Good afternoon —
With interest rates staying at historic lows, homebuyers are facing stiff competition throughout the country, especially first-time homebuyers. There are two bills making their way through Congress right now that seek to help those homebuyers, and one will directly impact closing.
One bill aims to give a $15,000 tax credit to first-time homebuyers. This one would help a pretty broad subset of buyers, but as a tax credit it requires homebuyers to have money up front which will then be reimbursed by Uncle Sam at tax time.
The other bill, aimed at first-time homebuyers who are also first-generation buyers, looks like it will be much more complicated. It's structured as a grant which would be available as down payment assistance at the closing table.
State finance agencies would be tasked with administering the program and distributing the funds. But they could delegate that responsibility to community-based nonprofit entities, such as community development financial institutions, minority depository institutions, housing counseling agencies or community development credit unions.
Industry reaction has been mixed.
One California-based LO told HousingWire: "Many down payment assistance programs are unworkable and/or contrary to the best interest of home buyers, in my experience. A grant at closing for first-time homebuyers, if properly managed and efficiently executed by the states, would be a welcome step. As always, the devil is in the details."
Tim Rood, managing director and head of government and industry relations at SitusAMC. noted: "Operationalizing this is a challenge. You're going to have to make it simple to incent participation instead of punishing misapplication."
But Tai Christensen, director of government affairs at CBC Mortgage Agency, had a more positive take. "It's exciting that so many lawmakers are taking up this issue of increasing minority homeownership seriously — it's a big win. I say, bring on the bills, and may the best bill win."
Christensen's CBCMA provides down payment assistance financing through its affordable housing program, the Chenoa Fund, and she thinks it will be important to include the nonprofits and government entities that already have expertise in down payment assistance and relationships with underserved communities.
"We would argue that the language needs to be such that any government entity that provides DPA should have those resources," Christensen said.
Which would you support? A tax credit administered by the IRS, or a grant administered by state finance agencies? Or would you support both? We would love to hear from more of you in title and settlement on these bills and possible effects on your business and processes. You can email me about any subject at swheeler@housingwire.com.
Until next week —
Sarah Wheeler
HousingWire Editor in Chief
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