Home buyers need more 'skin' in the game

Re: 'Last ditch attempt to preserve seller-funded gifts' (Aug. 4)

Dear Editor:

So much talk and time wasted on a very simple problem. Having seller-funded gifts (through a third party) meets the down-payment requirement for an FHA loan, but the argument is it raises the price of the home (it does) plus defaults are greater on these types of loans. The simple solution is to just eliminate the down-payment requirement altogether. If the 3 percent "gift" down payment doesn't serve the purpose of the borrower having "skin" in the game, eliminate it. The outcome shouldn't be any different, and you reduce the cost of the housing to boot. Why keep trying to fix something that doesn't work the way it was intended? So much time, so much talk and what's the result? All the different ways designed to provide the 3 percent down payment to meet the requirements are sort of akin to money laundering. The more you give people the less value it has. Where is the personal incentive, sacrifice, saving, etc.? What about all those things that go into attaining a goal? I guess you don't need to do any of that anymore. The government will do it for you and when you don't want it or it's too much work, you give it back. Sound familiar?

Lenore Berzanske
Citizens Bank
Mentor, Ohio

Dear Editor:

This country has been great about adopting policies that help people pull themselves up to the next level. Killing the down-payment assistance programs will certainly slow our economy even further by eliminating buyers from the marketplace. I have assisted many young minorities to become the first generation of homeowners in their family by utilizing down-payment assistance programs.

John Cunningham
Real estate agent
Phoenix, Ariz.

Dear Editor:

The general rule is: the higher the risk, the higher the loss potential. It is correctly assumed that riskier homeowners will eventually default on their loans. In a respectable study on bankruptcy, the results were shocking: Fifty percent of the petitioners for bankruptcy were homeowners who it can be assumed passed all the tests for the mortgage at inception.

There is something wrong with this picture. Since it is recognized that most of us lack an understanding of how to manage our finances, it then makes sense that we all need help in how to manage our spending. So-called "counseling" is not the answer. There is a need to monitor and guide the homeowner as to how to stay on track and avoid financial distress. This requires a new look as to how this can be done.

I would suggest that any seller-funded down-payment assistance legislation should also require that homeowners participate in "specific" financial education programs that address lowering the risk of default through voluntary monitoring and guidance. The homeowner will welcome this ... it is a win-win situation.

Samuel D.Bornstein
Professor
Kean University School of Business
Union, N.J.

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