Comment Submitted by Patricia Selmer, City of Port St. Lucie (2nd Comment)

I submitted a comment but have additional information to add. In re-reviewing the notice, it appears that there could have been more references made to the fact that the regulation does not prevent governmental agencies,WHO ARE ALSO SELLERS OF THE SUBJECT PROPERTY, from furnishing all or a portion of the required cash investment. The first reference to the regulation in 203(b)(9)(C) prohibiting seller-paid minimum investments appears in paragraph 1A. Paragraph 2B states that reading of paragraph 1A to include federal agencies, etc. would allow the such authorities to provide assistance toward the minimum cash investment for the borrower on one hand & take away the ability for FHA to provide the financing on the other. There are other such references that indicate that “there is no indication that State and local governments or their agencies or instrumentalities were to be within the scope of the amendment.” Section II indicates that HUD's interpretation of section 203(b)(9)(C) "does not prohibit FHA from insuring mortgages originated as part of the homeownership programs of Federal, State or local governments..." when those agencies "also directly provide funds toward the required minimum cash investment." I don't believe that statement covers the entire problem associated with the misinterpretations. There seems to be no question that these programs through governmental entities can provide all the funds needed in the transaction under an FHA loan. It is the fact that the governmental entity is also the seller that appears to be the problem. Would it be possible to add "EVEN IF THE FEDERAL, STATE OR LOCAL GOVERNMENT IS ALSO THE SELLER" to the foregoing paragraph or other appropriate areas? We have had problems with lenders understanding information from NSP staff regarding this rule; we need to make sure we are as clear as we can be to make this interpretation work. I’ve already had one FHA lender indicate that the notice is not clear and he needs legal advice