Save Down Payment Assistance Programs!

One of the negative provisions of the Housing and Economic Recovery Act of 2008 is the elimination of seller-funded down payment assistance programs (DPAs) effective October 1, 2008. DPAs have helped hundreds of thousands of families purchase a home by providing for a gift for the down payment. Studies suggest that tens of thousands of families who are otherwise qualified for a mortgage are unable to purchase a home due to being unable to save for a downpayment. For more information on DPAs, please see my post, Down Payment Assistance Programs posted on February 16, 2007.

Help Support HR 6694

Al Green (D-TX) – along with Gary Miller (R-CA), Maxine Waters (D-CA), and Christopher Shays (R-CT) – have presented a law that will save DPAs and at the same time reforming them to make them less risky. The reason for the elimination of DPAs is that FHA mortgages that utitlize DPAs for downpayments have a higher default rate than FHA mortgages withouts DPAs. However, by eliminating DPAs altogether, the government will prevent thousands of people from purchaing a home that are qualified for a mortgage except for the downpayment.

HR 6694 not only saves DPAs, it also reforms them to lessen the riskiness of these loans. It establishes minimum credit scores to make sure the borrowers are credit-worthy, and eliminates the moratorium on risk-based premiums for FHA loans to enable increased premiums for FHA mortgages with DPAs.

These changes to the Housing and Economic Recovery Act of 2008 will help reduce the number of defaults and foreclosures without further hurting housing sales which are affecting all areas of the US economy.

What can we do?

For the next 5 weeks, Congress is out of session. This means they are much more acceissble at their local offices to the people who they serve. Please pick up the phone, write a letter, or send an e-mail to your Congressmen and Senators to support HR 6694. Senators have been more negative on DPAs in the past so we really need to work on contacting them.

Here are links to two websites that make contacting your Congressman easy:
http://rallyforhomeownership.org/ and http://capwiz.com/nehemia/issues/alert/?alertid=11709431. These sites provide information on the act as well as talking points to use when contacting your Senators and Representatives. They will also help you find and contact your Congressmen.

Act today before we see housing sales decrease further.