Phew – I am sure glad the last blog-post subject line had a question mark in it!
Guess what disappeared… the mortgagee letter that was on HUDs website about this ability to “use the $8000 First Time Home Buyer Tax Credit” – yeah… its gone!
As of today you can not use the tax credit for a down payment. True, there has been a lot of discussion on this, but as of now it is not currently an option. Those statements were made by the Secretary of HUD yesterday and a HUD/FHA letter was published on the website Monday night.
Then…the new Director of HUD pulled that Mortgagee letter this morning and is no longer even available on the HUD website. [Notice ML 09-15 has been pulled]. This theoretical program is not something that is deliverable as of yet. Sometimes I wonder if they are intentionally trying to sabotage the marketplace. They, once again, have gotten people worked up in a frenzy over something that might – maybe – possibly – happen… then they act as if it was not said at all!? OMG, are you kidding me?
This is why, more than ever, it is important to have a trusted mortgage broker in your corner. I will deliver the news to you as it comes out and if/when they change it, you will know about it first - here. Thank you for the trust you place in me, it is not something that I take lightly. If you have any questions don’t hesitate to call me, for now…..and if anything should come to market officially you will see it here.
Just as an FYI – before this could happen, there would need to be:
- …State agencies approved and funded for the down payment ‘float’
- …a Change to the HUD guidelines on the time frame that is allowable for a loan. [Currently must be amortized over 10 years with no balloon.]
- …and a change to the IRS guidelines allowing your refund to be re-assigned to a state or non-profit entity
How long do these things take? Oh my, your guess is as good as mine. With the tax credit due to expire on Nov. 30th, 2009, this may never even see the light of day. Wanna know what happens – Subscribe to the blog to keep in the loop
Chris Brown is the premier expert on HARP loans and Government FHA and VA loans. Please visit The Mortgage Chili Blog
May 15, 2009 at 11:06 pm
Chris – I started following you on Twitter and you sent me a private message. Twitter won’t allow me to reply to your PM because you aren’t following me (you can only send PMs to people who are following you). Also, I couldn’t find a spot anywhere on this blog to contact you, so I figured I’d leave a comment here. Just a heads up.
May 17, 2009 at 6:32 pm
This just demonstrates how inept the folks over at HUD really are. While the idea of using the $8K tax credit as a downpayment is a viable one, the system for implementation was not formulated as you pointed out above. I am amazed that the Secretary made those comments, slammed out a mortgagee letter without thinking the process through.
In this day and age, real estate professionals are key – the guidelines and the rules change daily and we have to be the source of credible information.
Great blog post!
May 19, 2009 at 11:07 am
This tax credit always seemed a bit odd.
It seems like from the beginning even politicians acted like this was a downpayment assistance program. Of course, for all of the reasons you cited it couldn’t “technically” even be considered for use in that way.
Then lenders got in trouble marketing such a gimmick, but HUD/FHA seemed to like the idea and started lobbying for such.
However, the real irony is they just finished battling down the DPA (downpayment assistance) lobby headed by Nehemiah Project–contending such programs raised default rates.
We live in weird times, huh? Lots of wackiness in the mortgage market.
May 19, 2009 at 12:36 pm
I think you guys nailed it – a little confusing to say the least. Makes it fele like they are intentionally sabotaging the recovery – ugh!
Chris Brown