Judge David Neffer of the U.S. District Court in Utah has blocked the Department of Housing and Urban Development's motion to restrict down payment assistance for nonprofit housing funds, according to National Mortgage News.
"In April, Federal Housing Administration chief Brian Montgomery issued an industry letter stating that nonprofits must prove they operate only within their geographic area," according to the report.
"Funds wishing to have a broader reach must get permission from each local government authority where it backs loans."
Neffer's injunction was the result of claims that Montgomery's letter violates the Administrative Procedure Act by the Utah-based Chenoa Fund, run by the Cedar Band of Paiutes.
"In April, the Utah tribe sued HUD, alleging that the department tried to avoid scrutiny when it imposed new restrictions outside a formal rulemaking process," according to NMN.
"HUD had delayed implementation of the letter until next week, but Neffer's ruling casts further doubt on whether the policy will go into effect."
To learn more about the HUD's struggles to restrict down payment assistance for nonprofit housing funds, click on the image above.