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Mortgage programs that helped nearly 79,000 people buy homes using government-insured loans last year would be eliminated as part of a broader housing package that Congress expects to pass this week
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the FHA said seller-funded down payments present the single biggest challenge to its solvency. Borrowers who take part in these arrangements go to foreclosure at nearly three times the rate of borrowers who put their own money down
Slowly but surely, sanity is returning to lending standards.
Somebody ought to draw it in crayons for me. If the argument is made that if you cannot come up with a downpayment on your own you're not in a position to handle home ownership then we may agree. But get off y'alls high horses. I don't see much skin being put by the vast majority of first-time homebuyers around my personal reality, who got their windfall down payment from daddy and mommy for their wedding/graduation present. If I had a quarter for every co-worker/peer who got his downpayment from mom and dad, I'd have the downpyament for a house myself. I'm sorry, that's been my experience, every turn I take somebody's in their late 20s is "buying" a house on the shoulders of their parents down payment money. Much more than people getting into option ARMs to get into same house, at least for my age group.
I just don't see any differentiation in somebody's ability to responsibly carry on the burden of a mortgage payment as a function of having the benefactor be some obscure entity versus it being mommy. So again I ask: what skin?!?! Y'all didn't put any skin when pops gave you a down payment. Parental down payments are no different in principle than DPA, without either you'd be in the same boat I am; renting. The difference between myself and my peers, who work the same job for the same length of time, make the same money, and have the same housing cost in their 1500sf 2y.o. 3/2 house as I do in my 30y.o. 700sf 2/1 apt complex, is a mystery 40K that obviously came from their sweat and toil.....gimme a break. But oh they love hiding that fact, it wouldn't help their credibility when they sit up there and point their fingers at us lowly renters, trying to match their parents savings power with 20% their parents income.
They want to ban DPA? I say ban parental down payment...see how well that goes down with folks. My daddy won't give me 40K, who am I to tell Nehemiah he can't be my daddy? Elitist stuff .....
I do not think it is fair for the government to eliminate down payment Assistant.
If they are limiting Down Payment Assistant why not stop closing cost help.
It is the same thing getting assistant from a third party.
Let get this clear. Down Payment Assistant is not coming fromt the Government money it is coming from the Seller proceeds.
This is how Down Payment Assistant works:
A down Payment Assistant company gets the money that they will give to the buyer from the seller at closing plus they charge the seller $500-750 processing fee so really the money is coming from the seller not the Government/Down Payment Assistant company. They are a way for the seller to give the money to the buyer but no directly to the buyer that is their purpose.
DOwn payment Assistant can come out of the closing cost the seller is giving the buyer:
Example: Sales price $200,000
Loan amount $194,000
Down payment of 3% which is $6,000.
The Down payment Assistant company will give the buyer the $6,000 then they charge the seller $6,000 plus procesing fee of $500-$750.00 at closing
I do not know where people get that any of the money is government money. DOwn Payment Assistant programs are Non-profit.
The problem isn't DPA,the problem is people getting loans they couldn't afford.Just because a lender says you qualify for XX doesn't mean you have to get a loan for that amount.And in my opinion the only type of loan there should be is a fixed rate,not these adjustable loans and interest only loans.
If they are limiting Down Payment Assistant why not stop closing cost help.
It is the same thing getting assistant from a third party.
Closing cost help still requires that the buyer put their own money down. Studies show that buyers putting their own money into the deal are less likely to default.
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This is how Down Payment Assistant works:
A down Payment Assistant company gets the money that they will give to the buyer from the seller at closing plus they charge the seller $500-750 processing fee so really the money is coming from the seller not the Government/Down Payment Assistant company. They are a way for the seller to give the money to the buyer but no directly to the buyer that is their purpose.
DOwn payment Assistant can come out of the closing cost the seller is giving the buyer:
Example: Sales price $200,000
Loan amount $194,000
Down payment of 3% which is $6,000.
The Down payment Assistant company will give the buyer the $6,000 then they charge the seller $6,000 plus procesing fee of $500-$750.00 at closing
You forgot the part where the seller raises the price by 3-4% above market value to get the "gift" money to make the sale happen. After the deal is done, there is 0 equity in the house, circumventing the spirit of the FHA's 3% down payment requirement even though via accounting tricks it was technically satisfied..
Tell me this - why does paying a third party to launder the money between the buyer and seller make this plan OK when it's not OK to just give a down payment directly to the buyer? What magical properties does the DPA program have that changes the money from a not-OK source to an OK one? The money's ultimately coming from the seller in either case - how does adding an additional layer of fees make the buyer less likely to default on their effective 0% down loan?
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I do not know where people get that any of the money is government money. DOwn Payment Assistant programs are Non-profit.
I don't know how a group that gets a 10%+ commission to move money from one person to anther can really be called a non-profit, despite what the paperwork says.
FHA loans with DPA have over 2x the default rate as those without. That should be enough said, but...
If "mommy & daddy" put up a chunk upfront, they are also much more likely to help with any shortages down the road too. If you were lending your money would you want someone who has the backing of "mommy & daddy" or someone with no savings who is completely on their own??
Using DPA almost always puts the true loan to value over 100%. Going minimum down with seller paid closing costs puts the true LTV at about 100%.
Then there is also the $600 that Nehemiah 'sucks' out of the deal just for being a clearinghouse.
Lastly, the DPA completely circumvents the guidelines established by HUD.
FHA loans with DPA have over 2x the default rate as those without. That should be enough said
But it goes on to say..... Syphax and the FHA disagree about the most basic statistics on these loans. Syphax maintains that the agency's assessment is skewed. He said it has undercounted the number of loans made while properly capturing the number of foreclosures it has had to pay for -- thus inflating the percentage of bad loans.
All I know is the first home we owned we didn't have DPA and did just fine our second home we got DPA and our payment is $168 less then the first home,not to mention our taxes were seperate on our first home now they are included in our payment.The problem is people buying too much house,just because a bank tells me I qualify for X amount of $ doesn't mean I need to shop in that price range.Instead the thinking should be I can afford this payment a month COMFORTABLY and stick to that. That's what we did,infact our payment is about $200 less a month than we can afford comfortably...Bonus.
Last edited by mystree; 07-24-2008 at 10:39 AM..
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