{"id":3265,"date":"2008-06-25T10:14:28","date_gmt":"2008-06-25T17:14:28","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=3265"},"modified":"2008-06-25T10:14:28","modified_gmt":"2008-06-25T17:14:28","slug":"down-payment-gift-programs-yea-or-nay","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/3265\/down-payment-gift-programs-yea-or-nay\/","title":{"rendered":"Down Payment Gift Programs: Yea or Nay?"},"content":{"rendered":"

On June 9th, in a speech to the National Press Club, FHA Commissioner Brian D. Montgomery announced that his agency plans to create new regulations banning the use of down payment gift programs.\u00a0 The most popular of these programs is The Nehemiah Program <\/a>and you can go to their site\u00a0for more details, but the gist is this: seller contributes 3.5% to this charitable organization, which then contributes 3% to the buyers purchase, serving as their FHA downpayment.\u00a0 Appears to be a win-win: the seller gets their home sold, the buyer gets into a home with no money down and a charity gets .5% for helping.\u00a0 The problem, according to Montgomery, is that loans using this type of problem are defaulting at two and three times the rate of their traditional down payment loans.<\/p>\n

There is no question that this type of program gets more people into homes than would otherwise be possible.\u00a0 But… what of the ethics?\u00a0 Although legal and within the bounds of FHA’s current guidelines, is there any question that this type of program also eviscerates the very spirit of the guidelines?\u00a0 FHA allows charitable gifts with the understanding that there is an implied vouching for the client.\u00a0 Whether it be family, employers or a city program, the idea is that the donor has some knowledge, purpose or interest in seeing the buyer succeed.\u00a0 But with the down payment gift programs, the donor is the seller and their only interest is in selling their home.\u00a0 (In fact,\u00a0at times the home’s value is inflated to cover the 3.5% donation creating a circular interest of the buyer for the buyer.)<\/p>\n

A down payment gives the buyer some “skin in the game” and creates within lenders a sense that the buyer won’t walk away at the first sign of trouble (which sense was confirmed as we watched homeowner after homeowner walk away from their mortgage recently when there was no equity to protect – not an ethical consideration, purely business).\u00a0 Without downpayments, rates would climb to cover the inherent risk.\u00a0 Maybe that type of loan will come back once the risk can be assessed, Read more<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

On June 9th, in a speech to the National Press Club, FHA Commissioner Brian D. Montgomery announced that his agency plans to create new regulations banning the use of down payment gift programs.\u00a0 The most popular of these programs is The Nehemiah Program and you can go to their site\u00a0for more details, but the gist […]<\/p>\n","protected":false},"author":36,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[26],"tags":[],"class_list":{"0":"post-3265","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-lending","8":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":4812,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/4812\/other-types-of-credit-may-be-feeling-the-crunch-but-home-mortgages-are-still-readily-available\/","url_meta":{"origin":3265,"position":0},"title":"Other types of credit may be feeling the crunch, but home mortgages are still readily available","author":"Greg Swann","date":"October 4, 2008","format":false,"excerpt":"This is my column for this week from the Arizona Republic (permanent link). \u00a0Other types of credit may be feeling the crunch, but home mortgages are still readily available Bad news about the economy is coming in from all directions, so you may be in the mood for some good\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":10960,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/10960\/my-jim-casey-take-on-the-fhas-policy-to-address-risk-and-strengthen-finances\/","url_meta":{"origin":3265,"position":1},"title":"My “Jim Casey” take on the FHA’s Policy to Address Risk and Strengthen Finances","author":"Scott Schang","date":"January 22, 2010","format":false,"excerpt":"\"Before I knowed it, I was sayin' out loud, 'The hell with it! There ain't no sin and there ain't no virtue. There's just stuff people do. It's all part of the same thing.\" - (Preacher) Jim Casey \/ Grapes of Wrath Here's my take on the FHA 1\/20\/10 press\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.californiateachersandemployeeshomeloanprograms.com\/wp-content\/uploads\/2010\/01\/Read-all-about-it.gif?resize=350%2C200","width":350,"height":200},"classes":[]},{"id":7903,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/7903\/fha-and-va-assumable-loans-offer-an-exit-strategy-for-todays-buyers\/","url_meta":{"origin":3265,"position":2},"title":"FHA and VA Assumable Loans Offer an Exit Strategy For Today’s Buyers","author":"Brian Brady","date":"April 16, 2009","format":false,"excerpt":"How can an FHA mortgage or VA home loan sell a home faster?\u00a0\u00a0 When mortgage rates are 10% and the 5% government loan is assumable. I've taken a few pokes at the contributors on Active Rain; John MacArthur isn't one of them.\u00a0 John is a Branch Manager with Long and\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":4128,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/4128\/racing-the-clock-on-dpa-programs-will-the-dems-save-the-day\/","url_meta":{"origin":3265,"position":3},"title":"Racing the Clock on DPA Programs: Will The Dems Save the Day?","author":"Brian Brady","date":"August 27, 2008","format":false,"excerpt":"I had some fun, yesterday, with a report about the down payment assistance ban and the First-Time Homebuyer Tax Credit.\u00a0 I poked fun at the hypocritical nature of the Down Payment Assistance Programs and speculated that the Tax Credit might be collateral for a \"tax refund loan\", thereby, facilitating the\u2026","rel":"","context":"In "Real Estate"","block_context":{"text":"Real Estate","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/real-estate\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":7404,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/7404\/why-fha-loans-wont-be-getting-cheaper-or-easier\/","url_meta":{"origin":3265,"position":4},"title":"Why FHA Loans won’t be getting cheaper or easier…..","author":"Tom Vanderwell","date":"March 9, 2009","format":false,"excerpt":"When the subprime market imploded and people starting rushing to FHA, the \"chant\" was that FHA is the new \"subprime.\"\u00a0\u00a0 FHA originations skyrocketed and anyone who didn't have a 700 credit score and a downpayment of 5 to 10% was quickly led into FHA.\u00a0\u00a0 I remember reading statistics of different\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":9723,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/9723\/why-your-fha-decision-engine-approval-gets-denied\/","url_meta":{"origin":3265,"position":5},"title":"Why Your FHA Decision Engine Approval Gets Denied","author":"Tony Gallegos","date":"September 11, 2009","format":false,"excerpt":"The occurrence of FHA loans receiving an FHA TOTAL Scorecard approval and subsequently having the loan denied once it hits the underwriter\u2019s desk is happening more and more. It\u2019s a reality the field must acknowledge and from what I have seen, the good originators have taken note and have adjusted\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/3265","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/users\/36"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/comments?post=3265"}],"version-history":[{"count":0,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/3265\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/media?parent=3265"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/categories?post=3265"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/tags?post=3265"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}