In the February 23, 2012, issue of the Federal Register (77 FR 10695), the Federal Housing Administration (FHA) published a request for comments on its revised proposal to reduce the amount of closing costs a seller (or other interested third parties) may pay on behalf of a homebuyer purchasing a home with an FHA-insured mortgage for the purposes of calculating the maximum mortgage amount. Comments are due on or before March 26, 2012. All comment submissions must refer to the Docket Number FR-5572-N-01 and the title “Federal Housing Administration (FHA) Risk Management Initiatives: Revised Seller Concessions,” and be submitted through one of the following methods: 1. Submission of Comments by Mail. Comments may be submitted by mail to the Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 7th Street SW., Room 10276, Washington, DC 20410-0500. 2. Electronic Submission of Comments. Interested persons may submit comments electronically through the Federal eRulemaking Portal at Commenters should follow the instructions provided on that site to submit comments electronically. Please refer to the following web address for further information on filing comments: This revised proposal revises a similar proposal to reduce seller concessions published by the FHA in the July 15, 2010 Federal Register (75 FR 41217). Based on the comments received on that proposal, FHA decided to make the following changes and seek comment on these changes: • Reduce the amount of seller concessions permitted as offsets to actual closing costs to 3 percent (based on the lesser of sales price or appraised value) or $6,000, whichever is greater, but not allow the offsets to exceed the borrower’s actual costs. This reduction in concession allowances does not apply to HUD’s Real Estate Owned homes and Neighborhood Stabilization programs, for which the allowance remains at 6 percent. • Limit acceptable uses of seller concessions to payments toward borrower closing costs, prepaid items, discount points, the FHA Up Front Mortgage Insurance Premium, and any Interest Rate Buydown. This revised definition eliminates payment supplements such as homeowner or condominium association fees, mortgage interest payments, and mortgage payment protection plans.

Complete Memorandum