Well HUD Kills Another Program that was very helpful to our under-served groups.
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Undeserved or underserved?? lol funny typo
VA loans perform better because of the higher moral character of the buyer. The military has drilled into these veterans that they should always follow orders and do the right thing. Obviously HUD is of the opinion that these ‘scam’ down payment program loans default more than those where the buyer has ponied up on the down payment.
Just curious, why isn’t there a program where the realtor contributes to the down payment? Because realtors only care about making a sale, getting all of their commission, and they don’t care if the buyer will be able to make payments in the future.
Another question – why do you think that 2 out of 3 future buyers will need down payment assistance? are you implying that minorities cannot save money?
Pat, you’re a terrible person and way off base.
First: veterans do not have a higher moral character than those who aren’t. That’s a pile of bull. Do you think veterans don’t default or file bankruptcy? Uh. They do. Do you think they don’t commit adultery? Commit murders? The rate of domestic abuse is higher in marriages of veterans.
And realtors are NOT all about the commission. I told many people they couldn’t afford to buy a house. Many thanked me. Some went and chose another realtor who let them. When they were losing the house, they called me to help. Some I could help, some I couldn’t. But my reputation is stellar and that’s because I do the right thing for my clients as do most agents. Your disdain sounds like you made your own bad decision and are looking for a scapegoat.
I have been originating for 25 years and have NEVER done one of these transactions. I have never seen an FHA loan be approved with the down payment coming from premium pricing. Closing costs, yes, but down payment? Additionally, the rules for approval should not be eased just because the buyer is a minority. Why should minorities be able to buy with easier requirements?
Please see the statement below from Potomac Partners regarding the NHF Sapphire Program.
“Last Friday, FHA Headquarters staff started calling lenders to advise them of FHA’s concerns with the origination of loans using NHF programs. FHA has told lenders that the issue pertains to questions about NHF’s “not for profit” status and its eligibility to offer down payment assistance programs.
Apparently in 20 counties in California (possibly in northern California), NHF is considered an instrument of the local government. We have been unable to find the list of the 20 eligible counties.
This issue has no direct connection to HUD/Inspector General disagreement about State Housing Finance Agency (HFA) down payment assistance programs. This issue apparently stems from a HOC loan review that was then escalated to FHA Headquarters. FHA’s management reviewed the transaction and apparently concluded that the NHF programs did not comply with the law (thereby precipitating the FHA phone calls to lenders).
We understand that NHF obtained a legal opinion from a reputable law firm justifying their position. NHF also sent the email below to lenders on Monday night. The NHF email said:
“It has come to our attention that HUD has reached out to a number of NHF’s client lenders indicating that, under certain circumstances and depending upon the location of the underlying property, NHF’s DPA program loans may not be eligible for FHA insurance. This is surprising and we disagree with HUD’s position. We are reviewing this issue with HUD cooperatively and will report back on our progress in the near future.”
Until FHA announces/publishes some change in its position, lenders should exercise “caution” in originating new loans involving the NHF programs. For loans in the pipeline, while FHA has told lenders that they will not be “punitive.” There is the risk of FHA requesting indemnification if the loans are reviewed.
It also does not appear that FHA will be putting out any additional guidance.”
i have never used any down payment assistance programs in my 20 years of doing mortgages….But again I do a lot teaching with my buyers/borrowers on how to save a down payment ….and to be real candid they come out better borrowers ..ie a couple of months ago closed on a loan with a borrower who saved 5000 in a matter of 2 months …His response to me was “I did not know I could do it till you showed me the way …changed my lifestyle and this is the first time in my life i have money in the bank ” ….He went on to say ” this is kinda liberating ….Im getting a new home and have money in the bank who would have thought I could do this”…….They wont let brokers use the State funded down payment assistance in my state ..or even the local city DPA program….I believe I do a better service for my clients by educating them on how to do simple tasks …like saving money…besides you never get “something for nothing” you have to pay for it one way or another…..
Well said, Dennis. “Teach a man to fish” is much better. We see many (not all) of these lower income people with the latest technology, see them chain smoking, boozing it up, using food stamps to buy steak and lobster, abusing the help. Along with working hard and saving comes self pride. Like your example. Priceless. Mental illness and depression are real issues in our country. I believe lack of jobs and welfare contribute to these issues.
I have been a mortgage lender for 33 years. It is obvious that there are many varies opinions to this topic. I suppose that no one is completely right. We each have had different experiences relate to DPA programs. The Sapphire program is just one of may programs that have come along. I am not a fan of any program that allows third parties to make a living for doing nothing, but funneling money through a transaction and skimming off the top. With Sapphire, the origination lender is require to contribute 1/2 of their compensation including service released fees to the deal. In addition to this, the interest rate was 1.5% over market rates. The buyer then gets 4.5% towards down and closing costs. It appears to me that U. S. bank who sponsors this program is making an immediate profit plus a huge spread as they service the loan. The are also coming back on the selling lender if the loan pays off early. This is a program that should be shut down. There isn’t anything wrong with asking buyers to prepare to purchase. Some say that it isn’t possible, but making good decisions along the way and sacrificing a little bit, teaches great lessons for life.
So instead the same borrowers will jump into bed with CALHFA and borrow 7.5% in a silent second mortgage for a .25% reduction in rate. Which immediately puts the same borrower upside down with CLTV of 104%. This program has allowed 10’s of thousands of people bridge the gap into home ownership without the need for shadowing second loan.