The New Year Brings the Possibility of the Rebirth of Down Payment Assistance Programs.
Category: Real Estate Trends
Published: Tuesday, January 06, 2009
The Housing and Recovery Act of 2008, which was passed by the House and the Senate, was a piece of legislation which addresses housing related issues. On July 30, 2008, President Bush signed this bill into law and by October 1, 2008 it was the demise of down payment assistance programs. A down payment assistance program is one that gifted low income buyers money to cover the down payment for the purchase of homes backed with an FHA loan. This new bill forbids the FHA from insuring mortgages with down payments which have been gifted from private down payment assistance organizations. Many of these programs, like the Nehemiah Corporation of America, are non-profit. The Nehemiah Corporation has helped over 300,000 families get into homes they may otherwise not have been able to purchase.
In addition to getting rid of the down payment assistance program, the bill also calls for an increase in the minimum down payment. Prior to the Housing and Recovery Act of 2008 The FHA required a down payment of 3% of the sales price, this number has increased to 3.5% since the bill has been implemented.
According to Rep. Barney Frank, D-Mass., at a hearing on foreclosures, states that HR6694 is certain to pass. HR6694 is an initiative that would still allow builders to use down payment assistance programs through non-profit groups. Mr. Frank explains that HR6694 is backed by the Department of Housing and Urban Development and is sure to pass in the House of Representatives. Frank continues, "the implementation of HR6694 would automatically allow qualified borrowers with credit scores of 680 or above to use seller-funded down-payment assistance on FHA-backed loans." In mid 2009, HUD will be free to extend the program to borrowers below 620 if the Secretary of Housing determined it could be done without compromising the FHA's insurance which relies on taxpayer subsidies.
Many people are watching to see what the final verdict on down payment assistance programs will be. Subscribe to this RSS feed to stay up to date on trends, news, and advice on real estate.
Oak Tree Realty Group has earned the privilege of selling HUD homes. If you would like to learn more about HUD homes in Murrieta and REO property in Murrieta contact Oak Tree Realty Group at 1-951-973-7177.
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