The Housing and Economic Recovery Act of 2008 (HERA) amended the National Housing Act to add a prohibited sources clause, under Section 203(b)(9)(C).  This requirement prohibits any portion of a borrower’s the minimum cash investment, as required by section 203(b)(9)(A) from being provided by:  (i) the seller or any other person or entity that financially benefits from the transaction, or (ii) Any third party or entity that is reimbursed, directly or indirectly, by any of the parties described in clause (i).  While section 203(b)(9) prohibits assistance from a seller involved in the transaction, FHA continues to receive questions regarding the prohibition on persons or entities that may financially benefit from the transaction.  In particular, FHA has received questions regarding whether downpayment assistance programs operated by government entities are being operated in a fashion that would render such assistance prohibited.  This rule would define through rulemaking the circumstances in which governmental entities are deriving a prohibited financial benefit.  As part of the process to ensure government entities are providing downpayment assistance in accordance with the requirements established by this rule, the Department also seeks to establish requirements for placement of Government Entity downpayment assistance programs on a roster after FHA review and approval.