Frank revisits FHA down payment program

September 11, 2008
By: National Association of Federal Credit Unions

House Financial Services Chairman Barney Frank, D-Mass., reportedly is interested in revisiting a Federal Housing Administration mortgage down payment program that was eliminated with this year’s housing and economic recovery statute.

The new law bars seller-financed down payment assistance; that includes arrangements where sellers make payments to charitable organizations that, in turn, provide assistance to borrowers. It also bars FHA risk-based insurance premiums, which will become subject to a one-year moratorium on Oct. 1.

Frank is looking at how both programs can be revived (National Journal’s CongressDaily, Sept. 10).

FHA’s commissioner, Brian Montgomery, has said foreclosure rates of borrowers receiving seller-financed down payment assistance are three times greater than borrowers without such assistance.

Rep. Al Green, D-Texas, has proposed using credit scores to determine eligibility for such assistance and assessing fees based on a percentage of the principal.

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For additional information, please contact Shelley Mitchell, smitchell@nehemiahcorp.org, 916-231-1999.

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