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FHA Zero Down Payment Financing Returns - As Will Higher Default Rates
Seeking Alph ^ | 14 September 2010 | Bill Zielinnkski

Posted on 09/21/2010 8:20:45 AM PDT by Lorianne

Home buyers can once again purchase a home using FHA financing with a zero down payment.

Previous zero down payment FHA loan programs were funded by seller contributions funneled through a nonprofit group which then donated the down payment to the purchaser. These seller-financed down payment programs were terminated in 2008 after the FHA experienced default rates three times higher than when buyers made a cash down payment.

The innovative zero down payment FHA home purchase program was recently introduced by The Lending Company of Phoenix, Arizona. In order to meet the FHA required 3.5% down payment, the borrower receives a 2.5% gift from a non-profit organization and the remaining 1% can be gifted from a family member.

The Lending Company notes that the program is not a seller-paid down-payment assistance program. To further reduce the amount of cash required by the purchaser, the seller is encouraged to provide seller concessions to cover closing costs. A borrower receiving both gift funds and seller concessions can potentially purchase a home without putting any cash into the transaction.

(Excerpt) Read more at seekingalpha.com ...


TOPICS: Business/Economy; Extended News; Government
KEYWORDS: economy; fha; handouts; recipefordisaster; zerodown

1 posted on 09/21/2010 8:20:51 AM PDT by Lorianne
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To: Lorianne

This is proof positive that the Obama administration is out to destroy out country.


2 posted on 09/21/2010 8:26:38 AM PDT by J Edgar
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To: Lorianne

Wow. Here we go again.


3 posted on 09/21/2010 8:27:22 AM PDT by Texas resident (Outlaw fisherman)
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To: Lorianne

IT MAY BE WELL LIKELY, THAT WHEN APPRAISALS ARE MADE ON THESE HOMES, THEY WILL COME IN UNDER THE PURCHASE PRICE, DUE TO THE GIFTING WHICH HAS TO BE DECUCTED FROM THE SALES PRICE IN AN APPRAISAL. (darn caps lock key....sorry)


4 posted on 09/21/2010 8:30:36 AM PDT by illiac (If we don't change directions soon, we'll get where we're going)
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To: Lorianne
In most cases, if the person hasn't been able to save enough for a down payment (especially 3.5%) then they probably aren't going to be able to make payments either.

I have told many younger people (and I don't feel old for doing it) don't even consider buying a house without a 10% down-payment. Then put 5% down, and the other 5% in a separate account to cover all the costs of home ownership that you didn't anticipate.

As far as I know only two people listened, but they are both still home owners today.

5 posted on 09/21/2010 8:44:09 AM PDT by I cannot think of a name
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To: Lorianne

This will become more common.

As discretionary income increase, the downpayments will increase. Simple economics.

Not much discretionary income out there right now.

As long as the monthly payment (principle+interest+proprety taxes and insurance)is about the same as the former rent payments, these people should do ok.


6 posted on 09/21/2010 8:55:12 AM PDT by texmexis best (My)
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To: Lorianne

So it’s evil when it’s done under Bush, but okay when it’s done under Obama. Okay. got it.

No matter how you spin it it’s still giving big loans to people who are incapable of saving any money.


7 posted on 09/21/2010 9:03:37 AM PDT by Seruzawa (If you agree with the French raise your hand - If you are French raise both hands.)
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To: Jet Jaguar; NorwegianViking; ExTexasRedhead; HollyB; FromLori; EricTheRed_VocalMinority; ...

The list, ping

Let me know if you would like to be on or off the ping list

http://www.nachumlist.com/


8 posted on 09/21/2010 9:07:32 AM PDT by Nachum (The complete Obama list at www.nachumlist.com)
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To: Lorianne

Now, we are ‘Back to the Future” with making loans again to persons who do not have the creditworthiness to buy a T-Shirt on a payment plan.

As a person who has paid the down payment or more on the 3 houses I have owned, this is a particularly sore point.


9 posted on 09/21/2010 9:52:34 AM PDT by ridesthemiles
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To: Lorianne

My current property is for sale.

I am not giving any concessions or willing to deal with any ‘creative financing or creative accounting’ in the sale of same.

I do not want to even be a cog in the wheel of such transactions.

Rural property- 5.58 acres- all set up turn-key for horses.


10 posted on 09/21/2010 9:54:52 AM PDT by ridesthemiles
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To: Lorianne

Reinflating the bubble.


11 posted on 09/21/2010 9:56:31 AM PDT by kevao
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