The
DPA was eliminated effective October 1, 2008, in the comprehensive housing bill (H.R. 3221) due to political negotiations. It seems every time the government steps in to help during a crisis, political pressure creates a law that does more damage than good. They had to do something about Fannie Mae and Freddie Mac, but at the cost of down payment assistance program; was that wise?
I have copied part of a document that gives statistics on the
DPA program. The truth is currently in Phoenix, 82% of homes sold are now FHA. Let me just tell you FHA disappeared during the boom run up of 2004 to 2006
due to low loan limits and high real estate prices, so they weren't the culprit of this BUST. Back to the facts, of those FHA loans 50% are
DPA loans. What will happen when you remove 41% (82% X 50% = 41%) of the buyers from our market? It can't be pretty, that is our government helping out again.
Many in congress pointed to
DPA as the reason for this bust. NO, the reason for the bust was GREED by people with money running up property values, bank fraud, unlicensed loan officers and the rest of the industry going along. Yes, I mean us Realtors too.
DPA does have a higher failure rate than regular FHA loans. But when 94% of the borrowers pay on time, is that a bad program. It creates
home ownership and pride in the community.
Home ownership is the only way for many people to build wealth and a nest egg for retirement. This again shows how the narrow minded LAWYERS we hire, through our votes, as representatives twist the truth for their own agenda. It is always about ME, ME, ME(or should I say, my special interest, my special interest...). That is why I switched to Independent. I see votes as GREED and MEED, not what is best for our country. That is why no one is
doing anything about: Energy problem, Trade imbalance, Budget
deficit, Medicare, Social Security and Education. Because we are still 15 to 20 years away from those becoming the next BUST for our country! Is the only answer hyper inflation to make these financial issues go away? Our political representatives seem to think so, because that is the only answer right now.
Don't get me going, Just my opinion.
Jeff Cameron
IMPACT OF THE CHARITABLE DPA PROGRAM ON FHA
The Mutual Mortgage Insurance Fund (
MMIF) WILL NOT Require an Appropriation – The
MMIF is the fund that supports FHA’s home mortgage program. A 2007
Congressionally mandated independent actuarial review of the fund shows that from 2007 to 2014 the
MMIF will realize over $1 billion per year and be at three times the statutorily required 2% capital ratio even with a significant number of charitable
DPA gift assisted loans. H.R.6694 will further enhance the fund by requiring higher
FICO scores and increased premiums based on
homebuyer qualification.
FHA Loans Using Charitable DPA Gifts Enjoy 94% Success Rate; Comparable To Other FHA Loans – 94% of charitable
DPA-assisted
homebuyers pay their mortgage without undue difficulty, according to a 2005 study by the General Accounting Office. Specifically, FHA homeowners using gifts from seller-based and other
DPA assistance with 3-year old loans have a 6% and 5% default rate respectively while FHA owners using no
DPA assistance have a 3-4% default rate. H.R.6694 will further enhance the success rate requiring higher
FICO scores for
homebuyers who need
DPA assistance
.
Loans Using Charitable DPA Gifts are 50% of FHA’s Current Annual Volume – The advent of the private sector’s
subprime, zero
downpayment mortgage market caused FHA’s overall mortgage market share (in dollar volume) to decline from 7.87% in 2001 to just 1.99% in 2007 (HUD Actuarial Review). Even though the number of
DPA gift-assisted loans stayed about the same, the drastic decline in the overall number of FHA’s non-
DPA loans means that
DPA gift-assisted loans (from any source) now account for almost 50% of FHA’s total loan volume. Seller-assisted
DPA’s portion of FHA’s current loan volume is 30%. The private sector sub-prime, zero
downpayment market also siphoned off the less risky pool of FHA borrowers – leaving FHA with a larger than usual proportion of higher risk loans -- contributing to an increase in all of FHA’s claim rates. H.R.6694 will continue advancing FHA’s mission to serve low-to moderate-income
homebuyers by reauthorizing and reforming
DPA.
HOW THE CHARITABLE DPA PROGRAM WORKS WITH FHA DPA Program Is Specifically Designed to Meet FHA Borrower Needs – Charitable
DPA programs aid borrowers who meet all the rigorous underwriting requirements with verified documentation to qualify for a FHA-insured loan but have insufficient capital to meet the three percent
downpayment requirement for an FHA loan. Charitable
DPAs bridge the gap by providing this
downpayment as a gift to the buyer, helping those who otherwise could not become homeowners. The
DPAprogram was developed and designed to work with FHA’s specific mortgage requirements to expand
homeownership opportunities to those who can qualify and sustain
homeownership while also serving the population of
homebuyers that is FHA’s mission to serve - minority, low-income, and working families with limited access to capital of whom 80% are first-time
homebuyers.
read more on
Ameridream:
http://www.ameridream.org/Documents/Congress/Support-HR6694-TalkingPoints-8-21-2008.pdf
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