While mortgages that allow consumers to put little, if any, money down when buying a home have largely disappeared as a financing option available from private lenders, they are still available — and growing more popular — through a government-backed program, the Wall Street Journal reported today. That’s raising concerns among critics who blame no-money-down mortgages for many of today’s housing market woes. While federal housing officials are moving to end the practice, home builders are currently promoting the programs to move unsold inventory. The offers — including “100 percent financing” — are made possible due to down-payment assistance programs run by nonprofit organizations. These programs are funded largely by home builders and also by private homeowners desperate to sell. The seller-funded groups provide enough down-payment money to buyers that they can qualify for a mortgage backed by the Federal Housing Administration, which requires at least a 3 percent down payment.

The Bush Administration issued a Statement of Administration Policy yesterday opposing various provisions of the Senate housing assistance package. As it has stated previously, the Bush Administration strongly opposes a program to provide block grants that would allow State governments to purchase foreclosed properties. The Administration said that it believes the principal beneficiaries of this type of plan would be private lenders - who are now the owners of the vacant or foreclosed properties - instead of struggling homeowners who are working hard to stay in their homes. It also opposes provisions within the Senate legislation increasing the conforming loan limit beyond a reasonable level based on median area home prices, as calculated by the Office of Federal Housing Enterprise Oversight, as well as a provision to grant explicit legal protection to servicers that follow certain prescribed steps.