Why Seller funded downpayment goes away?

Main points about the Seller-funded Downpayment Assistance Provision

* Seller-funded downpayment assisted FHA loans have a very high default rate. In FY2007, the default rate on seller-funded downpayment loans was more than 28%, roughly three times the default rate on FHA loans without seller-funded downpayment assistance.

* The FHA does not collect enough in premiums to sustain a 28% default rate on its loan portfolio without the need to raise premiums for all FHA borrowers or receive a federal subsidy for the first time in the 71-year history of the FHA program.
FHA is the only mortgage program that has allowed seller-funded downpayment assistance.

* Under the legislation, FHA borrowers can still receive a 100% loan. The only requirement is that they must contribute 3.5% of the total costs in either the downpayment and/or closing costs.