Comment Submitted by Patricia Selmer, City of Port St. Lucie

I have written letters to HUD for almost a year, requesting that someone review this prohibition in light of the problems it has caused our NSP buyers and lenders. I am so happy to see this interpretive rule!! But I would like to point out that the new rule will not solve all of our NSP financing problems. There is another rule that needs interpretation in order for us to be able to meet the public purposes of NSP. That rule is the CDBG/NSP rule prohibiting use of this type of funding for more than 50% of the down payment (section 105 (a) 24 - Housing & Community Development Act.) HUD does not provide a definition for down payment in the rule, & that term is not used in any consistent manner by lenders. Is down payment the same as minimum contribution? On FHA loans, is the 3.5% a down payment? NSP staff (in webinars) says it is. Therefore, even if a seller that is a governmental entity is allowed to pay the down payment, the amount paid is limited to 50% if they use NSP funds. Our income qualified borrowers do not have sufficient funds available to pay 3.5% or even 1.75%. So we have had to work with one lender that furnishes bond loans and another portfolio lender. The bond loan is secured by first & second mortgages & NSP funds are secured by a third.) The portfolio lender does not require a down payment, so NSP funds can cover the entire investment required from the borrower. We have not been able to use regular FHA or conventional lending for our loans. With the new rule, NSP can cover more of the down payment but not all of it. We still need bond & we still need our portfolio lender. Our borrowers do not have a choice. I have written letters to HUD CPD and they indicate "there is a statutory limit of 50 percent on downpayment assistance..." The same letter indicates that there is no statutory definition of downpayment. So, we don't know exactly what it is but it's required. This new rule solves half of the problem for NSP but not all. Thanks.