HOME in 5 underwent major changes in response to the Office of the Inspector General’s (OIG) recent investigation. The changes in this case were much simpler than the changes for HOME PLUS a few months prior. The OIG disapproved of the Home in 5 discount point charged to borrowers at closing by the lender. As a result, the Home in 5 Down
Payment Assistance (“DPA”) to remove the 1% discount fee. The grant amount lowered by a matching e 1%. The Home in 5 grant equals 4% of the borrower’s loan amount instead of the previous 5%.
What is New with Home in 5:
Discount fee Eliminated
- BEFORE: Lenders charged a 1% origination and 1% discount fee to HOME in 5 borrowers
- NEW: Lenders do not charge a 1% discount fee to HOME in 5 borrowers
Grant amount decreased to 4%
- BEFORE: HOME in 5 grant equaled 5% of the borrower’s loan amount
- NOW: HOME in 5 grant equals 4% of the borrower’s loan amount
These new changes avoid future issues with the OIG and HUD. In addition, the originating lender receives more revenue on HOME in 5 loan from the master servicer. This enables the lender to remain profitable. It is a win-win for the borrower and the lender.
These changes for reserved HOME in 5 grant funds went into effect on July 29th, 2015.
By Jeremy House