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Down Payment Assistance Providers (DAPs) enabled borrowers to obtain FHA mortgages to purchase homes with no money down. In essence, the DAPs acted is if they were charities. The DAPs gifted the money for down payment and closing costs to the borrower. The funds for the gift came from the seller of the property. Typically the seller of the property inflated their selling price to accommodate the cost of the gift funds. The purchaser of the home typically paid a higher price for the home. In the transaction, the DAPs retained a fee. A typical fee was $500 for a transaction. Multiply the DAP fee times the number of transactions and you can see millions of dollars that the DAPs received through their transactions. Nehemiah and Ameridream were great at exploiting this program dominating more than 50 percent of the DAP market in 2008.
Seller assisted down payments are no longer eligible for FHA mortgage insurance. That leaves these down payment providers in the business of lobbying for changes in legislation that would permit them to once again skim hundreds of millions of dollars from homeowners once again.
Seller assisted down payments are no longer eligible for FHA mortgage insurance. That leaves these down payment providers in the business of lobbying for changes in legislation that would permit them to once again skim hundreds of millions of dollars from homeowners once again.
Now ask which mortgage companies participated in this program and how much they benefited from seller assisted down payments the program!
3 comments:
Although a loan does not start out as income to the borrower, it becomes income to the borrower if the borrower is discharged of indebtedness.
Make sure to know the state of your finances before contacting your lender. Determine how much income you're bringing in each month, how much you're paying in bills and where you can cut costs. Just a tip!
This was awesome real estate blog. THNX.
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