Panama City Beach Real Estate Market Conditions
Panama City Beach Real Estate Information | Market Conditions | Boating and Fishing

Things just got more difficult for first time home buyers…although I have to admit I am not sorry to see this go by the wayside. It was confusing to buyers, sellers and REALTORS(R). The practical application of this program and this rule in particular has proven difficult.

FHA commissioner Brian Montgomery announced a change in HUD rules that will no longer allow borrowers who pay for their down payments with funds from the seller to obtain an FHA insured loan for that transaction.

The issue of seller funded down payments has been a controversial one, with members of the mortgage banking industry and nonprofits critical of rulemaking by the IRS and HUD that has restricted the ability of these organizations to channel money from the sellers to the buyers for a down payment.

Two studies by HUD and the Government Accountability Office have shown that homes with seller funded down payments tend to have an inflated sale price, and result in higher rates of foreclosure, short sales, and negative equity in the home.

If this is true it is because you can not get sellers to GIVE or Gift money to buyers. Buyers are under the impression that they are getting a gift that they do not have to pay for when in reality the seller just increases the price of the home to cover the ‘Gift’ amount and the buyer of course pays in the end because they have to finance the home at the higher sales price.

It reminds me of use car sales tactics.

Nehemiah Corp. and AmeriDream Inc., two of the largest nonprofit organizations that administer seller funded down payments, have brought suit in federal court seeking an injunction to that would block HUD’s proposed rule from being implemented.

Kind regards, Mike Foate-Prudential Shimmering Sands Realty

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