News Wire: Charitable Down Payment Assistance Programs...Gone

News Wire: Charitable Down Payment Assistance Programs...Gone

by Hassan Nicholas

OK, so...remember that entry I wrote about the legitimacy of charitable down payment assistance programs? I had my suspicions and it appears I wasn’t the only one. Recently the Department of Housing and Urban Development aka HUD announced a rule intended to exclude “quid-pro-quo” down payment assistance programs. The popular program permitted FHA borrowers to receive cash gifts/contributions, directly or indirectly, from the seller. By charging a service fee popular charitable assistance programs such as Sacramento-based Nehemiah Foundation and others went around a loop hole that prohibits contributions and gifts from the seller. Now that it’s banned it has hurt the business and aspirations of many real estate agents and home buyers. Even with prices still falling in many areas, the quality (availability) and quantity (the amount) of assistance offered for first-timers has decreased substantially. All the more signs that spell out an economic slump that hasn't ran it's course yet.

Edit:

Even with the passing of the Housing Bill, charitable down payment assistance programs are not going down without a fight. Here is a statement released by AmeriDream that I stumbled upon,

"Last night, Congress introduced bipartisan legislation, H.R. 6694 that would reauthorize and reform charitable downpayment assistance. This bill would remedy a harmful provision in the new housing law which limits homeownership opportunities for low and middle-income Americans. The legislation, sponsored by U.S. Reps. Al Green (D-TX), Gary Miller (R-CA), Maxine Waters (D-CA), and Christopher Shays (R-CT) reauthorizes and reforms charitable downpayment assistance funded in part by sellers, which has helped over one million families and individuals become homeowners since 1999. The program was eliminated by legislation signed by President Bush on July 30, 2008.

The Green-Miller-Waters-Shays plan would re-authorize and reform non-profit downpayment assistance and secure it as an allowable source for FHA borrowers. The bill seeks to ensure that providers of the downpayment assistance operate in a transparent manner to guard against conflicts of interest. The bill also includes language to ensure that FHA maintains its financial stability by permanently authorizing the Secretary to assess higher premiums to higher risk borrowers."

OK, so what this means is that supporters of these types of programs are attempting to pass a bill that will counter the provision outlined above. And word is, it will more than likely not be voted until 2009.