The Action Continues With FHA.

Written by:

Stacey Sprain,

NAMP Volunteer Writer

This week brought forth a list of noteworthy activity on the mortgage-front. In fact, so much has been reported that it's been hard to keep up with it all. Perhaps the biggest news story of the week came on Monday.

On Monday, October 1st, HUD brought forth a very controversial final ruling. The rule, which takes effect October 31, 2007, establishes that a borrower is prohibited from receiving certain seller-funded downpayment assistance in order to meet the current 3% minimum investment requirement for FHA financing. Notably, the rule prohibits downpayment assistance that "consists, in whole or in part, of funds provided by any of the following parties before, during, or after closing of the property sale: (i) the seller, or any other person or entity that financially benefits from the transactions; or (ii) any third party or entity that is reimbursed directly or indirectly by the seller, or any other person or entity that financially benefits from the transaction." 72 Fed. Reg. 56002, 56007 (Oct. 1, 2007). Go to http://www.ameridream.org/Documents/HUDRule/HUD-Rule-FR-5087-F-02-Final.pdf to view a copy of the Federal Register for 10/1/07.

Members of U.S. Government have been voicing their positions throughout the week. One of the most notable announcements of opposition came on Monday following the announcement of HUD's decision. To view the press release from Representative Gary G. Miller, Chairwoman Maxine Waters, and Representative Al Green, go tohttp://www.ameridream.org/Documents/HUDRule/PressRelease-Miller-Waters-Green.pdf. Since publication and press release of the ruling, a number of DPA providers have filed lawsuits in federal court in attempt to block the ruling that is set to take affect on 10/31/07.

Ameridream and Nehemiah, two of the largest providers have been publicly announcing their strong opposition to the decision and have been seeking support from mortgage-related organizations, individuals, citizens and government officials. It is very unclear at this time how these law suits will affect the ruling and even if they will have any affect at all. To view a copy of Ameridreams filing, go to http://www.ameridream.org/Documents/HUDRule/AmeriDream.v.HUD-10-1-2007.pdf. Nehemiah's Press Release can be viewed at http://www.nehemiahcorp.org/pr/pr_100107.cfm.

Investors have been slow to respond to the action as most are likely seeking legal counsel and advice on the matter before they officially release their stance and policies in regards to the announcement. One thing is for certain, this is a situation we will continue monitoring with great interest!

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.