiered mortgage insurance premiums, often referred to as ‘risk based mortgage insurance premiums” although this bill does not seem to refer to them that way.
I guess the perfect evidence that this is the same bill is the fact that Nehemiah issued a press release on January 20, 2009 stating that:
According to Nehemiah Corporation of America, the Congressional Budget Office (CBO) confirms that FHA Seller-Financed Downpayment Reform Act of 2009 (H.R. 600) is similar to the previous DPA Bill (H.R. 6694) in that it would not cost the federal government any money for the next five years. This is due largely to the self-funding mechanism that sets premiums based on an individual’s credit scores.
Also according to the press release:
Creating opportunities for homeownership will be the cornerstone to strengthening a crumbling housing market and breathing life back into the economy,” said Mr. Syphax. “With credit scarce and homeownership harder to achieve than ever, the consequences of removing a program that created 50,000 homeowners a month is unfathomable and will likely further devastate the housing market, not to mention communities across the country that have come to rely on these programs. Congress must ensure that the pending bailout of Wall Street does not undercut the important role that consumers play in any economic recovery, not to mention the liquidity programs like downpayment assistance provide at no cost to taxpayers.
It’s for times like these that the government initiated the Federal Housing Association during the New Deal, and its role is as germane now as it ever was,” continued Mr. Syphax. “Washington needs to follow H.R. 600’s lead and see what is so plainly obvious to the CBO. DPA can provide the liquidity and access to homeownership needed to push billions of otherwise lost dollars into the housing market and won’t cost taxpayers, Treasury or the U.S. government a thing. Language is already drafted through a bi-partisan Bill and it has been vetted by the CBO. Now Congress just needs to use it!
I have discussed seller assisted down payment programs at length elsewhere on this site, so I won’t burden you again with a full analysis right now. I know that as prices were going up, I helped many, many people become homeowners using this program. It has been a good thing for those people I personally know. On the other hand, making homes easier to buy with very little sacrifice and preparation, using this program as well as others, contributed to the housing bubble that we are experiencing now. There may be other, more effective methods which can be developed to help people buy up the homes sitting on the market now. Methods which contribute more toward a housing system with a strong foundation which doesn’t experience these bubbles and crashes.
Regardless, whether you support or oppose seller assisted down payment programs, the time has arrived to start paying attention again.
Copyright 2009 – Carl Pruitt|FHA Loan Advice|FHATrainingSource.com
Is Seller Paid Down Payment Assistance Coming Back?
Related posts:
- Are Seller Assisted Down Payment Programs Bad For FHA?
- News Flash – Reprieve for FHA Seller Assisted Down Payment Programs
- FHA Down Payment Assistance – What You Can Do To Save It
- Update: FHA Reform Bill Passes The Senate
- More Down Payment Assistance Confusion!
Tagged with: HR 600 • HR 6694 • nehemiah program • seller assisted down payment programs
Filed under: Down Payment Assistance • FHA Updates • FHA guidelines
Like this post? Subscribe to my RSS feed and get loads more!
our problem is my wife is a RN and does not drive and i am semi retired. Her place of employment is 30 miles each way so when she work one day I drive over 120 miles so she can work. We hand qualified for a FHA loan in the town she worked and a week later we was told we did not qualified for the load as out house in Sacramento was a debit only and not a asset with the rent we could have received. Is there any thing new with rent of a home as a income and not a debt in the works.thanks
I HAVE A QUESTION, I HEARD A BILL (1852) WAS GOING TO HELP BROKERS, THEY KNOW LONGER WOULD HAVE TO HAVE THE COSTLY AUDITS THAT FHA REQUIRES YEARLY. DO WE HAVE A ANSWER TO THIS YET?
ARE BROKERS STILL BEING REQUIRED BY FHA TO HAVE A YEARLY AUDIT?
How do I apply for the down home assistance?
That part of the bill was not in the final law that was passed. They were going to make it possible for brokers to use a bond instead of an audit. Keep in mind though that it is often as difficult to obtain the bond as it is to pass the audit. At the present time, lenders must all submit yearly audits.
The elimination of DPA programs is catastrophic at a time when qualified homebuyers are needed to purchase homes.
The Congressional Budget Office (CBO) estimates that seller-financed DPA will generate $65 million over the next five years and save taxpayers $13 million next year.
Downpayment assistance programs have the potential to add 235,000 more jobs without costing the taxpayers a penny.
Please express your support for H.R. 600 that reforms and restores DPA now by visiting http://capwiz.com/nehemia/issues/alert/?alertid=11709431 . It has a helpful area to compose a message, which will be sent directly to your Senators and House Representative.
Thank you for your time.
At present, there is no seller funded down payment assistance. There are programs on the state and local level. The best place to start looking is with your local housing authority.
Because too many people were abusing the system and buying another home while presenting a fake lease on their former primary residence, HUD had to stop allowing anyone to count rental income on their previous primary residence to offset the payment. One of many instances in today’s mortgage mess where the honest have to pay a price for the scoundrels.
If reinstating down payment assistance (DPA) will help stimulate our desolate housing market, I hope we will all keep an open mind and figure out ways to make the program better. From my vantage point, we need DPA now more than ever.
I have defended DPA many times on here. There are two sides to it all. First, there is no doubt that real estate prices have gone up too fast because too many people were given the opportunity to buy a home. As much as those of us in the real estate/mortgage industries don’t want to believe it, owning a home isn’t a birthright and not everyone is suited for it. People who are loaned the money to buy a home should have demonstrated an ability to live below their means. Owning requires more cash flow than renting. You can’t call the landlord to fix things or maintain the lawn.
Because it has been too easy to buy a home, prices have been artificially increased. A lot of the benefits attributed to down payment assistance programs have been phantom equity increases that weren’t supported by a real economy. The economic reality is that prices MUST come down to solve our countries economic problems. Nothing government does to artificially support prices is going to do anything but delay the pain for a little while. It isn’t a coincidence that prices have fallen at a record level and home sales have then gone up.
On the other hand, I don’t believe that DPAs are the inevitable cause of all the foreclosures as HUD has maintained. All we need to do is use the common sense underwriting FHA is famous for and account for layered risk. If someone puts no money down, but would have substantial reserves if they used down payment assistance, they should be more prepared to own a home than someone with no reserves. We should be very careful of debt ratios with 100% financing. Even people who might end up underwater temporarily with their home loan will keep paying if they have appropriate debt ratios.
Perhaps it is time to come up with an FHA program closer to the VA model?