We have a down payment assistance (DPA) program for qualified loan applicants. We provide $500 towards the borrowers down payment. All of these loans have gone secondary market. With the Housing and Economic Recovery Act of 2008 several restrictions were placed on these assistance programs which pretty much eliminates our ability to continue our program through the secondary market channels we have been using. We don't have any in-house loan products that these folks would fit.

Anyone else crossing this bridge, other ideas for CRA on helping these guys or has the new economic environment made these programs obsolete for the time being?

The ban is on seller funded DPA programs (including any third party that will benefit from the transaction-which seems it can include a bank that will be the lender). Non-profit programs and government programs are still allowed. Perhaps you can make a grant to a non-profit that provides such a program?

Are you finding that these programs are being viewed skeptically in general? I am finding a lot of confusion.

You might want to research IDA (Individual Development Account) programs at websites like:

http://www.sfearn.org/

and


http://www.cfed.org/

I also have been wondering if small banks would be better served in this economy being examined as large banks, given the slow down in lending.

At our recent CRA Committee one of our directors thought we could still contribute to the closing costs on FHA loans. The thinking is that we could use this as an alternative to our down-payment assistance program which was shut down with the Housing and Economic Recovery Act.

Is our director accuarate in his thinking?