Oh Nehemiah, what verse were you?

Can this be the same Nehemiah? Well let's see.

Buyers in todays market are looking for good solid financing that is close to 100% and provides help with downpayment and closing costs. Here is your Nehemiah!

Guidelines for this Nehemiah: This is a grant program that provides gift funds for downpayment and closing costs to qualified homebuyers.

The seller contributes 6% to the Nehemiah Program. The program grants up to 3% for down payment and 3% for closing costs. The cost of the program at closing is $599.00 to Nehemiah. Nehemiah does not underwrite the package. FHA 1st loan and underwriting guidelines. Propeprty must appraise, value to include 6%. Some lenders cap price if using program (wells 417K). Increasing value 6% over list price and lender will scrutinize appraisal.

Sounds like the best thing since sliced bread and subprime loans?

Looming deficit impedes federal housing agency

As the president and Congress propose extending the benefits of Federal Housing Administration (FHA) insurance to hundreds of thousands of homeowners in need of mortgage assistance, the FHA itself faces a deficit for the first time in its history due to problems with its seller-financed downpayment loan program. If these problems continue, the agency could face a $1.4 billion deficit by 2009

MAKING SENSE OF THE STORY FOR CONSUMERS

• The seller-financed downpayment program today accounts for 35 percent of all FHA loans, up from 2 percent in 2000. Under the program, sellers cover the buyer’s downpayment and typically add it to the total cost being financed through a mortgage. These loans became more popular as homebuyers struggling to qualify for a home abandoned conventional FHA loans in favor of subprime mortgages. Between 2002 and 2006, the number of conventional home loans insured by the agency plunged from 1.3 million to about 314,000. Congress has been urged to take action to discontinue these loans, but opponents of such an action argue the program is necessary to help first-time buyers.
• Despite worries about FHA’s future, since September the agency has helped more than 150,000 homeowners refinance their mortgages. The president hopes to increase that number to 400,000 by the end of the year, and Congress is considering legislation that would expand FHA programs to even greater numbers of Americans.
  To read the full story, please click here: http://www.nytimes.com/2008/04/09/business/09fha.html?_r=3&th=&emc=th&pagewanted=print&oref=slogin&oref=slogin&oref=slogin

Down Payment Assistance Program

We are excited that the down payment assistance program is still available after the court ruling earlier this week. The down payment assistance program was about to expire. This means that the 3% minimum down payment requirement for FHA loans can be paid by the seller using the program. How this works is that the 3% down payment is shown as a gift from a non-profit entity such as Nehemiah or Ameridream. The funds for the gift actually come from the seller and these monies are transferred in escrow. This allows the borrower to purchase with no money down and can even move in with no money if the seller also agrees to pay closing costs. In this marketplace, if the seller were willing to take 6% less than the asking price, in effect, the borrower would have a 3% down payment from the seller and 3% to cover all closing costs.

With FHA, no cash reserves are required and less than perfect credit is acceptable. A buyer could purchase a property without any funds or cash reserves. This strategy is now commonly used in short sales negotiations with banks. A new FHA modernization bill is expected to come out over the next couple of months which may eliminate the down payment assistance program but the new changes would likely reduce the down payment requirement to only 1-1/2% instead of 3%. We are hopeful that the new higher FHA loan limits will be in effect within the next 2-3 weeks. The new conforming loan limits may not be available for many weeks beyond that.

FHA loans are becoming the number one financing option for many borrowers. Last month, 25% of the volume of Cherry Creek Mortgage was attributed to FHA loans. We expect that percentage to increase to 40% over the next three months.

If you are not 100% comfortable with FHA financing at this time, give me a call and I will put you in touch with my lender to help you out.

Information from Don McGlinchy at Cherry Creek Mortgage