FHA Loans and the demise of Down Payment Assistance Programs also known as DAPs

There are many changes in FHA loans due to the passage of HR3221. One of the biggest is the demise of the Down Payment Assistance Grant. This was a donation from the seller of the home to a non-profit agency such as Neiamiah. The non-profit agency would then be sure the buyer has the down payment money at the closing. It is documented as a grant which the buyer does not have to pay back. This has been a great way for those wanting to get the great rates and low PMI associated with an FHA loan but did not have the required 3% down payment. I amn told the reason for the demise of DAPs is that the foreclosure rate is much higher than if the buyer simply got a gift from a realtive or have the required 3% down payment saved up themselves. I don't know why but surmise that those who received the gift from a relative did not want the guilt of letting that gift of home ownership (from a realative) go into foreclosure. I guess that their is a lot less guilt if the gift came from someone they really did not know.

More of the changes in FHA loans and the home mortgage landscape due to HR3221 to follow in future entries.

Donald W. LaPlume Jr.

President/CEO

Sensible Mortgage Solutions Corp.