Industry News

Ban on down-payment aid takes effect

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Nehemiah Corp., a nonprofit corporation that has offered a privately funded down-payment assistance program to buyers since 1997, is continuing to push for reinstatement of its program after a ban on such assistance for borrowers seeking FHA loans took effect on Wednesday, Oct. 1. Such programs use seller contributions or other third-party contributions that are reimbursed by the seller to assist buyers in obtaining loans insured by the Federal Housing Administration. The U.S. Department of Housing and Urban Development had sought to end the use of seller-funded down-payment assistance programs with FHA loans, claiming that the practice drives up home prices and puts borrowers who use those down-payment gifts at greater risk of default. An estimated 20 percent to 30 percent of new-home sales were driven by borrowers using down-payment gifts during the second quarter. Scott C. Syphax, president and CEO for Sacramento, Calif.-based Nehemiah, said in an Oct. 1 letter that the ...