A new bill has been introduced before the Council of the District of Columbia that would amend the Home Purchase Assistance Program (HPAP). This program provides assistance to first time home buyers of lower and medium income households by offering interest free loans towards down payments and some assistance towards closing costs. These loans generally take the form of second-position deeds of trust.
Under the current administration of HPAP, before a closing can occur, the property must be inspected and all housing code issues must be resolved. This has proved to be a problem because the funds to correct the code issues may not be available and, even if funds were available, closings are often delayed in order to finalize the repairs and the subsequent inspections. As a result, real estate professionals were reluctant to suggest HPAP resources to prospective purchasers and purchasers who were considering HPAP were shying away from any houses that needed repairs.
The proposed Home Purchase Assistance Amendment Act of 2019, Bill B23-569 would address these problems by increasing the current loan limit from $80,000 to $100,000 and making available an additional $15,000 for “essential home repairs.” Another goal of the legislation is to allow for more flexibility in contract negotiations, specifically allowing for repairs to be done before or even after closing with the additional funding source. Of course, the requirements of the first-position lender would have to be considered. Ideally, those lenders would recognize the mandate of the proposed legislation and lighten the requirement of addressing mandatory corrective issues that may be raised in an appraisal.
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