HUD Indefinitely Suspends Rule Change to FHA Down Payment Assistance Guidelines

By Jessica Guerin

The Department of Housing and Urban Development issued a notice to lenders announcing the formal suspension of its rule change to down payment assistance guidelines.

According to the bulletin, HUD is halting the effective date of a mortgagee letter it issued in April that provided clarification to the documentation needed to qualify for down payment assistance on loans backed by the Federal Housing Administration, suspending the guidance “until further notice.”

HUD’s move is a reaction to a ruling last week made by a federal judge in Utah, which ordered the suspension of the program until its legality is determined as part of a lawsuit between HUD and a Utah-based Native American tribe.

The lawsuit was filed against HUD on behalf of the Cedar Band of Paiutes, a federally recognized American Indian band that operates the Cedar Band Corp. and the CBC Mortgage Agency.

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