Home in 5 DPA Fees Reduced

In July of 2015, the Arizona HOME in 5 down payment assistance program was thrust into the spotlight.   In fact, an Office of the Inspector General (OIG) investigation triggered fee changes to HOME in 5.

Home in 5 Status Update

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What Happened with HOME in 5?

It all began in July of 2015.  First of all, the OIG investigated a reputable lender regarding their HOME in 5 practices.  Interestingly, this  lender who utilized the HOME in 5 program the same way other local lenders were was the sole target.  While they were using the program ethically, the OIG found an issue in a particular facet.

Most significantly, the OIG felt the agreement between the lender and HOME in 5 master servicer violated HUD standards.  The OIG’s report revealed a major violation related to one specific fee charged.  In fact, every HOME in 5 borrower had a sizable discount fee added to their closing costs.  The issue took issue based on the fact discount fees are to be used to “buy down” the interest rate.

According to the OIG, this lender had not utilized the discount fee to lower a borrower’s interest rate.  As a result, the OIG passed their findings onto HUD.  The findings contained a recommendation that the lender refund the discount fees charged to Home in 5 borrowers.  Ultimately, HUD reviewed the OIG’s report and made a final decision.

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HOME in 5 Fees Reduced

HUD took on the HOME in 5 program review.  In addition, HUD became the decision maker after the OIG conducted it’s investigation.    The OIG disapproved that the lender charged HOME in 5 borrowers a discount fee while not using it for it’s intended purpose.

In fact, at the fever pitch rumor had it HUD considered eliminating the HOME in 5 Program.   Fortunately, that never occurred.  However,  the investigation ultimately changed the fee structure for all HOME in 5 loans. Regulators reduced how much lenders could charge going forward.

In conclusion, HOME in 5 is a great option.  However, many clients do not NEED it to purchase a home.  FHA, VA or USDA loan are great low down payment options as well.

By Jeremy House


  1. […] issue for our client.  A HUGE step forward toward their eventual loan approval.   By using the Home in 5 program, we freed up enough cash to allow our client to pay off a few  credits cards.   Paying off debt […]

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