“Such programs allow home sellers to give money to charities, which in turn assist buyers with their down payments. The sellers pay the charities a service fee, but often recoup the money by charging a higher price for the homes, usually 2 or 3 percent more, or an amount equal to the down payment, according to a 2005 study by the Government Accountability Office.” — Another scam dies a long overdue death. Here’s another key part: …the GAO study found that borrowers receiving assistance from the charities were more than twice as likely to default or become delinquent than other FHA borrowers were. In a ruling last year, the IRS went so far as to call the seller-financed programs “scams,” accusing the charities of inflating home prices. Hey look, we just agreed with the IRS on something! Just to be fair here is the counter-argument side: “The rule does discriminate between the haves and the have-nots,” she said. “People who have money from mom and dad or have money on their own are still okay . . . but people who have no access to any sources — those are the have-nots — that group is now going to be discriminated against.” Have-nots or not — putting people in a home they can’t afford does not help the borrower or anyone else. Perhaps the problem of “haves and have-nots” should be solved by more holistic means than simply attempting to bequeath people with houses, to the presumed benefit of creditors and a bevy of other neer-do-wells.

More: continued here