Under the programs, a third party, usually a nonprofit, provides a down payment to the buyer and is reimbursed by the seller, often a home builder. That allows buyers to qualify for a mortgage backed by the Federal Housing Administration, which requires a down payment of at least 3% -- which will increase to 3.5% on Oct. 1.

The programs had largely filled the void left by the subprime-mortgage market that all but vanished in 2007. Federal officials renewed an effort to end seller-funded assistance earlier this year, arguing that borrowers were two to three times as likely to default on their loans if they received their down payment from a nonprofit. Other critics say that builders simply increase the price of a new home by the price of the down payment.

From the "I guess they still haven't learned their lesson department":

"Our view was that, yes, there were abuses, but you ought to be able to curtail those, put in some safeguards and not wipe out the whole thing," said Rep. Frank.

If simply not being able to afford the home you want gets you into FHA, and then the affordability is created by eliminating the downpayment, how is this any different from what created the bubble in the first place?


itiswhatitis at 10:06 2008-09-11 said:
Barney Frank is Insane! Permalink

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