Saturday, January 17, 2009

Urgent!!! HR 600 Will Restore Down Payment Assistance

Up until the Housing and Economic Recovery Act of 2008 was passed, there existed a little known program called Nehemiah Down Payment Assistance. Nehemiah is a charity organization which gives the down payment for FHA loans to the borrowers. This is not a loan, but a gift. The money was donated to the Nehemiah Foundation by the seller, in escrow and then the Nehemiah Group gifted it to the buyer. This worked in a similair way to seller paid closing costs in that it was often "financed" by raising the offer price to compensate. This allowed true 100% financing. Because it was a gift, this met the qualifications for the FHA down payment requirement which was just raised to 3.5%.
The Housing and Economic Recovery Act eliminated this and other Down Payment Assistance (DPA) programs. Today Representative Al Green introduced a new bill H.R. 600 which is a 2009 version of H.R. 6694 which reinstates the down payment assistance by Nehemiah and other DPA groups. They are proposing some reforms, such as a minimum FICO score, but this would dramatically help our markets.
What is often misunderstood in discussing low/no money down loans, is that FHA loan are for people who qualify, they are NOT sub-prime loans. They have to have a job, bank account statements, tax returns....all the old documentation we used to require. They also have PMI (Private Mortgage Insurance). Now with the loan limits much higher in some markets, this has the potential to bring in a whole new group of qualified buyers to the table.
Here is the link to the site DPA Ground Swell 2 I urge all professionals and consumers to support this worthwhile Bill. H.R. 600. If we can get even another 10% into the buyer pool, we can really make some headway toward the recovery of our housing market.
Thank you!!!

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