Down Payment Assistance Programs have been a stable for Low to Moderate Income borrowers when it comes to buying a home. Well, now there seems to be some sort of internal HUD squabble about the integrity of these programs. What’s more is it would appear that HUD will go so far as to bring lawsuits against DAP providers around the country. You may want to check with whatever DAP’s you’re using in your area to see if there are any impending issues.
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Christopher Walken. COme…walk…into my…open HOUse.
I would use your Farrah Faucet poster to co-brand my marketing materials! #HOTT
I would use your Farrah Faucet poster to co-brand my marketing materials! #HOTT
No the next VP will be Pence
DPA: Oh, the controversial topic at hand. History not repeating itself? Here we go again, placing people into homes that cannot afford it. They have no residual income if their AC or hot water heater breaks. Uhh……. don't we remember how bad we were thrown under the bus for doing this in 03-06? Here we are doing it again. Unbelievable. We have Loan Officers who can only sell this product to get their phones to ring. I ask, if all DPA's were to go away overnight, what would your future pipeline look like. A true professional wouldn't rely on a DPA flyer to get them business. But….. that is exactly what we have happening with some. And then we also have the Realtors who are doing the same thing and are advertising loan programs available as "100% Financing available". When I communicate properly with a Buyer in regards to all the pros and cons with a DPA I find about 90% of them do or can find their own monies, whether that is a 401k or a gift from a family member. I often find out the previous Lender or the Realtor soliciting the program never gave them any other option or explained the negatives with a DPA. This is an injustice to our Buyers. If I am selling a home and I have 2 offers presented to me and one of them is a DPA, it's not rocket science as to which one I am taking, given the fact I would net the same profits on both. That's just one example of a "con". Yes, I understand the intent of the DPA and I am not a cold hearted person. The point is that it is being marketed in a predatory environment and the consumers are often not being told all the pros and cons with the program. Additionally, with some, we are literally placing people into homes that at the end of transaction have $83 to their name. When a home owner doesn't have any monies to fix a problem with the property, what happens? They have a likelihood of walking away, not making a Mortgage payment so they can fix their AC or water heater, or they let the condition of the property deteriorate which does what? Drives home values down and crime rates up. What we do today, has an impact on tomorrow or 5-10 years down the road. But some LO's and Realtors can't see that far down the road and I guess don't mind being labeled once again as we were in the last meltdown. Easy way to fix it: Require a certain amount of their own skin in the game and a certain amount of residual assets after closing. Say $1,000 of their own money into and $1,000 of their own money left over. If you can't save $2,000, do you really deserve a home? Some will argue yes. Some will still say having no money into it and $83 leftover is still ok………yet, the controversial topic.
Hi guys, love your show!!! It would be awesome to see a video on how BofA or Bank of America is in my opinion steering customers to use their loan officers sitting at the bank branches. In 2 instances buyers would come in to ask for a wire or cashier check to send to escrow for their initial EMD to purchase a home. The bank tellers would than state that they would waive the wire / cashier fees if only and only after they speak with their loan officer sitting at the branch. I am not sure if this is steering or illegal but it would be nice to see some research on this and the outcome. Thank you and have a great day!!!
I agree with Eric Kinneman regarding "Here we go again" and the borrowers having no "skin in the game." It is a lot easier to walk away from a loan when you have nothing to lose. When you get a gift from a parent or relative, you really do have something to lose. There are so many options out there for other ways to obtain money for a down payment rather than DPA.
On another point, I cannot tell you how many people have been hurt because they could not lower their payments after the interest on the first was lowered but the DPA would not subordinate the second so the borrowers were stuck at the higher rate (No appreciation on the property, but would otherwise qualify for an FHA Streamline Refinance).
By DPA federal grant programs, you mean my tax dollars subsidizing low income borrowers’ ability to purchase homes that they can’t afford.
Funny how quickly we forget the lessons of the last bubble. First lesson; it’s not healthy for our economy to push people into home-ownership when they are not financially ready. Second lesson; when you remove common-sense barriers to home-ownership; ie. minimum credit score requirements, minimum debt-to-income ratios, AND required down-payment from borrowers, you quickly inflate a non-sustainable housing market that will eventually crash like a house of cards. You should really study some economic history before you start in with the “every American deserves to be a home-owner” mantra. It’s already proven to be a failed experiment
Wilford Brimley. Besides having Dia – BEE- Tus, he just looks like a guy you can trust. I'm surprised he's not doing reverse mortgage commericals. Heck, he was Pop in the Natural…and while he and Hobbs didn't see eye to eye on how to run the team, he eventually won the championship game with the help from Hobb's game winning home run which literally knocked out the lights. Wilford Brimley, a true American. cue the Natural theme.
I would definately use Brian's face as my name dropper…….
Good show guys as usual, but the sky is not falling on DAPs yet and highly unlikely.
A couple of important notes:
1) HUD still believes DAPs funded through HFAs with premium pricing is legit.
2) DAPs make up about 70% of our database of 2500 homeownership programs and the DAPs under investigation- those funded with premium pricing through HFAs are less than 12%. Plenty more solutions.
To the “here we go again, skin in the game” crowd: Really??? That tired narrative has been debunked with facts for quite some time now. Time to update your Ed Pinto and Peter Wallison shtick. Read Bethany McLean’s “Shaky Ground”. And, stop whining about your tax dollars funding these programs. These DAPs in particular are funded through traditional MBS which are bought and paid for by investors.
Frank and Brian- happy to come on the show and share the data!
I offered Kobe Bryant a sales position at my Brokerage.
I offered Kobe Bryant a sales position at my Brokerage.
Totally Agree Eric!!! I know some of the people who use these DPA programs around here (NJ), and some of them make very convincing arguements that NOT using a DPA program (when its available) and even as a Realtor, recommending these DPA programs, is stupid and unwise. But they NEVER bring up any of the points you made. They don't even acknowledge that having some skin in the game is even a benefit to the consumer. I couldn't disgree with them more. Used to be that 20% down was the norm, and while that did (I'm sure) keep some buyers from being able to buy, I would be willing to bet any amount of money that the rates of foreclosures were WAY less back then. Thank you for your comments.
I would like to see more statistics on these programs as to their default rate. Per Rob’s comment above there are more moving parts to these programs. However, in working with REO’s I am surprised at how often I have seen the same home sold through a DAP program foreclosed on as many as three times. One can go into our county records and research the prior mortgage. I always look at history on a property and research my inventory. Interestingly some of the houses have gone through multiple foreclosures without being in any program. Do houses have bad karma? Hmmm. As for a celebrity hack. I am a celebrity. Just ask me. ; )
Happy to share the data. Let me know where to send it.
Jay Koerner Thank you Jay. And Bill Elliot.
Jay Koerner Thank you Jay. And Bill Elliot.
Jay Koerner We should remember however that when 20% down payments were the "norm", prices were twenty five percent or less of our current market. It was a different time and to keep money moving, i.e., closed sales, any assistance is OK. How do you differentiate gifted funds from a relative from DPA to an individual having no relative with money? Just saying.
John Reid That's easy. Free Govt money or "Bond Grant Money" is much different than a relatives gift. If your dad gives you 20K and you go belly up on a home or let it go to crap, you are likely to be banshed or shunned or never trusted again, opposed to Govt or Bond money where people could give a rip and have no quams or care about letting that free money go to waste.
Ty Burrell. (Phil Dunphy). Obviously.
Too bad Realtor.com already thought of it.