Revived Plan Could Boost Home Sales

January 21, 2009
By: Dawn Wotapka, The Wall Street Journal

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 jump-start stalled sales and offer ailing home builders a glimmer of hope.

Rep. Al Green, D-Texas, is championing HR 600 to reinstate a 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," Rep. Green said.

Prior attempts to rescue down-payment assistance, or DPA, have failed. But as the housing market's pain worsens, DPA supporters say a return is necessary.

It is a "cornerstone to strengthening a crumbling housing market," said Scott Syphax, president and chief executive of Nehemiah Corp. 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.)

Critics have argued the programs contributed to the real-estate bust by helping people buy homes with little or none of their own money, fueling defaults.

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

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