There's... No... Hope...

Insert your favorite string of curse words here: ___________________________...!

A growing number of state and local governments are now offering what are called "down payment assistance programs," grants or low- and no-interest loans to first-time buyers or those who haven't owned a house in a few years.

The number of programs, now somewhere around 1,000 nationally, has increased 3% to 5% in the last six months alone, estimates Marc Savitt, president of the National Association of Independent Housing Professionals, an advocacy group.

And, in a stark reversal, some banks are now far more willing to work with borrowers who need down payment assistance, buyers who were considered too risky 18 months ago.

These programs are targeted at low- and middle-income buyers who have either never owned a home, or haven't owned one in a few years. And then the benefits are substantial: Typically, the programs offer up to $80,000 in loans with interest rates from 0% to 2% to people with little or no money to put down. And then, because participants often have to get their mortgage through the programs' preferred lenders, the primary mortgage rates are also low, often 0.75% to 1% lower than average rates. That can be a better deal than Federal Housing Administration-insured mortgages, which require annual mortgage insurance and an upfront fee, and may have higher interest rates.

To fund the programs, many states and municipalities are using money raised by selling municipal bonds. Also helping: A program funded by the Department of Housing and Urban Development increased its support to local down payment assistance programs by 16% in its last fiscal year to $44 million.

There is absolutely, positively no frigg'n hope for this once great country.

William R. Barker
January 11, 2011