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SEC. 2113. CASH INVESTMENT REQUIREMENT AND PROHIBITION OF SELLER-FUNDED DOWN PAYMENT ASSISTANCE.


(9) CASH INVESTMENT REQUIREMENT

  •  
    • (A) IN GENERAL- A mortgage insured under this section shall be executed by a mortgagor who shall have paid, in cash or its equivalent, on account of the property an amount equal to not less than 3.5 percent of the appraised value of the property or such larger amount as the Secretary may determine.
    • (B) FAMILY MEMBERS- For purposes of this paragraph, the Secretary shall consider as cash or its equivalent any amounts borrowed from a family member (as such term is defined in section 201), subject only to the requirements that, in any case in which the repayment of such borrowed amounts is secured by a lien against the property, that--
      • (i) such lien shall be subordinate to the mortgage; and
      • (ii) the sum of the principal obligation of the mortgage and the obligation secured by such lien may not exceed 100 percent of the appraised value of the property plus any initial service charges, appraisal, inspection, and other fees in connection with the mortgage.
    • (C) PROHIBITED SOURCES- In no case shall the funds required by subparagraph (A) consist, 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 transaction.
      • (ii) Any third party or entity that is reimbursed, directly or indirectly, by any of the parties described in clause (i).


This subparagraph shall apply only to mortgages for which the mortgagee has issued credit approval for the borrower on or after October 1, 2008.

    Paragraph (9) of section 203(b) of the National Housing Act (12 U.S.C. 1709(b)(9)) is amended to read as follows:
 

5 Comments on H.R. 3221 Section 2113 (Amendment Prohibiting Seller Paid Down Payment Assistance)

AUG
06
2008
1,602,102 Points 154 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

I think personally taking this away is really sad for many potential home owners whom only have the problem of getting a down payment. I've seen many successful homes be purchased because of these programs and now this may make it almost impossible for a 1st time home buyer to purchase a home.

Todd Clark, Helping Families Home - www.IFoundYourNewHome.com
8:56am • #1
AUG
20
2008

I TOTALLY AGREE Todd, it seems like there is a better way to insure home owners bring "skin to the game" and as a result fight harder to keep their homes out of foreclosure.  I believe Obama has an idea concerning community service in exchange of education tuition assistance.  We can do a Habitat for Humanity approach for those who lack the 5% Conventional -- 3% or soon to be 3.5% FHA down payment.  Anyone interested in starting a new Foundation?
5:43am • #2
FEB
06
2009

 

I don't agree Todd, regardless, if this is a none profit, given as a gift. It shouldn't have to be paid back. While the program receive a tax right off as a none profit. That's double dipping.
Fitnoj
4:52pm • #3

 

I don't agree Todd, regardless, if this is a none profit, given as a gift. It shouldn't have to be paid back. While the program receive a tax write off as a non profit. That's double dipping.
Fitnoj
4:54pm • #4
FEB
08
2009

The purpose of the Program and the previous law allowing the existance of such programs was to provide low-income individuals with an opportunity for home ownership.  The non-profit status applies to entities that do not make a profit from operation.  If the organization is not making a profit it has the right to be called a nonprofit entity. The tax write off is the governments recognition that the entities existance is to provide a specific good/service to the country therefore it is not taxed like a business making a profit.

There is no double dipping, but quite frankly as of October 1, 2008 there is are longer seller assisted down payment programs.  Whether it is good for the Seller, the Buyer, the economy or the industry is debatable.  However, it is not debatable on the existance did allow for more individuals living with marginal incomes to purchase homes.
Steve from UF
9:35am • #5

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Earl Johnson

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