It you did not notice on the comments to my July 29, 2008 entry Housing and Economic Recovery Act of 2008 Part I, a section of the new bill will more or less eliminate, “down payment assistance grants.”  What are these?  Well, they can be government subsidized programs or charitable organizations that utilize a HUD/FHA rule that allows for Down Payment Assistance (DPA) to be given to homebuyers in the form of a gift or grant. 

You know them as American Dream , Nehemiah , City of Henderson Neighborhood Services , Nevada Housing Division  and Sovereign Grants Alliance

They are effectively going to be eliminated.  Some of you have voiced your opinions for and against these programs.  The DPA company’s goal is to allow buyers to buy, so it would seem an obvious plus for our industry if they could remain.  The opposite argument is that these programs should not be present, that eliminating DPAs serves to reduce the default rate on FHA loans which are going to be taking over a significant share of the future loans being originated. 

Historically HUD has fought these programs and in fact lost a law suit to get rid of them.  See the Order here.  The Court viewed the programs as legal.  The new Housing and Economic Recovery Act of 2008 through section 2113, eliminates these assistance programs.

If this concerns you and you want to try to affect it one way or the other, I found the following websites:

Support Home Ownership

Nehemiah Corporation of America