Hello, LOs!
Recently, I asked for your thoughts on when is the right time for down payment assistance. There are basically two schools of thought: now is not the right time because of the hot market, or the right time has long passed and there is no time like the present.
I wanted to highlight a couple of responses from you.
One Wisconsin-based underwriter asked, "If now is not the right time, when will it ever be the right time?"
"The home appreciation statistics are increasing by the month. There certainly is a great need for LMI buyers to receive assistance. Otherwise, many deserving folks will be locked out of the process."
But he said the government need not reinvent the wheel with a new program - there are already down payment assistance programs, overseen by housing finance agencies. Why not increase funding for those programs, or funding for the existing Federal Home Loan Bank network, he suggested.
"Both are already dispensing millions of dollars to borrowers that have completed homebuyer education and are both income and credit qualified. These are responsible borrowers that will be able to maintain their homeownership. They just need a little assistance to make their dreams of homeownership a reality."
But several of you said you agreed with Fannie Mae chief economist Doug Duncan, who said down payment assistance in a hot market could be "risky."
"Incentives for buyers will just further heat the market and only lead to buyers having more money to spend to cure appraisal gaps," one Las Vegas-based LO wrote. "Another idea may be to offer a tax credit for those who sell to first time buyers."
A down payment assistance program once seemed on the horizon, but it's unclear if it's still a priority of the Biden administration. A key liberal think tank published a memo last week on the "path forward on Build Back Better," but it made no mention of housing.
LOs, given that Build Back Better isn't going anywhere soon, what policies could you envision to assist first-time and minority borrowers, while not exacerbating the already-hot market? Send a note to gkromrei@housingwire.com
Georgia Kromrei
Senior mortgage reporter, HousingWire
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