Source: WSJ

Gee, you think that might be a problem?  We more than double the rate of default based on whether the buyer cheats on his down payment?

Of course the firms involved in this are beating shoe leather in a desperate attempt to prevent the rug from being pulled out from under them.  Never mind that the entire concept of a "non profit" that simply washes someone else's money is one of the more "interesting" uses of the 501 section of the IRS code that I've managed to come across in my years.

The other problem with these "down payment assistance" programs is that they are really a scam to hide the actual selling price, and therefore they distort the market in other ways - all of them bad.

If you have a $100,000 house (for example) but the seller of the house finances the down payment of 3%, then the real selling price is not $100,000, its $97,000.  But it is reported in the MLS as a $100,000 sale, even though the seller doesn't really get $100,000 for the house, as they kick back $3,000 to the buyer.

I call this fraud but apparently HUD calls the practice acceptable and allows these "adjustments."  I guess when the entire housing finance industry has become steeped in gamesmanship and BS "a little more" doesn't bother anyone.

Nobody really expects The Fed to drain the swamp tomorrow or, for that matter, at any time in the reasonable future, but they sure as hell should.  Bloomberg picked up on the box Ben finds himself in though (gee, you're only a few months late guys) today:

"Raising rates may exacerbate the economic slowdown and roil banks whose losses sent their stocks down the most in a decade this month. Forgoing a rate boost next quarter risks damaging the Fed's credibility and deepening its divisions. Already this year, three officials have dissented on rate decisions."

Oh what a tangled web we weave when we practice to deceive.

Congress needs to get involved in putting a sock in this crap, but being an election year and all, the best we can probably expect is more BS partisan rhetoric. 

Of course being a "Friend of Angelo" might have something to do with that, along with being a Friend of Fannie and Freddie.  Speaking of which, do you think we'll ever see any sort of meaningful disclosure of all of these "special deals"?

IRA calls it "legalized bribery."

I agree, and its time for this garbage to stop.