There are many people trying to get congress to give the Downpayment Assistance Programs a reprieve. Greg Swann from Bloodhound Blog believes that about 40% of Phoenix buyers will be affected October 1st when DPA’s are discontinued due to the new law. That is a scary number.
We need buyers but do we need buyers who can’t put down 3%? I honestly don’t know. I have read arguments for and against but believe that removing the idea of the DPA is a knee jerk reaction. 100% financing has been villified so much that we automatically rail against it. With tightening loan standards I don’t think 100% financing is the problem.
The short sales, foreclosures and defualts that I hear about involve adjustable rate mortgages and stated income loans. I personally haven’t heard of a case of FHA or VA loans in default. I know they exist but it shows how much rarer they are.
Here is a link to a site that is pushing for Congress to reinstate DPA’s that was put up in the comments of my last post about DPA’s. Instead of making an entire bill or law, how about just changing the rules about who can give gifts? They realized that the “charitable organizations” were nothing more than the seller giving the buyer the downpayment. Money laundering. Let anyone “gift” the money to the buyer and give it a year to see the consequences.
photo via http://www.flickr.com/photos/squeakymarmot/
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