Federal Court Rules Against HUD's Ban On Seller Paid Down Payment Assistance Programs

On Friday, February, 29th Judge Lawrence K. Karlton of the United States District Court for the Eastern District of California granted a motion for summary judgment for the Nehemiah Corporation of America for relief against HUD's rule to ban private seller paid down payment assistance programs as proposed in the “Standards for Mortgagor’s Investment in Mortgaged Property” regulation published October 1, 2007. In his ruling, Judge Karlton said "HUD failed to supply a reasoned analysis for its decision and didn't consider reasonable alternatives". The ruling permanently sets aside the final standard issued by HUD, remands the matter back to HUD for further agency actions consistent with the courts findings and disqualifies HUD Secretary Jackson from participating in any remanded proceedings.

For now, the ruling will allow the privately-funded down payment assistance programs like Nehemiah's to continue to help low to moderate income families pursue their dream of home ownership. However, two similar court cases are still pending in the U.S. District Court for the District of Columbia. It will be interesting to see how those cases proceed based on this ruling and what if anything HUD will do to pursue further action on this matter.

Metro Mortgage Company is a federally regulated Mortgage Banker specializing in Conventional, Jumbo and FHA/VA mortgage loans throughout Florida.

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