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Legislative Alert: HUD Issues Mortgagee Letter on Government Entities Down Payment Assistance (DPA) Program

Posted By Administration, Monday, April 22, 2019

On April 18, the Department of Housing and Urban Development (HUD) issued Mortgagee Letter 2019-06, “Down payment Assistance and Operating in a Governmental Capacity,” on government entities operating in their governmental capacity when providing down payment assistance insured by the Federal Housing Administrators (FHA). Under the ML, a mortgagee must properly document that an government entity funding down payment assistance for an FHA-insured mortgage is legally authorized to provide such assistance in the area in which the home is located. Within two years of the mortgag­­­­e being closed, the mortgagee must also receive a legal opinion from the government entity that funded the down payment assistance stating that the home being purchased is located within the entity’s legal jurisdiction. The new requirements apply effective immediately as of April 18.

 

Back in December, NALHFA met with FHA Commissioner Brian Montgomery and his single-family housing staff. The group met to discuss the impending policy guidance regarding DPA in connection with FHA-insured mortgages. As a key industry stakeholder, NALHFA arranged the meeting to communicate the importance of preserving the ability of local HFAs to provide DPA and other secondary financing on a preferred basis with FHA single-family loans. NALHFA continues to have a strong working relationship with HUD and will continue to work with them on behalf of its members and the local housing finance industry.

 

NALHFA will be reviewing the Mortgagee Letter and would like to hear from our members on how this guidance will impact their organization. Please send any comments to Katelynn Harris at kharris@nalhfa.org

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