Dear Mr. Good:
Thank you for contacting me regarding down payment assistance programs. I welcome your thoughts and comments on this issue.
Under current law, in order to qualify for FHA-insured home loans,borrowers are required to contribute a minimum amount to the cost ofpurchasing the home. Under certain circumstances, the borrower'srequired contribution may be paid by other entities.
On July 30, 2008, President Bush signed into law H.R. 3221, theHousing and Economic Recovery Act of 2008. This comprehensivelegislation includes a provision, effective October 1, 2008, thatincreases the borrower's required contribution to the cost ofpurchasing a home from 3% to 3.5% and mandates that the borrower'srequired contribution toward the purchase of a FHA-insured home may notbe provided by the seller or by any third party that is beingreimbursed by the seller.
In response to H.R. 3221, Representative Al Green (D-TX)introduced H.R. 6694, the FHA Seller-Financed Downpayment Reform andRisk-Based Pricing Authorization Act of 2008. This legislation wouldamend H.R. 3221 to provide exceptions to the prohibition on sellercontributions. In addition, downpayment assistance organizations wouldbe required to offer financial counseling services to borrowers H.R.6694 passed the House Financial Services Committee on September 16,2008, and is now awaiting consideration by the full House ofRepresentatives. No companion legislation has been introduced in theSenate.
As Congress continues to consider this important issue, you may becertain I will keep your views in mind. I appreciate hearing from you,and I hope that you will not hesitate to contact me on any issue ofconcern to you.
Kay Bailey Hutchison
United States Senator
284 Russell Senate Office Building
Washington, DC 20510
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