Using First-Time Homebuyer Tax Credits for the Downpayment - It's GONE !!!! - The story of the $8,000 tax credit

Reblogger Sheldon Neal
Real Estate Agent with Bergen County, NJ - RE/MAX Real Estate Limited

Well Folks - HUD giveth, and HUD taketh away

It seems that as of right now, HUD has pulled the ability to use the $8K credit for a downpmt, and those who have used it for this purpose to this point, may just have been the lucky ones.

Fortunately, we have partners on A|R like Jeff Belonger who was able to get to the bottom of today's developments on this subject.

Hopefully this program - or something similar - will be available soon for those First Time Buyers who could really use it.

Thanks to Jeff for his diligent research, and sorry to all those peeps who were hoping to take advantage of the currently rescinded '$8K advance for downpayment' ...

Sheesh, my head is spinning ...

Original content by Jeff Belonger

gone diving - fishing

 

The $8,000 first time homebuyers TAX CREDIT - HUD has saved the day. Well, okay, it saved it for a day. It's gone now, recinded, at least for now. Everything that you have been reading about yesterday, about FHA/HUD putting out mortgagee letter 2009-15, it's no longer there. Tom Burris had noticed this yesterday and I just got off the phone this morning with the HUD office. For reasons unknown, this letter, ML 09-15, has been taken off the self. Besides, I have my reasons to this and also felt that many of the blogs posted yesterday were incorrect. Here is why....

 

 

 

fha loans & fha mortgages

 

In regards to FHA loans, a borrower can only obtain monies for their actual downpayment of 3.5% by the following :

  • Their own funds
  • up to 100% of a gift from a relative/family member
  • From the Federal, state, and local governmental agencies and nonprofit instrumentalities of government
  • FHA approved non-profits 
  • monies from their employer in a form of employee contribution
  • monies from secured borrowed funds... IE. borrowing equity from your home to buy another home or borrowing against your car that is free and clear or borrowing from your 401-k, etc, etc

 

 

 

Here is the major confusion that was put out yesterday both HUD, NAR, and many realtors and loan officers that wrote about this.  In the body of the mortgagee letter, ML 09-15, at the bottom, it stated :

The Tax Credit: Short-Term Loan: 

Entities that can offer the tax credit advance with short-term loans:

  • Federal, state, and local governmental agencies and nonprofit instrumentalities of government, FHA-approved nonprofits, and FHA-approved mortgagees may provide short-term or "bridge loans" secured only by the anticipated tax credit due the homebuyer as collateral.

 

The confusion : It states, As collateral and not as a secured lien against the home, but as a secured loan against the collateral. Which in this case would be the $8,000 tax credit, which would be secured against.

Because of this, HUD does not allow for monies to be borrowed or given to in any form that I did not mention above, to be used for the down payment.  The reality of it all, basically everything that was stated in the mortgagee letter, that has been revoked for now, is old school FHA. When it comes to FHA loans / FHA mortgages, you could get monies for your down payment from the items that mentioned above, which is mentioned in the mortgagee letter.  Well, was mentioned...  One caveat to all of this is that HUD was going to allow for lenders to secure a short term loan or bridge loan against the $8,000 to be used to purchase a home. But again, that can't be used for the actual down payment, because it goes against the basic FHA guidelines of downpayment monies of 3.5%. Now, unless HUD changed this, it does not clearly state this in the mortgagee letter, even though that letter is no longer valid.

 

 

Summary : When I read the ML 09-15 the other day, all of this jumped into my head. But I didn't have time to dissect all of this, yet I wanted to get this out to the public. After seeing many blogs written with inaccurate information, because NAR stated certain things from a HUD spokesperson, it was never clear, in which this gave me large goose pumps. My advice, consult an FHA Expert, even if you hear it from others that are high up, such as the NAR. And be careful on those that call themselves Experts also. I personally think that this was immature of several agencies for putting this information out there without verifying it's accuracy and intentions. And I would have to assume that HUD feels the same way since they took this mortgagee letter off their site and off the HUD clips site.  Thanks

 

 

 

EXTREMELY IMPORTANT REMINDER : Just because HUD or any other source puts information out there, doesn't mean it will happen. Keep in mind that most lenders have overlays and can add to certain rules and or guidelines.   

 

And just for the fact that HUD says it's fraud to obtain the tax credit prior to closing. This question has been asked to HUD by many of us and their response is FRAUD.  Why?  You are receiving the monies before you are buying the house. Yes, you can give the IRS the address prior and a potential closing date. But I smell shit hitting the fan very soon, since a lot of this is still new. And remember those lender overlays?  I know some lenders and underwriters that won't allow this type of loan to go to closing.

 

Ken Cook wrote a very short and brief blog about all of this. It's very clear. FALSE info flying around about the first time tax credit used as a downpayment.

 

 

For real, updated information on the First time Homebuyer's Tax Credit, please read :  $8,000 first time homebuyers tax credit.

 

 

 

follow Jeff Belonger on Twitter

 

 

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages - 

- Conventional Loans - 203 k loans -

- Mortgages -

 

Experience & Knowledge at its BEST !!!

 

_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Copyright © 2009 by Jeff Belonger

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the umbrella to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Comments 35 New Comment

Anonymous
Post a Comment
Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the music-note to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Rainer
24,450
Debra V. Edwards
Realtor/Builder, Cashiers, NC., Highlands, NC., Glenville
edwards builders and realty, inc.

Is the government to be trusted anyway...spend, spend, spend...my bank account was full last year at this time...now it is empty...so much for 'saving for a rainy day' theory.  That 9 mos that you're suppose to keep in emergency fund, has now been emergency funded out...don't tell this to the government, they'd probably tax me on it...  

Learn it first, right here on AR....and I was sooooo excited that 'they' were doing something right.

May 17, 2009 04:16 PM
Rainmaker
502,647
Pat & Wayne Harriman
Broker/Owners, Wallingford CT Real Estate
Harriman Real Estate, LLC (203) 672-4499
Rainmaker
378,341
Sonya Loose
Wixom Lake, Secord Lake, Sugar Springs and Smallwo
Gladwin MI Real Estate (Homewaters Real Estate)

Wow, I hadn't heard this yet and am so glad I read your blog post.  I told a client this yesterday based on an email from NAR...

May 21, 2009 10:25 AM
Rainmaker
42,689
Michael Barrow
Realtor, San Diego CA Real Estate
Keller Williams Realty - San Diego Metro

Yeah, when I first saw the initial announcement on Realtor.org I was going to blog about it...good thing I procrastinated this time! =)

May 25, 2009 10:04 AM
Rainmaker
128,109
Mike Henderson
HUD Home Hub - 303-949-5848
Your complete source for buying HUD homes

This was one of the crazier stories I have seen so far in my time in the real estate and mortgage industry.

May 26, 2009 01:43 AM
Anonymous
Post a Comment
Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the key to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Ambassador
650,152

Sheldon Neal

That British Agent Bergen County NJ
Ask me a question
*
*
*
Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the car to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Additional Information

Cerified Distressed Property Expert


Locations of visitors to this page

New Jersey Real Estate Agents