Thursday, March 06, 2008

Downpayment Assistance Update

HUD has been prohibited from implementing their rule which would abolish the use of "seller funded" down payment assistance programs (Nehemiah). Therefore, we may continue to use The Nehemiah Program for the foreseeable future.

On Friday, February 29, 2008 the United States District Court for the Eastern District of California issued a final ruling in Case No. CIV. S-07-2056 - in favor of The Nehemiah program. The decision requires HUD to "set aside" their final rule as published on October 1, 2007, which was to go into effect on March 31, 2008. As a result of this ruling, HUD is prohibited from invoking the final rule at this time. If HUD still wishes to proceed on this issue, they are required to start the process completely over and comply in entirety with the Administrative Procedures Act. This would entail them to once again issue a Proposed Rule and solicit comments, and adequately review and consider all comments (this is where they failed in the previous attempt), before issuing a Final Rule. In the worst case, once the Final Rule is issued, Nehemiah will once again be issued a six month grace period before the rule can be applied.

Please note, Both Houses of The United States Congress are debating legislation to Modernize the Federal Housing Administration. Both bills contain specific language and parameters with regard to "seller funded" down payment assistance programs. As you can probably imagine, the two houses do not currently agree. This will continue to be a "hot topic", which will probably be reported on in the mainstream press. If Congress comes to a resolution, and submits a Bill to the President, that he/she also signs, it is unclear how any changes will be enacted, and more importantly if Nehemiah will get a six month grace period.

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