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Originally posted by pineapple

Friends,
I do not think we will get the 1% down and the seller funded down payment may go away for all FHA loans. You need to buy now before a bill is passed. Please forward to anyone thinking of buying soon. (See below)



In his prepared remarks, Commissioner Montgomery asked Congress to maintain FHA's ability to maintain its mortgage insurance premium structure commensurate with the risk of the loans it insures. Unfortunately he said, neither the House or the Senate versions of the proposed legislation allows such flexibility in pricing and the solvency of the FHA without federal appropriations for its credit subsidy cost may be placed in doubt as early as the beginning of the next fiscal year.
He also called for an outright prohibition on down payment assistance from sellers or any other persons or entity that stands to benefit from the transaction financially. He said that data clearly demonstrates that FHA loans made to borrowers with seller-funded down payment assistance go to foreclosure at three times the rate of other loans. "We simply cannot sustain this business," he said. "We want FHA to be here not just for this generation but for generations to come."
Montgomery called for passage of the FHA Modernization legislation but said that the Bush Administration also believes that the FHASecure program should be expanded temporarily to address the housing downturn. He said that the program, announced last year to help more low-to-moderate income families who could not otherwise qualify for prime rate refinancing has assisted more than 150,000 homeowners and projects it will reach more than 400,000 families by year's end.

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