Mortgage Reform Law To Eliminate AmeriDream and DPAP’s


I was planning on using a down payment assistance program to purchase a home this fall, but it looks like the mortgage reform just passed by Congress and signed by President Bush is going to stop this program from being used. Is this true? Should I be using this program?


Your question about mortgage reform and downpayment assistance is a good one. There is a lot to the bill that was just passed. Its official name is H.R. 3221 – the Housing and Economic Recovery Act of 2008. This bill which was signed into law by President Bush on July 30, 2008 is intended to add some stability to the crashing U.S. housing and mortgage markets.

Elimination of Down Payment Assistance Programs Like AmeriDream and Nehemiah
To answer your questions, you may still buy a home under the current FHA lending guidelines with the down payment assistance programs like AmeriDream and Nehemiah until October 1, 2008. Unless there is new legislation that interferes with this new law, after Oct. 1 you will not be able to use this program any longer.
If you are planning on buying a home using any of these programs then you should act fast.

FHA Will Still Allow Down Payment And Closing Cost Gift
Let’s be clear about something here. Prior to the signing of this bill, the only type of loan that you could get that allowed a homebuyer to use a down payment assistance program was FHA. Although Fannie Mae and Freddie Mac had underwriting guidelines to allow it, lenders didn’t offer loans that worked with the program unless it was through FHA.

Gift From Family Member Only Acceptable Way To Get Down Payment Help
Now with this new law eliminating the use of the down payment assistance programs the only way that you will have to buy a home using a gift is if you get the gift from a relative. FHA will still allow you to purchase a home using gift funds, but these funds have to come from a relative.
If you are going to use a gift from a relative, make sure you follow the direction of a loan officer so that you follow the gift transfer protocol that they need you to follow to prevent any hold ups in getting your mortgage completed.
See these articles for more information on the specifics of these home buyer down payment programs.

What Is AmeriDream?

AmeriDream or Nehemiah – What Is The Difference?