HUD doing away with incentives…

I was in some HUD training recently and they mentioned that most of the incentives that HUD had in place to encourage buyers ands reward buyer agents are gong away on February 1st of this year. The incentives that are being withdrawn include the $100 down financing plan as well as the owner-occupant incentive of $2,500 for buyers that HUD offered to help cover repairs, as well as the extra $500 to buyer agents. Obviously, I’m disappointed that I can no longer get the extra $500, but even more disappointing is the loss of the incentives for the buyers. Many buyers needed that extra $2,500 to put the houses in reach.

I can certainly understand that HUD maybe couldn’t keep offering these incentive forever; however, so many of these HUD houses are in sad shape that I can’t see how stopping the repairs incentive helps at all. Let’s face it, many of these places are going to be tear downs if aid like that is not pro-offered to help get them back in livable condition. Many are uninsurable, meaning that they need to be rehabilitated before they can even be occupied. And many are priced so low that they are unattractive to normal mortgage companies, who can’t make any money on loan under $30-40K. Without the $2,500 repair incentive, these become the exclusive domain of the investors and cut out the poor buyers that HUD was originally set up to serve.

Unfortunately HUD, like the FHA folks, is toughening things up in the face of increasing losses and dwindling funds, just as the people they were created to help need it the most. The new HUD rules, combined with the simultaneous tightening of credit requirements and the increase in Mortgage Insurance rates by FHA will serve to cut off the entire bottom end of house buyers from the credit and help that they need. Instead of launching programs for mortgage modifications that nobody can use or programs to try to keep homeowners in homes that they can’t afford, perhaps the Federal Government needs to look at funding for these HUD and FHA programs that were working that lack of funding is now causing to be canceled.