moh malekpour
Elite Member
- Joined
- May 25, 2002
- Professional Status
- Certified Residential Appraiser
- State
- California
http://www.washingtonpost.com/wp-dyn/content/article/2008/06/20/AR2008062001242.html
This use to be added to sales price without mentioning in the purchase contract causing an inflated price.
This use to be added to sales price without mentioning in the purchase contract causing an inflated price.
.But according to HUD, FHA loans using seller-funded gifts are ending up in foreclosure and causing losses at between "two and three times" the rate of loans in which borrowers made their own down payments. In a proposed rule banning seller-funded gifts, HUD cited a 2005 study by the Government Accountability Office that found gifts funneled from sellers to buyers sometimes "raised the sales price of the homes involved in order to recover the required payments" given to buyers as inducements.
Inflated prices, in turn, contribute to excessive losses when buyers default, leaving FHA to pick up the bill, HUD said. Buyers using gifts default at higher rates in part because "they have no skin in the game" -- no real stake in the house -- according to Montgomery. HUD's proposed regulation includes extensive statistical data comparing performances of seller-assisted buyers with other borrowers from 2000 through 2007