FHA Book

WSJ Graph Analysis on DPA Defaults

Markham Lee over at SeekingAlpha.com takes a look at the WSJ’s graphs in their article about the problems with DPAs, which I wrote about the other day. Lee is not totally opposed to DPAs but stresses that down payment assistance should only be used to support “financially stable home ownership.” His analysis:

To be clear, I’m not against the program, provided it’s putting people into a strong, stable financial situation, and if the default rates are only slightly higher than those for regular FHA loans. The key is to set higher standards and aim to help people get ahead financially, instead of having them fiscally limp into home ownership. For example: instead of providing down payment assistance for people who can barely afford to make ends meet, provide it for those who will have enough savings for 3-6 months expenses (after they buy the house) if they receive help with the down payment.

Although I’m against DPAs, I don’t think they will be completely eliminated. I do think that if the powers-that-be take Lee’s attitude towards reforming down payment assistance they could serve their intended purpose and get deserving individuals in homes.