When I first wrote about H.R. 6694 it was after I wrote to my representatives through the Nehemiah and the DPAgroundSwell.org website in support of the bill - Received this email today from Dianne Feinstein. I have to say that I at least appreciate the attempt to personally address me and speak specifically to the subject of my original contact which was Seller Paid DPA.
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Dear Mr. Schang:
I am writing in response to your letter regarding down payment assistance programs. Thank you for taking the time to write, and I welcome this opportunity to respond to your concerns.
On July 30, 2008, President Bush signed into law the Housing and Economic Recovery Act. This legislation, which provides critical relief for American homeowners facing foreclosure, also contains a provision prohibiting Federal Housing Administration (FHA) program participants from using down payment assistance programs in which the seller financially benefits from the transaction.
The U.S. Department of Housing and Urban Development (HUD) Inspector General, the Government Accountability Office, and the Internal Revenue Service have cited serious problems with some seller-funded down payment assistance programs that have lead to substantial losses for FHA. The agency had $4.6 billion in unanticipated long-term losses in its annual re-estimate this year, primarily as a result of the increased amount of seller-funded loans in its portfolio. Foreclosure rates for seller-funded down payment assistance loans have been found to be three times higher than other FHA loans.
You may be interested to know that on July 31, 2008, Representative Al Green (D-TX) introduced the “FHA Seller-Financed Down Payment Reform and Risk-Based Pricing Authorization Act of 2008″ (H.R. 6694). The bill would reinstate FHA seller-funded down payment assistance for individuals with certain credit scores. Currently, H.R. 6694 is pending consideration in the House Committee on Financial Services and a Senate companion bill has not been introduced. Given the major concerns of the Senate Banking, Housing, and Urban Affairs Committee with seller-funded down payment assistance programs, it is uncertain if similar legislation will be considered in the Senate. Please know that I will keep your views in mind should the Senate consider this legislation.
Again, thank you for your letter. If I can be of further assistance, please contact my Washington, DC office at (202) 224-3841. Best regards.
Sincerely yours,
Dianne Feinstein
United States Senator
Further information about my position on issues of concern to California and the Nation are available at my website http://feinstein.senate.gov/public/. You can also receive electronic e-mail updates by subscribing to my e-mail list at http://feinstein.senate.gov/public/index.cfm?FuseAction=ENewsletterSignup.Signup.
