Buyer Tax Credit Loan Guidance Coming Soon
Detailed guidance on the federal government’s plan to provide short-term loans to borrowers using the First-Time Homebuyer Tax Credit is expected to be out shortly, but a spokesperson from the U.S. Department of Housing and Urban Development, which is writing the guidance, couldn’t give a firm release date.HUD policy staff are "still working out the details on it," HUD spokesperson Lamar Wooley told REALTOR® Magazine today. "So we expect it to be published shortly."
The short-term loan program, which would effectively monetize the first-time homebuyer tax credit by permitting eligible lenders to make bridge loans collateralized by the borrower’s expected tax credit, was announced by HUD Secretary Shaun Donovan at the Real Estate Summit NAR hosted on the opening day of its 2009 Midyear Legislative Meetings in Washington last week.
At the summit, Donovan said the loans would enable FHA consumers to access the tax credit funds when they close on their home loans so that the cash could be used as a downpayment.
"FHA will permit trusted FHA-approved lenders and HUD-approved nonprofits, as well as state and local governmental entities to ‘monetize’ the tax credit through short-term bridge loans," Donovan 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. FHA will be publishing the details shortly."
It’s unclear at this point what shape the guidance will take and whether authorization for the loans will be available across the board or only in states in which the state housing finance agency already has a tax credit bridge-loan program in place.
There are 10 states today that have such a loan program, according to the National Council of State Housing Agencies: Colorado, Delaware, Idaho, Kentucky, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, and Tennessee.
You can access details of these loan programs on the NCSHA’s Web site, "First-Time Homebuyer Tax Credit Loan Programs."
When it’s released, the guidance is expected to be issued as a HUD Mortgagee Letter and will likely discuss which federal, state, and local governmental agencies and nonprofit organizations will be permitted to make the loans, and whether lenders such as FHA-approved mortgagees will be permitted to make the loans.The guidance could also cover how loan amounts will be limited, what happens if repayment problems occur, and what repayment terms would look like.
REALTOR® Magazine will be checking with HUD regularly on the status of the guidance and will report its availability as soon as it’s issued.
—By Robert Freedman for REALTOR® Magazine
I guess my gut reaction is that I’ll believe it when I see it. I rarely believe anything that has the air of politics until it’s upon us.
NAR took a beating after the on again off again HUD information releases contradiction. To me it was another good indication that quick information is not nearly as valuable as vetted information. Many Realtors blogged and Twittered about this issue and then were upset that HUD said it wasn’t immediately true. I think it would have been nice had NAR released a quick “We’re looking into it” and maybe took down the information on Realtor.org; but non-the-less it drives home the point that we should all research our sources better, before retransmitting.
Also a hat/tip to Pam for using Twitter to get this word out. I just wish the Realtor Leaders would use current tools to engage their membership. Maybe we would have some very different outcomes…
