{"id":6716,"date":"2020-05-19T12:52:49","date_gmt":"2020-05-19T12:52:49","guid":{"rendered":"https:\/\/chenoafund.org\/?p=6716"},"modified":"2026-03-18T16:33:24","modified_gmt":"2026-03-18T16:33:24","slug":"why-does-hud-want-to-end-national-down-payment-assistance-programs","status":"publish","type":"post","link":"https:\/\/chenoafund.org\/why-does-hud-want-to-end-national-down-payment-assistance-programs\/","title":{"rendered":"HUD Plan to End Down Payment Assistance Programs Explained"},"content":{"rendered":"
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by Clayton Jarvis | May 18, 2020<\/div>\n
Originally published: MAP<\/a><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

With COVID-19 flattening the U.S. economy into a bleak and colorless landscape for prospective first-time buyers to navigate, it seems an odd time for the Department of Housing and Development to move forward in their efforts to shut down national down payment assistance plans.<\/p>\n

But that\u2019s precisely what\u2019s happening, according to CBC Mortgage Agency president Richard Ferguson.<\/p>\n

\u201cIt\u2019s really quite troubling,\u201d he says.<\/p>\n

HUD has been a vocal opponent of national down payment programs since the 2008 financial meltdown, for which the Department laid some of the blame on the once widespread practice of seller-funded down payment assistance. Ferguson explains that rather than actually providing funds for buyers, sellers were more often in the habit of raising the asking price of their properties and funnelling the proceeds back to buyers through the aid of a non-profit. The inflated prices meant countless buyers wound up purchasing homes that were overvalued shortly before the housing market fell off a cliff and hit every crag on the way down.<\/p>\n

\u201cThey see a company like Chenoa Fund,\u201d CBC\u2019s down payment assistance program, \u201cand they start to get just a little worried that national down payment assistance programs could have the same kind of affect that they had in 2008,\u201d Ferguson says. \u201cBut down payment assistance isn\u2019t what it was 12 years ago.\u201d<\/p>\n

Still, HUD has remained active over the past year in trying to eliminate the viability of programs like the Chenoa Fund. Circa Easter 2019, the Department attempted to implement a rule that would have spelled the end of such national DPA programs. Fortunately for Ferguson and CBC, the rule was so poorly worded that, if it had been implemented, it would have also prevented individual states from providing down payment assistance.<\/p>\n

\u201cWe immediately followed suit,\u201d says Ferguson. \u201cIt was an easy win.\u201d<\/p>\n

But HUD has gone back to the drawing board. Ferguson says the Department is attempting to craft a rule that would limit a government entity like the Chenoa Fund to lending within its jurisdiction. Because CBC is a native entity operating on tribal land in Utah, HUD may be hoping the courts limit the Chenoa Fund\u2019s reach to its tribal boundaries.<\/p>\n

As far as legal arguments go, it\u2019s not exactly foolproof.
\n\u201cWhat HUD\u2019s not recognizing is that the federal government bureau that gave us our charter, the Bureau of Indian Affairs, actually stated that we have the ability to provide down payment assistance or operate nationally,\u201d Ferguson says. Any rule in contravention of that charter would likely be thrown out in court.<\/p>\n

HUD declined involvement in this story, so questions around why shutting down national DPA programs remains a priority when 30 million Americans are out of work will have to be left unanswered.<\/p>\n

Ferguson believes such programs are more necessary now than ever. Originators, because of the rapidly changing rules and lending standards that COVID-19 has triggered at the state level \u2013 not to mention the murk forbearances add to the equation \u2013 are growing increasingly wary of providing down payment assistance to borrowers whose loans may not be able to be sold to state housing agencies.<\/p>\n

\u201cFHFA would be well served by allowing a national provider of down payment assistance to provide a countercyclical balance to what they states are forced to do when these market issues happen,\u201d he says. \u201cWe\u2019re actually saving a lot of deals that the states are no longer accepting because they\u2019ve raised credit requirements or lowered DTI or changed pricing.\u201d<\/p>\n

Reducing the amount of DAP available in the market seems like a curious move for a department whose mandate is \u201cto create strong, sustainable, inclusive communities and quality affordable homes for all\u201d. Ferguson feels homeownership is one of the most effective ways of addressing the widening wealth gap that exists in the U.S., and that HUD\u2019s attempt to cripple programs like the Chenoa Fund will fuel further inequality.<\/p>\n

\u201cIf these down payment assistance programs go away, most of the minorities that are reliant on these programs will be shut out of the market and will be forced to be a permanent renting underclass,\u201d he says.<\/p>\n

The Chenoa Fund assists approximately 7,000 homeowners every year.<\/p>\n","protected":false},"excerpt":{"rendered":"

by Clayton Jarvis | May 18, 2020 Originally published: MAP With COVID-19 flattening the U.S. economy into a bleak and colorless landscape for prospective first-time…<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[37],"tags":[141],"class_list":{"0":"post-6716","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-chenoa-talk","7":"tag-hud"},"yoast_head":"\nHUD Plan to End Down Payment Assistance Programs Explained - CBC Mortgage Agency<\/title>\n<meta name=\"description\" content=\"Why HUD wants to end national down payment assistance programs explained\u2014learn more at Chenoa Fund in our article.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/chenoafund.org\/why-does-hud-want-to-end-national-down-payment-assistance-programs\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"HUD Plan to End Down Payment Assistance Programs Explained - 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