Do we really want to learn from our mistakes?

The topic  I will be discussing is a very hot topic among real estate professionals  all over the country.      

The Housing stimulus law will take effect on October 1st.   A key provision of this plan, in my opinion will actually play a major part in helping to end our foreclosure crisis in Northern Virginia.  

FHA can NO longer insure mortgages that have the seller or another interested party who pays the buyer’s down-payment.   (For example:   We have all seen New Home Builder’s signs for “Zero Down Payment”.     The builder is actually paying the buyer’s down payment.)   As of October 1st, this will not be legal.   The National Association of Realtors is reporting that more than 28% of these types of loans ended up in default.   This is approximately 3 times greater than FHA loans without seller funded payment assistance.

Down payment assistance from government programs, family members  or charities that are not seller funded will still be allowed.

I believe this is going to greatly effect the New Home industry.   I do think this is unfortunate. On the other hand, I can’t tell you how many new home communities I have been in lately that have 3 to 4 or even more foreclosures on each street.  

This provision will keep some from buying, which is unfortunate,  but it should help prevent future foreclosures….isn’t that our goal?   There are many factors that have caused this foreclosure crisis we are in.   If you have read my prevoius blogs, I speak about how we are headed to recovery, but it will be slow.   There is NOT just 1 factor that has caused this real estate downfall.   If this was the case , we could just fix the problem and go on.   The good news is that our nation is fixings the problems that have contributed to  this crisis.  We do want this crisis to come to an end.   We want to learn from our mistakes not repeat them.

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