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FHA does NOT permit underwriting at a temporary buydown rate on fixed rate mortgages.

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Final answer:

The FHA's historical policies included redlining, which led to discriminatory mortgage and insurance practices. This meant that during the Great Depression, neighborhoods deemed high-risk due to factors like resident demographics were less likely to receive government aid for mortgage refinancing.

Step-by-step explanation:

The Federal Housing Administration (FHA) policies have indeed been associated with discriminatory practices that have affected mortgage eligibility and insurance practices, especially during historical periods such as the Great Depression. This practice, often referred to as redlining, involved denying or limiting financial services to certain neighborhoods based on racial or ethnic composition without regard to the residents' qualifications or creditworthiness.

During the Great Depression, the federal government took measures to prevent foreclosures by refinancing mortgages. However, this aid was not extended uniformly. Neighborhoods with specific characteristics—including those with challenging terrain, many old houses, or a high concentration of 'foreign-born, negro or lower grade population'—were deemed risky and often denied these refinancing benefits, which systematically disadvantaged certain racial and ethnic groups.

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