SELLER-FUNDED DOWNPAYMENT ASSISTANCE

SELLER-FUNDED
DOWNPAYMENT ASSISTANCE

SELLER-FUNDED DOWNPAYMENT
ASSISTANCE

SEC. 113. CASH INVESTMENT REQUIREMENT AND
PROHIBITION OF SELLER-FUNDED DOWNPAYMENT
ASSISTANCE.

Paragraph 9 of section 203(b) of the National Housing
Act (12 U.S.C. 1709(b)(9)) is amended to read as
follows:

(9) CASH INVESTMENT REQUIREMENT-

(A) IN GENERAL- A mortgage insured under this
section shall be executed by a mortgagor who shall have
paid, in cash, on account of the property an amount
equal to not less than 3.5 percent of the appraised value
of the property or such larger amount as the Secretary
may determine.

(B) FAMILY MEMBERS- For purposes of this
paragraph, the Secretary shall consider as cash or its
equivalent any amounts borrowed from a family member
(as such term is defined in section 201), subject only to
the requirements that, in any case in which the
repayment of such borrowed amounts is secured by a
lien against the property, that--

such lien shall be subordinate to the mortgage; and

the sum of the principal obligation of the mortgage and
the obligation secured by such lien may not exceed 100
percent of the appraised value of the property.

(C) PROHIBITED SOURCES- In no case shall the
funds required by subparagraph (A) consist, in whole or
in part, of funds provided by any of the following parties
before, during, or after closing of the property sale:

The seller or any other person or entity that financially
benefits from the transaction.

Any third party or entity that is reimbursed, directly or
indirectly, by any of the parties described in clause (i).'.