Both the House and Senate passed H.R. 3221, Housing and Economic Recovery Act of 2008, a comprehensive piece of legislation that addresses a variety of housing related issues. The bill contains a provision (SEC. 2113) that forbids FHA from insuring mortgages in which the borrower?s downpayment comes from a private downpayment assistance provider, beginning October 1, 2008. As of this date, the minimum downpayment will be increased from 3% to 3.5%.

The bill was signed into law by the President July 30, 2008.  With the stroke of the President?s pen, downpayment assistance was shut down in the United States effective October 1, 2008.

Other Downpayment Assistance Programs (DPA) are still open, including employer assisted downpayment. Only DPA programs where the Seller had a vested interest in the sale were closed.

During its existence The Nehemiah Corporation of America, a national non-profit organization, has helped over 300,000 families who would have otherwise been locked out of homeownership due to lack of downpayment funds.

SOURCE: National Association of REALTORS

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