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Disclaimer: There are various forms of legislation and rule making regarding downpayment assistance currently in process on Capital Hill. Due to the dynamic nature of the political processes involved, the status of each can change at anytime, with or without our knowledge. For example, a piece of legislation that passes in the House is not a law until it is ratified by the Senate and signed into law by the President. For more information on the Legislative process, visit the U.S. Senate at www.senate.gov and/or the U.S. House of Representatives at www.house.gov.
The following is a chronological list of potential legislation and rulings intended to keep you up-to-date on the most significant issues facing downpayment assistance.
July 22, 2008
HR 3221 Housing and Economic Recovery Act of 2008
(Engrossed Amendment as Agreed to by Senate*)
-Introduced by Rep Nancy Pelosi 7/30/2007
A bill to provide needed housing reform and for other purposes.
Status: Resolving differences -- Senate actions. Senate disagreed to the amendments of the House adding a new title and inserting a new section to the amendment of the Senate to H.R. 3221.
*This phrase accompanies the final copy of a bill that has been passed by one house and
certified by the Clerk of the House or the Secretary of the Senate. It includes the
amendments to the text from floor action.
Instructions To Find HR 3221:
- Go to Library of Congress - Thomas
- Enter HR 3221 in the Search box
- Select Bill Number from the drop-down menu and click Search.
- From the results list choose #2 - Housing and Economic Recovery Act of 2008
As of July 22, 2008 3:30 p.m. H.R. 3221 Housing and Economic Recovery Act of 2008 has not been passed. We cannot provide any further information about the bill at this time.
June 16, 2008
HUD 24 CFR Part 203 Standards for Mortgagor's Investment in Mortgaged Property: Additional Public Comment Period
To prohibit homebuyers using FHA-insured mortgages from accepting downpayment gifts that are indirectly funded by the home seller. Comment period ends on August 15, 2008.
March 3, 2008
HUD Rule Defeated
On March 3, 2008, Judge Lawrence K. Karlton of the United States District Court for the Eastern District of California upheld Nehemiah’s motion for summary judgment and ruled against a Department of Housing and Urban Development (HUD) rule to ban private downpayment assistance as proposed in the "Standards for Mortgagor's Investment in Mortgaged Property" regulation published October 1, 2007.
U.S. District Court for the Eastern District of California Judgment (pdf)
November 1, 2007
HUD Rule Injunction
On October 31, 2007, Judge Friedman of the United States District Court for the District of Columbia issued a temporary order stopping the Department of Housing and Urban Development (HUD) from implementing the downpayment assistance rule at this time. HUD issued the rule October 1 that ended seller-funded programs in connection with FHA-insured loans. The rule was set to take effect October 31, 2007.
HUD Notice of DPA Rule Injunction
U.S. District Court Order Regarding HUD Rule
October 1, 2007
HUD 24 CFR PART 203 Standards for Mortgagor’s Investment in Mortgaged Property; Final Rule
This final rule amends the Department's
regulations governing the specific standards for a mortgagor's
investment in property for which the mortgage is insured by the
Federal Housing Administration (FHA). Specifically, this final
rule codifies HUD's longstanding practice, authorized by statute,
of allowing a mortgagor's investment to be derived from gifts by
family members and certain organizations. The standards established
by this final rule address a situation in which the mortgagor's
investment is derived from a gift, loan, or other payment that is
provided by any donor, including an individual or an organization,
and also specify prohibited sources for a mortgagor's investment.
The final rule establishes that a prohibited source of downpayment
assistance is a payment that consists, in whole or in part, of funds
provided by any of the following parties before, during, or after
closing of the property sale: The seller, or any other person or
entity that financially benefits from the transaction; or any third
party or entity that is reimbursed directly or indirectly by the
seller, or any other person or entity that financially benefits
from the transaction.
This final rule follows publication of a May 11, 2007, proposed
rule and takes into consideration the public comments received on
the proposed rule. After considering all comments received, HUD is
adopting the May 11, 2007, proposed rule with certain minor
clarification changes.
The effective date of this rule is October 31, 2007. Therefore, in
order for the homebuyer to use a gift that was derived from the
seller, the homebuyer must have entered into a contract of sale
(including any amendments to purchase price) before that date.
Further, due to an April 1998 settlement agreement between the
Department and the Nehemiah Progressive Housing Development
Corporation (“Nehemiah”), if Nehemiah is providing a seller-derived
gift for downpayment assistance, the sales agreement must have
been signed before April 1, 2008.
July 19, 2007
S. 1789 Department of Housing and Urban Development Appropriations Act, 2008 - Introduced by Senator Patty Murray July 19, 2007
An original bill making appropriations for the Departments of Transportation and Housing and Urban Development, and related agencies for the fiscal year ending September 30, 2008, and for other purposes.
Status: Scheduled for debate
July 18, 2007
GAO-07-1109T Testimony Before the U.S. Senate Committee on Banking, Housing, and Urban Affairs: Proposed Legislative Changes Would Affect Borrower Benefits and Risks to the Insurance Funds
Key points
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Incorporates portions of the two preceding reports without some of the data stratification
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Continues to recommend that FHA implement a limited pilot program for Zero-down instead of a nationwide roll out.
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Suggests that Congress limit initial availability of new products
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Speaks to FHA declining market share and the impact that adverse selection is having on FHA
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Describes FHA market share declines, but does explore impact on racial or low- & moderate income populations
July 17, 2007
S. 1805 FHA Loan Limit Adjustment Act of 2007 - Introduced by Senator C. Schumer July 17, 2007
To amend the National Housing Act to increase the mortgage amount limits applicable to housing insured by FHA mortgage insurance
July 10, 2007
HUD extends Comment Period for 30 days on HUD 24 CFR PART 203 Standards for Mortgagor’s Investment in Mortgaged Property
HUD’s May 11, 2007, proposed rule provides for the public comment period to end on July 10, 2007. Due to significant interest in this rule, HUD is extending the public comment period, for an additional 30-day period, to August 10, 2007.
HUD Proposed Rule Extension in PDF...
June 28, 2007
H.R. 1852: Expanding American
Homeownership Act of 2007
- Introduced by Congresswoman M. Waters on March 29, 2007
To modernize and update the National Housing Act and enable the Federal Housing Administration to use risk-based pricing to more effectively reach underserved borrowers, and for other purposes.
June 25, 2007
H.R. 3074: Department of Housing and Urban Development Appropriations Act, 2008 - Introduced by Representative John Oliver
To make appropriations for FY2008 to
the Housing and Urban Development and
specifies certain uses and limits on or
prohibitions against the use of funds
appropriated by this Act.
(29) H.Amdt. 625 by Rep. Miller [CA]
An amendment numbered 16 printed in the Congressional Record to prohibit the use of funds to be used to take any action to issue a final rule or notice based on, or otherwise implement, all or any part of the proposed rule of the Department of Housing and Urban Development published on Friday, May 11, 2007, relating to standards for mortgagor's investment in mortgaged property. Proposed: Jul 24, 2007. Accepted: Jul 24, 2007.
Status: The House passed the HUD Appropriations Bill with the above amendment on July 24, 2007 by a vote of 268-153-10.
June 22, 2007
Subcommittee on Housing and Community Opportunity Hearing on Homeowner Downpayment Assistance Programs and Related Issues
To address public interest in this issue and answer questions surrounding downpayment assistance programs offered in communities across the United States.
June 2007
GAO-07-645 Federal Housing Administration - Decline in the Agency’s Market Share Was Associated with Product and Process Developments of Other Mortgage Market Participants
Key points
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FHA Market share dropped 13 points (19% to 6%) from 1996 through 2005
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FHA Share of Minority market fell 25 points for minority borrowers and 16 points for low- and moderate-income borrowers
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Black and Hispanic market share fell 27 and 35 points respectively
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This report contains some data stratifications that may be useful in the future
June 2007
GAO-07-708 Federal Housing Administration - Modernization Proposals Would Have Program and Budget Implications and Require Continued Improvements in Risk Management
Key points
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GAO continues to hammer on recommendation that FHA pilot Zero-down or Congress limit initial availability of new products
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Adverse selection brought on by FHA declining market share is the cause of projected positive subsidy for FY2008 (no mention of nonprofit DPA contributing to this condition.)
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Describes analysis of 2005 data applying FHA proposed changes and estimates that FHA insure loans would have increased by 9 to 10 percent greater had the higher mortgage limits been in place, under FHA's proposed risk-based pricing, about 20 percent of the borrowers would not have qualified for an FHA insured loan.
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Risk-based pricing will have a more significant impact on Black borrowers (32% of 2005 Black borrowers would not qualify using new guidelines vs. 18% of White borrowers.)
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Proposed FHA underwriting guidelines for Zero-down loans would include -
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Limit amount of up-front premium and closing cost that could be financed so that all borrowers would make some minimum cash contribution
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Limit to minimum credit score of 640
May 11, 2007
HUD 24 CFR PART 203 Standards for Mortgagor’s Investment in Mortgaged Property; Proposed Rule
To prohibit homebuyers using FHA-insured mortgages from accepting downpayment gifts that are indirectly funded by the home seller.
March 21, 2007
S. 947 21st Century Housing Act - Introduced by Senator H. Clinton March 21, 2007
To modernize the Federal Housing Administration to meet the housing needs of the American people.
