HOME in 5 DPA Changes Fees

HOME in 5 Program Changes fees and grant total - down payment assistance.

HOME in 5 Program Changes fees and grant total – down payment assistance.

As we anticipated, HOME in 5 has undergone a few changes in response to the OIG’s recent investigation.  The changes in this case are much simpler than the changes we saw come through last week for HOME PLUS (click – HERE  for more on HOME Plus).  Quick recap, the issue the OIG had was that the discount point charged on the HOME in 5 program was not being used to lower the borrower’s rate.  This prompted changes with HOME Plus last week and today, HOME in 5 announced their changes.  Home in 5 has simply removed the 1% discount fee and then lowered the grant by the same 1% making the grant now equal to 4% of a borrowers loan amount versus the previous 5% grant.  There is no real positive or negative impact to the borrower.

What is New with Home in 5:

 1. No more discount fee charged by originating lender (1% origination fee will still be charged):
a.  BEFORE: Lenders were required to charge a 1% origination fee AND a 1% discount fee to all borrowers using the HOME in 5 program
b.  NEW: Lenders will no longer charge a 1% discount fee to HOME in 5 borrowers however the 1% origination fee will still be charged by lenders

2. Grant now totals 4% of the borrower’s loan amount
a. BEFORE: HOME in 5 grant equaled 5% of the borrower’s loan amount
b. NEW: HOME in 5 grant equals 4% of the borrower’s loan amount

Why/how the change:

Why: To avoid future issues with the OIG and HUD
How: The master servicer of the HOME in 5 Program will now pay a higher revenue rate back to the Originating mortgage lender (called “SRP”).  This will create a situation where the originating lender no longer needs to charge the 1% discount fee in addition to the 1% origination fee to be profitable.

When are the Changes Effective:

The new grant amount and fee related changes will go into effect beginning with loans where HOME in 5 grant funds are reserved on or after July 29th, 2015. 

By Jeremy House

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Jeremy is the Founder of The HOUSE Team and a Sr. Loan Officer/Branch Manager with PrimeLending. Over the past several years he has ranked in the top 1% of all loan officers nationwide and one of the top 200 loan officers in America. In the mortgage industry, the devil is in the details. Jeremy prides himself on being a student and an expert when it comes to everything mortgage related.

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Comments

  1. I would like to ask it is possible to get prequalify with bad credit if so please
    Let’s me know . 480-427-6416

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