Friday, February 05, 2010

DC Bond: Back in Action?

By late February or early March, lenders and buyers may again have the option of pursuing the DC Bond, thanks in part to a $193 million award from the Obama administration to the DC Housing Finance Agency (DCHFA), $25 million of which has been set aside for Single Family Mortgage Program.

In the past the bond program was designed to make home ownership affordable to buyers in DC. Not all buyers mind you, but a pool of buyers who might not otherwise qualify for a loan. The past program was aimed at first time buyers, those who had not previously owned a primary residence in the past three years, and even repeat buyers if they purchased in "certain targeted neighborhoods." The benefits of the program? Again, in the past there had been a 4% grant that could be used towards a down payment or closing costs. The interest rates on the loans were compatible with the conventional rates. There had been and presumably will be, maximum income limits and purchase prices that will determine final qualifications.

While yesterday's "soft release" meeting remains shrouded in mystery, DCMud has acquired tentative details on the new bond from sources familiar with the proceedings, which was an opportunity for bond lenders to dig into the details of the new bond, ask questions and offer suggestions about getting the word out to potential buyers, before the bond hits the market in the next few weeks. Though the details can and very well may change here's the gist:

The new bond rate will likely be set at 5.25% and would initially only be available as an FHA loan, with a conventional release potentially expected anywhere from 30 to 60 days later. The new bond may offer a $10,000 soft second to go towards a down payment or closing costs for buyers with little to no cash upfront. Income stipulations will probably remain the same, so buyers who qualify with FHA would qualify for the DC Bond. With interest rates on conventional loans expected to rise by the year's end, the DC Bond looks like an attractive option for many first-time home buyers.

The potential 5.25% rate on the bond is competitive with rates available in the local market and will become more so if rates do increase to the rumored 6% by year's end. The DCHFA is still working out the details of conventional loans with both Fannie and Freddie, negotiating rates and trying to determine whether to choose one or the other or both. The initial bond release could potentially be good through December 2010 with $25 million backed by the U.S. Treasury set aside to cover bonds during that time period.

The DC Bond presumably could sell quickly to the benefit of the industry and first time home buyers. If the spirit of the previous bond remains, this will be a huge boon for those first time home buyers who either have little or no cash to put towards a deposit, or simply couldn't qualify for a traditional loan. And the potential $10,000 for a down payment and closing cost help is a no-brainer.

The possibilities for the bond sound pretty good, but we'll have to wait a few weeks until the DCHFA releases official numbers to know for sure.

Washington, DC real estate development news


Susan @ dcrealestate said...

Many of my first time buyers loved the DC Bond program last year and I was sorry to see it end in August. It's great to hear it's making a comeback, hopefully with Freddie/Fannie conventional options to follow. This is a very flexible program and a great alternative in its conventional form to FHA which can be restrictive in terms of property choice for condo buyers. Many people don't realize how much of the city's territory the map covers and the income and price limits are very reasonable. The loan process is pretty typical for buyers and my experience just one additional form required for seller completion. Another thing to love about DC Bond is its limits on lender charges. Now who doesn't want that? I'll look up and post the link to the 2009 map for interested buyers. Looking forward to the public release of information next month!

susan @ dcrealestate on Feb 5, 2010, 12:27:00 PM said...


pqresident on Feb 6, 2010, 9:40:00 PM said...

the DC Bond program is a great financing tool. it should be restored.

Anonymous said...

what are the qualifications?

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