Not yet. But… things may change!
Rep. Al Green [D-TX] introduced H.R. 600, to revise and reinstate seller-financed downpayments for mortgages for single-family housing insured by the Secretary of Housing and Urban Development under title II of the National Housing Act.
Track the progress of this bill via RSS feed from GovTrack.us or visit the site periodically to stay informed. I’ll also be posting updates here.
Note: This bill is in the first step in the legislative process. Introduced bills and resolutions first go to committees that deliberate, investigate, and revise them before they go to general debate. The majority of bills and resolutions never make it out of committee. We can’t let this happen to H.R. 600.
Like many of you, I believe in this program. If you wish to see it or some semblance of it make it through, thus making seller-funded DPAs a viable option for would be homeowners, then please… Contact Your Congressional Representative today and ask them to keep an eye out for and to support this bill.
I hope you found this post useful! As always, if you or anyone you know is in need of a local Florida mortgage loan originator, I’m your guy. Call me at 888-859-7418 or apply online for your Florida mortgage. We’ll keep you posted and let you know when it’s time to pull the trigger!
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Kevin – Please keep us posted on this – there are many first time homebuyers who could benefit from this when done correctly with a reputable mortgage lender like yourself.
Cyndee Haydon – Clearwater Realtor’s last blog post..Clearwater Real Estate Mortgage 101 – Mortgage Rates versus Fees
Will do, Cyndee! And thanks for the kind words. Winter Haven, Florida is looking at a nice big fat absorption rate of 1 year and 9 months as of right now. We need all the help we can get to bring down some of this inventory!
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I’ve never been a big fan of seller assistance on down payments. I’m of the belief that this does more harm than good. Do we really need to be continuing the practice of loaning money to buyers who can’t save for a down payment? Not even the minimal 3.5% contribution for FHA? Is that seller contribution coming from seller proceeds or being added to the price of the home? Is this really the best way for those buyers to proceed?
Hey Lenny – I hear you, and you have some very valid concerns. The DPA programs as they were set up prior to their October 1, 2008 ending were a bit too lax.
Here’s my take, as I stated over on my ActiveRain blog:
These loans are FHA loans, approved by FHA standards using government guidelines. The new Bill, HR 600 will have tighter credit and lending standards to ensure the right borrowers are qualified and are capable of paying their mortgage.
The mortgage industry at large has been asking HUD for tighter restrictions for years on this program and HUD has consistently refused to provide them. Granted, we don’t hear too much about this fact in the media. So, I understand if folks may not be aware of this fact.
Regarding your point about rasigin home values to fit the DPA model:
I think I speak for all reputable mortgage brokers by saying that home loan amounts will not be increased as a means of reimbursing – if you will – sellers who participate in DPA programs. This practice is dishonest and goes completely against my personal beliefs and values. Again, I think most honest mortgage professionals and Realtors will agree with my take here.
Frankly, I don’t know of a single FHA approved appraiser today who is going to risk their business and career to inflate an appraised value by 6%. It’s just not going to happen. If you know appraisers willing to do this, please turn them in, as they are absolutely contributing to the problem!
Finally, the Congressional Budget Office did its homework and found back in October that DPA programs do not and will not costs taxpayers or the government one single dollar. To the contrary, these programs will help clear up the inventory of those foreclosed homes and actually help raise property values.
Your thoughts, as always, are very much appreciated, Lenny. Thank you so much for taking time to comment. I do appreciate it, sir!
Kevin,
I hear you as well, and I certainly understand that this program can help move some inventory. I just don’t see that it’s a good financial message to assist someone who brings nothing to the table. These would-be buyers have shown (arguably) that they do not have the ability to save with their current income and spending habits while paying rent. A risky borrower to say the least, even considering credit scores. I know we need to keep the market moving, but at what cost?
On another, but related note:
Did you see the news today about about rising default rates for FHA backed loans?
Hey Lenny, regulation is definitely the key, along with Mortgage professionals who are responsible enough to determine whether a borrower will truly be able to balance their existing debt with their new mortgage payment.
Regarding the FHA defaults, can you provide the URL for the article you read? Would love to read it.
As always, I really appreciate your comments. Stop by often, and I’ll be sure to visit your blog as well!
Just passing through, but it would seem that you are correct, Kevin. If the lenders would spend more time in making sure their buyers could qualify for the loan, we would be in the situation that we are in now. HR 600 will at least ask for verification of the FICO score to start with and it doesn’t hurt to make sure that the buyer take a class or two to give them some idea about what they are getting into. I would definitely support something like that