Down Payment Assistance May Go
On Friday, May 11 The Department of Housing and Urban Development proposed a rule that would prohibit potential home-buyers from taking advantage of down payment assistance programs like Nehemiah and AmeriDream.
These programs will help buyers by offering them grants to help pay for closing costs as well as the minimum 3% down payment required with FHA loans. Typically these grants are offered to low-income buyers who would otherwise be unable to afford the down payment.
The controversy surrounding these down payment assistance programs (DAPs) stems from two facts. The first is simply that home buyers that use DAPs are more likely to default on their loan.
The foreclosure rate on all FHA mortgage loans is around 3%. For buyers who use gift funds for their down payment the foreclosure rate is approximately 6.5%. Both of these foreclosure rates are considerably smaller than other sub-prime mortgage loans serving low to moderate income buyers.
The other issue with DAPs is that they are typically reimbursed by the home seller or builder. This means that instead of haggling over the price of the home, the buyer accepts the initial price of the seller. The seller will reimburse the down payment company and will typically make at least an extra 1-2% on the home.
Some say that builders and sellers are including the down payment assistance into the price of the home, causing inflation of the homes value. The IRS said, a year ago, that many of the down payment assistance programs do not qualify as charitable organizations because the gifts end up benefiting profit seeking sellers.
Down payment assistance programs are used by almost a third of all FHA borrowers, most of which are low to moderate income home buyers.
Instead of getting burned by a predatory sub-prime loan where they are likely to default, they are able to afford a new home and achieve the American dream of home ownership. Scott Syphax, the Chief executive of Nehemiah, has this to say about the new rule, “At the very time that the collapse of subprime is killing access to the American dream, the one program that is a lifeline for working families is marching to the front of the line to shut the last open door.”
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May 15th, 2007 at 3:04 pm
[…] Its very easy to get loans these days with all those down payment assistance which lets those people get home loans who are not really in a situation to carry on paying thier mortgage repayments in the near future as rightly said in an article Down Payment Assistance May Go where the writer gives very logical arguments and I agree with him/her 100%. I browsed through that blog about home loans and found some very interesting facts about FHA 203k Loan it was an eye opener for me as I honestly didint know much about this provision provided by FHA.This loan would enable families to move to newer settlements which are more greener genrally and have better ameneties and attention from the authorities.All in all subprime is passe and FHA loans are the most in thing which would make lives easier for families who are going to take a FHA loan in the near future.If you are looking to get a mortgage any time soon I suggest you have a look at this mortgage loan website first […]
May 15th, 2007 at 7:53 pm
[…] You can also find a lot of great information on FHA loans and FHA Home loan news at the Home Loan Blog. You will also find some very good topics to discuss upon. The FHA Home Loan Blog has many great information that you should know about if you are trying to find a good FHA loan. If you want to stay updated, this blog is the best place to visit often. New developments, like the rules proposed by Department of Housing and Urban Development which may prohibit home-buyers from taking advantage of down payment assistance programs, and Congress is puzzling over home loan reform are worth a discussion and you must keep yourself informed of such updates if you want to get the best deal on FHA Loans. […]
May 22nd, 2007 at 1:34 pm
Has anybody heard if buyers fund aka Neighboorhood Gold is out of business already?
May 24th, 2007 at 7:43 pm
It is true Neighborhood Gold is Dead.
May 24th, 2007 at 8:00 pm
Yeah, I was told that those folks there finally got caught by the IRS. I understand that the guys at FHADPA are next on the IRS list. What they did to AmeriDream was outrageous. How they are not in jail now is a mystery. I just wish that Wyatt guy working with them was not such a sucker. He is pretty smart, but must be very gulliable.
Anyway, the folks at Buyers Fund said that if lenders and buyers want excellent service and do not want to be left in a lurch, contact AmeriDream at www.ameridream.org or e-mail them at info@ameridream.org. You can also call at 866.AmeriDream and a person will answer the call.
Even though they screwed me and keep trying to, I still think that they are the best out there. I should know, I have been inside everyone of these organizations.
May 25th, 2007 at 8:25 am
I just became aware of someone passing themself off as DPA Founder on this website. For the record, whoever is calling themself by that title is not me and I have no idea who this person is.
May 28th, 2007 at 6:30 am
Whoever DAP Founder is, they don’t have a clue as to what they are talking about. First off, the Grant America Program, FHADPA, is not subject to IRS jurisdiction. Next, we didn’t do anything TO AmeriDream except make it the largest DPA in the country and we left it with $20M of which the current management has burned through much of it. AmeriDream was only, “…the best out there.”, because Ryan and I made it that way.
We’re not in jail, subject to any civil lawsuits or any other lies you can fabricate, because we didn’t do anything wrong. John Wyatt is smart and he partnered with the people who made AmeriDream successful. I have talked with David Ahrens at the Buyer’s Fund personally and he said he is not endorsing one organization over another nor are they referring their business to AmeriDream. Moreover, they plan to continue operating until July 3rd.
Therefore, you must be an AmeriDream shill. So stop spreading your lies, acting like you are Don Harris and shut the fuck up. You have made yourself look like the spineless, uninformed ass that you are.
Why are you too afraid to use your real name? Wuss!
Hey Don - What do you want to bet that this is Bob Newman spouting this bullshit? It has to be some loser with too much time on their hands and nothing else to do.
June 3rd, 2007 at 5:52 pm
Is there any down payment assistance that a person can get between now and August
June 13th, 2007 at 1:29 pm
Dave Mac-
Sure, go to www.fhadpa.com
June 15th, 2007 at 12:18 pm
Hey Dirty DON! How’s the Baby?
June 16th, 2007 at 4:14 pm
I never post to these things, but I wanted to publicly say thanks! This artical got me into my home and out of the renting cycle. After reading this I found a site called www.StuntLoan.com that did the down payment assistance. It is like a dream! I never would have thought I could buy a house with NO money in my savings. Thanks for this information, you really changed my life.
Ed
August 16th, 2007 at 2:00 pm
I would like to pipe in about DAP. First I would like to say that my wife and I would not be in a home right now if it wasn’t for Down Payment Assistance. We had jobs, but they just paid the bills and the rent. We wanted to get into a home that we could put much sweat equity into and make it a good investment, but we didn’t have 20% to put down on a home that would not pass a housing inspection. If a home can not pass a inspection (Needs TLC) the lender wants 20%. Also paying $1000 dollars a month in rent would not let us save. The cycle keeps the average american down. Reserving the profitable home purchases for the investor that will trun in into more rental property. America the land of the renters. I found a company www.stuntloan.com that did oyur down payment. They gave us great service and made the whole process happen. Now we pay $400 a month and have increased the value of our home by at least $30,000 or more. Stunt Loan let us get our foot in the door and buy a fix me up. I hope they don’t take this option away and continue to assist the renting cycle that keep many Americans down.