As a result of the Housing and Economic Recovery Act, HUD is terminating the use of interested party down payment assistance. Interested party down payment assistance consists, in whole or in part, of funds provided by any of the following parties before, during or after closing of the property sale: the seller, or any other person or entity that financially benefits from the transaction; or any 3rd party or entity that is reimbursed directly or indirectly by the seller, or any other person or entity that financially benefits from the transaction.
By now all of you have seen or heard about the new Housing and Economic Recovery Act recently passed by Congress. One of the results of that act is the elimination of Down Payment assistance by HUD on FHA Loans as outlined above. It is still acceptable for the Seller to provide closing costs assistance, this change only applies to the practice of using Programs such as Genesis that allow Sellers to indirectly pay all or part of the Buyers Down Payment.
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