AgentIndustry News

Last ditch attempt to preserve seller-funded gifts

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Legislation introduced in the House by Al Green, D-Texas, would scuttle plans to eliminate seller-funded down-payment assistance as an option for loans guaranteed by the Federal Housing Administration, but allow FHA to implement risk-based premium pricing. The Bush administration has sought to end the practice of allowing seller-funded "gifts," saying they artificially inflate home prices and triple the likelihood a loan will default. Supporters, who say minorities will be disproportionately affected if the programs are abolished, had thwarted the Department of Housing and Urban Development's previous attempts to end the practice (see story). But beginning Oct. 1, the sweeping housing bill signed into law last week by President Bush, HR 3221, will prohibit FHA from recognizing seller-funded "gifts" from nonprofits that are largely funded by home builders as a valid form of down-payment assistance (see story). Borrowers would still be able to use gift...