Inman News Service reports that the National Association of Realtors now endorses seller funded downpayment contributions, which were outlawed (effective October 1) by last summer’s housing bill. A new bill was immediately introduced to re-instate the the seller funded gifts. I have posted about this before, but basically, since the seller cannot legally pay the downpayment for a a buyer who can’t scrape together enough for the minimal FHA downpayment, the seller-funded scheme allows the seller to “contribute” to a “non-profit” company the downpayment plus a service fee. The “non-profit” company then “gifts” the money to the buyer. Sounds like the seller is giving the buyer the downpayment, plus the middle man is getting a little of the action too.
If these programs were good for the housing market, or the economy, why didn’t the housing bill just let seller pay buyers’ downpayments directly? The new bill has some credit score guidelines and higher rates for higher credit risks, but bottom line is buyers are able to buy with no outlay of their own funds. It would cost more to rent an apartment, because, generally a deposit and a first month’s rent is required before possession.