yes, Cathy there's a few of these third party non profits around that have been taking gifts from sellers and giving gifts to the buyers for downpayment and closing costs.

BUT, I heard that they weren't going to be able to do this any longer.

I'll have to check another blog to see if I can find you an update.

Cathy,

It is no different than any other FHA down payment assistance program.  

Dan,

The courts over ruled FHA wanting to eliminate these programs.  For now they are safe, but who knows what the new year will bring.

Hi Cathy, I have had a few deals with buyers using the non-profit gift funds. They can be good for the buyer and can be a headache for the seller.

Great for the buyer who is cash strapped, but does qualify for the mortgage. Not so good for a seller who is just squeaking by with little equity.

The home must appraise for the purchase price and the seller must be willing to give (donate to charity) the amount of the DP.

Dan, both Nehemiah and AmeriDream are in business at least until next year sometime. I did know the dates but can't find them now.

Here are links to both web sites:

http://www.nehemiahcorp.org/

http://www.ameridream.org/

Hi Cathy

I just closed on one last month. The Seller had to pay 3% of Buyers closing cost & prepaids and give the Buyers a 3% downpayment gift plus pay a $499 processing fee. Like Gary said not so great for the sellers, but they were happy to get the house sold. It had been on the market 6 months. My Buyer's were very happy to get it.

The  local lenders are not taking any more Nehemiah applications. We had to have our contract in place before Oct. 31st.  Check with your lenders to see if they will still take applications.

Tom Mitchell

tom.mitchell@callawayCountyHomes.com

www.CallawayCountyHomes.com

Cathy, We do quite a few of these mortgages in Lansing area and it has been popular. See http://activerain.com/grimesd (Don can give you the scoop) on how strong it is now. Mike

Hey, Cathy!  I just did one last Friday.  I had never seen or heard of it but there were no problems here with it on either side.  It was Homestead Trust (Home Downpayment Gift Foundation 501(c) (3) non-profit organization.

Better hurry and get it done.  My lenders here say it will be over by April 2008.  Tell those first time buyers to save that tax refund check for a down payment or ask Mom and Dad for a nice Christmas present.  There will still be state bond money for down payment assistance that charges points on the back end, I see a lot of these but the beacon scores need to be over 600 to qualify. And the bond programs have loads of paperwork for buyers and sellers.  My lenders are saying the non-profit down payment for a transaction fee programs will not be something they are offering after the first of the year.

Have done lots of these.  It's perfectly legal and legit if you use good companies and all parties know what is going on.  AmeriDream seems to be the most widely used and respected around here.

Why the programs exist:  Per FHA rules, seller CANNOT pay buyer's 3% FHA Down Payment - However, a buyer can pay this Down Payment using money received as a gift FROM SOMEBODY ELSE.  AmeriDream assists as a middle man.  It's like legal money laundering.  

Mechanics: Seller makes a donation to a charity.  Seller is, in effect, paying the 3% FHA down payment for the buyer, to AmeriDream, plus a small processing fee.  AmeriDream then gifts the buyer with the Down Payment and keeps the processing fee for providing the money laundering service.  

How the offer is written: Buyer adds 3% plus a processing fee (maybe $500 - but ask the lender?) to the price the buyer is otherwise willing to pay for the house.  

If the buyer also needed 3% from seller for closing costs then the offer is for 6% more than really willing to pay, plus the processing fee.

Keep in mind that you usually need to write full price offers to make this work.  A full price offer turns into a 94% of list offer in the above scenario.  Not all bad for the seller if they want to sell.    

If the house will appraise for the total price of the purchase agreement, all will be fine : )

Here's another one http://preferredprogram.org and the HUD update http://preferredprogram.org/HUD/Update.aspx

Vicki - I just heard the same thing today.  After Cathy's post I wanted to learn more, too.  The one I did Friday was the first and only one I had done - I heard the same thing from a lender that I talked to as well.  April 2008 is pretty much it.

FHA loan reform is under way.  The 3% down payment requirment may be waived in near future.  If this happens, it would eliminate the need for using these down payment assistance programs altogether.

Until then, the programs still offer a way for buyers and sellers to make a deal work when credit is good enough but there is not enough cash from buyer.

Just closed a Nehemiah FHA last week. On a short sale. The Nehemiah part was no problem. The short sale is a whole 'nuther story...

Chronicled here:

http://www.phoenixrealestateguy.com/the-short-sale-from-hell/562

and here:

http://www.phoenixrealestateguy.com/short-sale-from-hell-the-saga-continues/571

Just happened to come upon this blog and thought I'd throw in my 2-cents worth.  I am with The Nehemiah Program.  Nehemiah won its court case with HUD last week (February 29th) and the HUD Rule prohibiting downpayment assistance has been thrown out by federal judges in California and DC.

It is business as usual at Nehemiah Corporation of America.  We expect to be offering DPA well into the future.  The IRS Revenue Ruling has not had an impact yet on Nehemiah, however, we are prepared to address the issue should the IRS want to pursue the ruling relative to Nehemiah.

The FHA Modernization legislation has passed both the House and Senate, but, the bills need some reconcilliation before they can go to the President.  The members of Congress who are conferring on the differences hope to have resolution soon after they return from spring recess.  One bill calls for 100% LTV and the other calls for 98.5% LTV.  Not sure where they will end up.  FYI...the Senate version unilaterally eliminated downpayment assistance programs...soooo...if you like having the option of DPA available to help your buyers and sellers, this is a good time to call your US Senator!

Nehemiah has helped over 250,000 individuals and families achieve homeownership.  We have privided over $1 Billion in gift funds to these families.  Many folks perceive the program as a buyer's program.  The fact is that there was a ready willing and able seller on the other side of each of those 250,000 transactions.  The program really serves the interests of all parties to the transaction.

For current information on the regulatory issues impacting the downpayment assistance industry, visit our website at www.getdownpayment.com.  You can also register for our next free webinar and learn all about the program and how to assist more buyers and sellers.

David Baritell, GRI, CRS, MIRM

Director of Business Development

Nehemiah Corporation of America

dbaritell@getdownpayment.com

Well, it looks like it is just about official and The Nehemiah Program actually has added a countdown clock on their website at www.getdownpayment.com . The DPA’s will be no more as of October 1, 2008. Personally, I feel it is more fiscally responsible to have these plans go away, but the real estate industry will probably feel some impact from the new law when it takes effect. Call me crazy, but really, if you cannot save at least 6% for down payment and closing costs, you probably aren’t in the position to buy that particular home. We really don’t need everything Here and Now, do we? Work hard, save up and buy smart. This is how we as real estate professionals should be counseling our clients anyway. We should not be working transactionally, but rather relationally as their real estate consultant for life. Your buyers will thank you for that in the future.

I on your side John...

The Nehemiah Program actually  Swapping dollars to bury more buyers into a home they can not afford and puff up the appraisals to end up with 100%.. in some cases more.

We already had a belly full of 100% mortgages, now 300 billion $$ bail out on the way,,Nehemiah already got there Vigorous..for passing money through a dummy charity.

Why don't the sellers just pass the down payment to the closing attorney and then he pass it off to the mortgage company at closing..same thing..except for what Nehemiah charges!

Oops I forgot this one   http://www.ameridream.org/ Bye,Bye also