Home Front

A blog about the economy and the Sacramento-area real estate market.

August 6, 2008
Down payment assistance: real estate faithful try to revive it

Many in real estate couldn't believe it when Congress passed a new housing bill that eliminated down payment assistance gifts effective Oct. 1.

 They're still shocked.

 I spent some time on the phone this afternoon with Jeff Johnson, who runs the Citrus Heights branch of a national mortgage lender, Platinum Home Mortgage.

 His view: "We're really going to be in trouble."

 Like many in real estate, he says that the elimination of down payment assistance - pioneered here in Sacramento in the 1990s by Antioch Progressive Baptist Church - will keep thousands of would-be buyers out of the market. He believes that just as the sales here have started to rise, this federal decision is going to slow them down again.

  Sacramento's Nehemiah Corp. of America, one of the biggest providers of these down payment gifts, is trying to spark a national rally to have lawmakers reinstate it. California Congresswoman Maxine Waters, a Los Angeles Democrat, is talking about introducing a bill to reinstate it.

 But it still looks like a long shot. The federal government has long maintained that down payment assistance unfairly raises the price of homes for those who can least afford it - and that buyers who use the tool go into foreclosure at a higher rate than others. Supporters of the assistance say that's exaggerated. 

 Home builders are also crying the blues about losing down payment assistance, as attested in this article in Builder Magazine. It quotes Nehemiah President and Chief Executive Officer Scott Syphax, saying: "We've only started the battle.

Johnson is helping fight it. He calls it one of the worst federal housing decisions in his 30-plus years in the lending business. 

Congress, nonetheless, has spoken. At least for now.



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