Last week we Received an email that HUD was allowing Tax Credit Loans.  Here's a quick update: The offer is off the table for now.

HUD has pulled/rescinded their Mortgagee Letter 9-15, which allowed tax credit loans. They are apparently "analyzing" the issues this ruling created.

HUD has retracted the mortgagee letter, and here's why:
In regards to FHA loans, a borrower can only obtain monies for their actual down payment 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  government agencies

--FHA approved non-profits 

--Monies from their employer in a form of employee contribution

--Monies from secured borrowed funds... (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)

 
*****Here is why the letter is causing major confusion: *****
In the body of the mortgagee letter, ML 09-15, 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.

 
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 wasn't mentioned 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  The reality of it all, basically everything that was stated in the mortgagee letter, that has been revoked for now, is old school FHA.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 mortgages, you could get monies for your down payment from the items that mentioned above. They were going to make an exception to all of this.  HUD was going to allow 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 down payment monies of 3.5%.
 
This is a very fluid situation, and we'll keep you posted.
 
If you have any questions, please email me at information@networkfundingla.com or call me at 225-910-6053.

 

Mitch