{"id":4128,"date":"2008-08-27T21:26:04","date_gmt":"2008-08-28T04:26:04","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=4128"},"modified":"2008-08-27T21:26:04","modified_gmt":"2008-08-28T04:26:04","slug":"racing-the-clock-on-dpa-programs-will-the-dems-save-the-day","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/4128\/racing-the-clock-on-dpa-programs-will-the-dems-save-the-day\/","title":{"rendered":"Racing the Clock on DPA Programs: Will The Dems Save the Day?"},"content":{"rendered":"

I had some fun, yesterday, with a report about the down payment assistance ban and the First-Time Homebuyer Tax Credit<\/a>.\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 need for down payment funds today.<\/p>\n

The whole thing is silly when you think about it.\u00a0 100% financing, through the FHA, is the answer.\u00a0 Then, we can stop winking at the violation of the spirit of the law.\u00a0 Some commenters, suggested that 100% financing, or attempts to provide down payment assistance, is dangerous and might bankrupt HUD.\u00a0 The fact is that down payment assistance programs have a default rate that is twice the normal acceptable FHA default rate<\/strong>.\u00a0 The universe of FHA loans have a default rate of 3-3.5% while DPA loans are 7-9%.<\/p>\n

While it’s easy to say that over 9 out of 10 buyers, who use the DPA program to buy a home, succeed, the high default rate COULD bankrupt the FHA insurance fund.\u00a0 I queried some senior bank credit officers about this.\u00a0 What I discovered is that those defaults CAN be managed if we layer the risk<\/strong>.\u00a0 For you non-mortgage types, that means that we tighten one C if we loosen the other<\/a>.\u00a0 I was astounded to hear that over half the DPA defaults could have been avoided if underwriters strictly adhered to a recommended debt-to-income ratio of 29\/41 and a minimum credit score of 620.<\/p>\n

Compliance to the underwriting guidelines then, could make DPA programs, or 100% financing work.<\/strong><\/p>\n

Last year, I wrote a letter to Senator Dodd, here on Bloodhound Blog<\/a>.\u00a0 That letter introduced me to a few contacts inside the Beltway; I called them today .\u00a0 What I heard was classic political maneuvering.\u00a0 The recently passed Housing Law<\/a> was a compromise.\u00a0 Republicans, siding with the HUD Commissioner, effectively banned the DPA programs and INCREASED the minimum down payment requirement, on FHA loans, to 3.5%.\u00a0 Democrats, capitulated on the eventual DPA ban because they prohibited HUD from engaging in “risk-based” pricing, which is, higher rates for people who might not Read more<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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 need for down payment funds […]<\/p>\n","protected":false},"author":15,"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":[5],"tags":[],"class_list":{"0":"post-4128","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-real-estate","8":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":7402,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/7402\/if-i-never-make-a-single-payment-on-my-super-cheap-fha-loan-do-i-still-get-my-8000-tax-credit\/","url_meta":{"origin":4128,"position":0},"title":"“If I never make a single payment on my super-cheap FHA loan, do I still get my $8,000 tax credit?”","author":"Greg Swann","date":"March 8, 2009","format":false,"excerpt":"WAPO:The last time the housing market was this bad, Congress set up the Federal Housing Administration to insure Depression-era mortgages that lenders wouldn't otherwise make. This decade's housing boom rendered the agency irrelevant. Americans raced to aggressive lenders, seduced by easy credit and loans with no upfront costs. But the\u2026","rel":"","context":"In "Big Mother"","block_context":{"text":"Big Mother","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/big-mother\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1355,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1355\/mortgage-minutes-with-the-fha-expert-old-skool-guvvies-may-solve-the-subprime-meldown\/","url_meta":{"origin":4128,"position":1},"title":"Mortgage Minutes with The FHA Expert: Old Skool Guvvies May Solve the Subprime Meltdown","author":"Brian Brady","date":"April 30, 2007","format":false,"excerpt":"I interviewed \"The FHA Expert\", Jeff Belonger of www.theFHAexpert.com in this 18 minute podcast. This is my first interview so you'll notice two things: 1- I sound like the used auto dealer in a small town that bought the town's only radio station; I'll work on the delivery. 2- Jeff,\u2026","rel":"","context":"In "Interview"","block_context":{"text":"Interview","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/interview\/"},"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":4128,"position":2},"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":8526,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/8526\/8526\/","url_meta":{"origin":4128,"position":3},"title":"$8,000 Tax Credit Advance Friend or Foe?","author":"Scott Cowan","date":"May 20, 2009","format":false,"excerpt":"I have been following the $8,000 Federal Tax Credit with great interest this year. Currently it is the most talked about topic that I am discussing with potential home buyers. There is a lot of interest in receiving $8,000 when a first time buyer files their taxes for 2009. Now\u2026","rel":"","context":"In "Big Mother"","block_context":{"text":"Big Mother","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/big-mother\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":8412,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/8412\/fha-and-the-8000-tax-credit-what-i-know-and-what-i-dont\/","url_meta":{"origin":4128,"position":4},"title":"FHA and the $8000 Tax Credit – what I know and what I don’t….","author":"Tom Vanderwell","date":"May 13, 2009","format":false,"excerpt":"It has amazed me how many people (mainly Realtors and lenders) are already out there proclaiming that you can now go back to the days of the \"No money down\" loans with FHA and you can do it right now.\u00a0\u00a0 Well, that's not quite the whole story.\u00a0\u00a0\u00a0 Let me explain:What\u2026","rel":"","context":"In "Dirty Laundry"","block_context":{"text":"Dirty Laundry","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/dirty-laundry\/"},"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":4128,"position":5},"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":[]}],"_links":{"self":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/4128","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\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/comments?post=4128"}],"version-history":[{"count":7,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/4128\/revisions"}],"predecessor-version":[{"id":4135,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/4128\/revisions\/4135"}],"wp:attachment":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/media?parent=4128"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/categories?post=4128"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/tags?post=4128"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}