Since the gift comes from the seller, doesn't this tie make SF-DPA more risky?

There is nothing wrong with tying downpayment assistance to a seller's property since that does not deprive a potential purchaser of choice. If he/she does not want to purchase a given seller's property, he/she does not have to do so. Further, there is absolutely no evidence that tying the gift to a given property makes the mortgage loan any more risky than loans made with the other forms of downpayment assistance discussed above.

The motives of sellers who participate in a seller-financed downpayment assistance (SF-DPA) program are not suspect either. Undoubtedly, the overwhelming reason for a seller to participate is the desire to sell his/her home and to sell it promptly. Particularly in the current housing market with its huge overhang of unsold homes, there is a strong incentive for a seller to reduce its sale proceeds by gifting the downpayment in order to move his/her property.

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For additional information, please contact Shelley Mitchell, smitchell@nehemiahcorp.org, 916-231-1999.

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