Revival of Seller-Funded Down-Payment Assistance Highly Unlikely

Mark Twain famously said the reports of his death had been greatly exaggerated.

In the case of seller-funded down-payment assistance (DPA), it is instead the rumors of the program’s rebirth that have proven premature, according to NAHB CEO Jerry Howard, who spoke with BUILDER today after a meeting at HUD. “There was reason to hope as recently as 24 hours ago,” Howard told BUILDER. “But the chances [of anything happening] have been greatly reduced.”

According to a story in today’s Wall Street Journal, there appeared to be a movement this week to revive the program, which will be eliminated as of Oct. 1 under the housing rescue legislation signed this summer. A bipartisan group of U.S. Representatives had proposed continuing the use of seller-funded down payments with FHA loans, but only for borrowers who met minimum credit scores, and for those with riskier credit profiles, higher mortgage insurance premiums.

For builders, seller-funded down-payment assistance has provided a lifeline in terrible housing markets across the country, contributing double-digit percentages of their homes sold in recent quarters. But it looks like a lifeline that builders will have to learn to do without; Senate Republicans remain strongly opposed to seller-financed DPA, according to the NAHB’s CEO.

“We would like to get it done,” Howard said. “But the hurdles we thought had been removed are still there.”