- HUD Guidance
Date Published: September 2006
Print ShareThisPrior to May 2006, it was understood that FHA prohibited a downpayment assistance provider from using second mortgage liens or grant agreements which stated that the downpayment assistance provider is entitled to excess proceeds at foreclosure in the event a third party's bid exceed the FHA-insured first mortgage amount. However, after researching this issue, it was determined that FHA regulations would not prohibit HOME downpayment assistance in conjunctions with FHA-insured financing under such a scenario.