Mortgage Debt Cancellation Relief - H.R. 3648 Public Law 110-142
Individuals who are relieved of their obligation to pay some portion of a mortgage debt on a principal residence between January 1, 2007 and December 31, 2009 will not be required to pay income tax on any amount that is forgiven.
General Provisions of Public Law 110-142:
- No income limitation: All Borrowers receive the relief, no matter what their income.
- Dollar limitation: no more than $2 million of mortgage debt is eligible for the exclusion ($1 million of debt for a married filing separately return).
- Relief applies only to an individual’s principal residence.
- The forgiven mortgage debt must have been secured by that residence.
- No relief is available for cash-outs, whether the cash-out takes the form of a refinanced first mortgage, a second mortgage, home equity line of credit or similar arrangement.
- Eligible debt is what is called "acquisition indebtedness." This is debt used to acquire, construct or rehabilitate a residence.
- Refinanced debt qualifies, so long as the debt does not exceed the original amount of the debt. (Same rule as Mortgage Interest Deduction).
- Home equity debt (or second mortgages) qualifies if the funds were used to improve the home. ((Borrower must have adequate records, as under current law.)
- See cash-outs, above. No amount of a cash out maybe treated as acquisition debt.
Additional Provisions of Public Law 110-142:
Refinanced Mortgages:
The relief does apply to refinanced debt in some circumstances. The rules seek to assure that any debt eligible for the relief is directly related to the acquisition or improvement (such as rehabilitation, expansion, renovation, reconstruction) of the principal residence. Debt used for furnishings (i.e., any movable property) in the home is not eligible for the relief. When the proceeds of any refinanced debt is used for any purpose other than acquisition or improvement, those proceeds are not eligible for the relief.
Principal residence:
A principal residence is defined in the same manner as the rules that apply to the capital gains exclusion on the sale of a principal residence. An individual may not have more than one principal residence at any given time.
Second Homes:
As a general mater, the relief does not apply to any debt forgiveness on any mortgage for any second home of the taxpayer. However, if a taxpayer uses a residence (other than his principal residence) solely as an income-producing rental property, already-existing relief provisions might apply, depending on the taxpayer’s situation. If the second home property was acquired as a speculative investment (such as for resale rather than rental), relief provisions are unlikely to be available.
In all events an individual who is in a short sale, foreclosure, workout or similar situation on a residence (including condos) other than his principal residence should consult a tax adviser to determine what, if any, relief provisions might be available.
Mortgage Insurance Premiums:
The deduction for mortgage insurance premiums is extended through tax year 2010. Income limitations on the deduction will continue to apply.
Surviving Spouses/$500,000 Exclusion:
In some circumstances, a surviving spouse is denied eligibility for the full $500,000 exclusion on the sale of his/her principal residence. This most frequently occurs when the residence is not held in joint ownership at the time the spouse who is not on the title dies. In that case, the deceased spouse had no ownership interest, so there is no basis step-up on that half of the property. The surviving spouse is thus eligible only for an exclusion of $250,000 . (Had the home been sold during the deceased spouse’s lifetime, the full $500,000 exclusion would have applied, so long as they filed a joint return.)
Challenges for the surviving spouse are compounded when this circumstance occurs late int he year. The surviving spouse is often unable to sell the property within the same year that the spouse died. This legislation provides that a surviving spouse may claim the full $500,000 exclusion not only in the year of the deceased spouse’s death, but also during the two years after the spouse’s death.
Second Homes Converted to Principal Residence:
The new law signed by the President does not include a provision limiting the application of the $250,000/$500,000 exclusion when a second home is converted to a principal residence.
Background Information
A fundamental principle of the income tax is that a taxpayer must recognize income and pay tax any time a debt of the taxpayer is forgiven or discharged. Exceptions are provided in several circumstances, including bankruptcy, insolvency (as defined by state law) and for some investment real estate. until this new rule was enacted, however, no exception applied to any amount debt forgiven on a mortgage for a taxpayer’s principal residence. Thus, until now, when some portion of a mortgage debt was forgiven, that amount has been treated as taxable income and borrower has been taxed at ordinary income rates on the forgiven amount, even though there is no cash.
The newly-enacted relief for mortgage debt forgiveness is Congress’s response to the problems generated by the subprime crisis, short sales, rising foreclosure rates and price corrections in some markets. Thus, when a lender forgives some portion of a borrower’s mortgage debt in a short sale, a foreclosure, a workout with the lender or some similar circumstance, the borrower will not be required to recognize income or pay tax on the forgiven amount. This relief applies to debts forgiven between January 1, 2007 and December 31, 2009.
Saturday’s Golf Course ~ City Park
The middle of March seems like a funny time to be talking about golf courses. Actually this time of year Colorado golfers are watching the weather report and ready to jump on the course at the hint of a sunny day.
In fact two weeks ago, we had such a day. I was over by City Park, picking up a client to look at houses. We both remarked on how this beautiful, sunny Colorado day had brought out the golfers at City Park Golf Course. The parking lot was full to capacity, the side streets were lined with golfer cars and the driving range had a line!
It’s no wonder City Park Golf Course is a popular place. The location is very convenient,
only 10 minutes from downtown Denver. The green fees are reasonable, approximately $37 with a cart. The nearly new club house is very nice, as is the pro shop and the well-run restaurant overlooking the fairway.
The course is fairly challenging but not over-bearing as many courses tend to be. If you loose a ball you don’t have to wade through rattle snake territory to retrieve it! Long hitters may have an advantage, but if they don’t place their shot in the right spot on the tilted green they will end up putting more than wanted.
City Park Golf Course is my favorite place to shoot a Canon. In fact some of my most favorite Denver skyline shots were taken from the 8th tee box. The course location offers some of the most inspiring city/mountain views. It is not unusual to find me roaming the course after dark or at day break, in anticipation of a perfect sunrise/sunset with the Denver skyline in the frame.
City Park Real Estate
Homes surrounding City Park Golf Course come in all shapes and sizes. The area to the
west offers older homes, bungalows, Denver Squares and two stories. Many homes in this area were built in the late 1800’s. Home seekers looking for a fine vintage home to restore (or a fully restored one) will find some good choices (value & style) here to the west of City Park.
To the north (above 23rd Avenue) the neighborhood was developed in the 1940 and 1950’s with a mixed bag of architecture. I particularly enjoy some of the scuptured trees and bushes in this area. For some reason when I think of City Park north this vision comes to mind. Homes in this area are priced beginning high $200’s for less than 1000 sq. feet.
The eastern border is in Park Hill along Colorado Blvd. Here we find large lovely homes of the early 1900’s. These homes built opposite the golf course and the park have an extraordinary, unmarred view of the city and with the mountains as a back drop. These homes are still very popular despite the fact they are on a busy boulevard.
South of the golf course is City Park, Denver Zoo, Museum of Natural History and the Imax. Further south of 17th Street is another fine mixture of new development and historic older homes. Homes here were built at the turn of the century. There is a new multi-use development of high rise, row houses and condos with modern finishes and some "knock your socks off views" of the Front Range, City Park and Denver in general.
This location is becoming even more appealing with the restoration of Colfax
Avenue. The Tattered Cover relocated its store to the Lowenstein Theater complex from the popular Cherry Creek location. Many feel this move is just the beginning for many good things to happen along this once blighted avenue.
The price range of homes in this area will begin in the high $200’s for a very conservative brick bungalow with natural woodwork, two bedroom, one bath and off street parking. On the high end, a brand new row house can be had in the $600’s or a nicely redone Victorian 1900 vintage home in the $500’s ++. The area offers such a diversity in housing, one can pick the price point if one is flexible on requirements!
Hope you have enjoyed your virtual golf tour of the City Park Golf Course and City Park neighborhood. I encourage you to visit the area and enjoy it live and in person! If you would like more information about City Park Real Estate, I’m happy to chat with you.
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Let’s Wiki it! Fix I-70 Now!
Are you following the conversation over at Google Groups regarding Chris Romer’s wiki bill?
To read the comments just join the Google Group called Fix I-70 Now. The comments run the course of good to great, many of which I’ve never considered before.
It all started off a month ago when Senator Romer suggested a wacky plan to charge a fee to users of I-70 during rush ski hours along with giving a rebate to travelers who make an effort to drive to and fro the mountains in low traffic time. Romer went skiing the same weekend, when identifying himself, follow skiers wanted to hit him over the head with a ski pole!
The assault didn’t actually happen, but what did happen was Romer got everyone talking about a problem we all have been living with for a very long time.
The bummer to bummer traffic is ruining our wonderful day trips to the mountains. It is most evident during the winter, but summer time traffic is not all that light either.
The truth is, our highways are in adequate for the amount of traffic using them.
I love the idea of constructing a monorail. The graceful gliding of silent cars through the mountains seems to be an elegant solution. Of course the solution will come with a price tag, but any solution has a price tag. The problem is, who’s going to pick up the tab?
On the Google site the most interesting suggestion is:
The idea that follows was suggested by someone in a letter to the
Rocky Mountain News sometime last year, and it struck me as
brilliant. Bore a highway tunnel from Floyd Hill to Dillon. One
“hole” could be drilled initially with two reversible lanes, and a
second one added later if necessary. A toll could be charged to help
defray the construction costs. This option would have minimal impact
on I-70 during construction, would be immune to weather problems, and
would save both time and fuel for those who used it.I am told that Switzerland, Austria and Italy have extensive highway
tunnels through the Alps, we should too.
Wow, that would be a heck of a long tunnel! The benefits certainly are obvious, of course the price tag for this would be enormous too! Colorado doesn’t have the tax base like Switzerland, Austria and Italy does. But I bet if we managed to build a tunnel like this and charge for its use, the users would be glad to pay, simply for the convenience of it!
Some suggestions for finding the money are interesting too:
My suggestion is to take all the money budgeted to keeping hard-core prisoners on death row alive in the Colorado Prison Systems and use that money to use the already operating bus transits system in effect to shuttle from a point on I-70 to their designated slopes/skiing area. What’s so difficult about using a method already in effect?
Staggering the opening/closing of the resorts is another good idea.
Taxing out of state home owners?? Utterly stupid idea. Do you know the long term affects of that? Get out your calculator.
WHAT TO DO WITH THE PRISONERS? Enforce Capital Punishment. Prisoners are in prison BECAUSE they broke the Law of the State of Colorado or the Law of The United States of America. How much tax money does it take in one year to keep an habitual criminal alive? Colorado’s Crime Rate is on the rise because the criminal has no fear of the Law. Capital Punishment enforced is a deterrent.
They are violators of the Judicial System. Keeping them alive on death row - why, gee thanks and a slap in the face to the Law Abiding Tax Payer.
Finding existing money that is not being used efficiently certainly is a good start. It doesn’t matter which way we go, the road to a solution is going to be littered with road-blocks, opposition and miscellaneous challenges.
I encourage everyone to go browse the Fix I-70 Now site. The comments are entertaining, some far fetched, others ignorant and even totally self-serving. Go browse and ponder a solution. Colorado needs it.
Sellers, you have to sell three times not once!
Putting your home on the market these days seems to be so complicated. Resale homes have to complete with builder models and the rest of the resale competition. The competition is rough!
Savvy Colorado brokers make sure their homeowners know the value of staging the home, so they hire a stager to provide professional advice to the seller. Stagers arrive at the property with a bundle of suggestions to help make the home more marketable.
Yes, that means yet another "to do list" for the homeowner. Once the staging is compete, the photographer comes in to perform their magic for the MLS.
The home goes on the market and hopefully the phone begins to ring with requests for showings.
BUYER SALE #1
If the seller is lucky the showings provide a ready, willing and able buyer, who wants to buy the home.
The offer is written and accepted, then the inspections begin.
INSPECTOR SALE #2
Now if the seller has maintained the home the SECOND SALE to the home inspector will be a piece of cake. If not, the seller may end up having to do some repairs. Either way the if the seller can get through this process with the buyer still willing, the next step might be the toughest.
APPRAISER = SALE #3
Yes, the last and final step is to make sure the seller’s home value is in line with the market. The current real estate market has been effected by foreclosures and the liquidity crisis in the financial industry. Appraisers are being required to be very conservative in their values plus the fact many areas of Colorado have been designated as "declining" by the private mortgage companies.
In my office we are seeing appraisals come back lower than the sale price. When this happens the seller has a couple choices.
- The seller (or seller’s agent) has the right to provide comparables that might better fit the property. It is up to the appraiser to determine if the new comparables are better suited to the property, if so the appraised value can be adjusted.
- The seller doesn’t have to sell the property if the value is not equal or greater than the appraisal. The seller can keep the property and lose the buyer.
- The seller can reduce the price of the home and sell it to the buyer at a reduced price.
- If the buyer feels the appraisal is out of line and doesn’t mind paying more for the home than it appraised for, they can do so. But the additional amount must be over and above the minimum down-payment required by the lender.
FOR YOUR INFORMATION
- Appraisers are generally looking at no more than 90 days back for sold comparables. Sold comps older than 90 days are likely to be irrelevant.
- The lending rules are changing every day for every loan. Our company is advising buyers to have 2 loan options, maybe with 2 different lenders. Plan A and Plan B.
- Lenders and their support system are at the mercy of the market.
- This too shall pass.
WHAT SHOULD A SELLER DO?
First it is important to know that homes ARE selling. In fact we sold more units this year than last. The issues we are facing can be resolved, but it means some sellers may not get the price they want for their home. The best way for a seller to know where they stand is to do a very realistic analyst of the homes sold in the neighborhood.
- Track homes sold and update every 30 days.
- Watch the current and seasonal trends. Realize the market has busier times of year, so this month’s numbers should be compared to the same season last year.
- Consider the absorption rate. If it is increasing that means longer days on market with more homes competing. Most likely that means values will decrease.
- If values are declining, make a decision to stay with the market or GET OUT.
GOOD NEWS
Even though the Denver real estate market seems to be taking a big hit in values, much of the metro area is not that bad off. In fact 20% of the homes that sell, do so in the first 30 days.
As a seller the goal should be to be one of those that sell in the first 30 days. The homes that are selling typically are in mint condition. The sellers have taken extra care to price and package the home so it is very attractive to a buyer, inspector and the appraiser.
When selling a home, be sure to speak to all three buyers, and the home will get sold.
Sold! What does that really mean?
Yesterday my cell phone rings. On the other end was an inquisitive voice stating she was
sitting in front of my listing at 9654 XYZ Road. She said her agent told her the house was “sold” and she wanted to know why my sign was still up.
“Well,” I explained, “The house is actually under-contract waiting to close.”
“But your sign is still in the yard.” she protested.
“Correct. It will stay in the yard until the house is closed. Then I will have it removed.” I replied.
“Oh. Thank-you.” click.
This conversation got me to thinking how often we use words that aren’t technically correct. The caller’s agent told her the house was “sold.” When in fact it was “pending” or “under-contract.”
Pending is not sold
Pending and under-contract mean the same thing. When a buyer writes an offer on a house there is a period of time between the offer being accepted (under-contract) and the actual sale or closing of the house. That time can be a matter of a couple weeks to months.
During this time the buyer completes inspections and finalizes financing details. If there are items on the inspection the buyer and seller cannot come to terms on, the contract could “fall.” Actually the contract doesn’t fall, but rather buyer can opt not to purchase the house.
It is for this reason we don’t remove the “for sale” sign. The sign will stay up until the home does officially close.
One thing consumers may notice, a rider saying “under-contract” or “pending” might get attached to the sign. This typically lets the consumer know there is an interested party who is working toward purchasing the property.
It is important to note, a buyer can still place an contract on a property in what we call a “back-up position.” This would mean if the first contract did not work out, the offer in second position would than have a chance to purchase the property.
Is writing a Back-Up Contract wise?
Most listing agents and sellers LOVE having a back-up contract. It helps their negotiating position with the 1st contract and gives a feeling of security if the 1st contract doesn’t work out at least there is a “plan b.”
So as a consumer should you consider putting in a back up contract? Maybe.
Let’s work through this scenario. The seller has two contracts. The first contract just completed their inspections and they are now requiring the seller to do repairs. The seller can say, “no!”
This could force the buyers into accepting the house “as is” knowing that if they didn’t they would lose it.
Sometimes the buyers love a home enough and realize the only way they will get to buy it, is on the seller’s terms. This wouldn’t happen if the seller didn’t have a second contract.
So as a back up contract, you just helped the seller force the buyer to buy and you walk away empty handed.
Of course every situation is different. It could just as easily happen in reverse with a buyer who refused to go forward and walks away, leaving you with the house!
Saturdays Golf Course ~ Arrowhead Golf Club
Today was a semi-nice day with warmish temps yet the snow is still dotting the ground. Instead of posting dreary winter golf course pictures, I thought I would share the shots of Arrowhead, taken at the end of golf season 2007.
The day we played here was most memorable for the amazing range in change of weather. Over the course of a few hours we experienced all four seasons! Luckily Mother Nature saved winter for the last half hour!
Avid Golfer magazine designated Arrowhead as the top winner in the "Most Scenic Course (Public or Private)" category. One look down just about any Arrowhead fairway will confirm this course is a perfect choice. Jutting, jagged, gigantic red sandstone monoliths decorate the landscape lending the most incredible accents to the rolling foothill terrain. Arrowhead located south of I-470 in Littleton’s furthest most southwestern boundary is only 45 minutes from downtown Roxborough.
Looking through the red rocks one can view Denver in the distance. This hole was nearly our last on this particular fall day. Soon the gray clouds began to drop nasty cold rain, then sleet on us. Being the dedicated golfers we are, we continued to play in the wet, until we were frozen to the bone and shaking. Brrrrr!
Finally we caved in, running for the shelter and warmth of the car. Despite the weather it was a memorable day. Filled with the joy of the moment we went home wet, but satisfied.
Any day with golf in it, is a good day.
Snapping back to reality, (this is a real estate blog after all) the community surrounding Arrowhead Golf Club is called Denver. There are various plats within this gated community. Most homes are custom or semi-custom. At the entrance to the community the homes are wedged in at a higher density. As the road winds around the the west and then south the lots get bigger.
Many homes have views of the golf course, some are even high enough to have a view of the plains toward Denver.
Roxborough Real Estate
The price of homes in the gated section of Roxborough start at $400k and go up and up from there. Outside the gate there are a variety of subdivisions some old, some brand new with reasonably priced homes starting in the high $200’s.
The area has a unique beauty that makes the extra few miles to get there worth the trip. Now that more people are opting to live in the area, the close in daily amenities are easier to find. There is a strip shopping center in the Roxborough community with a grocery store, several fast food restaurants and filling station.
Just outside the entrance to the gated community is Roxborough State Park. Once voted one of the most beautiful state parks by National Geographic Magazine. The untamed terrain within the park resembles the terrain at Arrowhead. So if only half of a couple plays golf and the other half is a hiker or photographer, this neck of the world would be a good match for a day playing outside.
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Are you upside down?
Homeowners who need to sell their property right now are finding they owe more than the home is worth. This is a tough problem to face. How can it happen?
There are several reasons why the mortgage on a home exceeds its value:
- Real estate values in the neighborhood have declined, due to an over abundance of homes on the market or a glut of foreclosures.
- The home owner has refinanced taking out a larger mortgage than the value of the home can support and/or incorporated closing fees into the mortgage, thus increasing the mortgage amount.
- Late fees and back payments have been added onto the mortgage and are also accumulating interest charges.
- A negative amortization mortgage was taken out on the home.
- Lack of maintenance
Homeowners who find themselves in a situation where values in the neighborhood are dropping, but they don’t have to sell their home really have nothing to worry about. Since most people plan to live in a home for many years, the market will rebound and values will increase. Sit tight and tune out all the negative press. Make your payments, enjoy life and when it comes time to sell you will be fine and probably save yourself a few gray hairs in the long run.
If you are a homeowner that MUST sell your home and are up-side-down with your mortgage vs. home value, you do have some choices.
- In a declining market you can price your home to sell and make up the difference with cash from your pocket at closing. Many homeowners do not like doing this, but will just to be able to move on to their next home. If the homeowner is lacking the cash, it might be possible to get a cash advance on a credit card or from relatives to complete the transaction.
- Rent the home out until the market improves. Sometimes this means only a couple years of renting until things look better.
- In the case of a home that has not been cared for, fixing the home might bring it up to acceptable standards to sell.
- Request the mortgage company holding the mortgage restructure your mortgage so you can sell. The balance of what is owned can be transferred into another note which you can make payments on until paid off. The mortgage company may or may not be able to do this depending on what type of lending institution they are. Of course the better the borrowers credit score the better the chances are of negotiating this type of deal.
- Short sale ~ ask the mortgage company to accept less than what is owed and write off the balance. This is a lengthy, not guaranteed process that could take up to 6 months. If the bank is willing to cooperate in a short sale, the amount of mortgage that was relieved could be subject to income tax. (please check CPA for details) Short sales have a negative impact on credit ratings.
- Some employers (as in the case of a transferee) might agree to absorb the amount short in order to get the employee settled in the new location.
- Deed in Lieu of Foreclosure ~ if there is absolutely no way to get the home sold and there are no funds, renters or family to help, giving the home back to the bank is an option. The best way to do that is to start a conversation with the mortgage holder to see how they would like to go about it.
There is really no "one size fits all" solution. Usually there is a way to salvage a situation if one tries. Homeowners in trouble have become the focus of many agencies, with the government looking for ways to help.
If you are a homeowner who is up-side-down and you need to get out of your home, don’t hesitate to call and ask for help. Start with your mortgage holder. If I can assist you in the Denver metro area, please feel free to call.
FHA increases loan limits in Denver, Colorado
I received this from one of my lender partners…
The mortgage industry just received a bit of good news with the loan limits for FHA being raised significantly! With this increase, a number of homeowners will benefit in the resale of their existing homes and with the purchase their next residence. For most of the Boulder metro counties, the new FHA loan limit for a single unit property will be raised to $406,250. The exceptions are Englewood county @ $460,000, and El Paso county @ $325,000. Currently investors are restructuring their policies to accommodate this change, so more updates will follow.
With FHA financing, there are many advantages beneficial to the borrower:
- FICO scores are more conservative, with a minimum score of 600 for most investors
- $0 down with seller assistance thru non-profit, such as Nehemiah
- More flexibility with the job stability of each borrower
- Metro Denver is not considered a declining market with most investors
- Competitive interest rates, currently 6.00% for a 30 yr Fx rate.
Please let me know of any questions you may have regarding this or any other mortgage concerns. I look forward to assisting your clients with their mortgage financing needs.
Sincerely,
Jim Barnard
Senior Mortgage Banker
Denver Mortgage Company
Direct 303-414-6850
Cell 720-201-6038
Fax 303-414-1681
Home owners in trouble have the FED on their side
There isn’t a day that goes by where we don’t hear or read a story about a home owner having trouble making house payments. The Foreclosure Crisis continues with more and more communities trying to figure out what to do to help. The Federal Government is taking a strong look at various solutions.
Federal Reserve Chairman Ben Bernanke said this week.
“In this environment, principal reductions that restore some equity for the homeowner may be a relatively more effective means of avoiding delinquency and foreclosure. ”
“Reducing the rate of preventable foreclosures would promote economic stability for households, neighborhoods and the nation as a whole. Although lenders and servicers have scaled up their efforts and adopted a wider variety of loss-mitigation techniques, more can, and should be, done.”
Interesting how the Big Guy has a different twist to solve the problem. I’ve only heard of lenders reducing their interest rates for home owners in trouble. That just means the mortgage payment is made more affordable, especially with the adjustable rate loans that topped out at unmanagable highs.
By reducing the loan amount to give the mortgage holder instant equity means home owners who must sell might be able to use this adjustment to get out of their home without having to lose it to the bank.
Bernanke’s reasoning for giving the home owner equity was to take stress off the homeowner and give him financial incentive to stay in the home.
I’m not sure I agree with Mr. Bernanke on this. Given a choice between taking a lower interest rate or a reduction of loan amount, I would have to make my decision based on my future plans.
If my intention was to stay in the house, the lower interest rate would be more attractive in the long run.
If my life situation was such I had to move, my preference would obviously be the principal reduction.
So the solution aka Bernanke is not “one size fits all.” Of course nothing in life is…
Bottom line, the market may stink, but the strategy is still the same. If you live in an area of declining values and don’t have to move.
DON’T MOVE. DON’T SELL. STAY PUT.
On the other hand if you are thinking about downsizing, moving up or investing, now is the time to do it. What you lose on your current home you will gain equally if not more by acting now.
Really.
There is Life After Foreclosure
Please feel free to call on me if you have questions. I welcome your click or call.
Nehemiah Wins…Good News in the Down Payment Assistance Arena
Just got an email notice regarding the popular Down Payment Assistance program called Nehemiah.
Dear Colleague,
I am pleased to announce that Nehemiah was victorious in its litigation against HUD!
Judge Lawrence K. Karlton of the United States District Court for the Eastern District of California upheld Nehemiah’s motion for summary judgment. The Court Clerk’s Office is directed to enter judgment and close the case.
To be clear, the U.S. Department of Housing and Urban Development’s (HUD) rule to ban private down payment assistance as proposed in the “Standards for Mortgagor’s Investment in Mortgaged Property” regulation published October 1, 2007, is permanently set aside.
Mary Steinmeyer, Certified Mortgage Lender
This program enables home buyers to ask the seller for a "grant" for their mortgage down payment. The seller grants the down payment to the buyer via the Nehemiah program. Nehemiah charges the seller a fee for then doing the paperwork and passing the down payment along to the buyer.
This is good news for buyers who lack a mortgage down payment. With down payment assistance they may be able to purchase a home.
I say "may" because typically the seller inflated the price of the home to account for this bonus to the buyer. The appraisal becomes the issue if the value of the house cannot be met. In some markets this may be difficult.
Just the same, buyers say a little thank you to Judge Lawrence K. Karlton. If you ever see him on the street, perhaps buy him a beer! 
This site brought to you by Kristal Kraft, a licensed Colorado Real Estate Broker