The tax credit down payment is back. Well maybe not so much.
HUD announced today the details of the "new" program that have been much anticipated and in the news recently with a lot of false information. I expect that today's announcement will add to the dissemination of false information.
The policy allows certain entities to offer tax credit advances with second liens. This is the approach already taken by THDA for Tennessee purchases. Other states have similar programs.
The purchaser may not receive cash back as a result of the tax credit advance.
The second lien may not exceed the total amount needed by the borrower for down payment, closing costs, or prepaid escrows.
As an alternative to a tax credit second mortgage, approved entities may PURCHASE the anticipated tax credit refund.
More information is available in the reissued Mortgagee Letter 09-15.
News articles are already out on this HUD announcement, but in actuality I cannot find very much in the mortgagee letter that is new. There seems to be more in the headlines than in the details.
Maybe someone else can find more. It looks to me like the last paragraph in the announcement is almost a threat. "FHA will monitor the purchase of tax credit transactions closely." The primary concerns are overcharges for the tax credit advances and use of this program by entities involved in the transaction. This last is a nod to the former seller funded down payment programs that were discontinued this past fall.
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Richard Smith Conventional, FHA, FHA 203k, HUD $100 down purchases, VA, Jumbo VA, Rural Development, Jumbo, FannieMae Homepath, Home Equity Line of Credit (HELOC). |
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Wow what a rollercoaster! It's on again off again it's driving me crazy! I hope they just keep it on this time so I can advertise it! LOL
Sincerely,
Kathleen
Kathleen,
It really is not what the headlines lead one to think.
In Florida, the State put together a bridge loan to avoid this sort of back and forth.
Rob, I saw some posts on the FL program. Sounded good. That is the type of program that HUD allowed before this "news". There really is no roller coster. The program is the same as it has always been. Approved entities can offer a second mortgage. If they want they can incorporate the tax credit as part of the second mortgage program.
There is just so much media on this, after the Sec Donovan spoke at the real estate agent convention a couple weeks ago.
Hi Richard, I think after reading this that you have exactly correct. Not really much new, with the exception of procedurally. Details Details, LOL. I think it is just a face saving announcement and like you said the headlines are bigger than the change or even the clarification.
William,
Face saving is a phrase that came to mind. It is hard to believe the commotion over this Much Ado About Very Little, since his PR talk to the realtor convention.
Richard