As a Mortgage Professional, you know that 50–70% of your income comes from your past clients through repeat business and referrals. That first engagement is the building block for current and future income. Loan officers should be prepared to answer ten questions that savvy homebuyers ask before making a decision on who will help them realize their dream of owning their future home.

 

Question 1: How many transactions do you work on per month, per year?
Transactions can be viewed as upvotes and likes. The more transactions a loan officer is working on or has closed, the better a potential homebuyer assesses your experience and track record for helping others like them successfully get loans. Include in the conversation the number of referrals you receive because that suggests happy customers. When you talk about transactions, discuss the level of the difference between normal and excessive transactions and what that means to the borrower in terms of service they will receive.

 

Question 2: What is your Net Promoter Score?
As you know, the Net Promoter Score is used by many lenders to track their loan officers’ performance on every closed loan transaction. Every loan officer is going to tell potential homebuyers that they give great service.

 

Help the borrower know that a Net Promoter Score (NPS) is an objective measurement of your customer’s willingness to recommend your product to their friends or co-workers. It’s’ a holistic way to measure the satisfaction of your customers. A Net Promoter Score is an index that ranges from -100 to 100. Often an NPS is based on a single-question survey delivered post-closing after their buying journey has finished. For example, on a scale of 1-10, “How likely are you to recommend our services to your friends and family?” Responses from 0-6 are “detractors.” Responses from 7-8 are neutral, and responses from 9-10 are your promoters.

 

Help the potential homebuyer understand the scoring and where you place in the scoring. A loan officer with a very weak score of less than 50 has less than 50% of consumers recommend the loan officer to a friend and should be a sign that homebuyer walk away from that loan officer. Low scores could reflect issues that consumers have identified with the loan officer, such as (1) closing delays, (2) not being responsive to phone calls or emails, (3) lack of transparency into the process, and (4) other negative experiences.

 

Question 3: What is your experience working with consumers like me?
Yes, every loan is unique. When you are engaging with a potential homebuyer you are learning about their situation. But you have experience with homebuyers in similar situations. For example, if the homebuyer is a marketing manager working at a startup and receives annual bonuses and incentive stock options, you will want them to know that you have experience working their profile and structuring and closing comparable transactions. Help them understand what that experience means to them.

 

Question 4: Can you explain your process and turn-times for working with applicants to get my loan from application to approval?
You should be able to explain the mortgage process concisely and clearly so that potential homebuyers can be sure that you understand how to help them navigate the process and that you are not a newbie. Be upfront; if it is going to take two weeks for an underwriter to review a loan file, share that so the homebuyer can write a purchase contract with enough time for closing on your loan. If you are only in charge of the initial sale and will not oversee the loan from start to finish, they need to know that so they are clear what to expect. There should be no surprises, and being upfront helps the customer trust you through the process.

 

Question 5: What is your track record of on-time mortgage closings?
Talk about the importance of closing loans on time and what that means to the borrower, especially when they can be held liable for a breach of contract by the seller for not closing on time. Honestly share your record for closing loans on time and the process you follow to make that happen.

 

Question 6: Tell me why you chose this profession?
Are you passionate about your profession? Top producing loan officers are dedicated and will go the extra mile to deliver a compelling experience for their customers, and to make the mortgage process as seamless and user-friendly as possible. Simply the way you talk on the phone or interact with your customer says a lot about you.

 

Question 7: How do I keep track of the status of my loan and at what milestones will I receive updates?
Communication is everything. Sometimes, as loan officers, we forget just how stressful applying for a mortgage loan is for the homebuyer. Let the potential customer know how you will communicate with them throughout the 30-day mortgage process, and help them through each step and to track the progress of the loan. This becomes especially important if they sense that you will be working on too many files. Share what kind of updates they will receive; for example, routine versus immediate communication, such as when a further documentation is needed. If you have online portals for consumers to track the status of their loan, make this a clear value proposition.

 

Question 8: What do you think my chances of loan approval are?
You know what your institution can and cannot approve. You should be able to clearly articulate whether you believe a borrower can get a loan approved or not and why. Be transparent. If the borrower needs to change aspects of their financial situation to get a loan approved, they should know that. Most loan officers use an automated decision engine to see if the potential homebuyer can be approved at point of sale even if the loan officer is not sure, or the loan officer can call an underwriter to get an opinion on a lending rule or guideline upfront. Talk about the tools and some of the key factors in the decision process.

 

Question 9: What city and state is your processing center and underwriting center located at?
Help the potential homebuyer understand your closing process with the processor and underwriter. Homebuyers are told that it is always better to have local processing and underwriting (or at least within the same time zone) because it is easier to get questions answered. If processing or underwriting is not local, let the borrower know what hours are available for them to contact the appropriate person for questions and how this might impact their loan closing, especially in case you need to submit additional items.

 

Question 10: Is there anything that we have not discussed that I should be aware of?
Based on your conversation with the potential borrower, help them understand that their loan is top priority to you and that you will help them through this complex process. Be willing to disclose the positive and the negative. Help them uncover questions that they should be asking and the answers to those questions. Often, it’s these moments that determine if the borrower will become your customer.

The post Ten Questions Homebuyers Ask When Choosing a Loan Officer appeared first on Chenoa Fund – Down Payment Assistance.

 

16 Members Signed onto Letter Urging HUD Not to Impede on “Well-Performing Programs”

 

Today, CBC Mortgage Agency (CBCMA) applauded a letter sent by the Congressional Black Caucus and the Congressional Hispanic Caucus to U.S. Department of Housing and Urban Development (HUD) Secretary Ben Carson highlighting the importance of down payment assistance programs to low-to-moderate income and minority homebuyers. Over a dozen members signed onto the letter, sponsored by Congressman Emmanuel Cleaver (D-MO), underscoring concerns with HUD’s recent actions that could potentially reduce the availability of down payment assistance programs and calling for further data before taking future action.

 

Additional signers on the letter include: William Lacy Clay (D-MO), Joyce Beatty (D-OH), Alcee L. Hastings (D-FL), Barbara Lee (D-CA), Marcia L. Fudge (D-OH), Bennie G. Thompson (D-MS), Vicente Gonzalez (D-TX), Rashida Tlaib (D-MI), Al Lawson, Jr. (D-FL), Nanette Diaz Barragán (D-CA), Debbie Dingell (D-MI), Robin L. Kelly (D-IL), Darren Soto (D-FL), Lucille Roybal Allard (D-CA), and Bobby Rush (D-IL).

 

The letter noted, “Additionally, HUD indicated…that it is considering limiting national scope governmental entities providing secondary financing. It is critical that well-run programs, regardless of their scope of operation, be allowed to continue their mission of assisting minority borrowers. We ask that HUD collect performance data on individual government DPA programs so that it can identify those programs that are not performing well rather than eliminating programs simply because of their scope of operation.”

 

“As a provider of down payment assistance to homebuyers across the country, I commend Rep. Cleaver’s leadership on this issue, and the Congressional Black and Hispanic Caucuses for their continued support of Americans interested in buying a home,” said Michael Whipple, senior vice president of CBC Mortgage Agency. “Without accounting for the performance of the individual governmental DPA programs, broad-brush elimination tactics will ultimately harm homebuyers seeking financial assistance, and do nothing to protect the taxpayer.”

 

The letter also recognizes HUD’s responsibility to ensure the solvency of the Mutual Mortgage Insurance Fund (MMIF) and support HUD’s efforts to properly administer its programs. However, the letter urges HUD that if restrictions on secondary financing are necessary to protect the MMIF, those restrictions would not necessarily hinder well-performing programs who are responsibly assisting qualified borrowers.

 

“HUD has provided no data to support its claim that through eliminating the scope of programs such as CBCMA, it will improve the solvency of the MMIF,” said Whipple, who noted that CBCMA data shows that CBCMA-assisted loans perform as well as the general pool of government entity assisted FHA loans.

 

This letter is among a recent series of congressional actions urging HUD to collect data on the entire list of down payment assistance program providers.

 

About CBC Mortgage Agency

CBCMA provides secondary financing to borrowers, who are receiving loans insured by the Federal Housing Administration (FHA). CBCMA takes great care to ensure that the FHA loans perform well, including providing education as well as 12 months of counseling to borrowers after the purchase of their home. In addition, CBCMA regularly reviews its credit standards to ensure that the borrowers it assists are credit worthy.

 

CBCMA is a wholly owned subsidiary of Cedar Band Corporation, a federally chartered tribal corporation wholly owned by the Cedar Band of Paiutes, a federally recognized American Indian band. For more information about CBCMA and its programs, visit chenoafund.org.

 

The post CBC Mortgage Agency Applauds Congressional Black Caucus and Hispanic Caucus Letter Encouraging HUD to collect Individual FHA Loan Performance Data appeared first on Chenoa Fund – Down Payment Assistance.

Congressional Letter Calls on Agency to “Engage in Meaningful Tribal Consultation” Prior to Issuing Rules Affecting Tribal Nations

 

CEDAR CITY, Utah – The Cedar Band of Paiutes today applauded a letter (attached) sent to U.S. Department of Housing and Urban Development (HUD) Secretary Ben Carson regarding Mortgagee Letter 2019-06. The letter, co-sponsored by Reps. Cindy Axne (D-IA) and Tom Cole (R-OK), underscored the serious bipartisan concern over HUD’s April 18th ruling which, if implemented, would have caused a “significant detrimental impact on one or more tribal nations.”

 

The letter also highlighted how the agency “must follow federal policy on consultation with tribal nations…which provides that federal agencies shall not make regulations, policy statements, or take actions that have substantial direct effects on one or more Indian tribes and that impose substantial direct compliance costs.”

 

Additional signers of the letter include: Reps. Sharice Davids (D-KS), Raul Grijalva (D-AZ), Deb Haaland (D-NM), Kendra Horn (D-OK), Ben Ray Lujan (D-NM), Betty McCollum (D-MN), and Xochitl Torres Small (D-NM).

 

“By undermining the rulemaking process which requires any federal agency to consult with tribal nations before drafting policies, HUD has set a dangerous precedent in disregarding its own ‘Government-to-Government Tribal Consultation Policy’ and Executive Order 13175, the ‘Consultation with Indian Tribal Governments requirement’” said Michael Whipple, executive with the Cedar Band of Paiutes’ housing agency. “We thank Congresswoman Axne and Congressman Cole, as well as each other Member of Congress who signed onto this letter, for their leadership on this issue and for defending the sovereignty of tribal nations.”

 

To date, HUD has failed to fulfill its obligations to engage in tribal consultation in its attempts to either eliminate or severely limit down payment assistance programs provided by governmental entities, including down payment assistance programs offered by Native American tribes. Although HUD ultimately withdrew the Mortgagee Letter after litigation brought on by the Cedar Band of Paiutes, the agency recently announced plans for a proposed rulemaking that would have a similar devastating impact on tribal nations.

 

The Cedar Band of Paiutes wholly owns and operates Cedar Band Corporation, which wholly owns CBC Mortgage Agency (CBCMA), a provider of secondary financing to homebuyers receiving loans from the Federal Housing Authority. The Band heavily relies on the revenues generated from CBCMA and other Band enterprises to support its essential governmental programs.

 

“HUD’s action issuing Mortgagee Letter 19-06 in every way tramples on the self-determination of the Cedar Band, and threatens the sovereignty of all tribal nations throughout the country,” added Whipple. “We hope that HUD adheres to both Executive Order 13175 and its own policies when considering implementing future rules that affect the sovereignty of all Tribal nations.”

 

About CBC Mortgage Agency

 

CBCMA provides secondary financing to borrowers, who are receiving loans insured by the Federal Housing Administration (FHA). CBCMA takes great care to ensure that the FHA loans perform well, including providing education as well as 12 months of counseling to borrowers after the purchase of their home. In addition, CBCMA regularly reviews its credit standards to ensure that the borrowers it assists are credit worthy.

 

CBCMA is a wholly owned subsidiary of Cedar Band Corporation, a federally chartered tribal corporation wholly owned by the Cedar Band of Paiutes, a federally recognized American Indian band. For more information about CBCMA and its programs, visit chenoafund.org.

The post Cedar Band of Paiutes Lauds Bipartisan Letter Urging HUD to Follow Longstanding Tribal Consultation Policy appeared first on Chenoa Fund – Down Payment Assistance.

For most people, the biggest purchase they will make in life – by far – is buying a home. It’s an exciting process, but it also can be daunting and fraught with stress.

 

A bit of anxiety is inevitable. But with some solid planning and research, you can ensure your journey to the day you unpack boxes at your new address is a predictable one.

 

Once you’ve found the house of your dreams, the homebuying process should begin with some serious self-evaluation: are my finances in good order, and can I afford this?

 

The best way to fully answer those questions is to talk to a loan specialist. These folks work in all sorts of settings, from mortgage brokers’ offices to banks and credit unions. Find one you trust (personal referrals are always best) and have a frank discussion about your income, expenses, and credit history.

 

Assuming all systems look like a go, you will then fill out a loan application and get “pre-qualified” for your mortgage. Obtaining a letter certifying that you are pre-qualified helps you determine how much home you can afford. It also validates for the seller that you can, in fact, get a loan to buy the house you say you want. That gives the seller peace of mind – and can give you leverage in negotiations.

 

Save the image to desktop and share with others.

As part of the loan application process, your credit history will be disclosed and given a hard look by lenders and other parties. Brace yourself. Credit reports essentially are evaluations of how you’ve managed your financial life, and they can hold some unpleasant surprises. Among other things, you can be dinged for late payments on credit cards as well as large and maxed out balances on accounts, unpaid debts sent to a collection agency, and events such as bankruptcies.

 

To avoid hitches in your homebuying journey, it’s a good idea to make sure you’re familiar with your FICO score before you start the loan process. Because lower FICO scores typically translate into higher interest rates and fees, it sometimes pays to wait on seeking a home loan until your credit picture improves.

 

Once the loan application process is underway, your lender or mortgage broker will ask for a long list of supporting documents. These include copies of pay stubs; Social Security numbers and birthdates for all borrowers; proof of your work history for the previous 24 months; copies of W-2 forms, and even banking and investment statements. If applicable, you’ll also need a divorce decree detailing any child support or alimony obligations.

 

Handing over all of this information can feel intrusive, but don’t take it personally. For one thing, you’ve got no choice. More importantly, it’s just your lender’s way of validating that you are a good risk deserving of a large loan.

 

Once you’ve been pre-qualified for a loan, you or your real estate agent can usually take the next big step down the homebuying road – ordering an appraisal of the home. An appraisal is required by lenders to prevent them from loaning you more money than the house is worth, and the appraisal fee will be included in your closing costs.

 

Now we’re getting near the finish line. But first, your loan package must be “submitted to underwriting.” Sounds fancy, but in fact it’s just a comprehensive review by the lender of all the elements influencing your loan, from your financial documents to the title search and appraisal.

 

After that’s complete, you’ll arrive at that wonderful place called closing. It’s the last step on the home-buying trail, the final hurdle before you get the keys and pop the champagne. Set aside some time for this appointment, because you’ll be reviewing and signing a lot of documents. There’s loads of fine print, so make sure you understand what you’re signing, and that the terms match your expectations.

 

In some cases, you’ll be required to set up an impound account to cover property taxes and homeowners insurance, in addition to your monthly mortgage payment. This is dependent on the terms of your loan, so be sure to ask questions if the process is unclear.

 

Along with the paperwork, you’ll need to wire funds or provide a certified or cashier’s check to cover the down payment, closing costs, prepaid interest, taxes, and insurance. If you’re receiving down payment assistance, the details may vary a bit.

 

Once you’ve wrapped up your signing and payment process, your lender will distribute your loan funds to the closing agent, a process called “funding the loan.” Those are the magic words – your cue to pick up your keys and call in the moving vans.

 

Completing a home purchase is a complicated process, one requiring inner fortitude and patience. But the rewards – your very own house and the chance to build equity for your family’s future – are well worth it.

The post What to Expect When You Buy Your First Home appeared first on Chenoa Fund – Down Payment Assistance.

The United South and Eastern Tribes Calls HUD’s Exclusion of Tribal Nations ‘Antithetical’ to Federal Policy

 

The Cedar Band of Paiutes today commended the United South and Eastern Tribes Sovereignty Protection Fund (USET-SPF) resolution responding to the April 18, 2019 Department of Housing and Urban Development (HUD) issuance of Mortgagee Letter 19-06. The HUD Mortgagee Letter endeavored to establish that tribes may act in their governmental capacity only on their reservations or when working with enrolled members. While HUD’s Mortgagee Letter was ultimately withdrawn in response to successful litigation brought by the Cedar Band of Paiutes, HUD has indicated that it intends to advance rule changes affecting tribal nations through rulemaking.

 

The resolution, entitled “Urging Consultation Prior to Proceeding with Rule Making on Tribal Down Payment Assistance Programs”, was adopted at the USET-SPF Annual Meeting on the Sovereign Territory of the Mississippi Band of Choctaw Indians. In the resolution, USET-SPF called on HUD to engage in meaningful government-to-government consultation with tribal nations before rulemaking or any other action that “would undermine the inherent sovereignty of Tribal Nations to act in a governmental capacity…”

 

The Cedar Band of Paiutes wholly owns and operates Cedar Band Corporation, which wholly owns CBC Mortgage Agency (CBCMA), which provides secondary financing to homebuyers receiving loans from the Federal Housing Authority. The Band heavily relies on the funds generated from CBCMA and other Band enterprises to support its essential governmental programs.

 

“Our Band operates within existing federal regulations pertaining to sovereign tribal nations. It is paramount that organizations such as USET support and defend the sovereignty of the hundreds of tribal nations affected by HUD’s rulemaking on down payment assistance,” said Delice Tom, chairwoman of the Cedar Band of Paiutes.

 

Chairwoman Tom also pointed to a similar resolution recently passed by the National Congress of American Indians, underscoring that “HUD has the full attention of the tribal nations community, which expects the agency to promote and protect the inherent sovereign rights of all tribal nations.”

 

While HUD has issued a Notice for Proposed Rulemaking confirming it intends to proceed with rulemaking, the Band maintains the importance—and requirement—of tribal consultation in the early stages of the rulemaking process.

 

About CBC Mortgage Agency

 

CBCMA provides secondary financing to borrowers, who are receiving loans insured by the Federal Housing Administration (FHA). CBCMA takes great care to ensure that the FHA loans perform well, including providing education as well as 12 months of counseling to borrowers after the purchase of their home. In addition, CBCMA regularly reviews its credit standards to ensure that the borrowers it assists are credit worthy.

CBCMA is a wholly owned subsidiary of Cedar Band Corporation, a federally chartered tribal corporation wholly owned by the Cedar Band of Paiutes, a federally recognized American Indian band. For more information about CBCMA and its programs, visit chenoafund.org.

The post Cedar Band of Paiutes Applauds New Resolution Calling for HUD to Consult with Tribes appeared first on Chenoa Fund – Down Payment Assistance.

The Cedar Band of Paiutes applauds Senator Tom Udall’s (D-N.M.) recent remarks reprimanding a federal agency for its failure to conduct tribal consultations with regard to programs impacting Indian tribes.

 

In response to the agency representative’s assertion that it did not engage in consultation with tribes because it was not statutorily required to do so, Senator Udall stated, “I would really take issue with your statement. Consultation is the bedrock of a strong government-to-government relationship with Tribes . . . [the agency] knows very well that any direction it’s given to act is to be done with consultation. To say that the statute does not direct it runs counter to all Indian law principles, existing executive orders, and the spirit and the language of the law that’s before us.”

 

“On behalf of the Cedar Band of Paiutes, I thank Senator Udall for his thoughtful insights and supportive stance on the importance of tribal consultations involving federal agency actions,” said Delice Tom, Chairwoman of the Cedar Band of Paiutes. “Engaging in meaningful consultation with tribal nations before commencing rulemaking is paramount to respecting the sovereignty of tribal nations.”

 

The Cedar Band of Paiutes wholly owns and operates Cedar Band Corporation, which wholly owns CBC Mortgage Agency (CBCMA), which provides secondary financing to homebuyers receiving loans from the Federal Housing Authority. The Band relies on the revenues derived from CBCMA and other Band enterprises to sustain essential Tribal governmental programs.

 

“This isn’t the only instance where a federal agency has disregarded consultation with tribal governments on decisions which significantly impact them,” continued Chairwoman Tom. “Our Band experienced this very overreach when the Department of Housing and Urban Development issued Mortgagee Letter 19-06 earlier this year. In issuing the mortgagee letter, which significantly impacted our Band, HUD violated its own tribal consultation policies as well as long established federal policy.”

 

While HUD’s Mortgagee Letter 19-06 was eventually withdrawn in response to successful litigation brought by CBCMA, Cedar Band Corporation, and the Cedar Band of Paiutes, the Band maintains that the letter was issued without the required consultation with affected American Indian tribes and bands.

 

“We applaud Senator Udall for his unwavering support and commitment to holding federal agencies accountable for their failure to consult with tribes and upholding longstanding policies that protect, preserve, and promote the sovereignty of tribal nations,” Chairwoman Tom concluded.

 

About CBC Mortgage Agency

CBCMA provides secondary financing to borrowers, who are receiving loans insured by the Federal Housing Administration (FHA). CBCMA takes great care to ensure that the FHA loans perform well, including providing education as well as 12 months of counseling to borrowers after the purchase of their home. In addition, CBCMA regularly reviews its credit standards to ensure that the borrowers it assists are credit worthy.

 

CBCMA is a wholly owned subsidiary of Cedar Band Corporation, a federally chartered tribal corporation wholly owned by the Cedar Band of Paiutes, a federally recognized American Indian band. For more information about CBCMA and its programs, visit chenoafund.org.

The post Cedar Band of Paiutes Applauds Sen. Tom Udall’s Remarks Reinforcing Sanctity of Tribal Consultations appeared first on Chenoa Fund – Down Payment Assistance.

Clay Questioned FHA Commissioner Brian Montgomery; Underscored Collecting Data on Individual Government Entities as Paramount to Extending DPA Assistance to Minority Communities

 

CBC Mortgage Agency (CBCMA) today applauded Chairman Lacy Clay (D-Mo.) of the House Financial Services Subcommittee on Housing, Community Development & Insurance for his supportive remarks regarding down payment assistance (DPA) programs. During the subcommittee hearing entitled, “An Examination of the Federal Housing Administration and its Impact on Homeownership in America,” Rep. Clay questioned Brian Montgomery, commissioner of the Federal Housing Authority, to elaborate on the importance of DPA programs.

 

Below is an excerpt of the exchange:

 

Congressman Clay: “It appears that HUD can’t determine which government programs are providing down payment assistance on any FHA loan, which is critical before attempting to issue new regulations of government down payment assistance programs. Will you commit to not moving forward on any rule making or other administrative changes related to down payment assistance provided by governmental entities until HUD is able to collect data on individual governmental entities and has analyzed a statistically significant amount of data on the performance and pricing of FHA loans with down payment assistance from each specific governmental entity?”

 

Commissioner Montgomery: “Thank you, Mr. Chairman. As you know payment assistance has a long history at FHA…I just want to make sure that any down payment assistance provider is doing so within what our rules permit. Whether it’s a jurisdictional, whether it’s whether or not they financially benefit off the transaction which HERA doesn’t permit. So, I will commit to any effort to undertake rule making will be deliberate, it will be based on research and facts as we know it.”

 

“It is crucial that HUD collect data on individual government programs before trying to regulate them,” said Michael Whipple, vice president of CBCMA, noting that HUD recently issued a Notice for Proposed Rule Making, indicating that the agency intends to move forward with rule making in January. “Only by accurately tracking the performance and pricing of loans originated by each government entity can HUD better manage their risk and protect taxpayers.”

 

CBCMA provides secondary financing to homebuyers receiving loans from the FHA. Earlier this year, HUD initiated a major policy change that would have effectively ended or significantly reduced many DPA programs run by government entities — but without doing anything to protect the FHA Mutual Mortgage Insurance Fund. HUD did this without any data to support its actions. Following a legal dispute, a federal judge stayed HUD’s ability to enforce its new policy, and ultimately the agency withdrew it.

 

“Had HUD gotten its way, groups like CBCMA would have been put out of business, and borrowers would have suffered,” continued Whipple. “We hope that Commissioner Montgomery’s response indicates he intends to collect data on individual government programs before HUD engages in its announced rulemaking.”

 

About CBC Mortgage Agency
CBCMA provides secondary financing to borrowers, who are receiving loans insured by the Federal Housing Administration (FHA). CBCMA takes great care to ensure that the FHA loans perform well, including providing education as well as 12 months of counseling to borrowers after the purchase of their home. In addition, CBCMA regularly reviews its credit standards to ensure that the borrowers it assists are credit worthy.  CBCMA is a wholly owned subsidiary of Cedar Band Corporation, a federally chartered tribal corporation wholly owned by the Cedar Band of Paiutes, a federally recognized American Indian band. For more information about CBCMA and its programs, visit chenoafund.org.

 

The post CBC Mortgage Agency Lauds Chairman Lacy Clay’s Questioning on Down Payment Assistance appeared first on Chenoa Fund – Down Payment Assistance.

Over the last several years reports have surfaced stating that down-payment assistance exhibit “high rates of delinquency” as in the 2018 Department of Housing and Urban Development’s (HUD) report to Congress¹,

 

“Mortgages with DPA generally exhibit higher rates of delinquency and default, and those with such assistance financed by self-identified governmental entities have higher rates of default than those with other forms of DPA.”

 

The Stigma of DPA, the “High Rates of Delinquency”

If you only look at that statement “High Rates of Delinquency,” you would clearly have the impression that ALL down payment assistance provides for “Unnecessary Risk.”

 

HUD is attempting to make the case that nationwide DPA programs generally are too risky because of their past experience with another type of nationwide DPA, which has been illegal since 2008.

 

HUD’s analysis has serious limitation because it fails to take account of other risk factors unrelated to down payment assistance, such as the borrower’s demographic attributes, including credit score, which could lead to poorly designed and racially punitive corrective action.

 

This view is likely the result of pre-crisis down payment assistance programs in which property sellers were allowed to pay the buyer’s down payment and raised the price of the property in order to cover the cost. Those seller-paid programs have been shut out of the market for years and are no longer an issue. Today’s programs must be economically viable without the help of a home seller. In recent years, loan performance on transactions in which the borrower received down payment assistance has been far better compared to loans under the former seller-paid programs.

 

DPA Loans Perform Equal to or Better than Other Mortgage Loans

According to the joint report from the Center for Household Financial Stability at the Federal Reserve Bank of St. Louis, Center for Community Capital at the University of North Carolina and Harvard Joint Center for Housing Studies, ² receipt of down payment assistance is not significantly associated with default risk.

 

The study³ sheds light on the relationship between different forms of DPA and default risk using multivariate methods applied to a well-documented national affordable lending data set from the Community Advantage Program (CAP). Despite HUD’s stated concerns, “my colleagues and I find that the receipt of down payment assistance is not significantly associated with default risk.”

 

In the 10-year study researchers looked at 3,000 loans that were made under the Community Advantage Program (CAP) originating between the years of 1999 and 2000, authors concluded, “Our multivariate analysis indicates that the receipt of DPA (down payment assistance) is not significantly associated with default risk. In particular, while grant assistance from a government or community organization is marginally significant as a predictor of default risk in one of our model specifications, this effect disappears altogether when racial controls are incorporated in the model. Thus, the receipt of DPA appears to be unrelated to default risk.”

 

DPA is Important Component of Mortgage Finance

 

Down payment assistance has become an important component of mortgage finance for a growing segment of first-time homebuyers. Approximately 43 percent 2 of FHA first-time homebuyers relied on some form of down payment assistance.

 

Down payment assistance can take many forms. In many situations, family members provide relatives with the necessary funds for a down payment. But in the minority community, especially among African American families which have 1/10th the household net worth compared to whites, family members often lack the capital to help relatives with a home purchase. This is where government down payment assistance programs help bridge the gap.

 

The differences in the performance of FHA loans that receive DPA from governmental entities versus FHA loans that receive DPA from relatives may have little to do with questionable practices by government DPA providers. It may not be programmatic at all, but rather the simple fact that government programs help an entirely different set of people. Those who are helped by relatives are the beneficiaries of intergenerational wealth, while those that are helped by governmental entities are typically underserved borrowers who come from disadvantaged backgrounds.

 

It is not a simple coincidence that approximately 54% of families that CBC Mortgage Agency assists are minorities, including about 20% that are African American and about 30% that are Hispanic. Families that CBCMA assists do not typically come from generations of homeowners. Some are the first homeowners in their families, and many are lower income.

 

Conclusion

The truth is, everyone deserves to own a home. Some may have issues to address before they are ready, like poor credit histories or the need to secure stable employment, but such barriers can be overcome. The worth of every individual is great, and each among us deserves to enjoy the peace and security that come from homeownership.

 

We admonish HUD to not make decisions about DPA that will harm minorities by limiting DPA, which will do nothing to improve performance, and only shut people out of becoming homeowners.

 

¹HUD: Annual Report to Congress Regarding the Financial Status of the FHA Mutual Mortgage Insurance Fund…Fiscal Year 2019

²Harvard Joint Center for Housing Studies: A Cautionary Tale of How the Presence and Type of Down Payment Assistance Affects the Performance of Affordable Mortgage Loans

³CBC Mortgage Agency: 2019 State of Down Payment Assistance Report

The post New Mortgage Industry Report Seriously Challenges Down Payment Assistance Stigma of “High-Rates of Delinquency” appeared first on Chenoa Fund – Down Payment Assistance.

CBC Mortgage Agency President Richard Ferguson seeks to dispel misconceptions that negatively impact thousands of borrowers

 

A groundbreaking report released by the Harvard Joint Center for Housing Studies found that down payment assistance programs had little impact on loan performance. The center’s Working Paper, “A Cautionary Tale of How the Presence and Type of Down Payment Assistance Affects the Performance of Affordable Mortgage Loans,” found, among other things, that the performance of home loans was not significantly impacted when down payment assistance was used.

 

According to the study’s authors, “Our multivariate analysis indicates that the receipt of DPA (down payment assistance) is not significantly associated with default risk. In particular, while grant assistance from a government or community organization is marginally significant as a predictor of default risk in one of our model specifications, this effect disappears altogether when racial controls are incorporated in the model. Thus, the receipt of DPA appears to be unrelated to default risk.”

 

Down payment assistance can take many forms. In many situations, family members provide relatives with the necessary funds for a down payment. But in the minority community, especially among African American families, family members often lack the capital to help relatives with a home purchase. “This is where government down payment assistance programs help bridge the gap,” said Richard Ferguson, president of CBC Mortgage Agency, a nationally chartered housing finance agency and a leading source of down payment assistance.

 

A recent white paper published by CBC Mortgage Agency, found that more than 90 percent of down payment assistance recipients would not have been able to purchase a home without down payment assistance. More than half of buyers helped by CBC Mortgage Agency are racial or ethnic minorities.

 

“Down payment assistance programs have come under attack lately, with some arguing that all down payment assistance is bad,” stated Ferguson. “This view is likely the result of pre-crisis down payment assistance programs in which property sellers were allowed to pay the buyer’s down payment and raised the price of the property in order to cover the cost. Those seller-paid programs have been shut out of the market for years and are no longer an issue. Today’s programs must be economically viable without the help of a home seller. In recent years, loan performance on transactions in which the borrower received down payment assistance has been far better compared to loans under the former seller-paid programs.”

 

“Many individuals are unaware that they can achieve homeownership even though they are unable to save for a down payment,” Ferguson added. “This includes many who diligently make large student loan payments each month which leave them with little money to save towards a down payment for a home. Down payment assistance is the solution for these individuals.”

 

Reporters who would like to arrange an interview with Ferguson about down payment assistance or the reports mentioned in this announcement can reach out to Strategic Vantage Marketing and Public Relations.

 

About CBC Mortgage Agency
Founded in 2013, CBC Mortgage Agency is a nationally chartered housing finance agency. As a leading source of down payment assistance, the company helps low-income consumers, often in minority neighborhoods, achieve the dream of homeownership. CBC is a subsidiary of the Cedar Band Corp., a federally chartered tribal corporation founded by the Utah-based Cedar Band of Paiutes. More information can be found at chenoafund

The post Studies Find that Down Payment Assistance Programs Don’t Affect Loan Performance appeared first on Chenoa Fund – Down Payment Assistance.