First Time Buyers Get Even a Better Break! What About Everyone Else?

From: NAR Government Affairs
Date: 29 May 2009
RE: Tax Credit Guidance for FHA Loans Announced by HUD


In his speech at the National Association of REALTORS Housing Summit on
May 12, 2009, US Department of Housing and Urban Development (HUD)
Secretary Shaun Donovan announced a program that allows borrowers to use
the first-time homebuyer tax credit for a down payment or closing costs on
a FHA-insured mortgage. The Secretary said We think the policy is a real
win for everyone, ensuring that borrowers can tap into the numerous
organizations that are already part of the FHA network to receive this
additional benefit.

The details of the program were announced today in Mortgagee Letter
2009-15. Government entities and instrumentalities of government may
provide a second mortgage. Currently, 10 state housing finance agencies
offer a product buyers can use that will effectively monetize the tax
credit for down payment purposes. These states are Colorado, Delaware,
Idaho, Kentucky, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, and
Tennessee Get information on these programs at
http://www.ncsha.org/section.cfm/3/34/2920.. State Associations are
encouraged to work with their respective housing finance agency to
implement similar programs. The 3.5 percent down payment may also be a
gift from a family member, employer or nonprofit, charitable organization.

The original guidance permitted lenders and HUD-approved nonprofits and
lenders to offer bridge loans via second lien financing or short term
loans. Guidance released today allows lenders to offer the monetized tax
credit for down payments in excess of 3.5 percent, closing costs and
interest rate buy downs. Mortgage industry leaders have indicated that
this type of product may not be immediately available to consumers.
Lenders will need some time to develop documentation for what will
effectively be personal loans to the home buyer.

Read the HUD Mortgagee Letter at
http://portal.hud.gov/pls/portal/docs/PAGE/FHA_HOME/LENDERS/MORTGAGEE_LETTERS/2009_MORTGAGEE_LETTERS/09-ML-15%20USING%20FIRST-TIME%20HOMEBUYER%20TAX%20CREDITS.PDF


For information on FHA contact Jerry Nagy at 202.383.1233,