Seller-Funded Down Payment Assistance Programs - Don't Waste Time Getting in Contract!

Seller-Funded Down Payment Assistance Programs are on the way out due to provisions in HR 3221, which President Bush signed a few weeks ago...in fact for some lenders, the programs have already been phased out. I have been passed several memo's lately stating that many banks funding new loans will no longer accept new Nehemiah files after the end of August. There are still some banks funding loans that will allow the use of these programs, but buyers - don't waste time getting in contract! Realistically, with a 30 day escrow, you would need to be in contract to purchase your home really quickly (like within the next week or two) to be able to close escrow before Nehemiah is officially banned.

Here is language from a memo I received from Sierra Pacific Mortgage last week -
"Seller-Funded DAPs (Down Payment Assistance Programs) are no longer eligible due to the passing of the Housing and Economic Recovery Act of 2008. FHA loans currently in the pipeline that have Seller-Funded DAPs MUST fund no later than Friday, August 29, 2008. No exceptions permitted. Pipeline reports will be sent to the OPS managers later this afternoon.

Examples of Seller-Funded DAPS include, but are not limited to: American Family Fund/Dove Foundation Inc. Ameridream, American Homebuyers, DPA Alliance, Family Home Provider, Genesis Foundation, HART, Home Downpayment Gift Foundation, Home Ownership Provider Inc (HOP), Nehemiah, Newsong and The Genesis Program. This list is not intended to be all- inclusive, and is provided to illustrate examples only.

Please note: Down payments from other sources, including municipalities and other government agencies can continue to offer down payment assistance, and are not affected by this change.

In addition, Seller-Funded DAPS are not eligible for conventional loan products. All affected loans not approved by the end of business today, August, 21, 2008, will be cancelled. All affected loans already approved will be prioritized to the best of our ability. We apologize for the short notice and appreciate your understanding and support."

There is legislation out there to try to save these types of down payment assistance. HR 6694 seeks to reform these programs (add certain buyer qualifications) and keep them in place. You can get more information on this bill at http://www.dpagroundswell.org - and also use this site to take action and contact your congressional leaders.