Legislation signed by President Bush in late July had a number of little publicized tidbits tucked away in it. One of the largest pieces in the legislation is the elimination of down payment assistance programs like Ameridream and Nehemiah. There is justification for this on both sides of the proverbial Congressional aisle. And, real estate agents, lenders and prospective buyers are scrambling trying to get deals done before the deadline of September 30, 2008 hits. Basically, all loans dependent on these programs must close escrow before October 1, 2008 or the deal implodes. However, what most consumers don’t realize is that the legislation gives some flexibility to banks and the investors who hold the mortgage portfolios regarding when they actually discontinue funding or accepting these mortgages, as long as there are no more as of October 1. A number of banks have already stopped allowing these programs and they are dwindling on a daily basis.
The biggest challenge with this legislation is that it was passed hastily. If one looks historically, almost every piece of hastily passed legislation ends up bad legislation. Now to add fuel to the fire. As soon as the President signed the bill, the next day legislation was introduced reinstating the programs, and I might add….hastily. From there, Congress promptly went on vacation for the month of August.
No one can predict where this situation will end but suffice it to say, if buyers have been on the fence, they better move yesterday or the window of opportunity will slam shut in a few weeks for many of them.