Two major downpayment assistance providers have sued the Department of Housing and Urban Development to block a final rule that prohibits seller-funded DPA on Federal Housing Administration loans starting Nov. 1.Nehemiah Corporation of America, Sacramento, Calif., and AmeriDream Inc., Gaithersburg, Md., filed separate lawsuits. "HUD's action to move forward with banning privately funded downpayment assistance programs is outrageous, and we have responded by filing a lawsuit in federal court to challenge the merits of HUD's damaging rule and to seek an injunction blocking implementation of this rule," said Nehemiah president and chief executive Scott Syphax. He pointed out that HUD received 15,000 comment letters opposing the DPA rule and that the House has just passed an FHA reform bill that creates new standards for DPA providers. (A Senate FHA reform bill would ban seller-funded downpayments on FHA loans.) Due to a 1998 settlement with HUD, Nehemiah is exempt from the HUD rule for six months and can still provide downpayment assistance on FHA loans until April 1.

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