Yesterday, 07/24/2008 the house passed the long anticipated HR3221 bill and has sent the bill to the Senate for ratification. This bill is 649 pages and is full of changes that will have an effect on how lenders do business to loan limits and changes to getting a loan. The bill was a compromise between the Democratic Party and the Republican Party, but it will have in my opinion a dramatic effect on the housing situation with surplus homes from foreclosures. One aspect that is welcome is the "HOPE" Program that will be able to convert 1st and 2nd loans that were ARM's to fixed rate loans backed by FHA. This program will be funded with up to 300 Billion dollars to help homeowners from foreclosures. This program is slated to be repealed in 2011, but could be extended for a later period if necessary.

What is going to change home ownership is the ability to receive any down payment assistance from any source other then a gift from a relative. This will take effect in October 1, 2008; so all DPA will have to be funded prior to that date. For perspective on how this will affect the Nevada market I will show you the latest information on the benefits for DPA's.


14,368 } Approximate number of constituents who have benefited from DPA
$85,750,712.25 } Total amount of DPA gifts
$2,580,444,023.32 } Amount of mortgages generated because of DPA
$232,239,962.10 } Approximate amount of real estate and loan commissions generate by DPA transactions
2155 } Approximate number of new construction bought because of DPA $177,301,076.09 }
Tax revenue generated to State and local governments by new home construction bought with DPA: 2155 x $82,269 (amount in tax revenue generated from an average single family unit)

• Over 80% of DPA participants are minority, female, or first-time homebuyers
• DPA composes over 40% of FHA business and uses NO tax-payer dollars to fund their programs
• FHA is financially sound and is projected to make billions of dollars through 2014 even with a high concentration of gift assisted loans and will have a capital ratio at three times the congressionally required amount
• A GAO study found that 91% DPA homebuyers were successful homeowners
• DPA programs helped to add over $24 billion to the economy from 2000 through 2005

It is estimated that this will eliminate 100,000 people from ever attaining the ability to purchase a home. Ironically George Bush Senior made the DPA available when he was President and it was his son that led the Republican Party to remove it.  There are other changes the will increase the minimum down payment from 3% to 3.5% and higher MIP fees. Feel free to write me with any questions @ john.lefrancois@dalusa.com