MBA NewsLink Q&A: Rob Chrane of Down Payment Resource
Down Payment Assistance is a growing part of the lender’s purchase business arsenal, so we interviewed Rob Chrane, founder and CEO of Down Payment Resource, to discuss the evolution of this market.
A 30-year veteran of the real estate and mortgage industries, Chrane launched the only comprehensive database of U.S. homebuyer assistance programs and develops tools that empower lenders, real estate agents and listing services to connect homebuyers with affordability programs. Chrane actively collaborates with housing organizations and coalitions such as the Urban Land Institute, National Fair Housing Alliance and MBA’s CONVERGENCE initiative. He is a frequent speaker at national and local events on the topic of homeownership affordability.
MBA NewsLink: DPA seems to be talked about more than ever these days…Why is that?
Rob Chrane: While DPA has been around for some time, there’s been a notable recent increase in the number of lenders and consumers becoming aware of DPA. Part of that can be attributed to the growth in program numbers, now well over 2,400 nationwide, and rising funding amounts. The National Council of State Housing Agencies notes that from 2021 to 2023 housing finance agencies increased their total volume of DPA by 43% (to $1.5 billion) and their average amount of assistance by 48% (to $12,000). We’re seeing this trend mirrored with other funding sources and, of course, DPA is currently gaining momentum and bipartisan support as part of the housing programs being discussed in the 2024 Presidential election.
MBA NewsLink: What benefits does DPA offer?
Rob Chrane: On average, DPA lowers the homebuyer’s LTV by 6%, enabling lenders to qualify more applicants by opening their property and eligibility box.
That said, a lot of DPA goes unused. Last year, we partnered with the Urban Institute to examine the impact DPA could have on buyers in today’s housing market in 10 top metros. We found DPA could have potentially salvaged about 46,000 denied applicants (30.7%). Across channels, we found that 79.9% of FHA loans likely could have qualified for DPA. Yet, according to HUD data, only about 15% of borrowers with FHA mortgages used DPA from a government source. The gap between the number of eligible loans and those that used DPA is almost 65%, and represents a significant portion of LMI and minority applicants who may have qualified for an FHA loan with additional funds.
MBA NewsLink: Why aren’t more lenders operationalizing DPA?
Rob Chrane: That’s the million-dollar question, isn’t it. Some mistakenly think DPA isn’t available in their area, whereas all 3,143 U.S. counties have at least one DPA program. Some think DPA is restricted to LMI and first-time buyers not knowing that many programs have no income requirement and accept repeat buyers. They think DPA is too complicated or will slow transactions when the reality is that DPA is pretty straightforward and shouldn’t extend timelines.
They also think real estate agents will not want DPA buyers but we all know their goal is to sell homes. If DPA moves them toward that goal they’re all for it. We even created Down Payment Insiders, a Facebook group, just for them. Finally, there’s fear that DPA isn’t keeping pace with rising home prices but our quarterly reports show that DPA programs continue to be enhanced with more assistance, higher income limits and higher purchase price limits.
MBA NewsLink: Is DPR LOS-agnostic?
Rob Chrane: Yes, DPR works with the entire spectrum of industry participants, offering lenders unmatched access to all things DPA, including technology and resources to feed your long-term purchase volume with direct source referrals.
One recent integration is with the Encompass® LOS platform from ICE Mortgage Technology, which makes it easier for loan officers using Encompass to enter loan data from the 1003 and instantly view DPA programs their homebuyers would qualify for. We think that’s giving lenders using Encompass an advantage in qualifying more of their applicants.
(Views expressed in this article do not necessarily reflect policies of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes submissions from member firms. Inquiries can be sent to Editor Michael Tucker or Editorial Manager Anneliese Mahoney.)
