It would appear that the fall of the NHF program was due to the instigation of the HFA’s. So they have HUD kill a true DPA and you won’t believe what they give us instead.
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"HFAs Kill NHF and Give us This?"
To DPA or not DPA? ….. that is the question. Regardless of the label(name) of the product and the state in which it may exist, the disconnect I see is with the agents. Most will turn their nose when an offer is presented where the buyer is utilizing some form of DPA.
Yes, MD may have its flaws and yes AZ appears to have the highest number of available DPA options, but on a scale of total originations -just how many deals are DPA deals? A borrower who gets in a house with close to zero, and even with the aide of the DPA is truly just barely getting in. As a lending community are we setting them up for success by providing them an almost 100% loan? When we see the profile that exists- little to no savings, adding MCC to offset ratios, and at times even having to help the borrowers attain the minimum required score through means of rescoring, repairing, etc…im all about promoting homeownership. But some of these state HFA’s don’t really give the borrowers the best help they deserve. Yes, so they get funds to close the gap on needed funds for their down payment — but the first mortgage is often priced .250-.375% higher than the open market. Where’s the love with that???
As usual, you guys don’t fully understand the situation here. NHF, which you describe as a “private” organization, was actually created by a local government entity in California, and was using a dubious interpretation of FHA’s policy on government DPA programs to offer DPA as a government entity. Further, and this was the issue HUD addressed, they were utilizing their “government” status in CA to offer DPA nationwide. HUD’s position was that for purposes of its government DPA programs an entity cannot operate outside of the jurisdiction in which it has governmental authority. HFAs can’t typically operate outside of their state boundaries, and therefore, don’t overreach their authority. In short, HUD said that an entity’s eligibility as an “instrumentality of government” (HUD’s terminology) only extends to the boundaries in which it has governmental authority. e.g. An instrumentality in CA cannot take the authority granted to it by the State of CA or a county in CA to operate in Texas or Delaware without being granted government instrumentality authority by the new state in which they propose to operate.
NCSHA is just an industry organization – like MBA. As such, it does not operate any DPA programs or engage in any other types of lending. But they do advocate on behalf of their members – just like MBA. HFAs have varying corporate structures – some are actually part of state governments; others are independent quasi-governmental nonprofits. Either way, they all have as their mission serving low- and moderate-income borrowers in their respective states.
I hope these facts are helpful in better understanding this issue.
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To DPA or not DPA? ….. that is the question. Regardless of the label(name) of the product and the state in which it may exist, the disconnect I see is with the agents. Most will turn their nose when an offer is presented where the buyer is utilizing some form of DPA.
Yes, MD may have its flaws and yes AZ appears to have the highest number of available DPA options, but on a scale of total originations -just how many deals are DPA deals? A borrower who gets in a house with close to zero, and even with the aide of the DPA is truly just barely getting in. As a lending community are we setting them up for success by providing them an almost 100% loan? When we see the profile that exists- little to no savings, adding MCC to offset ratios, and at times even having to help the borrowers attain the minimum required score through means of rescoring, repairing, etc…im all about promoting homeownership. But some of these state HFA’s don’t really give the borrowers the best help they deserve. Yes, so they get funds to close the gap on needed funds for their down payment — but the first mortgage is often priced .250-.375% higher than the open market. Where’s the love with that???
Sounds like a great way to wipe out some student loan debt though!
As usual, you guys don’t fully understand the situation here. NHF, which you describe as a “private” organization, was actually created by a local government entity in California, and was using a dubious interpretation of FHA’s policy on government DPA programs to offer DPA as a government entity. Further, and this was the issue HUD addressed, they were utilizing their “government” status in CA to offer DPA nationwide. HUD’s position was that for purposes of its government DPA programs an entity cannot operate outside of the jurisdiction in which it has governmental authority. HFAs can’t typically operate outside of their state boundaries, and therefore, don’t overreach their authority. In short, HUD said that an entity’s eligibility as an “instrumentality of government” (HUD’s terminology) only extends to the boundaries in which it has governmental authority. e.g. An instrumentality in CA cannot take the authority granted to it by the State of CA or a county in CA to operate in Texas or Delaware without being granted government instrumentality authority by the new state in which they propose to operate.
NCSHA is just an industry organization – like MBA. As such, it does not operate any DPA programs or engage in any other types of lending. But they do advocate on behalf of their members – just like MBA. HFAs have varying corporate structures – some are actually part of state governments; others are independent quasi-governmental nonprofits. Either way, they all have as their mission serving low- and moderate-income borrowers in their respective states.
I hope these facts are helpful in better understanding this issue.