No down-payment help, no housing recovery
Letters to the Editor
By Inman News, Tuesday, September 16, 2008.Re: 'Congress weighs reprieve for seller-funded gifts' (Sept. 9)
Dear Editor:
With the passage of HR 3221 on July 30, SFDPA programs will end on Oct. 1. HR 6694 has been introduced to un-ban the SFDPA programs.
FHA claims that the elimination of SFDPA programs will stop 300,000 first-time home buyers from buying a house in the next 12 months nationwide. Conservative estimates show that for each first-time home-buyer purchase, 10 more purchases result from it within 12 months. That's 3 million home sales that won't happen because of the ban on down-payment assistance in the next year. Since California accounts for 10 percent of that number, that equates to 300,000 less sales per year in California. This does not take into account the hundreds of thousands of other buyers who aren't first-time buyers who use SFDPA to buy a house.
FHA "pulled the wool" over the eyes of Congress by showing them the staggering statistics for 100 percent financing in order to get SFDPA programs banned. The problem is FHA showed them the stats for stated-income, no-doc, 100 percent, subprime loans that had huge rate increases and prepayment penalties, not full-doc, FHA, 97 percent loans with SFDPA. Now it looks like Congress has realized its error and is attempting to correct it with HR 6694.
If you want to see this country pull out of the housing and mortgage crisis we are in, you need to encourage Congress to pass HR 6694. If HR 6694 does not pass, the impact on the country will be devastating for many more years to come.
Arnie Leis
Loan consultant
Rancho Mirage, Calif.
Dear Editor:
It is essential to keep the down-payment program in effect. Many of the buyers in our area don't have the required funds available for down payment, but are able to make the monthly payments -- and do -- without defaulting. Most of the time these are the people who take the best care of their property and are the most grateful for the opportunity to own their dream home.
David Munroe
Broker
Century 21 McDonald Realty
Great Falls, Mont.
***
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Submitted by chis eliopoulos on September 16, 2008 - 12:46pm.
I do NOT think passing this bill is a good idea.
Regardless the luck of projected sales expressed in this article one has to see the big picture.
With that program we will end up to again to 100% financing.A great part of the problem that brought the market down was easy to obtain "cheap" financing and over leveraged transactions.
When that happens (and will happen again) the governement is balling out the players of that industry (see Fannie and Freddie).That costs the tax payers money.
It is my opinion that this is a form of industry welfare and I have no interest paying for it as a tax payer.
I will care less if a broker sales more houses.That makes the broker money not the tax payer.
I'm hearing for years how home equity is fueling the economy. This is the greatest BS story ever told.It is actually a pyramid.
Fueling and economy with borrowed money instead of disposable income is insane.The 90s and now is the proof of that.Now this bill wants to assure that is going to happen again.This is the time to say no to industry welfare,no to banking corrupt practices and structure a different model that will safe guard all.
Submitted by Jillayne Schlicke on September 16, 2008 - 12:57pm.
Regular FHA loans required a 3.5% downpayment.
That itself is not very much of a cushion if we're expecting home values to continue to drop throughout 2009 across the U.S.
Having zero equity is a huge risk factor for default and foreclosure.
Reinstating DPAs do much to prop up the housing market today but can we think beyond our next paycheck and imagine what would happen if the FHA insurance program goes under?
People, the ENTIRE 3.5% downpayment for an FHA loan can be a gift from a relative.
Let's keep FHA alive for a long time.
We must kill all DPA for good.
Submitted by Sean OToole on September 16, 2008 - 12:59pm.
Down payment assistance is a farce. Why ask our congressman to allow these funky non-profit gifts? Why not just be honest and ask for taxpayer insured (FHA) 100% financing - which is in reality all that DPA accomplishes?
Sean O'Toole
Founder / CEO
ForeclosureRadar.com
Submitted by Tamara Heyward on September 16, 2008 - 1:00pm.
Not sure about the math in the letter from Mr. Leis' letter. How does one first time homebuyer purchase lead to 10 more purchases in the next 12 months?
I do believe, as Mr. Munroe asserts, that there are people that have the ability to make monthly payments even if they can't save a large down payment, and that those people often take the most pride in their homes.
What scares me is looking up sales data in the MLS and seeing almost every sale in a neighborhood made possible with SFDPA. The SFDPA is often tacked on top of the sales price because - you guessed it - the seller made no downpayment when they bought and has no equity to give the buyer. This artificially inflates sales prices. And how is a neighborhood full of 0% equity owners anything more than a glorified rental neighborhood?
Submitted by Mack Perry on September 16, 2008 - 1:07pm.
Passing this legislation is only part of the battle.
There needs to be a companion bill in the Senate and I don't believe one has been introduced as yet. I wrote about this on my blog last week. Here ia a link to the article: http://www.mackperryhomes.com/down-payment-assistance-getting-cpr/
William M "Mack" Perry
http://www.mackperryhomes.com
Submitted by Benjamin Dona on September 16, 2008 - 4:44pm.
There's absolutely nothing wrong with the DPA programs when they are used as they were originally intended. Now that the industry is getting back to using more reasonable underwriting standards, a few thousand dollars help to buyers who are qualified to purchase a home should be seen as a good thing.
Florida Home Loans | Southwest Florida Blog
Submitted by Wenceslao Fernandez Jr, BS, Realtor, CDPE on September 16, 2008 - 8:46pm.
I feel there's a place for DPA in our society. However, I also feel that these programs should be implemented after buyers have passed certain program to learn about money, finances, savings, and whatever else will raise their awareness about money management.
Certainly 3.5% is a low downpayment when you consider that most other folk, in normal, pre-craziness days, had to come up with 10% or walk.
With the downpayment required coming from a family gift in part or in whole, there is no reason someone can't save this money. If you are not able to do so, then perhaps this buyer is living above their means and any slip will bring them to catastrophe since they have no cushion.
Do we really want to prolong this market? Do we want it back once its over? This is cyclical enough as it is, let's not make it worse by making hasty choices today, that offer no foundation for tomorrow.
Let FHA be FHA and let's not pervert it too.
www.MiamiRealEstateKing.com
Certified Distressed Property Expert
Miami-Dade County, Florida.