DPA Ban Seen as 'Positive'

The controversial ban on downpayment assistance that went into effect Oct. 1 on government-insured mortgages may hurt FHA loan production in the short-term, according to a panel at the diversity conference. But over the long haul, it will be a blessing, the panelists agreed. There may be fewer loans now, said Timothy Doyle of the Conference of State Bank Supervisors, who called the prohibition "a positive." But in the long term, he added, the ban "will result in more sustainable home ownership." Mr. Doyle contended that DPA has "driven the high rate of foreclosures" because it bypasses sound underwriting principles. Proponents of down-payment assistance argue that it is a valuable tool in getting cash-trapped borrowers - typically minorities and immigrants - into homes. But not Tom Goyda, vice president of research and analysis at Wells Fargo Home Mortgage. Although "a lot of people love" DPA, he said, the ban will help ensure the long-term viability of the FHA.