Questions, Questions
There’s a lot of uncertainty about where legislation will leave the mortgage market in the next week. With a couple of bills, things could change in a hurry. Until this bill passes – no one knows what will happen for sure.
One thing is for sure, HUD (Housing and Urban Development) does not like down payment assistance programs. Last year they attempted to eliminate the use of Down Payment Assistance (DPA) and Nehemiah was able to win by explaining how they would ‘Discriminate against low income borrowers’ by eliminating the use of the program.
The new bill institutes a lot of great additions (to be addressed in a separate post), however one thing that is overlooked in most summaries is the elimination of down payment assistance.
For reference, the impacts can be found here. It’s bill HR 3221, section 2113. Yea, it’s a long bill.
Oh, Were You Planning On Using DPA?
If you’re currently pre-approved with the use of down payment assistance, it’s important you keep your eyes and ears open. If this bill passes (as it’s expected to as soon as the end of this week), the future is unsure for companies like Nehemiah.
I have to be honest – It bugs me… BIG TIME… to post on the subject with so many questions without answers, but it needs to be known what this can mean. I’ve talked to a long list of industry professionals and nobody really knows what’s going on.
Here are the big questions (after a day of calling everyone I know, there are NO answers yet):
- How quickly will FHA cut off submissions with down payment assistance?
- Will loans that have already been submitted with down payment assistance be able to close?
- What needs to be done to ‘lock in’ the use of down payment assistance now? (Register it?)
Again, tons of questions – no answers. YET.
My Interpretation of the Bill
Based on the language of the current bill, It suggests October 1st, 2008 is the big date. I’m not sure if lenders will tighten their belt before then or if they’ll accept loans that are closing before that date.
I’ll keep you posted.
The bill passed The House today and is expected to get through the Senate and on the President’s desk by the end of the week.
Handy Resources on the Topic
I’m super fortunate to have some great friends in the business. I’ve received a lot of resources on this subject from my friends over at Remax Real Estate Concepts (they deserve the plug, it’s just plain cool they are passing information on to a mortgage lender). If you’re a super cool person with good information, please feel free to contact my team (or you can just click the ‘What Can I Do For You’ button in the top right corner)!
Here’s what I’ve come across this far:
- Library of Congress: Amendment Agreed to by Senate
- Nehemiah’s Live Update’s on the Bill
- Press Release w/ Bill Summary (notice no mention of elimination of DPA)
That’s all for now, I’ve got to go back to going through past client files. There are a lot of old fence sitters that might need to take action soon!
Related Posts
Will DPA Be a Part of the Financial Bill to Save Wall Street?
New Bill Might Save Down Payment Assistance – Bill H.R. 6694
Short On Cash? Take Advantage of Down Payment Assistance
What’s This New Bill H.R. 3221 About?!
Des Moines Real Estate is Ready for Another Tax Credit
Heads Up: New Loan Fees Are on the Way
{ 2 comments… read them below or add one }
I’m feaking out! I just recently entered into a purchase agreement to build my first home on 7/7/2008. Now, I’m a young engineer who has been sucessfully paying off college debt for the last 3+ years and have not been able to save up much money. I was relying on an FHA loan and DPA to help me take advantage of the housing market and get into a house THAT I CAN AFFORD! Because I’ve been paying off debt for the last three years, MY CREDIT RATING IS EXCELLENT!
I have been approved for my loan an am now about to begin construction, but I may be forced to default on my purchase agreement if I can’t now pony up the 3.5% on my own. The House version of Section 2113 contained a statement:
“This subparagraph shall apply only to mortgages for which the mortgagee has issued credit approval for the borrower on or after October 1, 2008.’. ”
This gave me some relief at the time because I thought as long as my loan approval date was before October 1, I was fine…….then I read the Senate version. The Senate ammended the Bill to remove this qualifying statement, and now I’m screwed!
Even though I was talked into signing the purchase agreement and put down my earnest money with the incentive of no money down, that may not be legally allowed by the time I close on the house in November. I was so excited about this Bill…..until I found out what it was really about.
Hey Michael,
You’re definitely not alone. Only time will tell how lenders are going to interpret the new bill once it becomes a law. If you can buy a home that is already completed, you’ll be in good shape. The new construction scenarios are going to be tricky!
You may still have some alternatives. If you’d like to see what else is available, feel free to contact me by clicking on the ‘What Can I Do For You?’ link in the top right corner or you can e-mail me at tyler(at)tylerosbyteam(dot)com.
Thanks for joining the conversation. It nice to hear from Americans who this bill really impacts.