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There was a lot of political finger pointing last summer as the housing crisis deepened. As usual, when the government moved to help the situation they made it worse. In order to pass one of the laws last summer for the bailout, not the $700 billion, there was a concession thrown in. That concession was the elimination of the Down Payment Assistance program.
In my humble opinion, that was a huge mistake. Many pointed to those who had no money invested, as the first to walk away from homes. Being in the trenches, I saw investors that bought 10 homes without the ability to handle one of them being vacant as the first to walk. Does it really make a difference for a home owner if they invested $10K for down payment on a $275K home, when the home is now worth $140K?????
Right now home values are so low in low income areas. This is the time when wealth is created. People with good credit, could buy a home for $60K right now in parts of Phoenix. Their payment would be lower than the rent they pay. We need those buyers today! Who else will buy? The "new" rules make it difficult for investors to buy without paying CASH. Yes, they are buying. I just did a report for a bank on a home in Phoenix, over 60% of the sales are cash. But those investors will only buy at ridiculously low levels, driving our market further down. Furthermore, many of these homes need carpet, paint and appliances. Today's home buyers need cash to repair their new home. The last DPA I personally did was a situation where they had the cash, they wanted to use the money to fix up their new home. It worked perfectly!
HELP OUT NOW, TAKE THE POLITICS OUT AND SUPPORT DPA, DOWN PAYMENT ASSISTANCE. It does affect your home's value and your world. Be part of the solution and stop pointing fingers!
Just MY Opinion!
Jeff Cameron
Below is a copy of an open letter sent to President Obama seeking his support of H.R. 600, the FHA Downpayment Reform Act, recently introduced by Congressman Al Green (D-TX) with bi-partisan support of Representatives Maxine Waters (D-CA) and Gary Miller (R-CA).
January 26, 2009
President Barack Obama
The White House
1600 Pennsylvania Avenue, NW
Washington, D.C. 20006
Dear Mr. President,
Congratulations on your historic inauguration. Your swearing-in was a defining moment in American history – a moment when our nation lived up to its creed that all men are created equal. We wish you and Congress well in these challenging times.
You are aware of the troubles we face in our economy, particularly our housing market. New homebuyers have vanished. Housing starts are at their lowest level in a half century. More than 2.3 million homes stand vacant in our communities. The loss of homebuyers is weighing down the broader economy, hurting home good stores, mom and pop shops, builders, construction companies, and local governments, all of whom depend on a stable housing economy for revenue. Economists across the political spectrum agree: the housing market lies at the root of our economic challenges.
So what can we do? To stabilize the housing market, we are proposing common sense solutions that will educate homebuyers and will give credit-ready homebuyers an opportunity for affordable homeownership and incentivize them to enter the market. We hope you will join us.
You stated in December that, “we need to move past the stale arguments that say low-income Americans shouldn’t even try to own a home.”
We agree, Mr. President. And we are ready to help. At a time when most are proposing solutions that cost the taxpayer money, we are supporting no cost bipartisan legislation in Congress (H.R. 600) to reauthorize and reform downpayment assistance programs funded in part by sellers, also known as DPA, which expired under federal law last year. DPA funding from qualified non-profits helped more than one million creditworthy families and individuals become homeowners from 1998 to 2008, and generated $24 billion in economic activity in just a five year period alone, according to a 2007 study by George Mason University’s Center for Regional Analysis. Further, according to a soon to be released study by Dr. Robert Fountain at California State University, DPA was responsible for creating 235,000 jobs over the past decade and during the twelve months preceding the elimination of DPA helped generate $4.6 billion in local and state tax revenue. These are dollars that state and local economies throughout America have come to rely upon. If this program remains closed, however, more than 300,000 aspiring homeowners – each of whom is deemed creditworthy by the Federal Housing Administration - will be shut out of the home buying process annually and billions of dollars and thousands of jobs will remain out of reach for our local communities. Our economy simply cannot afford this. We respectfully urge you to support H.R. 600, The FHA Downpayment Reform Act.
You stated in your inauguration that we must “ end to the petty grievances and false promises, the recriminations and worn-out dogmas that for far too long have strangled our politics.”
We agree, Mr. President. And we are ready to help. We hope to join hands with your Administration and Congress to find bipartisan support for the policies that will shape our housing market in the future. The past is the past, some people will remain critics of the DPA program and not move past stale arguments that no longer apply; what matters now is our shared pursuit of a more stable economy based on long-term, sustainable homeownership.
You stated in your campaign that we must not repeat “ the cycle of bubble and bust” that has plagued our economy.
We agree, Mr. President. And we are ready to help. To accomplish such sustainable and responsible homeownership, AmeriDream has educated more than 60,000 potential homebuyers over the last decade and will redouble its education efforts in the coming decade. Studies show that homebuyer education programs lead to more successful homeownership. Further, we believe in FHA’s goal to provide safe, sanitary and affordable housing for low and moderate income families. We believe that if more homebuyers of yesterday chose a FHA insured loan, our country would be better off today. We support a suggestion that you made in 2007 to develop a Home Score system, a system to create a simplified, standardized metric for home mortgage allowing prospective homebuyers to easily compare various mortgage opportunities so that an educated and informed homebuyer can make an educated and informed decision. The more successful our homeowners are, the less likely our economy is to be felled by another housing bubble.
Mr. President, we respectfully ask for your support. We encourage you to back H.R. 600, The FHA Downpayment Reform Act, so that creditworthy working class homebuyers may once again stimulate the housing market. The reauthorization of DPA is supported by the Congressional Black Caucus, the Congressional Hispanic Caucus, the National Association of Realtors, The National Association of Mortgage Brokers, the US Conference of Mayors, the National Association of Home Builders, an affiliate of the AFL-CIO - the Labor Council for Latin American Advancement, the National Association of Counties, many other state and local organizations and hundreds of thousands of other Americans who have voiced their support to their elected officials. We urge you to make homebuyer education a central part of you economic recovery strategy. Finally, we welcome your commitment to make petty grievances in our government a part of our past. Simply put, our country can afford no less.
We look forward to working with your administration as we pick ourselves up, dust ourselves off and get back to making responsible and sustainable homeownership for all a priority.
Best wishes to you, your family, and your Administration in these historic times.
Sincerely,
Ann AshburnPresident
BACKGROUND: AmeriDream, a 501(c)(3) charity, was established in 1999 to provide housing-related programs to low and moderate income individuals and families. Our mission is to permit qualified aspiring homeowners, a disproportionate number of whom are first-time homebuyers, minorities, legal immigrants, women headed households, and single-parents, achieve and sustain homeownership. Most significantly, AmeriDream has provided critical down payment assistance to over 250,000 low and moderate income homebuyers, enabling them to purchase their homes without using any taxpayer dollars. In addition, AmeriDream has educated over 60,000 homebuyers through our homebuyer education course; counseled and assisted approximately 1,200 people to retain their home when confronted with mortgage difficulties; and built 168 affordable housing units in our inner cities, most notably in Southeast Washington, DC. To date, AmeriDream has committed over $30 million to projects unrelated to its down payment assistance program.
Showing posts with label Down Payment Assistance. Show all posts
Showing posts with label Down Payment Assistance. Show all posts
Tuesday, January 27, 2009
Tuesday, September 30, 2008
Governments Actions 9/28/08
I received this summary of the Government’s Actions to help the credit crisis from Jeff Rodvien. I wanted to share it with you. I hope this helps answer questions.
Jeff Cameron.
Summary of Trouble Asset Relief Program.
The Emergency Economic Stabilization Act of 2008 (the “Act”) provides the Treasury Secretary with the authority to restore liquidity and stability to the U.S. financial system and to ensure the economic well-being of Americans. As part of this authority, the Treasury Secretary is authorized to establish a trouble asset relief program (“TARP”) to purchase troubled assets from financial institutions under the terms of the Act.
I. Taxpayer Protection Provisions
• Funds Released in Tranches – TARP’s initial $250 billion will be immediately available. Presidential certification to Congress will be required for the next $100 billion. The remaining $350 billion may be made available after the President transmits a written report to Congress detailing the Treasury Secretary’s plan to exercise the remaining authority. Congress must vote to approve.
• Insurance of Trouble Assets – The Secretary must establish a program to guarantee troubled assets in amount not greater than 100% of the amount of the payment of principle and interest on the trouble assets. Premiums to be paid by the financial industry. The details of the program are left to the secretary’s discretion.
• Warrants – The Secretary may not purchase troubled assets unless it receives from the financial institution:
• For listed public companies – a warrant for voting, nonvoting stock or preferred stock. The secretary must agree not to exercise by someone who purchases from Treasury. The warrant must provide the government with reasonable participation in equity appreciation and provide additional protection against loss in sale of the assets. Exercise and type of upside in set by the secretary “in the interest of the taxpayers.”
• Anti-dilution provisions must be included.
• For non-listed companies A warrant for common or preferred stock or a senior debt instrument with a “reasonable interest rate premium.”
• No warrants required for purchases of less than $100M for the duration of the program.
• The final provisions give significantly more discretion to the Treasury.
• The substantial majority of the technical changes suggested by SIFMA and Davis Polk & Wardwell late this afternoon were accepted in the purposed legislation improving the effectiveness of the warrant provisions.
• Pricing and Auction Mechanisms. The Secretary is required to use market mechanisms for purchases wherever possible and to maximize the efficiency of taxpayer resource with auctions or reverse auctions. The mechanics of pricing are left to the discretion of the Secretary altogether the Treasury is required to publish program guidelines on this and other areas on an expenditure basis. The guidelines must be out within 2 business days of the first purchase or, at the latest, 45 days after enactment.
• Recoupment of Taxpayer Losses – Five years after the date of enactment, OMB will report to Congress on the TARP’s net gain loss. If the progress is running a shortfall, the President will be required to submit a legislative proposal to Congress that recoups for taxpayers the amount of the shortfall from the financial industry.
• Exchange Stabilization Fund Reimbursement – Treasury must reimburse the Exchange Stabilization Fund for any funds used for the temporary guaranty program for money market funds.
II. Limits on Executive Compensation
• Direst Purchases – For financial institutions that participate in direct purchases, the executive compensation limits include: prohibitions on senior executive officer compensation that encourages unnecessary risk-taking; claw-back of bonuses paid to senior executive officers based on statement of earnings that prove to be materially inaccurate; and a ban on golden parachutes paid while Treasury holds an equity or debt position in the financial institution.
• For direct purchases, the Secretary also retains significant discretion to impose heightened corporate governance requirements – though the standards are undefined.
• Auction Participants – The executive compensation limits are triggered by purchased assets in a aggregate amount exceeding $300 million in assets in subject to tax deduction limits for compensation limits above $500,000 paid to “covered” employees as well as disallowance for certain severance payments on which certain senior executives are subject to a non-deductible 20% excise tax. In addition the institution is also prohibited from providing, in any new employment contract, for a golden parachute in the event of involuntary termination, bankruptcy, insolvency, or receivership. Further guidance will be issued by Treasury.
III. Independent Oversight and Transparency
• Oversight Board – Composed of (1) chairman of the Federal Reserve Board. (2) Chairman of the SEC, (3) director of the Federal Home Finance Agency, (4) secretary of HUD, and (5) Treasury Secretary. The private sector appointees by Congress from prior draft have been dropped. The Board has authority to review the exercise of authority under the program; make recommendations; report any suspected fraud or malfeasance to the Inspector General; and ensure the politics implemented are consistent with protecting taxpayers and the economic interest of the U.S The possibility of the Board intervening directly to prohibit or limit the Secretary’s actions has been dropped and the oversight is more on policy level.
• Special Inspector General – New independent Inspector General to monitor the Treasury Secretary’s decisions. Inspectors Generals exist in most administrative agencies and usually perform an audit like function.
• Reports – The Secretary must make various reports to congress, including tranches reports and a regulatory modernization report.
• GAO Oversight and Audits – The legislation mandates a GAO presence at Treasury to overseas the program and conduct audits to ensure strong internal controls and prevent fraud, waste and abuse. It will also include a study to determine the extent to which leverage was a factor behind the current financial crisis.
• Transparency – The Legislative also require the online posting of a description, amount, and pricing of assets acquired under the Act within 2 business days of purchase, trade, or other disposition.
• Judicial Review – The standard for judicial review is limited to arbitrary, capricious, abuse of discretion or not in according with law. No injunctions permitted related to purchase of assets, insurance program, management and scale of foreclosure mitigation efforts. Any other injunctions must be considered on an expedited basis. No suits by any financial institution seller unless permitted in the contract with Treasury.
• Regulatory. Requires that the Treasury Secretary implement guidelines and regulations in multiple area including reports, pricing mechanisms and conflicts of interest.
IV. Home Foreclosure Mitigation
• Tax Relief for Certain Homeowners – Under current law, forgiven mortgage debt is not subject to tax through December 31, 2009, The bill extends this tax relief for three years through December 31, 2012.
• Assistance to Homeowners – Requires the FHA, Federal Reserve, and originated before March 14, 2008 and, after consultation with the Chairman of the Federal Reserve Board, any other financial assets that the Secretary determines is necessary for financial stability. For the broader financial assets top apply, Congress must be notified in writing.
V. Miscellaneous
• Definition of Troubled Assets – Includes all mortgage related assets originated before March 14, 2008 and, after constitution with the Chairman of the Federal Reserve Board, any other financial asset that the Secretary determines is for financial stability. For the broader financial assets to apply, Congress must be notified in writing.
• Definition of Financial Institution – It currently covers any institution, including, but not limited to, any bank, savings associations, credit union, security broker or dealer, or insurance company establish and regulate under the laws of the U.S. or any state and having significant operations in the U.S. This covers branches and agencies of foreign banks. It does not on its face cover affiliates of covered institutions, the “including but not limited” will give the Secretary the power to define covered institutions in rules and guidelines.
• Suspension of Mark-to-Market Accounting – Reaffirms SEC authority to suspend the application of mark-to-market accounting rules with respect to any company.
• Public Disclosure – For any financial institution that sells troubled assets, the Treasury Secretary determines whether the public disclosure with respect to derivatives, contingent liabilities and off-balance sheet transaction is adequate to the Secretary will make additional disclosure requirements to the relevant regulators which include the SEC, the OCC and the OTS.
• Community Bank Relief – Community banks that sell Fannie and Freddie preferred stock could treat the gains and losses as ordinary income instead of capital gains. As a result, any losses could be used to offset ordinary income for tax purposes.
Prior Draft Provisions That Were Dropped:
• Bankruptcy cram-down
• Program will not divert revenues to any of the housing funds
• Program will not make foreclosure properties available at a discount to state and local governments receiving emergency assistance
• The “say on pay” requirement is dropped
Jeff Cameron.
Summary of Trouble Asset Relief Program.
The Emergency Economic Stabilization Act of 2008 (the “Act”) provides the Treasury Secretary with the authority to restore liquidity and stability to the U.S. financial system and to ensure the economic well-being of Americans. As part of this authority, the Treasury Secretary is authorized to establish a trouble asset relief program (“TARP”) to purchase troubled assets from financial institutions under the terms of the Act.
I. Taxpayer Protection Provisions
• Funds Released in Tranches – TARP’s initial $250 billion will be immediately available. Presidential certification to Congress will be required for the next $100 billion. The remaining $350 billion may be made available after the President transmits a written report to Congress detailing the Treasury Secretary’s plan to exercise the remaining authority. Congress must vote to approve.
• Insurance of Trouble Assets – The Secretary must establish a program to guarantee troubled assets in amount not greater than 100% of the amount of the payment of principle and interest on the trouble assets. Premiums to be paid by the financial industry. The details of the program are left to the secretary’s discretion.
• Warrants – The Secretary may not purchase troubled assets unless it receives from the financial institution:
• For listed public companies – a warrant for voting, nonvoting stock or preferred stock. The secretary must agree not to exercise by someone who purchases from Treasury. The warrant must provide the government with reasonable participation in equity appreciation and provide additional protection against loss in sale of the assets. Exercise and type of upside in set by the secretary “in the interest of the taxpayers.”
• Anti-dilution provisions must be included.
• For non-listed companies A warrant for common or preferred stock or a senior debt instrument with a “reasonable interest rate premium.”
• No warrants required for purchases of less than $100M for the duration of the program.
• The final provisions give significantly more discretion to the Treasury.
• The substantial majority of the technical changes suggested by SIFMA and Davis Polk & Wardwell late this afternoon were accepted in the purposed legislation improving the effectiveness of the warrant provisions.
• Pricing and Auction Mechanisms. The Secretary is required to use market mechanisms for purchases wherever possible and to maximize the efficiency of taxpayer resource with auctions or reverse auctions. The mechanics of pricing are left to the discretion of the Secretary altogether the Treasury is required to publish program guidelines on this and other areas on an expenditure basis. The guidelines must be out within 2 business days of the first purchase or, at the latest, 45 days after enactment.
• Recoupment of Taxpayer Losses – Five years after the date of enactment, OMB will report to Congress on the TARP’s net gain loss. If the progress is running a shortfall, the President will be required to submit a legislative proposal to Congress that recoups for taxpayers the amount of the shortfall from the financial industry.
• Exchange Stabilization Fund Reimbursement – Treasury must reimburse the Exchange Stabilization Fund for any funds used for the temporary guaranty program for money market funds.
II. Limits on Executive Compensation
• Direst Purchases – For financial institutions that participate in direct purchases, the executive compensation limits include: prohibitions on senior executive officer compensation that encourages unnecessary risk-taking; claw-back of bonuses paid to senior executive officers based on statement of earnings that prove to be materially inaccurate; and a ban on golden parachutes paid while Treasury holds an equity or debt position in the financial institution.
• For direct purchases, the Secretary also retains significant discretion to impose heightened corporate governance requirements – though the standards are undefined.
• Auction Participants – The executive compensation limits are triggered by purchased assets in a aggregate amount exceeding $300 million in assets in subject to tax deduction limits for compensation limits above $500,000 paid to “covered” employees as well as disallowance for certain severance payments on which certain senior executives are subject to a non-deductible 20% excise tax. In addition the institution is also prohibited from providing, in any new employment contract, for a golden parachute in the event of involuntary termination, bankruptcy, insolvency, or receivership. Further guidance will be issued by Treasury.
III. Independent Oversight and Transparency
• Oversight Board – Composed of (1) chairman of the Federal Reserve Board. (2) Chairman of the SEC, (3) director of the Federal Home Finance Agency, (4) secretary of HUD, and (5) Treasury Secretary. The private sector appointees by Congress from prior draft have been dropped. The Board has authority to review the exercise of authority under the program; make recommendations; report any suspected fraud or malfeasance to the Inspector General; and ensure the politics implemented are consistent with protecting taxpayers and the economic interest of the U.S The possibility of the Board intervening directly to prohibit or limit the Secretary’s actions has been dropped and the oversight is more on policy level.
• Special Inspector General – New independent Inspector General to monitor the Treasury Secretary’s decisions. Inspectors Generals exist in most administrative agencies and usually perform an audit like function.
• Reports – The Secretary must make various reports to congress, including tranches reports and a regulatory modernization report.
• GAO Oversight and Audits – The legislation mandates a GAO presence at Treasury to overseas the program and conduct audits to ensure strong internal controls and prevent fraud, waste and abuse. It will also include a study to determine the extent to which leverage was a factor behind the current financial crisis.
• Transparency – The Legislative also require the online posting of a description, amount, and pricing of assets acquired under the Act within 2 business days of purchase, trade, or other disposition.
• Judicial Review – The standard for judicial review is limited to arbitrary, capricious, abuse of discretion or not in according with law. No injunctions permitted related to purchase of assets, insurance program, management and scale of foreclosure mitigation efforts. Any other injunctions must be considered on an expedited basis. No suits by any financial institution seller unless permitted in the contract with Treasury.
• Regulatory. Requires that the Treasury Secretary implement guidelines and regulations in multiple area including reports, pricing mechanisms and conflicts of interest.
IV. Home Foreclosure Mitigation
• Tax Relief for Certain Homeowners – Under current law, forgiven mortgage debt is not subject to tax through December 31, 2009, The bill extends this tax relief for three years through December 31, 2012.
• Assistance to Homeowners – Requires the FHA, Federal Reserve, and originated before March 14, 2008 and, after consultation with the Chairman of the Federal Reserve Board, any other financial assets that the Secretary determines is necessary for financial stability. For the broader financial assets top apply, Congress must be notified in writing.
V. Miscellaneous
• Definition of Troubled Assets – Includes all mortgage related assets originated before March 14, 2008 and, after constitution with the Chairman of the Federal Reserve Board, any other financial asset that the Secretary determines is for financial stability. For the broader financial assets to apply, Congress must be notified in writing.
• Definition of Financial Institution – It currently covers any institution, including, but not limited to, any bank, savings associations, credit union, security broker or dealer, or insurance company establish and regulate under the laws of the U.S. or any state and having significant operations in the U.S. This covers branches and agencies of foreign banks. It does not on its face cover affiliates of covered institutions, the “including but not limited” will give the Secretary the power to define covered institutions in rules and guidelines.
• Suspension of Mark-to-Market Accounting – Reaffirms SEC authority to suspend the application of mark-to-market accounting rules with respect to any company.
• Public Disclosure – For any financial institution that sells troubled assets, the Treasury Secretary determines whether the public disclosure with respect to derivatives, contingent liabilities and off-balance sheet transaction is adequate to the Secretary will make additional disclosure requirements to the relevant regulators which include the SEC, the OCC and the OTS.
• Community Bank Relief – Community banks that sell Fannie and Freddie preferred stock could treat the gains and losses as ordinary income instead of capital gains. As a result, any losses could be used to offset ordinary income for tax purposes.
Prior Draft Provisions That Were Dropped:
• Bankruptcy cram-down
• Program will not divert revenues to any of the housing funds
• Program will not make foreclosure properties available at a discount to state and local governments receiving emergency assistance
• The “say on pay” requirement is dropped
Tuesday, August 26, 2008
TAKE ACTION FOR DOWN PAYMENT ASSISTANCE TODAY
Here is a link to send a letter to your representatives about down payment assistance. Click the link below and put together an email in your own words. Act now before the special interest groups win this fight.
http://takeaction.supporthomeownership.com/ahaa/issues/alert/?alertid=11521436&PROCESS=Take+Action
My letter is below:
Thank you for using Association for Homeowners Across America (AHAA) Mail SystemMessage sent to the following recipients:
Governor Napolitano
Representative Mitchell
Senator Kyl
Senator McCain
Representative Kavanagh
Representative Reagan
Senator Allen
August 26, 2008
[recipient address was inserted here]Dear [recipient name was inserted here],
You must understand there were very few FHA loans from 2004 to 2006 due to high home values and low FHA loan limits. They did not fuel this boom bust event, GREED did! Today, 82% of home sales in metro Phoenix are FHA loans and 50% of those are down payment assistance, DPA. The first time home buyer was locked out of the market due to the boom. They are now saving the market as they buy homes at pre-boom pricing. What will happen when 41% (82% X 50%) of the home buyers are removed from our weak market????? This is the best time to let these kind of buyers into the market. Home values are below the cost to build a home, not counting the land. They will have equity as the market strengthens. REINSTATE DPA program for the good of ALL the AMERICAN citizens!
Sincerely,
Jeff Cameron
480-502-7699
http://takeaction.supporthomeownership.com/ahaa/issues/alert/?alertid=11521436&PROCESS=Take+Action
My letter is below:
Thank you for using Association for Homeowners Across America (AHAA) Mail SystemMessage sent to the following recipients:
Governor Napolitano
Representative Mitchell
Senator Kyl
Senator McCain
Representative Kavanagh
Representative Reagan
Senator Allen
August 26, 2008
[recipient address was inserted here]Dear [recipient name was inserted here],
You must understand there were very few FHA loans from 2004 to 2006 due to high home values and low FHA loan limits. They did not fuel this boom bust event, GREED did! Today, 82% of home sales in metro Phoenix are FHA loans and 50% of those are down payment assistance, DPA. The first time home buyer was locked out of the market due to the boom. They are now saving the market as they buy homes at pre-boom pricing. What will happen when 41% (82% X 50%) of the home buyers are removed from our weak market????? This is the best time to let these kind of buyers into the market. Home values are below the cost to build a home, not counting the land. They will have equity as the market strengthens. REINSTATE DPA program for the good of ALL the AMERICAN citizens!
Sincerely,
Jeff Cameron
480-502-7699
DPA, DOWN PAYMENT ASSISTANCE, SHOULD NOT GO AWAY
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 DPA
program 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
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 DPA
program 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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