Baton Rouge LA real estate listings and homes for sale, home buying, home selling information – Network Funding, LP

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Tax Credit, now it's on again!

May 29th, 2009 4:34 PM

JUST GOT THIS EMAIL IN.

A few minutes ago I got an email mentioning that there were changes today in the HUD guidelines for the 8000-tax credit.

Thanks to the Mortgage Grapevine for keeping us informed!!

“The Department of Housing and Urban Development issued guidance that opens the door for FHA-approved lenders to provide short-term loans — with restrictions — to borrowers who are eligible for the $8,000 first-time home buyer tax credit. Borrowers must still come up with the required minimum 3.5% down payment using their own funds. But after that, they can use the short-term liens to increase their down payments, cover their closing costs or buy-down their mortgage rate. Calling the tax credit advance "another step towards accelerating the housing market," HUD secretary Shaun Donovan told the National Association of Home Builders' annual spring board meeting in Washington that the initiative is a "real win for everyone." The NAHB estimates the advance will lead to 160,000 more sales — 101,000 to first-time buyers and 59,000 to move-up buyers who are selling their current residences to first-timers. Tax credit loans made by state and local housing finance agencies, government agencies and certain nonprofit groups can be used to cover the minimum 3.5%. However, non-profits that receive fees from sellers cannot provide down payment assistance under this program. HUD didn't want to do anything that would allow "these seller-funded schemes back in," a senior HUD official said. The department has issued a mortgagee letter (2009-15) with guidance on acceptable interest rates and fees. "We are putting in place the necessary safeguards and consumer protections, and if monitored the right way, tax credit loans can be used efficiently and safely," secretary Donovan said.”

In reading this, it looks like HUD will be looking more to the local agencies to fund this rather than the DPA companies that were around in past years. If a non-profit does this, under those restrictions, the down payment requirement is waived.

The HUD letter says that it can be down either as second mortgage or a grant, and HUD will be monitoring the non-profits closely to make sure they are not charging “excessive” fees.

One sentence that pops out at me is the non-profits can’t receive fees from the sellers. Does that mean that a non-profit can charge the buyer? Could this be done as a reverse down payment assistance program?

Also I downloaded the printed up the letter from HUD, and there are more details there. If you’d like a copy, drop me an email to information@networkfundingla.com and I’ll be happy to forward you one.

I welcome your ideas and comments. I’m sure that there is someone out there that can come up with a plan to utilize this benefit. Let me know.

Thanks.

Mitch

www.networkfundingla.com

information@networkfunding.com

225-910-6053

Posted by Mitch Champagne on May 29th, 2009 4:34 PMPost a Comment (0)

HUD TAX CREDIT LOANS

May 22nd, 2009 12:40 PM

What HUD Giveth, They Now Taketh Away.

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

Posted by Mitch Champagne on May 22nd, 2009 12:40 PMPost a Comment (0)