The Department of Housing and Urban Development inspector general’s criticism of state downpayment assistance programs is misplaced and could be damaging to the program, the Urban Institute warned. In a recent analysis, researchers Laurie Goodman, Jim Parrott and Bing Bai said their study of FHA loans with downpayment assistance provided by housing finance agencies (HFAs) has found no problems and, in fact, has been valuable to borrowers. “They present minimal risk to FHA’s finances,” the authors concluded. The UI study responds to a HUD IG audit of FHA loans originated with downpayment assistance to see whether the department had adequate controls to ensure that such loans complied with HUD requirements. After three previous audits, the IG has concluded that FHA borrowers pay for the assistance through higher interest rates, in violation of HUD rules. In addition, the ...