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Syphax is head of one of these "non-profits", so he's out of a job if this program goes away - of course he's going to disagree. The most unbiased studies back up the FHA's numbers.
Ban DPA programs, but implement 100% loans by FHA.
I agree, but it takes an "act of congress"...literally
I would like to see 100% financing for strong borrowers (700+ FICO, good ratios, good jobs, reserves) and actually increase the minimum down to say 5% for the weak borrowers (under 640 FICOs, no reserves). Keep it at 2.25% for those in between.
Location: central, between Pepe's Tacos and Roberto's
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Quote:
Originally Posted by cohdane
I understand that some people might have enough money for a monthly mortgage, but don't have enough saved for the down payment...
...which means they don't have enough saved to fix a roof.
...or a leaky basement.
...or to get a house repainted.
...or to handle any of the other typical, but unexpected costs of owning and maintaining a home.
And that means they shouldn't be homeowners. Renters still have a roof over their heads. A nice affordable roof.
Not necessarily true. If one saves up $6000 for a down payment on a $200,000 house, and they use that entire amount for the down payment, do they still have money saved up to maintain the house? Of course if FHA instituted some sort of reserve requirement than it would be a moot point, but they haven't. I believe that a SFDPA, used correctly and responsibly, can be a very valuable tool. However, as Tim pointed out, it is a loophole and although allowed is not legal. However, I would like to use 2 scenarios to prove my point about SFDPA's. You tell me which one is more risky/likely to default. Better yet, you tell me which scenario you would be more likely to lend YOUR money on. Keep in mind that both scenarios are acceptable by current FHA guidelines.
1. A guy wants to buy a home. He has $6000 saved up and it took him about 3 years to save it up. He has a very steady job, been there over 5 years. The guy pays around $1200 a month in rent, has been in his rental unit for 3 years and has never been late. This guy has good credit, and has worked very hard on building and maintaining his credit. Although he could use his $6000 for a down payment, he would prefer to use SFDPA for 3 reasons. He makes too much money for a state grant or other government gift, he doesn't have family to ask to gift or his family is not well off enough to help him out with that, and he would like to hold on to that $6000 as an emergency fund (3 months of living expenses).
2. A younger guy, let's say 20. Still lives at home with his parent's, has never lived on his own. Although he has been employed for the last 2 years, he has had 4 different jobs in 2 different lines of work. He has no savings, but has decent credit due to his folks co-signing on a car for him and he also has a couple of credit cards that he makes the minimum payment on although they are maxed. His parent's agree to gift him the down payment amount of $6000.
Keep in mind that both parties do meet standard underwriting criteria such as DTI ratios and credit scores. If you had to lend money to one of these scenarios, which would it be?
My point is that skin in the game does not necessarily mean anything if it is not your's. I am not really pro-DPA (although I used it responsibly to purchase my first home) and I am not really anti-DPA (although it is illegal as Tim pointed out). All I'm saying is that if you get rid of one, I think you should get rid of the other as well. Either that or reform it, set some asset reserve requirements. I suppose I wouldn't have such an issue with this if they were to reduce the minimum cash investment requirement by a little, but this piece of legislation has in fact increased it to 3.5%.
Homeownership is an ENTITLEMENT of the privledged. You didn't get the memo?
Quote:
Originally Posted by hindsight2020
Somebody ought to draw it in crayons for me. If the argument is made that if you cannot come up with a downpayment on your own you're not in a position to handle home ownership then we may agree. But get off y'alls high horses. I don't see much skin being put by the vast majority of first-time homebuyers around my personal reality, who got their windfall down payment from daddy and mommy for their wedding/graduation present. If I had a quarter for every co-worker/peer who got his downpayment from mom and dad, I'd have the downpyament for a house myself. I'm sorry, that's been my experience, every turn I take somebody's in their late 20s is "buying" a house on the shoulders of their parents down payment money. Much more than people getting into option ARMs to get into same house, at least for my age group.
I just don't see any differentiation in somebody's ability to responsibly carry on the burden of a mortgage payment as a function of having the benefactor be some obscure entity versus it being mommy. So again I ask: what skin?!?! Y'all didn't put any skin when pops gave you a down payment. Parental down payments are no different in principle than DPA, without either you'd be in the same boat I am; renting. The difference between myself and my peers, who work the same job for the same length of time, make the same money, and have the same housing cost in their 1500sf 2y.o. 3/2 house as I do in my 30y.o. 700sf 2/1 apt complex, is a mystery 40K that obviously came from their sweat and toil.....gimme a break. But oh they love hiding that fact, it wouldn't help their credibility when they sit up there and point their fingers at us lowly renters, trying to match their parents savings power with 20% their parents income.
They want to ban DPA? I say ban parental down payment...see how well that goes down with folks. My daddy won't give me 40K, who am I to tell Nehemiah he can't be my daddy? Elitist stuff .....
I agree, but it takes an "act of congress"...literally
I would like to see 100% financing for strong borrowers (700+ FICO, good ratios, good jobs, reserves) and actually increase the minimum down to say 5% for the weak borrowers (under 640 FICOs, no reserves). Keep it at 2.25% for those in between.
Most DPAs are done with FHA, and FHA's guidelines is a lot stricter compared to conventional/alt-a/subprime loans.
Most FHA loans are 30yr fixed, and hardly any ARMs. FHA doesn't offer Interest Only.
AND....for anyone that thinks that everyone who is defaulting has subprime credit is....
You will see that most of the ppl defaulting have prime credit scores.
This guy knows his stuff, and was on CNN. (No, it's not me!)
Quote:
Originally Posted by mystree
The problem isn't DPA,the problem is people getting loans they couldn't afford.Just because a lender says you qualify for XX doesn't mean you have to get a loan for that amount.And in my opinion the only type of loan there should be is a fixed rate,not these adjustable loans and interest only loans.
If the DPA makes the value go over the limit then the loan wouldn't work!
Even if the value of the home is inflated by 100k, it will STILL need to be within the appraised value or the loan won't work.
The TRUE value is always what the appraiser appraises it for....
Appraisers not doing their job is another thread....
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