RSS Blog FeedHUD Limits FHA Proposal to Seller-Paid Assistance
Posted at 5:11 AM, Jun. 30, 2007
A number of state and local associations of REALTORS® have received reports of a proposed U.S. Department of Housing and Urban Development (HUD) rule that implies the department is seeking to prohibit the use of downpayment assistance programs in Federal Housing Administration (FHA) transactions. To clarify, the HUD proposal would only prohibit seller-paid downpayment assistance. For background, HUD's proposal is consistent with a report of the U.S. Government Accountability Office, which found that the average price of homes using seller-paid assistance was inflated by 3 percent and had a higher foreclosure rate. The proposal also follows action by the Internal Revenue Service (IRS), which has published a rule that strips organizations found to be "middlemen" for seller-paid assistance of their 501(c)(3) tax-exempt status. Looking ahead, FHA reform legislation under consideration in Congress would allow for zero-downpayment FHA loans, which would then abrogate the need for any downpayment assistance.{ 2 comments } { add comment } { Permanent Link }