HPAP Funding Controversy – Is It Funded or Not?

file___C__Documents and Settings_Owner_My Documents_My Pictures_hpap cycle jpg, originally uploaded by Prince of Petworth.

Yeah, I hadn’t actually heard of HPAP either until I received a number of emails about it. From a reader:

“This is a pretty big deal- was only able to buy my condo here in Columbia Heights because of this amazing program. Housing prices locally might finally start to see some of the collapse in the rest of the country if this program disappears. Can you send out a note to people?

Basically, the concept of HPAP program is that if you meet certain low-income requirements, you can get up to $70,000 as a downpayment on a house, which never has any interest, you don’t have to start paying back for 5 years, and then have 40 years to pay back. I know, sounds too good to be true- but it’s not, I personally used the program. And they’re talking about eliminating it. Make them stop!”

You can read more and learn how to sign a petition after the jump.

Update: The Post is reporting that it actually has passed. Their story can be found here.

Update 2: From comments – “This is from Councilmember Barry’s office, regarding the conflicting post article about $50m being approved for HPAP.  It was wrong.  HPAP is indeed still frozen:

The report in the post story is wrong. I plan to reach to them for a correction. The 50 million (which is incorrect too) is for the Housing Production Trust Fund. The 11 million in HPAP funding is frozen per the action the Council the other week.  We exploring ways to restore the funding but nothing concrete has come about yet. The best bet for now is to direct residents to DHCD’s website via dc.gov, updates on the situation will posted there.”

Also from an email:

Sign the Petition to Keep HPAP Funding in 2009

2009 HPAP funding is in jeopardy. DC proposed funding cuts have hit this critical housing program. I strongly encourage you to inform your HPAP clients AND Sellers (individuals and developers) to contact their DC Councilmembers (by phone or e-mail) and expressing your concerns about HPAP and/or lower recordation and transfer taxes.

On Monday, November 10, the DC Council passed the “Fiscal Year 2009 Balanced Budget Request Emergency Act of 2008”. There were no public hearings on this legislation. The legislation passed unanimously by a vote of 13-0 with only Councilmember Marion Barry asking for a delay in the vote for public debate of the proposal.

This emergency legislation closed a projected $131 million shortfall in projected 2009 revenues by agreeing to cuts proposed by Mayor Fenty. The Council then went further by creating a $47 million revenue surplus for possible further budget revenue shortfalls that are expected when the CFO announces revised revenue estimates next month (December) and again early next year (February).

Unfortunately, the Council created that $47 million surplus by freezing program funding scheduled for fiscal year 2009, but not yet implemented. One of those programs was $11 million dollars in increased HPAP assistance slated for 2009, but not yet used. If the CFO’s revenue estimates in December or February show signs of improving the Council can unfreeze the $47 million in reserves and move the programs forward again.

Even if this does not immediately affect you, your property or your development, without HPAP assisting the sale of affordable housing in the district the floor of the real estate market could be swept out from under ALL OF US. Prices would likely continue fall and nearly all DC owners would be affected with negative home values within the next SIX MONTHS!


36 Comment


  • Prince Of Petworth

    Did you click on the “more” hyper link?

  • This is so disappointing. There has been so much talk by the administration about supporting affordable housing options in the city. This is a huge step backward.

    I don’t usually agree with Councilman Barry, but good for him for trying to postpone this for public input.

    Jesse, thanks for putting the petition together.

  • I am so confused. I just saw this story in the Post’s DC Wire saying that the Council approved funding for HPAP:


    What’s the deal? Is the funding cut or not?

  • Prince Of Petworth

    Yikes, that is confusing. I’ll see what’s up. But if it’s been published in the Post I’d imagine it’s got to be accurate, right? hipchickindc should be able to straighten this out in the morning.

  • Very weird.

    I’ve been getting freak out e-mails all day from very reliable sources so I have no clue what to believe at this point.

  • Working on figuring out what the deal is here on whether this is being canceled or not, but for those interested in the program generally, here’s some great info to help you figure out if you might be qualified (I used the program and it is amazing):


  • This program and others like it overlook the fact that some people should not buy homes. Buying a home requires a lot of extra hidden costs. Maintaining the lawn. Roofs. Plumbing. Heating. Even something as simple as a toilet leaking can run a water bill through the roof.

    Anytime I call a technician, it is at least $100. That is a lot of money for a low income family. I have seen my tenants move from apartments to houses and back to apartments unable to shoulder the burden of the additional costs of livig in a home.

    Noone is willing acknowledge that some people are better off as renters. There is nothing wrong with renting. The idea that everyone should own their own home is foolish.

  • Nate-
    Yes, not everyone should own their own home. But when owning my own place costs me LITERALLY 1/2 of what I was paying in rent due to this program, it is a good one. My mortgage is under $800 a month, and that’s with a locked in interest rate. It’s not that people must bring nothing to the table here- we ended up needing to bring our own $10,000 downpayment from savings. But that is still dramatically lower than what we would otherwise have needed, because DC is simply an outrageously expensive market. While in other places in the country with the same amount of money I could buy a very nice house, here I have a small 1 bedroom condo. But it gets you out of the rental market.
    Additionally, there are credit qualification requirements on the program, and ratios of how much debt you can take on. If anything, this program is dramatically better at ensuring that people will be able to pay off their debt long term, because it requires attending training sessions, instead of just signing on to an ARM mortgage, which is what has caused all the trouble in the first place.

  • This is not a program for “low-income” residents who have no ability to support the debt service and repairs associated with homeownership. HPAP is for working people in the District who cross a fairly broad spectrum of income, and works with them as a down payment and closing cost addition to the mortgage for which they will qualify. There is a home buyer education component to it. It’s the single largest boon to the moderate income people who are shut out of the regular housing market in DC. It also works very well in tenant purchase, helping to preserve affordability in neighborhoods that would not otherwise have it. That said, it’s weird the way the Post reported it because the Housing Production Trust Fund, which is the city’s only locally-funded source for affordable housing, was guaranteed $50M.

    HPAP is funded by more than one source (local and federal money) and the original, ill-advised “freeze” (read cut, please!) from the Council specified that program. The possibility that HPAP *could* be re-funded by the re-funded Trust Fund is where the confusion begins.

    The reality is that the Trust is obligated– there are lots of projects that need to be funded. So I don’t know that it’s guaranteed that any of the $50M to the trust Fund will fund HPAP. This is a great example of an area where there needs to be careful thought and the cuts that do need to be made to the budget need to be precise. Cutting HPAP during a down economy, when it’s hard for people to get debt anyway, will just make the banks more scared to lend and then fewer housing sales means less money over all to the Trust Fund, which is primarily funded by transfer and recordation taxes.

    Thanks for indulging my affordable housing policy wonk moment.

  • I used HPAP to purchase my home. It was a disaster – yes, it helped – but overall, I would not attempt to do it again. I could go into more depth, but I got lied to repeatedly dealing with the different arms of the HPAP program – especially Housing Counseling Services. HPAP is a good program in theory, but the execution is a disaster, as with most things in DC.

    I agree with Nate here, there are lots of people that HPAP can get into homes that should probably remain renters.

  • 15thandColumbia, this program worked for you. If you brought 10K to the table, then you were likely well on your way to responsible homeownership anyway. HPAP just sped up the process for you. HPAP is also available for Section 8 tenants. Most of these people are not good candidates for home ownership.

    There are large swaths of DC for rent that are affordable for purchase and rent. DC gov’t has fell down in its job to make these places safe. Instead of tackling that problem, it artificially makes it easy for people to buy in places that are safe, which further exacerbates the affordability issue.

    Instead of guaranteeing these low loan rates, DC should spend the money on making NE and SE safe. The tax revenues generated from the increased business and property tax collections would be well worth it.

  • Nate…I don’t think HPAP is helping impoverished people buy homes. I qualified for an interest free loan which I ended up not being able to use since I bought a co-op that didn’t qualify for the program. But 4 years later I sold that place and bought a house. And yes, I repair things and keep the lawn mowed.

    It’s a way to help people with a moderate income buy their first home (I work for a nonprofit), not a handout to poor people. I think it’s a great program even though I was unable to use it in the end…I would hate to see it go.

  • GA Ave,
    It is my opinion that renting is a far better option for most in DC. These are very old houses. Lots of things go wrong. Especially the wiring, heating, and the plumbing. If you are having trouble buying, then you will likely have trouble maintaining. Not everyone. But many will.
    As I said, DC has many parts of the city that are very affordable. I’m talking less than 200K for an entire house. But the areas are not safe. Improve the safety and you don’t have to artificially make it affordable for people to buy. That only serves to drive the prices in NW up.

    I have tenants with menial jobs that qualify through Section 8 HPAP program. So obviously some unqualified people are able to take advantage.

  • PoP.

    Thanks for the support (and link) of the HPAP petition. I will be submitting all of the signatures to councilmembers at the end of the week. That image looks awfully familiar to me – hmmm (buildingdc.com/petition/) – lets see how many people we can get to support the cause, its in all of our best interest as DC’rs.

    Jesse Kaye

  • Nate-

    What do you think will happen to the pricing in those areas if they become safe???

    Clearly, they will go up. The safer an area in DC is, the less affordable. Maybe still more affordable than the NW, but this issue does not disappear just by making 1 area safer.

  • Also, where I was able to buy is an old building that was completely gutted and rebuilt from the inside- so not all locations are old and run down, leading to the problems you are talking about with maintaining the properties.

  • I’m curious to know if anyone is familiar with the original reasons as to why the HPAP program was formed — my guess (and it’s just a guess) is that it was a way to entice middle-ish income people looking to buy a house to buy one in DC rather than a neighboring suburb (back when more people were moving out of DC than moving into it), while others seem to be saying that it’s a way to enable lower and middle income people to buy rather than rent.

    Unfortunately, too many programs continue in existence just because they’ve been around for so long and I’d suspect that this program, depending on its’ goal, could stand to be updated in how it goes about achieving that.

    Can someone explain the diagram to me? Is it an argument for the DC government to spend taxpayer money to prop up inflated housing prices?

  • Nate . . . most people in DC DO rent. The rate of homeownership in DC is less than 50%. The same people who don’t need to buy do need affordable rental, which is consistently objected to in neighborhoods across the city, “safe” or no.

    DC Chica, yes . . . the origin of the program was encouraging home ownership in a city that has always had a relatively low rate of such. It’s a down payment and closing cost assistance program; it’s also a recaptureable (HPAP is a LOAN and not a grant– it’s what everyone wants debtwise: cheap, patient money) source. It has been updated,as recently as last year, to adjust the lending amounts. It’s one of the bedrock housing programs of the city. The Post and the City Council unfortunately have confused two different things– the Trust Fund and HPAP. There is more than one tool in the city’s housing toolbox, and HPAP is just one of a few. It’s a versatile tool that does not need to be updated. It just needs to be properly funded.

    And there has been an increase of people moving into the city, but there still needs to be tools to help people in the moderate income category achieve homeownership in the District, where the average cost of a house is in the $450k range and the median income for people who actually live in it (not for the total area) is about $50k.

    Programs like HPAP exist in many urban centers throughout the country. The difference here is that we don’t have the versatility of funding sources that most localities have (we only have city $$ and federal $$; other places have state, county, city and federal).

  • tania,
    why is it a foregone conclusion that people of a moderate income should buy instead of rent?

  • Thanks for the clarification, tania — assuming that the city does a good job of screening applicants (and it appears they do), it sounds like good program to me and one worth continuing!

  • Nate: Why is it a foregone conclusion that they shouldn’t?

    Some people are comfortable with renting. Some people see it as feeding money into a hole when they could be putting the same funds towards a personal asset (home) instead. Is it so wrong for someone who could afford as reasonable mortgage if they had down payment assistance to seek and get that assistance?

  • Nate-

    Sounds like a typical landlord response. No suprise you want people to keep renting. It makes you money, and the more people are able to stop giving their money to you, and start giving it to themselves through home ownership, the less wealth you have, and the more wealth they have.


    I bet you voted for McCain too.

  • Glad to see Tania’s input and clarification on this discussion. My sense now is that the writer on the DC wire story didn’t get the difference between the unfolding HPAP drama and the Housing Trust Fund.

  • Tania,
    The avg cost of a house is nowhere near 450K in most of DC. If you are of moderate income you should be looking in areas that are more affordable.

  • anonymous,
    There is so much demand for housing that I could rent up all of Petworth. So keeping someone renting is not more or less advantageous for me.

    On the flip side, I know how much it costs to maintain a home in this area. I have a couple of friends that bought condos in CH & P’worth. Both are having issues with the condo fees going unpaid by the subsidized buyers in their building. In one instance, the subsidized condo residents are unable to afford a modest $10-15 increase in the condo fees.

    These people should have been living someone more affordable instead of going over their head trying to buy a condo that was clearly unaffordable to them. Just because you were living there before the building went condo does not mean that you should continue or or entitled to live there going forward. These are the things that don’t make the paper but affect everyone in the buildings. And it happens more than any of us know.

  • Nate’s not listening.

    But, the HPAP underwriting is set up to ensure that the buyers can afford to both own and maintain the units are affordable. People always have drama in their lives, of all income levels, and their financial circumstances can change drastically in a short period –especially nowdays. HPAP also ensures that you get a regular, not a subprime mortgage.

    Over time, owners are able to build up a little nest egg so they can for the most part weather the storm and keep their homes. HPAP has never had a foreclosure.

    Those are the realities. Though Nate is right that not everyone should be a homeowner, the HPAP program isn’t to blame. the subprime mess is centered in places like suburban Vegas, Scottsdale, Modesto, Orange County, and the buyers were more likely to be folks who bought high end homes with ridiculous financing. In DC we haven’t had a foreclosure crisis yet, but if it comes it will be from wealthy investors who bought fancy condos and used subprime financing.

  • PoP, an interesting poll question would be to ask how many people are living in buildings with people that are behind on their condo fees?

    I look at houses weekly. I see a lot of houses where moderate income people bought homes and were able to pay the mortgage but unable to maintain the upkeep. These are people that would have been better served renting or buying a better home in a more affordable area…

  • Anon 1:24 – I own my place, or at least some small percentage of it since I have mortages. It is a money hole. The value is going backwards and the improvments I have made have little to show other than aesthetics (which is fine by me). The repairs I have made I would not have had to do if I were renting. I tend to side with Nate. Homeownership, especially owning homes in Petworth area comes requires patience, acess to cash or credit, and handyman skills. I would not recommend it for folks to have neither the means, the time, nor the inclination to care for a home. I see foreclosure for most who cannot commit to upkeep of thier homes. I think homeownership is great, but it is not for everyone.

  • Steve is right. A homeowner of modest means likely does not have quality plumbers, electricians, etc lined up to do work for him/her. Something as menial as replacing a hot water heat can cost $800 if you call a plumbing company. That’s a lot of money for most people…

    I can not tell you how many horror stories I have heard where the homeowner hired a sloppy contractor that did not finish a job. Or he did such a terrible job that the home was unlivable or the work had to essentially had to be redone.

    I was once at small claims court. A lady was crying the blues. She had paid all the money she had to a guy to redo her kitchen and he took the money, did a half a$$ job and disappeared. She was left in a home with a small child without a working kitchen. It was obvious that she was of modest means. She’ll probably rue the day she ever thought of buying a home.

  • It would seem to me that the people who currently can “barely afford” to own a house/condo (or are now being foreclosed on) overpaid for their house or bought more house than they realistically could afford. Owning a home should not be a money pit, and the fact that people are feeling that way right now reflects a housing market that is totally out of whack. Housing prices currently are inflated and falling, which is why for alot of people right now renting is a better option than owning, but the situation we’re in is rather unique.
    That said, I’d agree with something I read the other day saying that Fannie/Freddie Mac (and when you get down to it, George Bush) got so caught up in the idea of increasing homeownership rates (because it’s such an unquestionably good thing), that they encouraged people to buy homes who really were not good candidates for homeownership. I’m assuming that’s the mentality that Nate is objecting to.

  • This is from Councilmember Barry’s office, regarding the conflicting post article about $50m being approved for HPAP. It was wrong. HPAP is indeed still frozen:

    The report in the post story is wrong. I plan to reach to them for a correction. The 50 million (which is incorrect too) is for the Housing Production Trust Fund. The 11 million in HPAP funding is frozen per the action the Council the other week. We exploring ways to restore the funding but nothing concrete has come about yet. The best bet for now is to direct residents to DHCD’s website via dc.gov, updates on the situation will posted there.

  • DC_Chica,
    Oftentimes, people in condos that are over their head don’t foreclose, they just stop paying their condo fees. That affects everyone esle in the building.

  • Bear with me, I’m replying to Nate:

    1. Who says it’s a forgone conclusion that anyone should do anything? There is a program called HPAP for low and moderate income buyers who wish to do so. The city remains a majority rental town.

    2. The average cost of a home in DC *is* around $450. That means that there are lots that cost less than that and lots that cost more, and that the average comes out to $450. Yes, people should buy what they can afford, and lenders should lend them what they can afford.

    3. You are comparing apples to oranges. The affordability issue has nothing to do with HPAP. It does have to do with the current economy– the mortgage crisis, it should be noted, has more to do with people using “no doc” loans and “doc a” loans, and yes, buying more than they can afford. but it’s because lenders lent them the money . . . you can’t do that with HPAP. There are very strict measures in place to ensure that you’re within the 30-40% range.

    Finally, I understand that the reason Hamil Harris’ piece mentioned HPAP was because the Councilmembers themselves, lead by Tommy Thomas, got confused on the issue. Unfreezing HPAP is a key issue that should be addressed as soon as possible.

  • The avg price of a house in the vast majority of DC is much less than $450K. Even in Petworth, Brightwood, Ft. Totten, the prices are considerably less. Same for the condos. The avg 1BR condo in DC is much less than 300K. Petworth and everywhere east has condos much cheaper.

    The avg price in DC is skewed by the well to do areas. But someone of modest income could easily buy a home in Congress Heights, Anacostia, Deanwood for well under 300K. If you don’t believe me, I will send you some listing further proving my point. Now if safety is your concern, that is where DC gov’t has failed us.

  • Thanks for posting and discussing this. DC is not just rich Georgetown trust babies and poor Southeast Section 8 renters. What about us in the middle who teach, serve as firefighters, police officers, day care workers, store managers and mid income fed workers?

    DC housing has become too polarized with all of NW for people with money and every other ward for people who are destitute. I think HPAP helped to level things out for responsible middle income buyers. This program is extremely difficult to get approved for. It requires counseling, a good credit score, responsible budgeting and intellect. Without programs like HPAP, DC could become more polarized creating disparity that ultimatley leads to more crime.

    Many people think suitable housing is all about money, it is also about creating a community that doesn’t depend on 6 month transplants but people who are rooted and committed to building neighborhoods.

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