Revised Bill Concerning FHA Down Payment Assistance

Hopefully by now, especially given our latest blog post you understand the impact of H.R. 3221. A bill signed into law by President Bush last week revamping the mortgage industry and more significantly Fannie, Freddie and the FHA lending program. One of the key components of the FHA legislation was the removal of DPA (Down Payment Assistance) from the program. Basically this was a fairly unique program in which the sellers actually made the down payment for the buyers typically built into the sales contract and resulting in an inflated sales price. This was fine as long as the home appraised for the necessary value and has operated pretty well given today's environment.

In my opinion the removal of the program was far more significant than what many people think. Not only do the buyers have to come up with the money out of their own pocket but instead of 3% it is now 3.5%. In a market already starving for buyers this action simply adds fuel to the fire in the ever growing struggle of some normalcy in the housing market. The NAMB (National Association of Mortgage Brokers) and now a couple of U.S. Representatives agree that this change is a mistake. On Thursday July 31st H.R. 6694 was introduced by Al Green (D-TX), Maxine Waters (D-CA), Gary Miller (R-CA) and Christopher Shays (R-CT). This bill aims to reverse or revise the requirements for the seller-financed down payment assistance. NAMB will work in conjunction with Congress to reinstate this vital program that has helped so many Americans achieve the dream of home ownership. Only time will tell whether or not this battle can be won as FHA has experienced significant losses as a result of this particular program.

Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker