HUD again seeks end to seller-funded loans
Real estate roundup
By Inman News, Tuesday, June 10, 2008.
The following is a real estate news roundup:
HUD still trying to end seller-funded loans
The Bush administration is again moving forward with a proposal to ban seller-funded down-payment assistance for FHA-backed loans, reopening the public comment period on the plan for 60 days. The Department of Housing and Urban Development was forced to reopen an administrative proceeding on the rule change after a judge ruled it did not adequately explain its reasons for reversing past policy on seller-funded loans -- a practice it defended as recently as 2005 (see Inman News story).
Now HUD argues that the loans artificially inflate home prices and are three times more likely to end up in foreclosure. In a speech Monday to the National Press Club, Assistant Secretary for -Housing Brian Montgomery said that HUD had $4.6 billion in unanticipated losses -- mostly due to increased seller-funded loans -- and could require taxpayer assistance to continue operating for the first time in its 74-year history if it is not permitted to take action to mitigate its losses. No private mortgage insurance companies back such loans, Montgomery said, which now account for one-third of FHA's guarantee portfolio.
Nehemiah Corp. of America, one of three nonprofits that sued HUD in order to continue their seller-funded down-payment assistance programs, issued a statement saying the loans have been "enormously successful" in helping low- to middle-income families become homeowners, and calling HUD's decision to move forward with a ban "astonishing."
If I can assist you on any of your mortgage needs, please call me at
Karen L Heston
BOk Mortgage
918-488-7353
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