HUD has eliminated the use of the DPA (Down Payment Assistance) programs like AmeriDream, Nehemiah and Quick.com. These programs allowed the seller to give the money for the down payment to a third party “charity” that would in turn gift the money to the buyer. HUD is no longer going to accept these programs as an acceptable source of gift funds for down payment.
Also affected is the use of FHA and Oregon Bond with Cash Advatage. You may no longer use the Cash Advantage for down payment on FHA Oregon Bond loans only (conventional Bond still OK). HUD recently issued a ruling that prohibits use of such programs as AmeriDream, Nehemiah, etc. and included reference to other cash assistance that is from an “interested” third party or other entity. This regulation will be effective October 31, 2007 and will not affect any loans in the pipeline scheduled to close before that date.
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One point of clarification: Nehemaih has prior agreements though a lawsuit settlement with HUD that allows the program to function until March 31st, 2008. Also, contracts for purchase can be executed as late as October 30th, and still close under the old DPA guidelines.
My hope is that the Senate will get things going and put out their own, only slightly modified version of the House's FHA Maodernization bill. Something that can be easily voted on and sent to the Presidnet's desk for signature.
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