The Mortgage Bankers Association (MBA) is pressing the Federal Housing Administration (FHA) to reconsider its proposal to reduce the limit on seller concessions from 6% to 3%, according to MBA NewsLink. The trade organization outlined its argument in a recent letter to FHA Commissioner David Stevens.
Although the MBA agrees with reducing the limit on seller concessions, the organization believes the FHA should bring its limit in line with that of the Department of Veterans Affairs (VA). The VA limits seller concessions tp 4%. (The VA's definition of seller concessions includes payment of expenses such as prepaid closing costs and the VA funding fee. The payment of discount points is not subject to the 4% limit.)
‘At a time when the housing market is slowly showing signs of recovery, MBA does not think that it is appropriate to make policy changes that could negatively impact the purchase market, especially the first-time home-buyer segment, which serves as a catalyst for the overall market," the MBA letter said.
SOURCE: MBA NewsLink
(CORRECTION: Paragraph two of this story was modified to clarify the VA's policy regarding seller concessions. The original version stated only that the VA limits seller concessions to 4%)