The report found that loans insured before 2009 are responsible for 70 percent of the expected single-family FHA loan losses. Even though they are now prohibited, “seller-financed downpayment assistance loans” produced $6.6 billion in claims to date with the FHA, and may ultimately cost the agency approximately $13.6 billion. Without these seller-financed loans, FHA’s capital ratio would be above the congressionally-mandated two percent threshold.

The horrendously-disastrous seller-funded downpayment loans (SFDPA) were never legal (in contrast to what you might assume from the above ass-covering spin by FHA); in fact, many HUD staffers were trying to stop them for at least a decade running up to 2008 when the loans were superfluously "banned". ML-Implode was SLAPP sued for reporting this. Read more about the issue here.

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