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I just read an article by Gretchen Wenner about Seller Assisted Down Payment Programs going away. I knew this was coming and was watching out for it, but since it is now a topic in the Bakersfield Californian, here is what I think about it.
An example is the NEAMIAH program. It is a non-profit organization that takes money from the Seller and donates it to the Buyer to cover their downpayment. They also pay a fee to the non-profit organization on top of that, about $500 in some cases. Why would a Seller do that? In a slow market like we are in now, that may be the only way to get a property sold. An FHA loan requires at least a 3% downpayment.
The sub prime meltdown and the skyrocketing rate of foreclosures has caused the government to act. The thinking is that if a Buyer doesn't have a stake in his investment, he will be more likely to just walk away if he has trouble making the payments. In a perfect world, this law would be a good thing, but with the glut of foreclosures...
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