Court Halts HUD Effort To Ban FHA Down Payment Assistance Programs

by Peter G. Miller
November 1st, 2007

Efforts by HUD to curtail third-party down payment assistance programs have now ground to a halt, reports the Bloomberg News Service.

Bloomberg says that the U.S. District Court for the District of Columbia has temporarily halted the effort by HUD to stop down payment assistance programs by various non-profit organizations, including AmeriDream, Inc. and the Nehemiah Corp. of American. Typically with these programs a seller makes a charitable contribution to the third-party, the third party provides a grant to the borrower and the property is sold. The third-party keeps some of the money to off-set costs.

Bloomberg says the court determined that “‘HUD failed to supply a reasoned analysis for its departure from its longstanding policy”" and that is “‘failed to consider reasonable proposed alternatives.’”

Why HUD continues to fool around with efforts to stop third-party programs is unclear. HUD says such programs cause sellers to inflate prices, but if that is true then what is the value of the appraisal required for each HUD loan? Moreover, HUD allows as much as a 6-percent seller contribution from owners to off-set buyer costs.

On top of everything, the third-party programs have broad public and congressional support.

HUD, most likely, will appeal the court decision.

The entire article can be found at:

U.S. Court Stops HUD From Banning Housing Program

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