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Court Enjoins HUD Attempt to Impose New Down Payment Assistance Requirements

As previously reported, the U.S. Department of Housing and Urban Development issued Mortgagee Letter 2019-06 in April of 2019 to impose new documentation requirements for down payment assistance provided by government entities to be used in connection with Federal Housing Administration (FHA) insured loans. CBC Mortgage Agency, which is an instrumentality of the Cedar Band of Paiutes Indian American tribe, operates the Chenoa Fund down payment assistance program. The Agency challenged HUD’s action in the U.S. District Court for Utah. According to reports, Judge David Neffer recently granted a preliminary injunction preventing HUD from implementing the requirements.

The requirements originally were scheduled to go into effect for case numbers assigned on or after April 18, 2019, and HUD later extended the effective date to July 23, 2019, as a result of the lawsuit. At the least, the preliminary injunction will further delay HUD’s attempt to implement the new requirements.

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About this Author

Richard J. Andreano, Jr. , Ballard Spahr Law Frim, Washington DC,  Business and Finance attorney, Mortgage Banking, Consumer Financial Services, Fair Lending

Richard J. Andreano, Jr., is the Practice Leader of Ballard Spahr's Mortgage Banking Group. He has devoted 30 years of practice to financial services, mortgage banking, and consumer finance law.

Mr. Andreano advises banks, lenders, brokers, home builders, title companies, real estate professionals, and other settlement providers on regulatory compliance and transactional matters, Federal Housing Administration (FHA) issues, and administrative examinations, enforcement actions and investigations. He also works with litigation counsel on devising strategies for defense of class action...

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