Congressman Seeks To Revive Housing Down Payment Assistance
2009年1月21日 - 4:37AM
Dow Jones News
With a new administration at the helm, a Texas congressman aims
to revive seller-funded housing down payment assistance, a campaign
that, if successful, could jumpstart stalled sales and offer ailing
home builders a glimmer of hope.
Rep. Al Green, D-Texas, is championing HR 600 to reinstate a
controversial program that the government, concerned about default
rates, halted in the fall.
"We didn't have to end it, we could have amended it and
maintained it," Green said. "I am going to do what I can."
He faces an uphill battle: Previous attempts to rescue down
payment assistance, or DPA, have failed. But as the housing
market's pain worsens - prices continue to slide and buyers remain
paralyzed on the sidelines - DPA supporters say a return is
increasingly necessary.
It is a "cornerstone to strengthening a crumbling housing market
and breathing life back into the economy," said Scott Syphax,
president and chief executive of the Nehemiah Corporation of
America, which had been the largest DPA provider.
Until Oct. 1, a third party, typically a nonprofit such as
Nehemiah, could fund a buyer's down payment and be paid back by the
seller. That let buyers take advantage of mortgages backed by the
Federal Housing Administration, which previously required a 3% down
payment. (It is now 3.5%, but still lower than the 20% some lenders
require.)
The programs - which saw popularity jump after the loss of
subprime mortgages - fed sales, particularly for home builders. At
one point last year, one-third of the mortgages that industry titan
Lennar Corp. (LEN) originated tapped the assistance. DPA accounted
for about 31,000 of September's 96,473 FHA-insured loans, according
to Nehemiah.
Critics, including the FHA, have long argued the programs
contributed to the real estate bust by helping people buy homes
with little or none of their own money, fueling defaults. That's
why the federal housing law that started this summer banned
seller-funded DPA on mortgages insured by the FHA, essentially
halting the practice.
The FHA was not immediately available for comment Tuesday.
Before DPA's demise, some congressional members offered a
compromise that would have limited participation to borrowers with
higher credit scores, typically indicating more responsible bill
payers.
But not everyone favors a return. While such programs eliminate
the down payment hurdle, a key issue cited by many aspiring buyers,
"I would still be skeptical of any of these programs that just end
up allowing lower credit borrowers access to capital," said Rob
Stevenson, a managing director who covers home builders for
investment bank Fox-Pitt Kelton.
Even Centex Corp. (CTX), the nation's third-largest builder by
annual closings and revenue, previously stated "a return to more
normal qualification standards is a very good thing long term."
Specific details about this latest proposal, which Green said
counts Reps. Barney Frank, D-Mass., and Maxine Waters, D-Calif., as
supporters, were unavailable Tuesday. The next steps could include
a hearing in committee or joining it with another piece of
legislation.
"I absolutely believe that this program can be made to succeed,"
Green said. "We're willing to tweak it to make it work."
-By Dawn Wotapka, Dow Jones Newswires; 201-938-5248;
dawn.wotapka@dowjones.com
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