Posted by unregistered user at 3/26/08 7:49 p.m.

FHA allows the 3% downpayment to be a gift anyway, so why is there a problem with these down payment assistance programs?

Posted by laxtosnoco at 3/27/08 8:16 a.m.

There's a clear difference between a gift and a seller concession.

It sounds like the court ruling had little to do with the validity of the downpayment assistance program, and more to do with HUD not following proceedures.

Posted by unregistered user at 3/27/08 9:55 a.m.

How would it be that these programs didn't run the format past FHA/HUD in the beginning? I'm sure they did. And, how is this any different from a commission rebate company rebating commissions back to a buyer after a closing?

Posted by unregistered user at 3/27/08 11:41 a.m.

Charitable DPA works. It has value. I use it all the time. My community is small and I stay in touch will my clients. They are all still homeowners and loving homeownership...thanks to DPA with FHA!

Posted by Mack McCoy at 3/28/08 1:08 a.m.

- And, how is this any different from a commission rebate company rebating commissions back to a buyer after a closing?

One way would be if the buyer wasn't relying on the rebate to qualify for the loan.

Posted by unregistered user at 3/29/08 11:27 a.m.

IMO the court either had its hands tied by existing law that didn't address problems with abusive down payment assistance programs, OR it just plain made a really bad decision. Could've been the lawyer for HUD wasn't up to the task. The industry-side's lawyers are almost always top-notch as the industry can afford that kind of legal counsel. Some of these down payment assistance programs essentially launder money for builders and sellers, to make sure the deal goes thru and everyone gets paid. Once the deal is done even the loan is sold, so no one involved in the deal has any skin in the game except the homebuyer who is often uneducated about scams and finance, or they have stars in their eyes about homeownership. The IRS called these programs a scam, in those words, a couple of years ago. The IRS was involved because the programs are often set up as "charities" when in fact they should be a for profit, not a non profit, but if they were set up that way it'd be an obvious RESPA violation of lending laws. So they set up sham charities and launder money, thus the IRS said they were scams. I agree w/the IRS.

Posted by Mack McCoy at 3/29/08 4:42 p.m.

- Some of these down payment assistance programs essentially launder money for builders and sellers, to make sure the deal goes thru and everyone gets paid.

You know this for a fact?

Posted by realtypro at 4/16/08 3:36 p.m.

The maximum contribution from the seller is really 9%; it can be up to 6% in closing costs and 3% for the down payment assistance. If it's negotiated properly, the buyer can essentially put nothing into the transaction.