OUR LAST CLOSING WITH GIFT FUNDS. LOOKING AT THIS SALE, IT MAKES MORE SENSE THAN TARP.

By
Real Estate Agent with Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate 303829;0225082372

THANKS NEHEMIAH!  THANKS MR. BUILDER.

RUMORS ARE THAT THE "GIFT FUND" PROGRAMS WILL BE RESURRECTED IN SOME FORM. 

I have my doubts.  It made too much sense.  The benefits went directly to home buyers.  The sellers voluntarily reduced their net proceeds in order to sell the property. 

Seller's helping buyers is a market force. 

Congress is not receptive to:

  1. Market forces
  2. Home buyer benefits

Why did Nehemiah disappear?  It defies logic.  Of course, some of the reasons could be:

  • The gift fund programs didn't lobby Congress (political contributions). 
  • The benefits went directly to the home buyers.
  • The funds were not government administered with bureaucratic cronies in charge.
  • The gift funds increased the buying pool for homes for sale, new and resales.
  • The program worked to benefit the consumer.
  • The program helped reduce the inventory of homes on the market. 

BELOW IS A SECTION OF THE HUD-1 from our last closing, October 1, 2008, with gift funds through the Nehemiah program.

The seller contributed $12,449.70.  The property appraised for the full contract price.

Nehemiah

 

The Buyers are very happy. 

The Sellers (Lennar) are very happy.

The Real Estate Agent who sold the house is very happy.

Lenn is happy.

Nehemiah and Ameridream Gift Fund program makes a lot more sense to me than TARP. 

 

                              Family with house

          The Gift Fund Down Payment Assistant programs worked because they help families buy homes. 

 ON ANOTHER NOTE:  Did NAR lobby for this program?  Or, is our money going to go to Move, Inc.?

 Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988. 

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Re-Blogged 1 time:

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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Douglas.  Agreed.  Anytime.

Richard.  Easy answer.  They are paying high rent.  Just because a person doesn't have a mortgage payment doesn't mean that they don't have monthly housing costs. 

For me.  A mortgage is just credit.  Folks buy cars with no down payment.  Folks buy clothing, furniture, toys, services of all kinds, food, all on credit. 

If a person's dad wants to pay 10% for a down payment on a vehicle for his son, fine.  No one cares.  But, if that same dad wants to pay 10% down on a home for his son, everyone goes crazy.

If I sell a house to a cash buyer and reduce my net proceeds by 5% because that's all the money the buyer has, fine.  No one cares.  But, let a home owner try to reduce his net proceeds by 3% to pay the down payment for a buyer, and the world goes crazy.

 

Nov 14, 2008 07:29 AM #35
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Carol. Indeed it is and it just got harder.

Terry.  Interested you mentioned qualifying.  I hosted a financing seminar yesterday and the lender said he qualifies buyers up to 50% back end ratio.  Geez!  I'm still using 40% back end and then only if the front is 30% or lower.  I'm very consertive.  If the lender wants to go crazy, that's his business. 

 

Nov 14, 2008 07:31 AM #36
Rainer
10,096
Michael Almeida
Pillar To Post - Professional Home Inspection - North Arlington, NJ
Licensed New Jersey Home Inspector

Well,

Here's my thoughts....

Assistance programs by their nature create dependency. 

If they could not save for the down payment, my personal thoughts are that they are overextending right from the start.  if you tell me they have to pay that back in 12 months so that someone else may be afforded the same opportunity that's different. 

I have had the pleasure of becoming good friends with my local Subway owner.  He's been in this country 6-7 years.  He was brought over to this country with the assistance of his extended family.  In no time he was able to borrow enough money to open his own Subway.  He in turn has extended the same opportunity to his other friends and relatives (lent money to his family).  That is assistance.  He now is on his seventh year here and now owns three Subways. 

If you do not need to return the favor...you just do not value what you are given...

Nov 14, 2008 07:32 AM #37
Rainmaker
268,369
Tamara Inzunza
RE/MAX Executives / www.MovingToNova.com / 703-623-8759 - Alexandria, VA
Homes for Sale In Alexandria VA & South County

What's the happy medium here?  Financial education needs to be taught from grade school until high school.  Citizens need to learn how to not spend so frivously and how to save.  Saving for a downpayment is not impossible, why is it so hard for us to learn to save money?

Nov 14, 2008 09:05 AM #38
Ambassador
740,060
Christopher and Stephanie Somers - Realtors - Philadelphia Real Estate
Realtor / Owner - RE/MAX Access - Philadelphia, PA

Lenn,

I love the way you think !  And make a point !  Very powerful, yet very direct and specific.  You bring up some great points.  Would be great to get some responses from the political representatives ???  The whole TARP program is now a complete cluster*** - I dont think anyone can truly wrap their arms around it.  I was initially for the beginning bailout but I am beginning to see that I was wrong for having faith and confidence that the right thing would be done... it is a tough topic.   Your point here is that there are some great programs out there that benefit the buyer... and in turn the seller... and in turn the real estate market !!!  And in turn the economy !!!!!!!!! If so, these programs should be applauded and implemented !  Thanks : )

Nov 14, 2008 09:52 AM #39
Rainmaker
246,193
Gena Riede
Riede Real Estate, Lic. 01310792 - Sacramento, CA
Real Estate Broker - Sacramento CA Real Estate (916) 417-2699

Lenn, I too hope this program comes back. We need it to help set things right and sad but I think your reasons for the disappearance are right-on.

Nov 14, 2008 10:59 AM #40
Rainer
20,192
Eric McGowan
Moody, AL

Lenn, good points. The program made sense but the government thought otherwise. Declining values, as others have indicated, would have occurred regardless in my opinion. The economy expanded and then it burst---it happens. No economy can go through continuous "gain"--look at history. This program allowed people to buy homes, make improvements down the road, and pay taxes to municipalities. Let's hope that another venue, that makes sense, comes forward shortly.

Nov 14, 2008 11:38 AM #41
Rainmaker
380,528
Kerry Lucasse
eXp Realty - Nest Atlanta Team - Atlanta, GA
Your Nest Atlanta Real Estate Consultant

Wonderful post!  I've been so frustrated that the first-time home buyer programs are getting the heave-ho.  I actually purchased my first house thanks to the Nehemiah Downpayment Assistance Program.

Nov 14, 2008 11:46 AM #42
Rainmaker
225,083
Gene Wunderlich
1st Action Real Estate - Murrieta, CA
Realtor & Legislative Liaison

We've talked before about how valuable these programs can be and the fond hope that they do return in a viable form. The reason they went away under the terms of the July housing stimulus package was because FHA insisted. Their 'data' showed that these DPA financed homes had a higher percentage of foreclosure than some others. Jeez, don't you wish they'd have pulled their heads out on the sub-primes as well? The fact is - just like any other program it can be abused if all parties agree to abuse it. However, it is a lifesaver for many and could be a real stimulus for first timers right now. My step-daughter bought a place in July using Nehemiah - the payments are lower than their rent was and they can easily afford it but didn't have the downpayment. No abse, no fudged appraisal - just a good deal all around.

To the gentleman above with the plan to drop commissions by 50% - some people don't even earn a 50% commission, some earn far more. If your contribution to the transaction isn't worth what you earn on it, you could certainly join one of the companies who don't believe their service is worth it either. Most of those companies have gone out of business in Southern California as buyers and sellers have come to demand a level of service and professionalism in this challenging market. Please feel free to reduce your commission to whatever level you feel is warranted but kindly leave mine alone.

Nov 14, 2008 12:00 PM #43
Rainmaker
115,880
Pam Simpson
Bob Leigh & Assoc., LLC - Senatobia, MS
GRI, Broker-Assoc.

Lenn - I am SO in agreement with what you have written.  Doing away with DPA has really hurt our buyers here.  With regard to NAR lobbying for the program - fat chance.  I will NEVER take them up on their Calls to Action anymore and I really feel sorry for the poor unsuspecting REALTOR who has to call me next year about my PAC contribution! 

Nov 14, 2008 01:19 PM #44
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Pam.  That's funny.  Funny, they don't call me.

Gene.  I don't know what that fellow was talking about.  As you say, it's a free country. 

Kerry.  Good for you.  BTW, I do not believe that the excuse given from FHA about the program defaults.  Shucks.  If that's the only problem, raise the MIP.

Eric.  I believe that we'll get something to help buyers under FHA as soon as they can figure out a way to get the program administration to ACORN.

 

Nov 14, 2008 01:37 PM #45
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Gena.  Thanks.  You know what a cynic I am.  But, I'm also deadly serious.  As soon as they can figure out a way to gett he benefits from gift money to cronies, it will come back.

Christopher and Stephanie.  Isn't it amazing that the government will gift Billion Dollar corporations with up to $25,000,000,000 but won't permit a home seller to gift a buyer with a stinking 3% of the price of a home???

Tamara.  Because we have confiscatory taxes, union costs layered into the cost of autos, insurance companies that make humongous profits on home owner insurance, medical costs inflated by government mandated useless paperwork and drug companies that make money hand over fist transportation costs that are prohibitively expensive for mass transportation.

For starters.

Michael.  Sadly, not everyone has an extended family.

 

Nov 14, 2008 01:47 PM #46
Rainmaker
336,070
Tom Burris
NMLS# 335055 - Dallas, TX
Texas Mortgage Dallas Mortgage FHA

It may make more sense than TARP.... 

But if it is so good, then we shouls just make FHA 100%. And do away with the third party fee.

 

Nov 14, 2008 04:56 PM #47
Rainmaker
179,805
Tara Camp
Keller Williams Western Realty - Bellingham, WA

Great Post...I agree...It's another great program that dissappeared because it was misused and abused.  There is no moderation...only market extremes (no funding) to see-saw the after effects of the other extreme (loose funding).

Thanks for the quality, well written blogs!

Nov 14, 2008 05:25 PM #48
Rainer
32,230
Evelyn Panning
Property Connections Realty Inc. - Alturas, CA

Sensible Policies and Government Support . . . . sounds like an oxymoron. ~ Evelyn

Nov 15, 2008 08:48 AM #49
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Evelyn.  Excellent!!!

Tara.  Thanks.  My pleasure.  I love to "toss things around".

Tom.  That makes entirely too much sense.

 

Nov 15, 2008 09:58 AM #50
Rainmaker
155,073
Debra Kukulski, Broker Associate
RE/MAX Unlimited Northwest - Cary, IL
SFR,CDPE;GRI;ABR;e-PRO Realtor, Northern IL

Seller participation programs are a "Godsend" for some buyers who have good credit and the ability to qualify for and pay their mortgage but just do not have the down payment.  This helps the buyer, the seller and the industry, especially in these times.  I think this is the wrong time (if ever)  to be pulling them!

Nov 15, 2008 02:57 PM #51
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Debra.  You are so right.  The timing couldn't be worse.  This just shows the insinsitivity of the folks at HUD.  If money isn't going to one of their cronies to parcel out, it's not going to last.

 

Nov 15, 2008 03:38 PM #52
Rainmaker
155,073
Debra Kukulski, Broker Associate
RE/MAX Unlimited Northwest - Cary, IL
SFR,CDPE;GRI;ABR;e-PRO Realtor, Northern IL

Lenn, that is so sad but true.  They need to think about and help out Main Street now.

Nov 17, 2008 08:08 AM #53
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Debra.  Thanks.

I wonder how long it will take for them to realize that giving Billions to banks doesn't stop foreclosures?

Nov 17, 2008 08:15 AM #54
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