Down payment assistance cut as home prices soarmortgagepress.comhousing market, OFHEO budget, down payment assistance
Congress has passed the $388 billion omnibus appropriations
bill, which includes additional funding for the Office of Federal
Housing Enterprise Oversight (OFHEO) but cuts funding for the
president's signature housing initiative--the American Dream Down
Payment Assistance program, which is designed to help 40,000
low-income families by reducing down payment requirements by an
average of $5,000.
OFHEO received nearly a 50 percent increase in its budget, to
$59.2 million, as requested by the Bush administration. However,
the president's request for $200 million for his down payment
assistance program was cut to $50 million, a 75 percent decrease.
Citing budget pressures, House appropriators originally proposed to
cut the program to $85 million; however, Senate appropriators
expressed concerns about the viability of the new program, which is
supposed to help low-income renters become homeowners. The program
"may be helping families with excessive credit risk and who may not
be the best candidates for homeownership," says a Senate committee
report on the U.S. Department of Housing and Urban Development
appropriations bill. The Senate appropriators also noted that HUD,
whose budget was cut by $618 million to $37.3 billion, probably
couldn't distribute more than $50 million to the states even if
Congress provided more funding for the down payment assistance
program. In the final negotiations, House appropriators went along
with the budget cut.
These budget cuts occur as home prices record the fastest
appreciation rate in 25 years. Home prices increased by an
annualized rate of 18.5 percent in the third quarter, according to
new figures released by OFHEO. "The appreciation reflected in this
quarter's report show further acceleration from already rapid
increases," said OFHEO Director Armando Falcon Jr. The agency added
that the price increase is particularly steep when compared with
the price of non-housing goods and services. The states with the
highest appreciation were: Nevada (36 percent), Hawaii (28
percent), California (27 percent), District of Columbia (24
percent), Rhode Island (23 percent) and Maryland (22 percent).
Seventeen of the 20 metropolitan statistical areas with the largest
price gains are in California.
For more information, visit www.hud.gov.