Update: FHA backs away from no down payment loans – Money Features
After announcing a plan that would have allowed first time homebuyers to use a special tax credit to cover the 3.5% required down payment on an FHA-insured loan, the Dept. of Housing and Urban Development apparently had second thoughts.
Late last week HUD released a newly remodeled plan that does not allow the first-time homebuyer tax credit to be used for the down payment. Seems there was plenty of push back that allowing borrowers to land a mortgage without any “skin in the game” was not exactly a great idea. What’s amazing is that the proposal even got floated in the first place; the notion that taxpayer dollars would have been on the line for mortgages that required no down payment was a bit of a head spinner.
_____________________It seems that they saw the writing on the wall. What got us into this whole thing in the first place was allowing people to get a loan to pay for their downpayment or allowing them to borrow more than the actual amount needed for the home, digging into future equity and allowing more money to come to the borrower for upgrades and such.
This kind of lending allows people to get a property without putting in any significant amount of money and thus, not feeling the true weight of loss should they not keep up with payments.
Way to go guys! Thanks for seeing that it is IMPORTANT to encourage us all to sacrifice and save in order to buy. Commitment is KING!
pd
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