| The progression of home sales within the housing | | | | are Nehemiah, Genesis, and Ameridream. In a |
| market is dependent on first time home buyers | | | | nutshell, these non-profit organizations issue down |
| starting the domino affect. Their home purchases | | | | payment assistance to a prospective home buyer |
| are the catalysts that allow people to sell their | | | | and then collect funds from the seller of a home |
| existing home and then move into a new | | | | who has agreed to participate in this program at |
| property such as a larger home, condo or | | | | the time of closing. The non-profit charities charge |
| townhouse. In order to keep the housing market | | | | an administrative fee of between $300 and $500 |
| moving forward, we need to encourage | | | | to facilitate with the assistance of this funding. |
| homeownership at the beginning of the cycle. | | | | FHA sometimes refers to this arrangement as |
| Mortgage programs that are underwritten with | | | | seller funded down payment-which they don't |
| greater flexibility regarding credit, income and | | | | allow. Although the funding is coming from a |
| down payment will create more homeowners. We | | | | non-profit, the FHA perception is that it is actually |
| need mortgage loan programs that allow you to | | | | from the seller, albeit indirectly. The problem |
| buy a home with as little money down as possible. | | | | stems from losses. According to FHA, they have |
| As recently as March of 2008, there were | | | | experienced larger losses on portfolios of loans |
| conventional loans that allowed for 100% financing | | | | that were funded with DPA funds. |
| such as the Home Possible, My Community, and | | | | In fact, FHA hopes to eliminate these programs |
| 80/20 combination first and second mortgage | | | | altogether through the fast tracked housing bill |
| programs. Declining property values coupled with | | | | going through congress now. Time is of the |
| high mortgage delinquencies in all real estate | | | | essence! The senate version-which is the |
| markets have all but eliminated investors for | | | | supported version-will eliminate DPA. What would |
| these types of high LTV loans. In addition, due to | | | | this mean? Let me make this clear-if this bill |
| large losses by private mortgage insurance | | | | passes fewer houses will be sold. More qualified |
| companies (PMI) there is an unwillingness of | | | | homeowners will remain as renters. More homes |
| mortgage insurers to insure these loans. Hence | | | | will stay on the market and the real estate and |
| these loan programs have either been eliminated | | | | mortgage crisis will get worse. DPA funding offers |
| or now require a down payment. With Fannie Mae | | | | a solution to our crisis by making homeownership |
| and Freddie Mac's current financial problems and | | | | possible. If there are problems with the way |
| the overall state of the mortgage markets, don't | | | | things are being done within the current DPA |
| expect that they will be creating any new high | | | | program then let's work on modifying them. Let's |
| loan to value zero down mortgage products | | | | identify solutions-such as raising the minimum |
| anytime soon. | | | | required credit score on DPA funded loans. This |
| Herein lies the problem. Most first time home | | | | would probably lower the defaults and match the |
| buyers lack sufficient resources for the down | | | | underwriting to the risk. Elimination or outright |
| payment and closing costs. They often have good | | | | banning of DPA programs that are currently |
| credit and the ability to make a payment. Until | | | | helping our ailing housing market is foolish. As a |
| they save enough money, they are left out the | | | | Minnesota FHA mortgage broker who works in |
| housing market. FHA loans currently allow buyers | | | | the market on a daily basis, I can tell you about |
| to obtain down payment assistance (DPA) from a | | | | clients who are good people who want to |
| relative or from a qualified down payment | | | | become homeowners. Their shot at owning a |
| assistance provider. This means that buyers | | | | home depends on these programs. Get involved |
| without enough current resources may be able to | | | | and learn more. The consequences of making the |
| obtain enough funds to buy a home today. There | | | | wrong decision about the fate of DPA's will affect |
| are a number of approved down payment | | | | our entire economy. |
| assistance providers-some of the largest names | | | | |