New HUD rule change leads to setbacks

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The HUD (or Department of Housing and Urban Development), formally suspended an important rule shift regarding down payment assistance guidelines. The rule, issued in April 2019, was establishing a need for clarification and guidance for down payments on loans backed by the FHA, but as of today, has been suspended until further notice. 


These sudden actions came by as a consequence of a ruling made by a judge in Utah. After establishing there was certain discrimination against Native American tribes, specifically, the Paiutes, a lawsuit was filed by the Cedar Band of Paiutes, federally recognized and in charge of operation of the Cedar Band Corp and the CBC Mortgage Agency. They were the first to notice some irregularities.


HUD explained that what the Paiutes were complaining about was just an informal guidance irregularity, but the Paiute claim confirmed that the new rule targeted American Indian tribes and bands by prohibiting them from participating in any home purchase assistance programs, which is an important source of income for the Cedar Band.


The Paiutes never had a chance to reply against the new policy, so they’re now looking to fight against it as it appears to be a violation of federal laws. HUD has established a 90 day stay to review the rule, but the state of Utah wants to extend the limit until the case has been completely resolved. The HUD has yet to specify a new limit for this stay.



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