FHA Down Payment Rule To Ban Seller Financing

"Such programs allow home sellers to give money to charities, which in turn assist buyers with their down payments. The sellers pay the charities a service fee, but often recoup the money by charging a higher price for the homes, usually 2 or 3 percent more, or an amount equal to the down payment, according to a 2005 study by the Government Accountability Office." -- Another scam dies a long overdue death. Here's another key part:

...the GAO study found that borrowers receiving assistance from the charities were more than twice as likely to default or become delinquent than other FHA borrowers were.

In a ruling last year, the IRS went so far as to call the seller-financed programs "scams," accusing the charities of inflating home prices.

Hey look, we just agreed with the IRS on something! Just to be fair here is the counter-argument side:

"The rule does discriminate between the haves and the have-nots," she said. "People who have money from mom and dad or have money on their own are still okay . . . but people who have no access to any sources -- those are the have-nots -- that group is now going to be discriminated against."

Have-nots or not -- putting people in a home they can't afford does not help the borrower or anyone else. Perhaps the problem of "haves and have-nots" should be solved by more holistic means than simply attempting to bequeath people with houses, to the presumed benefit of creditors and a bevy of other neer-do-wells.