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Nehemiah Fading Fast, FHA Down Payment Increases
The recent housing bill eliminates Nehemiah and other seller-funded down payment assistance programs. Although legislative efforts are under way to restore these programs, these efforts won’t bear fruit before the October 1st deadline set by the recent bill.
Lenders are interpreting the deadline in different ways. Most have already begun closing the door on new applications. That’s tough on buyers who have spent months looking for a home and counting on Nehemiah. But even Wells Fargo, who until recently boasted that it would continue take Nehemiah deals right through September, just announced that you must be locked by September 2nd. And of course rate locks are tied to property addresses, so unless you’re under Contract in the next week, you’re going to need to find that 3% down payment someplace else.
FHA Down Payment Increases
Speaking of needing to find down payment money, the recent housing bill also increases the FHA down payment from less than 3% to 3.5%. That doesn’t seem like a lot, unless you were planning on getting the 3% from Nehemiah. That one-two punch is going to put a lot of buyers back into the saving mode or looking for gifts from family members.
August 25th, 2008 at 9:49 am
Providers of gift DPA are not going out of business on October. Borrowers who are credit approved before October 1, 2008 are eligible to receive DPA and their loans will be insured by FHA. Reform and Risk-Based Pricing Authorization Act of 2008 (H.R. 6694) if passed and signed into law will allow downpayment assistance to continue indefinitely. Please help save gift DPA. Families of modest means with good credit who qualify for a mortgage but lack a down payment will be shut out of homeownership without your help. Write Your Elected Officials. Please take a minute to submit your comment regarding the urgent need to pass H.R. 6694 http://www.getdownpayment.com/pdfs/hr6694.pdf that allows for downpayment assistance to continue indefinitely.
August 25th, 2008 at 10:35 am
Peggy, thanks for the link to HR6694. Let’s hope this can get fast-tracked the way the housing bill did. Everybody needs to write and call to help preserve this essential piece of the housing recovery.
Meanwhile, although the housing bill does not officially halt the use of SFDPA until October 1st, by the end of this week most lenders will have effectively stopped accepting new applications. Many buyers are trying to negotiate Contracts on bank-owned homes, but may be unable to secure bank approval in time to take advantage of Nehemiah. That would be a real shame.
August 26th, 2008 at 11:53 am
Another way to show support for HR 6694 is to visit http://www.dpagroundswell.org/. That website enables visitors to send letters directly to their representatives.
September 1st, 2008 at 11:19 pm
Nehemiah’s website recently provided HUD’s clarification of what credit approved means. “What is the precise definition of “credit approved” as described in the housing bill (H.R.3221)?
If a loan is manually underwritten, the approval date is the day on which the underwriter signs the Mortgage Credit Analysis Worksheet (MCAW) or the FHA Loan Underwriting and Loan Transmittal (LT).”
There are still plenty of lenders out there accepting DPA. If you’re a potential homebuyer, don’t be discouraged. Write to your elected officials today to support DPA reform.