This is from the Government Printing Office, (GPO) H3221 Bill text in SEC. 2113 pertaining to "Down Payment Assistance" as passed by the House & Senate
This is from the Government Printing Office, (GPO)
H3221 Bill text in SEC. 2113 pertaining to "Down Payment Assistance" as passed by the House & Senate
[See Sec. (C) PROHIBITED SOURCES]
SEC. 2113. CASH INVESTMENT REQUIREMENT AND PROHIBITION OF
SELLER-FUNDED DOWN PAYMENT ASSISTANCE.
Paragraph (9) of section 203(b) of the National Housing Act
(12 U.S.C. 1709(b)(9)) is amended to read as follows:
‘‘(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,
‘‘(i) such lien shall be subordinate to the mortgage;
‘‘(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.''.
For full bill text as passed by the House & Senate, you can access it here: http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:h3221enr.txt.pdf