NAMP Views HUD's Recent Announcement on DPAs as Opportunity for Mortgage Professionals & Homebuyers

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HUD has issued a new rule to block the loophole which allowed for down payment assistant programs to provide charitable gifts toward homebuyer's down payment requirements. The impact will touch low- to moderate-income homebuyers, the majority who are first time, who would have relied on a charitable organization to meet the requirements for an FHA loan and down payment on a home. The National Association of Mortgage processors (NAMP) views HUD's recent announcement on DPAs as opportunity for mortgage professionals & homebuyers to utilize other approved alternatives to these programs such as community seconds and SELP programs.

The National Association of Mortgage Processors (NAMP) responds to the recent plan by The Department of Housing and Urban Development (HUD) to disallow existing down payment assistant programs (DPAs). NAMP feels this will provide opportunity and more options for Mortgage Professionals & Homebuyers. To prepare mortgage professionals for such mortgage market changes, NAMP and FHA Online University provide the educational tools needed to utilize existing options for acceptable grant/gift alternatives. Although HUD's action will affect gifts by charitable organizations which have directly or indirectly been received by an individual involved in the mortgage transaction, FHA Online University prepares mortgage professionals to optimize available initiatives for those struggling to meet down payment requirements - an edge made available specifically through FHA Online University's class: FHA Processing - "For Processors."

The effect of ending charitable DPAs is significant because it ends the practice of any party to the mortgage transaction that will financially benefit as a result of the sale of the property in contributing to the borrowers minimum required investment. AmeriDream, Inc. and Nehemiah, two grant programs that fall under scrutiny through HUD's new rule, provided such funding. AmeriDream has assisted over one million homebuyers in the past few years to obtain affordable housing, 80% of which are first time homebuyers. Beginning in the mid-1990s, a number of charitable organizations, with faith-based organizations taking the lead, jump-started down payment assistance. Since then, DPA programs have been on the rise.

Says Stacey Sprain, a Certified Ambassador Loan Processor (CALP) for NAMP, "It seems quite clear to me that HUD's ruling is the result of the abusers who used DPA to market their products in order to make personal profit while using inflated property values and taking far too high of risks on borrowers who didn't fit into standard credit guidelines in the first place. We may not have DPA in the future but other options will come to those of us who are committed to withstanding the changes."

Importantly, FHA is not doing away with all DPA programs. The new rule is in line with FHA's stance on down payment options, and maintains the established guidelines of mortgage credit analysis. "Hud's final rule essentially states what mortgage credit underwriting standards have stated all along, without deviating in any way from the previously placed underwriting standards and practices regarding direct or indirect seller help for borrowers minimum required investment," says Bonnie Wildt-Hild, lead instructor at FHA Online University, "to say that potential homebuyers will be harmed as a result of diminished availability of funds with respect to Down Payment Assistance is incorrect. FHA still allows several grant programs, including programs administered directly by HUD. ADDI alone will inject a proposed $1.97 billion dollars in 2008 for down payment assistance for American Home purchasers. This combined with other incentives will provide a more than sufficient resource for first time homebuyers who lack sufficient funds to purchase a home."

The partnership between NAMP and FHA Online University is designed to help mortgage professionals to more effectively navigate these aspects of an ever-changing mortgage market, and gain the necessary insight and knowledge to continue serving low- to moderate-income borrowers in light of the recent developments.

About NAMP.
Based in the heart of Washington D.C., the National Association of Mortgage Processors (NAMP) is known throughout the mortgage processing industry as the voice of today's mortgage processor. NAMP is dedicated to assisting contract loan processors as well as in-house mortgage loan processors, in all aspects of their business. For more information, visit NAMP online at:

About FHA Online University.
FHA Online University offers live, instructor-led online FHA training classes to students nationwide. For more information, visit


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