Tuesday, July 22, 2008

Down payment assistance gone for FHA with new housing bill

From the Sacramento Bee:

A signature Sacramento program that has helped almost 300,000 lower-income people nationally buy homes in the past decade – while stirring controversy for years – is likely to be shut down this week, Nehemiah Corp. of America officials acknowledged Monday.

The nonprofit giant believes Congress and President Bush will ban its decade-old down-payment assistance "gift" program within days as part of a larger housing bill, Nehemiah President and Chief Executive Officer Scott Syphax said Monday.

The DPA programs were a source of high defaults for the FHA and represented one of the few paths to 100% LTV financing left in the marketplace. This represents another incremental tightening of credit guidelines that will certainly slow sales at the bottom end of the market but these sales shouldn't have been made to begin with.

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