Down payment assistance under fire
By admin | May 9, 2007
Could the current aid assistance with down payments be a cause in the rise of foreclosures? The HUD is seeking a ban on certain down payment assistance programs which are used in government-backed mortgages.
Nehemiah Corp. and AmeriDream Inc. provide the funds to aid in the down payment on home purchases and are then reimbursed by the seller themselves.
The programs are “a contributing factor of increased risk in our portfolio” of loans, HUD spokesman Lemar Wooley said in an e-mail.
In 2006, over 100,000 low and moderate income families purchased homes with the help of these programs. The number of foreclosures on these types of loans is double that of any other loans sponsored by the FHA.
Many times this assistance is paid for by the consumer in the end with the seller raising the price of the home to cover the expense to them. On average the seller raises the price of the home by 3% to recover the cost they have to pay.
There has been a rise in these FHA-backed homes from 14/603 in 2000 to 102,921 in 2006.
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