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Beware of Down Payment Schemes Not Permitted by HUD

As mandated by the Housing and Economic Recovery Act of 2008 (HERA), as of October 1, the ""Federal Housing Administration"":http://www.fha.gov (FHA) stopped accepting seller-funded down payments.
The ""National Association of Realtors"":http://www.realtor.org (NAR) recently issued a report warning about programs being created to get around this new requirement. Some are being set up as earned-income programs where a buyer asks a seller to enroll in a ""property alliance"" for a fee, NAR explained. An administrative cost is paid to the program, and the fee goes to the buyer as a commission that can, in theory, be considered earned income.
Although the ""Department of Housing and Urban Development"":http://www.hud.gov (HUD) does recognize earned income, such programs are not considered legitimate means for meeting the new down payment requirements for FHA-insured mortgages, NAR said.

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.

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