DC Suspends Housing Purchase Assistance Program (HPAP)

In a reaction to the city's budget shortfalls, the DC council voted to suspend the HPAP program and not renew funding for 2009. This has caused a huge upheaval in the lower tier of DC's housing market. If we have learned anything from the recent bank failings and whatnot it's that when one sector fails, it doesn't take long for that to reverberate to the rest of the economy. In my opinion, if DC wants to stop the Housing Purchase Assistance Program, they need to first fund the loans for people who have been approved and have ratified sales contracts. Many contracts will fall through for low-income purchasers who would not qualify for the loan of the purchase price (HPAP kicks in up to 70,000 as a 5 year interest free loan), which will just hurt that sector of the market (usually houses up to 300,000)and lead to more foreclosures and short sales. On the website http://buildingdc.com/petition (click to sign the petition and learn more) they have quotes from people weighing in on this budget cut. I found the following quote particularly informative:

Agent - “I have a client that has given notice to her landlord that she and her daughter will move out to in order to settle next week. They will be homeless if the City does not honor its contractual obligation to keep their word and fund her loan.
These prospective homeowners will add to the City’s revenues not subtract. The City will receive transfer and recordation tax revenue for each settled transaction and will ultimately receive property tax revenue, not to mention sales tax revenue when these homeowners go to Home Depot and other retailers.
This cannot be what the Council intended. The Council needs to understand that HPAP is funded in arrears and not in advance. Whenever it receives funding from DHCD that money goes toward reimbursing expenses from the previous quarter. This is a huge mistake and will ruin Thanksgiving and Christmas for countless families, not to mention pull the bottom out of the real estate market.” -D