DPA Options Have Never Been More Plentiful For Originators

DPA Options Have Never Been More Plentiful For Originators

BY PAMELA M. MARRON | CONTRIBUTING WRITER, NATIONAL MORTGAGE PROFESSIONAL

One of the most needed resources for clients who wish to purchase a home is down payment assistance. But in 2020 when some federal and state funds were diverted to assist homeowners and renters to stay in homes during the height of the pandemic, the emergence of wholesaler and some proprietary DPA programs came to the forefront.

This not only expanded the availability of needed DPA funds, but also provided awareness of the variety of programs with a slight advantage to mortgage brokers who can utilize wholesale DPA in addition to city, county SHIP and most state programs.

And with the mammoth rollout of the new URLA, be aware of differences of dropdown information in 4b. for second mortgages and 4d.for grants.

In today’s competitive housing market, homebuyers who need closing costs assistance from the seller often compete with cash buyers and flippers who don’t. Any advantage for the homebuyer is sought and down payment assistance can provide that advantage by providing funds needed through aDPA source rather than the seller.

BIG JUMP

Down payment assistance has been available to consumers for a long time, but the variety of programs currently available has not. For loan originators who wish to use as many of these sources as possible, Downpaymentresource.com offers this variety state by state.

Loan originators can generate leads from this source as well (for a fee) on the Down PaymentConnect side with a personal landing page and website link promoting that the loan originator can provide selected DPA programs for interested clients. Customized selection of specific programs a loan originator can provide that will show up for qualified clients is included.

The biggest problem loan originators have with down payment assistance is matching the DPA guidelines with the 1st mortgage product. Many originators have had the experience where a client fits all of the criteria for the first mortgage, but the loan is denied for criteria not met with the down payment program. The best benefit of all (to me!) with Down Payment Connect is the detail for each down payment program outlined on its own page, including who to contact and an updated status on funds availability at the top of each program description.

PROGRAM HELP

Some DPA programs provide a blended 1st and 2nd mortgage program so that client qualification criteria is easily matched. LandHome Financial Services, a national wholesaler that provides a blend of the 1st and 2nd mortgage, has a link in their description to an easy to follow DPA Program ComparisonMatrix linked to the FHA and two additional conventional programs that the company offers.

And, even if the DPA program that is offered is only a second mortgage that needs to be matched with a first mortgage, the Down Payment Connect DPA Directory often provides a link to get information on approved lenders and how to become an approved lender. This is done with Chenoa Fund, a nationwide down payment assistance program that can provide two different second mortgages that can subordinate to an FHA loan and a conventional DPA second mortgage for eligible conventional first mortgages.

NEW URLA DPA ENTRY

The most important detail to know upfront about DPA is if it is a grant (forgivable, sometimes after a period of time and not normally counted as a debt) or a 2nd mortgage (with interest rate and term and counted as a debt). In the new URLA, 4b. is where a DPA 2nd mortgage type and source is inputted and 4d. is where a gift or grant type and source is inputted. To ensure correct input, check with your DPA provider for the exact type and source that they require from the dropdown entries. 4b. and 4d. entries work for both Fannie Mae and Freddie Mac automated underwriting systems.

There are also additional fields to complete if the DPA is a Community Second.

Stay tuned!

Pamela M. Marron is a senior loan originator with Innovative Mortgage Services Inc.