'Zero Comeback' – the title implies that nothing has come back but something has made a return appearance. The 'zero down' mortgage program has once again raised its pretty or ugly head – depending on your point of view. The question is - should there be a 'zero down' program or should there be 'zero comeback' -- no comeback for this government initiative.
Legislation that will restore the Department of Agriculture home-buying program is in the works. It is not finalized but the wheels are in motion. This program offers 'zero down' loans in specific parts of the country. Low and middle-income borrowers will be eligible for these 'no-money-down' loans.
This initiative is not a new one. 'Zero down' has already been funded to the tune of $13.1 billion but funding was exhausted earlier this year. There are passionate feelings on both sides about this program. Obviously, your opinion will depend on how you think this program impacts you.
If you are a builder, you love it. If you need a home, you welcome it. If you are an industry watcher, you worry about it. If you are a taxpayer, you might imagine another bailout in the future.
Industry observers point out how 'zero down' offers played a huge part in the housing crisis. On the other hand, the USDA defends the program and lists the guidelines to keep out buyers who appear to be bad risks. The USDA has confidence in the 'zero down' approach.
They remind us that the foreclosure rate under the previous program was less than with the Federal Housing Administration. The USDA explained some of the rules for the borrowers. They cannot make more than 115% of a county's average income. The loans are not for extraordinary amounts but it is not petty cash either as the average loan is $112,000.
Yet if anything goes wrong with these loans – and anything can and probably will – the government is backing these mortgages. Affordable mortgages might come with a cost. Maybe the taxpayer will eventually be putting much more than 'zero' dollars down to clear up the mess down the road.
Of course, government officials insist that support is necessary in these troubled economic times. The 'zero down' program has helped millions of low and moderate-income earners get homes. Without the program, they would not have been able to get a loan.
On a personal level, as a caring human being, few would argue against families getting homes. If you examine the statistics and the risks and the probabilities, however, you might arrive at a different decision. Yet as a government in a caring society, the people should trump the profit. Of course, one reason why this is a divided issue is because so many are hurting and everyone does not qualify for this help.
Expect opposition to this 'zero down' program. Some will look at it from a practical 'taxpayer' point of view. Others will see it as an unfair program. If you need it and you qualify for it, you'll be glad that 'zero down' has made a comeback.
Do You Agree With 'Zero Down' Mortgage Programs?