Down Payment Assistance Programs Look to be Going Away

I’ve written several times over the past few months about Nehemiah and Ameridream, two of the largest down payment assistance programs in the country. A bill eliminating, or severely limiting, Down Payment Assistance (DPA) programs has already passed Congress, is currently before the House, and looks as if the President may sign by next week.

The Alanta Journal Consitution on the 23rd had this

“Who’s to blame for the subprime mortgage crisis sweeping the nation? Wall Street bankers who’ve overleveraged their books by billions of dollars? Or first-time home buyers who received gifts of a few thousand dollars to make the American Dream come true for them?”

“In a massive mortgage reform bill currently before Washington lawmakers, Congress will vote on whether to keep down payment assistance for those who need it —- or eliminate a vital program for hardworking Americans that has contributed not one iota to the current mortgage crisis.”

Further in the article is states that 94% of homebuyers who receive some sort of down payment assistance pay their mortgage, never go into default. Also, these are not sub-prime mortgages but rather are government insured, like the FHA and VA programs.

Is this a knee-jerk reaction on the part of Congress to do something? Why cut programs with a proven success rate rather than really looking at Wallstreet and the Big Three; Countrywide, WaMu, and Wachovia?

There are two different versions of the bill. The Senate version of the housing bill would have banned the DPA programs while the House version would not. It appears that the compromise bill that has been negotiated agrees with the Senate’s position, which also is supported by the Bush administration.

You may also be interested in the following:

HUD, the BIG Three and the Ongoing Mortgage Mess

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