OMG! Now what.
First the gov’t takes away down-payment assistance and now it wants to give it back?
Honestly, I have mixed emotions about this.
One one hand, it could be the shot in the arm that the housing market needs. Right now the industry is teetering on the influx of the First-Time Home Buyers. Move up buyers can’t move until the FTHB buys their home and the Dream home buyers can’t move up until the move-up buyers buy their home.
In essence that first domino must fall… butttttttt, at what cost?
The downside of the DPA programs is that the default rate on those loans was over 300% higher… don’t fool yourself… this does effect everyone in the end and might have more to do with our current situation than may be able to be measured.
I guess, being intellectually honest, the reimmergence of DPA, if in fact it makes it through all the hoops, may be a mixed bag at best.
Sure, having the new folks enter into the marketplace is necessary, but what is the long-term cost??
My advice to those that are reading this and may personally benefit from the new DPA, please do not let some smooth-talking mortgage professional… uh person… get you in over your head.
The future rests on it, and only time will tell.
September 19, 2008 at 9:52 pm
MC,
DPA is a great propgram when used properly (as intended). It helps more people and does more good than what HUD will lead you to be. The default rates of DPA are a fraction when you include the sub-prime loans. Here is some great 3rd party information that is recent public knowledge. http://www.supporthomeownership.com/uploadedfiles/Alex-Brill-Report-Sept-2008.pdf
It is about time someone spoke the truth about the problems at hand and not just blame DPA companies that are not using tax payer dollars to do what they do. In fact, becuse of them, there are billions of dollars in tax revenue generated.
Your ‘shot in the arm’ comment is exactly the point. Without the first time home buyer, the existing home owners can’t move up to bigger homes which continues the cycle. Right now our economy needs a huge shot in the arm. This is a step in the right direction.
However, all is not quaranteed. This new bill H.R. 6694 has passed throught the house commity and should be presented to the House on either Monday or Tuesday of next week. I have heard from various sources that there is huge bipartisan support in the House and it should go through. The fight will begin with the Senate. Senator Dodd and Senator Shelby (the good ‘ol boys club) made a deal with the devil and wont budge on the issue. This is where support is needed to make sure they contact their local senators and tell them how this bill will affect their business. http://www.senate.gov is the first place to start.
Lets stop placing blame and start making things work!
September 20, 2008 at 8:54 pm
Chris,
It’s refreshing to see your honest approach to the issue. I just wish more folks in the industry would do the same.
We need to remember that it’s the Seller Funded DPA programs that are in question (and that were eliminated w/ the recent legislation). I don’t know anyone who has argued against DPA programs in general. But it’s the seller funded version that remains controversial. And I think you hit the nail on the head – what’s it worth to keep it? In other words, do the benefits exceed the financial and social costs?
ML-Implode has an interesting take on the issue: http://whistleblower.ml-implode.com/?p=145
“Of even greater concern is the committee’s failure to recognize and properly address the rising FHA delinquency rate and impact that declining (correcting) market values will have on future loss severities and claims. Today’s reports are looking in the rear view mirror at yesterday’s market conditions which took place in a bubble atmosphere and skewed performance statistics.”
Are the market players (mortgage & real estate folks, government officials, the DPA providers) really considering the implications of continuing seller funded DPA programs? Many claim it’s all about the homeowner. But the louder they yell, the more it sounds like it’s about job security.
September 20, 2008 at 9:08 pm
JOVAN – It is good to point out that the statistics can be skewed, as can any statistics by any source. Believe me, I am best served with the re-emergence of seller-assisted DPA, but I am concerned about whether our financial underpinnings are equally as well served. To be honest, my main reason for questioning the wellbeing of this effort… was to see who was pushing it through Congress. When I find myself aligned with the likes of Maxine Waters!!!??? Good Lord… it is time to do a gut-check!
JASON – I am glad I am not the only one. If is does come back, I will use it but I will use it selectively… i just hope the agents are equally as selective. =0) BTW, anyone reading this should check out your site, http://themortgagebuzz.blogspot.com/ there is some great info there and it appears you are one of the few with the tools and intellect to understand the technical side of our business.
Chris