And then reinstated on January 29th: http://www.calhfa.ca.gov/homeownership/bulletins/2013/2013-02.pdf (need to close by end of May 2013)
The newest bulletin reads:
The California Housing Finance Agency (CalHFA) is pleased to announce that it is reinstating its
CHDAP Program effective immediately, and is now accepting reservations for new CHDAP
subordinate loans that are combined with FHA-insured first mortgage loans.
HUD has granted Housing Finance Agencies (HFAs), including CalHFA, transition time to comply
with HUDâ€™s implementation of its recent rule interpreting a provision of the Housing and Economic
Recovery Act of 2008, which governs the ability of HFAs to provide down payment assistance on
loans combined with FHA-insured first mortgages.
This transition time allows CalHFA to continue to pursue solutions that will be consistent with FHA
statutory requirements. HUDâ€™s transition relief is temporary. HUD is allowing lenders to fund
directly, and be reimbursed after closing by HFAs, but any CHDAP loans funded in this manner
must close prior to June 1, 2013 or the first mortgage loans may be uninsurable by FHA. On and
after June 1, 2013, HUD will require CalHFA to fund its CHDAP loans directly at closing. Until that
time, CalHFA lenders will follow normal procedures and fund CHDAP loans at closing, before
sending them to CalHFA for purchase. Again, CalHFA is working on developing a solution to
comply with this HUD requirement which will allow homebuyers to continue to utilize CHDAP
Shane Milne | Lending in all 50 states | NMLS #81195
The debate went on for a couple weeks and Chdap relented, letting us carry on with getting homebuyers in for a half percent! When it's cheaper to make the housepayment than rent; all the buyer needs is a little help to move in and it is also less expensive than paying first month's rent and a security deposit.
I had a buyer using this - with FHA - and it was suspended a few days ago (for FHA). However, I just checked with my buyer's lender and it HAS been re-instated (for FHA). YAY!!
I believe the suspension only applies to those buyers who would be using CHDAP funds along with FHA insured mortgages. Those with conventional, USDA and VA insured first mortgages should be unaffected.