FHA Mortgage Guide

HUD has decided that will delay it’s new anti-charity rule for two prominent down-payment assistance organizations.

The downpayment assistance ban goes into effect for third-party charities as of October 31st. There are two exceptions, however:

*The Nehemiah Corporation of America, due to a previous Settlement Agreement and as discussed in the rule, is granted relief from the effective date of the rule until April 1, 2008.

*HUD has agreed to grant the AmeriDream Downpayment Assistance Program relief from the effective date of the rule until February 29, 2008.

HUD objects to third-party downpayment assistance plans because it says buyers in such programs have a higher default rate than other borrowers and that sellers are raising prices to compensate for the contributions they make to third-party charitable groups.

While complaining about default rates filtered through charities, HUD continues to allow up to a 6 percent seller credit under FHA guidelines. HUD, of course, does not say if home prices are raised when sellers give buyers a credit, nor has it said if foreclosure rates in such transactions are higher than normal.

Check out these FHA resources for more information

This entry was posted on Sunday, October 28th, 2007 at 12:17 pm and is filed under FHA. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.