Will H.R. 600 reduce foreclosures associated with DPA homebuyers?

It is unknown what the foreclosure rates will be following the introduction of a reformed model of seller-financed downpayment assistance (SF-DPA). However, we are confident that the reforms included in H.R. 600 will improve upon the 94% success rate attributed to the old form of downpayment assistance. This legislation puts into place a number of changes that will improve upon the old model. For example, this bill calls for new minimum FICO scores as well as homebuyer education for those receiving downpayment assistance. Additionally, this bill contains language intended to address concerns of appraisal inflation. H.R. 600 is virtually the same bill that was introduced last year. The Congressional Budget Office (CBO) scored this bill, revealing that the introduction of SF-DPA reform would be budget neutral and would not jeopardize FHA's mortgage insurance fund. In other words, this independent agency concluded that it is possible to introduce a reformed model of downpayment assistance, which will benefit thousands of homebuyers, help to jump-start the battered housing market, and aid in stabilizing declining home values, at absolutely no cost to the taxpayer.

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For additional information, please contact Shelley Mitchell, smitchell@nehemiahcorp.org, 916-231-1999.

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