The Ameridream Scam

Andrew -

I've never been a big fan of Ameridream - it's just a wolf in sheep's closing, in my opinion.

Sure, they have helped many buy a home they otherwise wouldn't have been able to afford - but was this the right thing to do?  Many now are in deep distress, and in foreclosure - if not already out of their homes they purchased with seller Down Payment Assistance.

I agree with you!

DEAN & DEAN'S TEAM CHICAGO

What give up my Starbucks!  That's blasphamy! 

I agree getting back to basic budgeting and saving is a good thing. 

I have never had one on my listing or with one of my clients. I do know certain lenders push them as a way to get people into places. Few will most likely miss it.

Thank god it is going away...thank you for your post, I have felt like a minority posting on peoples blog saying it should go away...All the lenders I work with won't even accept a deal with it, and haven't for months.

We all have to keep that attitude, You are what you think. THe market is only as good as we think it is...

I disagree.  The down payment assistance programs have helped thousands of families into homeownership.  Sure the foreclosure rates are higher than for non-DPA transactions, but so what?  The vast majority of people who have purchased homes with the help of these programs are NOT in distress.

Where would you draw the line?  If zero down programs are bad, what about 3% down programs, or 5% down programs?  I'm sure the default rates on those loans are higher than on 20% down loans.  Would you require that every buyer have AAA credit and 20% down?  Where would our real estate market be if that were the case?

Every segment of the real estate market depends upon a continuing influx of new buyers into the starter homes.  The sellers of the starter homes move up to larger homes and so on and so on.  We need to do everything possible to help more people into the market.  

The way to decrease foreclosures is to tighten the underwriting standards to make sure that only qualified people get the loans.  Do away with no-doc loans and outrageous debt-to-income ratios, but don't take away the DPA programs.

Another example of how abandoning common sense has caused trouble. OF COURSE a buyer with money in the deal will be less likely to default. Does anyone else here the big, resounding cosmic "D'UH"?

So many institutions made so many reall dumb decisions that conributed to our current problems. They still seem to have lessons to learn in many areas.

Having been an affordable housing focused professional for almost 30 years, I've seen an almost 95% success rate in buyers who receive assistance with downpayment remaining successful home owners and go on to become 2nd and 3rd time buyers. The positive ecomonic impact to all aspects of the American economy of the successful homebuyers who benefited from programs like AmeriDream so far outweighs the negative. I've always had a special sense of satisfaction from helping credit-worthy homebuyers get the same feeling I got way back in from buying my first home when I didn't think it was possible because of not having the downpayment.

Having spent the last 18 years in title insurance and related industries, I have seen the impact downpayment assistance programs have had, and they have given thousands of credit worthy buyers the opportunity to own a home.  How can you deny the impact the absence of these programs will cause?  Thousands of homes have been built and are being built that were specifically marketed to a buyer that did not have a downpayment.  What happens to the buyer that signed the contract to close in November using downpayment assistance?  The builder cannot possibly finish the home and close the loan by Oct 1.  Sellers are conceding 8-10% to sell their home.  Participating in a downpayment assistance program is a win-win situation for all parties.  I agree with the poster that state the benefits far outweigh the negative.

I hear that opinion a lot, and it of course makes sense. However, I feel that the Amridream program did legitimately benfit a few people. There are people out there that through no fault of their own where caught up in this rough finncial times and had their one shot at a home through the Ameridream Program. Many out there are looking for a deal and only to take advantage of the program, but, lets not forget that the program was meant to help those who do not have the money for a Down Payment and I believe, to lift up cetain areas that may have lower than average wages and employment.

Karen & Bruce

I don't deny that the DPA programs has allowed a lot of people to buy homes and that these programs have their place, my opinion, and its only my opinion is that when the DPA comes from the seller the buyer has no "skin in the game" and not as much invested either emotionally or financially in the home.

The DPA is still available if the buyer receives the donation from a person or persons not financially connected to the transaction.

Home ownership is a Privilege not a right, everybody can have the opportunity to buye a home but not everybody should

It may be coming back.... http://www.dpagroundswell.org/news/news.cfm?newsID=72

This compromise aims to eliminate the candidates most likely to go into foreclosure - those with FICO scores below 620 (common sense).  If their FICO is between 620 and 680 they would be subject to risk based pricing.  Here is a link to my commentary:https://www.thinkbigworksmall.com/mypage/1953/2911/481350.

Todd, welcome to AR, i agree that there is a place for the DPA's but some control needs to be in place if the seller is putting up the down payment.

No skin off the back is the funniest argument I hear regarding DPA's.  I've used DPA's for 18 transactions this year.  Every one of those people had rented an apartment for at least 3 years (some up to 10).  They had never missed a rent payment.  Who's dream are they living?  The landlords who are collecting rent month after month. 

These people came to seminars that I hosted, met with realtors, looked at hundreds of homes online, looked at 25 houses in person, went through the documentation process, had friends and family help them move in, and are so excited to finally be in their first homes that it is amazing.  That's skin. 

In my opinion, DPA's are useful to help people keep money in the bank.  In other words, would you rather have a buyer spend every penny in savings to come up with the $5000 down so that when any repair or hiccup in income happens, they have to scramble?  Or would you rather have the seller contribute the gift and have that borrower keep the $5000 in the bank so that they have a nice nest egg in case something happens? 

I agree DPA's needed to be reformed and am glad as a taxpayer that the reforms are coming.  But banning them outright wasn't the right thing to do. 

Andrew,

Glad to be here...

I agree there need to be controls.  I like that the proposal that passed the House yesterday requires a minimum FICO score. I think it would be great if there was a minimum reserve requirement. If a borrower had to have 2 or 3 months payments seasoned in a savings account.  That way when the AC goes on the REO they bought last week, they can afford the repairs without going into foreclosure. 

Are there additional requirements anyone else out there would like to see?

Fantastic comments, I agree that DPA has a place but it should not come from the seller, it could come from Mom, Dad, Aunt Mary, the church/charity or where ever.

The buyer should have an investment in the home even if it is only an emotional investment that I don't want to sit across from Mom and Dad at the thanksgiving table and say that I lost the home that you gave me the down payment for...