In response to growing loan losses, officials from the Federal Housing Administration (FHA) are trying to eliminate seller-assisted down payments on federally insured mortgages, the Wall Street Journal reports.
The FHA has reopened for public comment a proposed rule banning such payments, which the agency believes can increase foreclosure rates. Seller-funded down payments involve a third party, usually a charity, that provides a down payment on a home and is then reimbursed by the seller or home builder.
Brian Montgomery, commissioner of the FHA, recently noted that government-backed loans made to borrowers who receive down-payment assistance enter foreclosure at three times the rate of other loans.
Source: Wall Street Journal