Nonprofits Warned on Use of ‘Gifts’ to Pay Buyer’s Debt
February 4, 2002
Nonprofit providers of downpayment assistance should take note of FHA’s warning regarding questionable “gifts” to pay off a homebuyer’s consumer debts. Downpayment “gift” funds from nonprofits that are used to pay off bad or outstanding debt raise underwriting issues and appear to be a masked inducement to purchase property, the FHA noted in Mortgagee Letter 2002-2.