Good information after so much bad information in other posts. Thanks!

Thanks for jumping on this so quick...  I had numerous lenders out here talking up the plan.  Fortunately, most urged caution in passing the info along...

I think we all got drunk on the information... HUD included!!

Makes sense because FHA borrowers have never been able to borrow down payment money, hense the "gift letters" from family, etc. 

This should not interfere with local governments that are creating vehicles for the use of the tax credit for down payment.

Seems to me that we got this information from the Secretary of HUD, Donovan.  Mmmmmm.

HEY ALL.....  just a quick clarification on what I wrote... The mortgagee letter itself, at the end, that talks about FHA approved lenders that can offer these bridge loans... it never states if this would supercede the regular FHA down payment guidelines. Hence one reason why this might have been taken down for now.

ROY....  thanks... I hope this is as accurate as it can be, and clear. I know I did confirm with HUD though, that this letter has been rescinded.

BILL... . I wanted to jump on this yesterday, but didn't have time too...  but now after speaking to HUD, that they rescinded the mortgagee letter, some of my assumptions are making sense now. thanks

I was afraid of this. Then we all got those e-mails last week from NAR, asking us all to contact our state reps, to encourage them to push it through,  knew it was in jeopardy.

LOL.... ah the wonderful new ideas of our governing entities !!!!

Well - as you have stated, nothing seems to be 100% certain on this subject yet.

Let's hope that they give us a clearer picture very soon, as there are many buyers who could benefit from it.

Cheers Jeff !

Sheldon

Good thing I didn't reblog anyone's post on that...was going to, but got caught up in some other business. Thanks for the update, Jeff.

Thanks for this. I had wondered about the mention of collateral. Plus lender overlay is a biggie and not to be ignored. kate ford

Thanks for the update-some things are too good to be true.

Typical governmental "cluster-bleep".  God help us all.

TOM B. .... .  it's funny because I was thinking the same thing and thinking about changing my title to, "How HUD got drunk while writing the new mortgagee letter".  lol

LENN... .  of course it makes sense after the fact.  And hence why HUD probably took the mortgagee letter down for now, because it was confusing with one major issue... as you mentioned. Where the down payment can actually come from. And it clearly did not state that what they stated, superceded the old rules & guidelines. thanks

LISA>... people just got way ahead of themselves. Just as the media does when putting misinformation out there, just to sell news. By writing about this yesterday, to be first, the author is able to get in front of Google to possibly get business from it... that is one of my opinions.

SHELDON.... . so true, yet so scary. And in regards to what you posted yesterday, HUD actually considers that fraud. I have spoken to HUD about it and so has Tom Burris's company. And as I stated, there are some lenders and underwriters that would not allow this. So as of right now, that borrower got lucky.  But in my opinion, they are not out of the woods as of yet, or that lender. FHA still has to insure that loan. So keep me posted.  thanks

WILLIAM.... .my pleasure.. and I felt a tad sick to my stomach yesterday while reading many of these blogs. I already noticed an issue and I guess HUD felt the same. The main reason why I say.. "speak with your FHA Expert" so they can find out.. don't always assume. thanks

Well done buddy. glad somebody finally put it right. As we've spoken I think that "secured borrowed funds" component is going to be the deciding factor on a lot of these. If you can get a loan for the tax credit up front and that loan is considered "collateralized" or secured by the future receipt of the tax credit funds, then voila you have your acceptable form of down payment.

Figures it would have to be you to put it our there right! Thanks Jeff!

FYI- here in Florida, although the $30 million has been allocated in the State budget, the specific mechanism hasn't been determined. I'm working my ass of trying to get that identified and will fill everyone in once we have more details.

Gerry Suarez, Jr.

Your FHA Loan Pro!

Jeff, thanks for the clarification.  Having had experience with the DC first time buyer credit for over a decade, it was never permitted to be applied to the down payment.  It often took buyers a couple of years to be able to use the entire amount to reduce their taxes.  Typically, the buyers were right out of school and entering the job market, without a huge tax liability - like the DC credit, the current one has income caps that eliminate many buyers altogether.

Shucks.  I figured that if the mortgage company could give borrowers "bridge loans" for their down payment, I've got a list of about 25 folks that are ready to go. 

Thanks for this "head's up" - I immediately went to my outside blog and added "IMPORTANT NOTICE" in a large bold red font.

I'm guessing they're drafting legislation at this very moment to temporarily modify that HUD rule regarding source of down payment - either that or scrambling with an alternative way to deliver the "rebate" at settlement.  After all, it IS the borrower's own money... right?

KATE... . I think the word collateral and the meaning of that, confused many and what and is allowed.. and how.  thanks

PAT... . my pleasure... and about this being too good to be true. I blame all of this on the politicians, when they started the tax credit. My argument was that you still needed the monies upfront for the downpayment to buy the house and then reimburse yourself. That is not rocket science in my opinion.

TOM BOSS. .... .  thanks for the laugh.. lol   I would love to throw in the other word...  lol

GERRY.... . thanks for the kind words and for the support. But you were part of this blog in a way, because of our conversations... so I thank you for that. But yes, we need to come to a better understanding of where the down payment can come from. I guess in a week or two, maybe we will get a revision to the mortgagee letter. Time will tell. Thanks buddy.

PATRICIA... aka PAT.... .  hence the problem and the normal HUD guidelines, to where the down payment can come from. Which is why I mentioned above, in the bullet points, the only places you can legally obtain the monies for your 3.5% down payment.  thanks

Jeff, Now I'm confused.  Have you see this?

HUD Secretary Announces Monetization of Tax Credit at NAR Real Estate Summit

WASHINGTON, May 12, 2009

Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, said that the
Federal Housing Administration is going to permit its lenders to allow homeowners to use the $8,000 tax credit as a downpayment...

LENN.... .  how cute and funny...  I think we all would have been rolling in the money if this was allowed, for the down payment. ... if in case, we could give them a bridge loan for their down payment. As Tom Burris stated above, maybe HUD was drunk?  lol

MARGARET.... . who really knows if they are even rushing to the drawing boards right now, to change this up and get it out to us. My guess?  If there was a change and or an update, we might see something in a week too two weeks. Keep in mind, the tax credit for 1st time homebuyers has been out there for over a year now... and the gov't and or HUD is just now thinking about this?  hhhmmmm rut row.. me needs a drink now.

DEE.... .  there should be no confusion.... look at the date you stated.  May 12th, 2009.  And look at my date of today, when I wrote this... May 14th... and that I personally spoke to HUD this morning and that this has been rescinded. Thanks to you, I am now going to send this to the NAR.  thanks

What really makes me MAD AS YOU KNOW WHAT............

is our own trade organizations sent it out,

Shame on NAR, Shame on MAR

If we can't trust them what the heck. Not only that but HUD had the Prepared Speech on their SITE.

Now they "change their mind", take it down?

Ridiculous!

I know we have to be careful when we read or hear information on blogs, forums, social networks but this was from folks we should be able to trust.

Jeff, here in Nashville they've been discussing that THDA was doing just that. Loaning the $8000, but as a second mortgage, to be used for downpayment and closing costs. It's a 0% loan until June 2010 when it's to be either paid off - with the tax credit monies. Is it possible that this isn't true too?

I think we all so slap happy about the whole thing.....and it came from NAR.  Yikes....I had my gal do some changes to our website that'll we'll need to take down right away.

Is there any hope that they may bend the HUD rules?  Any?

Thanks for your insightful and complete information.

Good job Jeff! This was a huge wildfire for us yesterday - even the level of participation on some conference calls was, as you know, way up. "The reality of it all, basically everything that was stated in the mortgagee letter, that has been revoked for now, is old school FHA." Who needs to say more than that? The NAR made a bunch of starving, excited agents think they had something cool and new that didn't involved HUD Approved Lenders like your company and mine.

Missy - that's exactly the point I was trying to make yesterday in such a hurry- the NAR blew this one BIG TIME and wasted a full day for me :) I bet 5000 real estate agents used this title on Twitter yesterday "First Time Home Buyer's Tax Credit Can Now Be Used as Down Payment" - oh brother!

Great blog post on a detailed subject. Thank you for the clarification!

Thank you Jeff! Amazing how the Secretary of HUD announced this at NAR Tuesday without it being confirmed and set into play! Wow. I wondered how it could possibly work, and now understand how it can't. What a shame to get first time homebuyers so excited over something that now will not happen.

Wow...I read that post yesterday about a buyer getting money up front. I thought that kind of weird. As always, you do your homework and bring facts...not fiction to the table.

Jeff, thank you for your time in researching what was/is going on and for your time in sharing it here with all of us.  You are always informative. 

Love the picture that Melissa put in the comment section:)

Interesting times, eh Jeff?  This is very subject is a great reminder of the power of the blog.  With that great power, comes great responsibility.  Misinformation spread quite quickly yesterday.  And now the real story comes out.  Nice work.

"Keep in mind that most lenders have overlays and can add to certain rules and or guidelines."  Very important sentence there that a lot of folks still don't realize. 

Well yesterday I had my false hope right before I had my virtual steak. No wonder I feel hungry today. Love your post because accurate FHA info and updates are of prime importance. Thanks, again.

A lot of mis-information generated over this topic. I was having a conversation with a loan officer about that yesterday afternoon, and as he was a touch more cynical about the grant than I was, we sort of ended the disagreement with the understanding that the government could do whatever it wants to do. As HUD is an entity associated with the government, anything can happen.

Jeff,

I'm here in DC and was in the Economic Summit 2 days ago when Secretary Donovan spoke to NAR. What I heard him say was that HUD was considering a program to monetize the $8,000 tax credit.

Then I awoke yesterday to blog articles and tweets stating it as fact. I was asking around yesterday in the meetings what people's interpretations of the comments were, and most people thought he stated it definitevely - but many people heard it like I did. Some of those people wrote blog articles without properly researching the information, or like you did - actually reaching out for clarification.

Thanks for posting this!

So if we're confused, think of how the consumer feels.  It's really sad that they are he ones hurt in all of this political flip-flopping.

It seemed a little too good to be true - I sent one of the announcements I received to a lender I frequently refer and she said it was being considered but hadn't gone through - I have learned to verify and I have been embarrassed too many times - particularly with those e-mails that need to be checked on Snopes etc.  Thanks for the correct information!

If it sounds too good to be true...you know the rest.

Jeff - I've commented on the confusion over the tax credit so many times it makes my head swim and I'm not even a lender.  I've had to correct local lenders at a mortgage class I attended.  They all said definitively you could (imo) cheat the system and just put a post-dated closing date on the IRS Form.  I was shocked.  They even quoted a "government website" (their words, not mine) that stated it was possible (turns out it was a site put together by the NAHB that had no reference to doing it anyway).  I called the IRS for my answers.  I figured they ought to be the authority, since it was tax money.  I've blogged about the misinformation floating around several times and based on Google keyword searches, there's a lot of people that are confused out there.  (And all of this was before this whole HUD mess.)  I was tempted to write a post yesterday about this new plan, but something in my gut said to wait.  I did and I'm thrilled I did.

As usual the right hand does not know what the left hand is doing. But it will be interesting to see if they decide to make some short term changes to this so we can use it. Thanks for the update

Im now confused. However it doesnt matter.  I think the money is best used right after closing to fix up a house needing repair so if they can just allow buyers to access it fast that would be great.

That did not last long.  I sent out copies of the HUD letter and news stories to clients and agents in my area.  I just sent a link to your blog post to the same group.

This is a great example of the power of Active Rain and our experts!

Hi Jeff~ It is so nice that we can count on you truly being the FHA Expert!  Thanks for setting us straight.  My girl still didn't call did she??

Jeff - I agree with Jim & Maria - think how the consumers feel and how confused they are!  The rule is that there is no rule or if there is a rule, it will not be a rule tomorrow or it will be a different rule!  That's the kind of support consumers are getting!

Mary

Great info Jeff...please keep us posted. This could really help things out in today's RE market!

Now I am confused as well, I specifically contacted HUD this morning to clarify and asked about the rumor of the recision, and I received a different response that what is posted here. It was confirmed directly from HUD that yes, the Secretary did in fact state as a future directive that these "bridge loans" should be expected. The email also stated that yes, nothing is implemented at this time but the IRS and HUD are working out the details and to look for a new mortgagee letter coming soon. Scary who is right and who is wrong if it is all coming out of HUD?

I got calls from agents yesterday, who I swear were dancing on the roof tops, wanting to know when we were going to start offering this"program".  

I had to remind them that we already do! The Colorado Housing and Financing Authority implemented a program similar to this in April called the CHFA JumpStart Program. Now, they'll only lend you up to $6000 of the $8000 Tax Credit, but in my neck of the woods $170,000 house can be one heck of a house. The repayment on the that 2nd is almost exactly like what was described in the mortgagee letter. No repayment until June 30th 2010. If it's not paid off in full by that date it reverts to 8% paid over 10 years.

Who would've thought Colorado would be on the cutting edge?!

A HUD spokesman just e-mailed me that "The details will be forthcoming," and NAR says it's expecting a formal announcement next week (Wasn't Donovan's speech a "formal announcement?").

It is rather mysterious that 09-ML-15 was withdrawn but seems premature to conclude that they won't find a way to do this when Donovan has taken a public stance on the issue.

Seems HUD had already given the Memphis Area Homebuilders Association the go-ahead to do bridge loans for buyers who assign their tax credit to them.

http://memphisdailynews.com/editorial/Article.aspx?id=42421

I tried to warn people that this was NOT a done deal in my comments and my posts on facebook, but not one would believe me,  They went right ahead and posted this information anyway.  I am gald that you posted this and confirmed exactly what I had found out from a couple of mortgage professionals I work with in New Hampshire.

@ Matt and Cherie,

No confusion folks, you are just losing sight of Jeff's original message with this post. HUD has had the means to "monetize" the tax credit all the time- just in certain, very specific ways. Without knowing exactly what the Memphis Area HBA is doing I'd guess they are securing their bridge loan to allow the assistance as "secured borrowed funds". I have suggested that very thing locally.

Regarding the upcoming changes, Cherie you answered your own question- "the Secretary did in fact state as a future directive that these "bridge loans" should be expected". When and if they get it right we will see if they give us anything better than we already have. Please don't read that to mean we don't have any recourse now. We have options, they're just the same old options we've always had.

Hope this helps, and sorry for jumping into your post Jeff!

Gerry Suarez, Jr.

Your FHA Loan Pro!

Jeff, thanks for the update and keeping us from looking silly.

Bettina

Thank you for the updated and clarified info. 

I feel like I have egg on my face and the carpet was just ripped out from under me. I should have suspected too goo to be true.

Jeff - Yep!  Count me as one of those dodo's that blogged about it.  After hearing about it, I checked with a several of my FHA lending sources as well as CalHFA (CA Housing Finance Agency) and no one had any info on it.

Now today, I have to explain to several of my clients who are already pre-approved and out there looking that they can't use their $8,000 tax credit for their down payment regardless of what they're hearing from anyone (including me).  Now I have to go and update my blog and include to it that this is not going to happen.  Is it ok if I link back to your blog?  Live and learn time for me.

Bummer...

I agree with all the commenters that say that some things are too good to be true. Thank you so very much for the update!

Jeff--Gosh...when NAR talks people listen and spread the info quickly. I heard about this at a continuing ed class but figured I would check it out here on AR first before I got too excited. Glad I was busy yesterday so I didn't misinform any of my clients or prospects. Your explanation really makes sense...Wishful thinking on our part I guess. :)

Jeff, I saw the posts yesterday and was somewhat encouraged but then I saw your comments and realized 'this aint no done deal!'  I'm glad I waited to see how it all washed out!

Brian.

Jeff - Thanks for taking the time to inform everyone about this.  I figured it seemed too good to be true.

Mr. Belonger...

Looks like you beat everyone to the punch!  Must have been up late LAST NIGHT TOO huh??

I am in Nashville visiting a friend, and STILL checked up on AR!  I am glad I did!   When I started getting calls yesterday morning on this, there were so many un-answered questions, and truly everyone thought this "Plan" was involving all kinds of loans.  But the truth of the matter is that EVEN IF they had worked everything else out, ....other than an FHA,VA, or USDA loan...You would STILL have a boatload of LTV/CLTV/TlTV issues,.....and the program, credit score and everything else start coming into play....SO, UNLESS you are talking about ONLY FHA loans...really, everything else is MOOT dont you think??

ANyway, nice job!

Bucky

Jeff, so what do you make of this posted TODAY???

http://www.realtor.org/RMODaily.nsf/pages/News2009051404?OpenDocument

Fascinating...and I was just planning to write a hallelujah post on my outside blog....oh well :-)

big wow.  I bragged all over this today-now I have to take it all back!  Oh well, I'm glad you cleared this all up.  Thanks-

Seriously, this is the federal government.  We should be able to do better than this.  HUD issues letter one day and withdraws it another???? 

Good news spreads like wildfire with the help of social media outlets; now we have go douse those hopeful flames (at least for the time being).  Actually, I did not notify any of my clients as I wanted to clarify and verify before spreading the word.

Jeff, Thank you so much for the clarification!  The rumor mill was a bit crazy so we certainly needed someone to tell us what was truly going on.  As you said, I would count on my lenders understanding these rules!

Jeff,
Thanks for the GOOD information.  And you know what they say about "Experts".  An "ex" is a has-been and a "spert" is just a drip under pressure.  Keep up the good work.  It is not only enlightening, but invigorating to read quality research.

Jeff: Thanks for the update. Hopefully we'll figure this out. Keep up the good work!

Jeff, I am rather confused due to all that I'e read... I appreciate the clarification.... so botom line is a borrower CANNOT borrow the $8000 to make th down payment reagardless  of how they are going to repay it.

Well, if we aren't supposed to believe what HUD and NAR say, then who are we supposed to listen to?  From now on I'm checking your site, Jeff. 

I read a post about this yesterday and I was surprised to hear about it after Congress had removed DPA.

It is interesting that this continues to be a debate as nearly 50% of all home sales are first time home buyers right now.  I'm not sure that any additional "stimulus" is needed for first time buyers.

Great info!

Add another reblog to your ticker.  I had a great time trying to find a lender to do this --- this was before I blogged about it.  Due diligence.

Jeff - DEWEY Defeats Truman. The ...uh ..credibility ...uh ... I brodcasted from Realtor.com made me proud to say I'm a parrot.

The press release  that I read  clearly stated that it was the Secretary of HUD Shaun Donovan that said that the tax credit could be monetized with an approved FHA lender in a bridge loan.  I object to the inference  that any Realtors just passed on information without checking it out.   

If this is what the Secretary indeed said and/or meant to say, then  the Secretary needs to get out a press release correcting it  Or the person releasing the press release incorrectly needs to correct it imo  

Like Gail said in a post, If a person can't believe the HUD Secretary who is speaking to the NAR, who should you trust?    I have worked for three different level government entities in the past and it is not uncommon for the left hand to not know what the right hand is doing.  Let's hope this is the case here for the sake of our first time homebuyers.

And you wonder why the consumers are confused about this. NAR can't keep it straight either. Thanks for your post. ~Rita

Jeff- Thanks for the update and clarification and getting it to us so quickly.

I certainly feel like an idiot. I read the news, I went to the document, convinced it was true. I even told a set of my buyers about this, I am going to look like a nut tomorrow. Not good.

Thank you for clarifying this.  I think we should all be a little more cautious about saying something has happened when it really has not and may not ever happen.

I am having a blast following this discussion across at least 30 blogs that I am watching. It's frighteningly hilarious. Jeff, do not be discouraged. You're a HUD lender, I'm a HUD lender. We're not "small potatoes" and even if we are we're tuned in and turned on. I'm failing to understand how people who are not lenders, HUD lenders, continue to insist we must be uninformed. Oh, well. It's usually not their customers we take as mortgage clients so let their lenders deal with them :)

It's the old adage (actually it's from screenwriter William Goldman) ~~

Nobody knows anything.

I can see that...  Great blog

Andrew Rosenblatt

www.RosenblattFinancial.com

AARRRRGGGGHHHHH>.. for many of you that know me, in many cases, my comments are like many blogs. I just spent close to 20 minutes just commenting to 6 people and my firefox crashed and didn't save a damn thing.  So I some of these might be shorter than I would like...  I am close to a perfectionist and don't like to do things half ass, but I am beat, tired, worn out... and right now, this would be like a full time 2nd job.  lol  thanks

MISSY.....    I wrote something great before... but in a nutshell, we can get angry and point fingers. I do think NAR jumped the gun some. Back to HUD in a minute. But aren't these people and entities like the media?  Trying to get the news out first?  Doesn't news make money in many cases? Look at us, as bloggers and those that Tweet on Twitter. How many people wrote blogs on this exact subject yesterday, mainly trying to get good and quick google juice... getting searched on this topic, because it brings business.

Now, I think you and I are different when it comes to this method. Yes, I blog for business, but at the same time, to educate. But with education, comes responsibility.. and if I sniff something out, that could be wrong, I need to hold back and research.  Overall, it worked for me, because I wanted to blog this very quickly yesterday morning. But I didn't feel at ease about it, because of what I had read... and bam, it paid off for me. Maybe there is a lesson in this. Maybe speak to those that are the true experts and not those just closest to the news or those that leak the news first.  Just food for thought.

Hey, it was great to catch up with you again... I hope all goes well with Mike.  thanks and thanks for the link love in your blog from yesterday, about the correction. I'll be over to comment later.  thanks

CONNIE.... .   I might try and write about this tomorrow night or over the weekend... but yes, what they are doing is legal. If you go back to my bullet points, those are the legal ways that you can receive monies. As stated, in your case, you can receive monies for the down payment from Federal, State, and local agencies. It's a form of a non-profit organization, and is allowed. The kicker with all the states that are allowing this?  You have to use their state bond program, that in many cases has income and sometimes credit restrictions. Two other things. they also have a recapture term and right now, in many states, the rates are around 6.0% to 6.125%, which is about a full percent higher in rate. Why not save for 5 months and or get a gift, and get the lower rate?  Yes, several lenders are approved to do the state bond programs, but I know many that try not to do them, because you get paid a flat fee in most cases. It would be like a seller telling you that you will get a 1/2 percent no matter what.  And how much work do you get out of me then?....  Hey, I love what I do and don't make a killing on people, but my experience and services are well worth the moderate prices that I charge.  Just food for thought.. thanks for asking.

ANNA..... hope?  Change?  What are you doing, running for President?  Please, no politics... lol  Seriously, I feel like our society in 2009, just because of one person, has been built on hope and change. Not saying that you said that on purpose, and I do have a point behind that. But another time. To answer your question?  I honestly have burried my head down some, moved forward, try to make the best of what I have, to make a living and to make my clients happy. If it happens, it happens.

I will say this... I am very disappointed in our gov't because they started this Tax credit about a year ago, in 2008.  Ask many people that have talked to me about a year ago, 3 months when this came out... and I have even blogged about it... How could they think that this was going to open up the flood gates, when you need money upfront in order to buy and in order to get this money after you buy. Common sense?  It's not rocket sciece.  Sorry Lenn, had to steal that one. The bottom line..  this was not planned out at all and now they are stumbling... and shouldn't be that hard to make this work. They are the gov't and they have already thrown billions of dollars into other worthless programs. Why not do something to make the real estate industry work, that might have the best chance of saving our economy???  Just my .02.

KEN.....  just a wildfire yesterday?  lol Dude, this might be one of the biggest wildfires in the history of the U.S.  I bet more good blogs about the joy of this happening than when it was rescinded. You are Mr. Twitter... what was the Tweet count on this subject today, explaining what has happened?  I Tweeted on this... Maybe 11?  lol  From the 500 + tweets from yesterday.

In any case, thanks for your kind words, for your support, and for being one of the first ones in getting this news out yesterday. As we talked on the conference call in the morning, I already expressed how I felt on this, hence why I held off on blogging about this. I found several holes in this, as you did, and it made me sick that so many reading the blogs yesterday thought that we all were given a Million dollars each, to spend.  lol  Thanks

MESLISSA.... . FREAKIN HILARIOUS….  Where did you get that?  Or how did you do that?  Thanks for the end of the week laugh. I sent that to several others in a group of mine and many laughed… thanks

ANGELA..... my pleasure and thanks for stopping by. I think we needed a lot more of this today. I wonder how many times that this was blogged?  In any case, how long have you lived in Ky.?  I lived in Louisville, KY for 5 years... loved it and had fun.  thanks

MARNEY...well, I am sure many of us are angry with Donnovan at HUD, at HUD, and at NAR for not being cautious and more like a young boy visiting his first go-go bar. lol  Seriously, people jumped too quickly at this and didn't read the mortgagee letter. I think I read it about 8 times,from 8 am until 9 pm last night. I had my reasons after reading it once.

In any case, I don't think full blame should be pointed at Donnovan. Most of what was talked about in that ML letter is old school FHA anyhow... most of the rules that apply previous, where mentioned in the new letter. It was the clarification and the fact that you can only get your monies for the down payment from specific places. They last mentioned a bridge loan and made it sound like it was okay to use this source as your downpayment also. But it never told me that it superseded the previous guidelines. So I could not assume... hence why they probably rescinded the mortgagee letter.

On another note, thanks for the link love on your outside blog. I like your site...  Marney Kirk ...so thanks.

I'm so glad that I just read your post -- I was about to write my own post about using the tax credit as part of your downpayment.  Thhings are changing SO quickly these days -- I'm glad I have AR as a reference!

Jeff - Thanks for the clarification.  I was not comfortable with the information that was put out, so I am glad I had not yet passed it on to the consumer.  I was more interested in finding out if NY State was doing something on their own.

Thanks for the clarification.  Now I will stop spreading the erroneous news.

thanks for some very helpful information!

SALLY....  thanks Sally... I really try to bring the facts to the table. And all because of joining AR and blogging, it makes me strive for more.  And yes, I like the limelight and getting more business and contacts.  So it pushes me more to be more accurate than most. That's what many readers say about my blogs when they e-mail me.  thanks

SARAH.... .  my pleasure.  Just think of myself as a poor politician that actually speaks the truth and is able to get into the picture of things.  ;o)  Seriously, I enjoy teaching others and keeping up on the particulars myself.

JASON S. ..... dude, I thought that picture was hilarious. And yes, tough times, yet fast paced and that it can be scary because of this. The speed at which information is not put out there for all to see, we need more people to verify it more than a few times.  And yes, lender overlays are extremely important. Thanks for pointing this out.

JOE..... lol .. you are a riot my friend.I shared your comment with a few other loan officers that were aware of my blog and they laughed out loud also. thanks.. And yes, accurate information is so key and important.. and I like to be one of the front runners that people know they can come to me for honest and accurate info. I don't know it all, but I will research it. ANd I have a few fellow friends/competition, that keep me honest in a way... meaning, if I might have missed something or something might not be clear, they give me their .02. thanks

ED.... . what was this loan officers take on this?  curious...  but yes, a lot of misinformation out there yesterday and a few of us that talked about this, cringed. Because we know how this stuff spreads and how disappointing it can be when the real information is stated.  thanks

GRETCHEN..... hey, gov't and media at its best. Let's just get something out there to make people happy and correct it later. Just like a loan officer that knows there will be problems, yet they yes everyone to death.. and then closing time.. delays, etc, etc.  In any case, my pleasure and thanks for stopping by.

JIM & MARIA.....  bingo and one of my arguments in many cases. As you stated, just think if we are confused, those that deal with real estate & mortgages on a daily basis... now think how the average consumer feels... rut row.  Thanks for bringing that up, because I use that when talking to other loan officers that don't clearly explain something to me. Then I say.. just think what the consumer would feel and or think then... lol  thanks

jeff,

Have to tell you, I would have fallen into that trap easily. And I would have never suspected anything whatsoever.

It's a nice idea, but I can some of the problems with the whole idea as I read through your post.

Ah, how things can change in a blink of an eye!

Sue

Here in Colorado CHFA (Colorado Housing Finance Authority) is allowing home buyers to use their tax credit as a down payment.

Agents can utilize good loan officers. If they can educate us and get the information out quickly than we can more reliably server our buyers.

This was a short lived program.. Thank you for the update.

Thanks for the information.  I believe the program is still in effect here in MD/DC, but I have to check.

Thanks for the excellent information Jeff.  Good to know what's really going on.

Dude your really smart.  That is cool it helps me look smart when i call people and tell them what i know because of your great posts.  Thank you.

New Jersey will be one of the state entities that Jeff mentions that will give those interest free loans, according to a business brief in today's Star Ledger newspaper.

THANKS FOR THE UPDATE!

Have we become so desperate to sell a house that so many think it GOOD NEWS that a tax credit could be used as a down payment?

The price of homes needs to come down to the local household income level or the income level needs to rise to the price of housing. Anything else is a temporary fix that will cause more harm at a later date.

I for one, am glad this "rumor" is dead.

If it seems to good to be true...it probably is...I wondered about the validity this when our state association chairman posted it on FB...as something they just heard in a meeting.  All you have to do is mention it to a room full at an NAR convention and it will be all over the nation within minutes via Twitter and FB.  I heard about this a couple of weeks ago from a lender and decided to sit on the fence and get to real story before pushing it.  Keep us in the loop and thanks for the heads up!

It ain't over till it's over as they say.  You can't believe everything you read no can you!!

Patricia Aulson/Portsmouth NH Real Estate

Still not sure what it all means. When someone finds out for sure will you let us know?

Jeff,

Thanks so much for the update and explanation.  I've spread the news.

CATHY..... to be honest, I don't think many lenders even know, they just say stuff like that. Not trying to throw your loan officer under the bus, but even when you call HUD, not all of them are on the same page either. And I know it's easy for loan officers to just throw assumptions out there that don't have a true time-line, making you think that they are on top of certain subjects.  Just my opinion. But yes, if it's too good, it could not happen.  thanks

MARLENE... . yes, many of us have said this. But if you heard me on my conference call yesterday, I was already negative about the mortgagee letter, giving my thoughts that this doesn't sound right and I am ignoring it.  And that I will research it.  I just had the feeling, while everyone else was jumping on the bandwagon. But could you blame many?  I do in the way of information. Everyone wanted to be first in getting it out. thanks

MATT..... misinformation on what you just talked about scares the living shit out of me...  hey, I am not perfect, but it's not hard to get the correct answers either. I had one realtor tell me that he had a client that closed on the tax credit before getting it. I said it was fraud....  IRS is okay with it, but HUD isn't.  IRS sent the check out...  unless the client lied about the settlement date, but I was told that they buyer used a later date, the correct settlement date. But here is the kicker,... some lenders and or underwriters are okay with this, some aren't.  Hey, could you come back and put a link to your most recent post about this?  thanks

ED & CINDY..... my right hand always knows what the left hand is doing... lol  Anyhoo... yes, some changes would be nice. I have been arguing this point for a solid year, when the first tax credit came out. Meaning... hey, this is great, but the people need money upfront to buy, to make a lot of this work.  thanks

CHUCK..... I would agree, but the biggest issue is that many of these homebuyers, that we could get these foreclosures off the market, don't have the downpayment. Many could make the monthly mortgage payments, but they still need the money upfront.  thanks

RANDY..... no, it didn't last long. But in all honesty, that was part of my argument to so many on their blogs the other day. Even if it was still in the letter, it was wrong, about the down payment, depending on where the money came from. Hence maybe one reason why they rescinded the letter for now. In any case, I agree, the power of Active Rain. What gets me to cringe still though are some of those mortgage blogs that are 110% incorrect. I woman loan officer the other day blogged about the HVCC, stating that it affects FHA appraisals also. That is 110% incorrect.  Thanks for stopping by and good to see you...

VICKIE... .  thanks, I appreciate those kind words....  and no, she didn't. I will have time to call her tonight and tomorrow. So I will let you know.  thanks

I was very skepitcal of this whole idea and really drug my feet on sharing the "good news". Glad that I am a procrastinator this time! The words "TAX FRAUD" kept running over and over in my mind...

Thanks for the clarification.  Steven and Marti

This whole tax credt,rebate,use it for a downpayment thing is crazy. 1 Agent actually did get the client to amend their taxes prior to closing and DID use the $$ for the down. That seems to me to be at the very least wrong and at worst maybe tax fraud?? Just do it the right way people dont try to go around the short way. In the end somebodys gonna take it in the shorts and I don't want it to be me! I am glad they tightend things up.

@Sheri Moritz

Hold on to your letters as your buyers may very well need to enter them as evidence when/if the IRS audits them.

You might want to read this:

http://activerain.com/blogsview/1075190/-8-000-first-time-buyer-tax-credit-now-here-are-the-guidelines-of-how-my-contact-got-it-last-week-updated-5-14-09-

and I suggest reading thru all the comments. As far as the lender giving you the OK I hope he/she was just referring to the appropriateness on the lending side, and not giving tax advice. I can tell you I have checked with numerous underwriting depts that have all answered the same- Obtaining the tax credit (getting the actual $ from the Treasury dept) before having closed on the home is considered fraud in their eyes.

Gerry Suarez, Jr.

Your FHA Loan Pro!

It seemed too good to be true to think that the government would have made a common sense decision.  Thanks for the quick update.

Jeff,

Who's on first?

What's on second?

I don't have a clue is in Washington D.C.!!!

I can't wait until the government takes over the health care system!

Lucky :)

Thanks for the clarification, i had a lender in my area tell me all about this. he was not even sure how it was supposed to all work.  just so many changes to keep up with.  

Psychology 101:  don't yell "boo" to a paranoid schizophrenic.  Buyers are already skittish.  Now they'll stick their heads even deeper in their shells until we can figure this latest fiasco out.  Holy Cow. Thanks for minding the store and staying on top of this soap opera.   

Hi Jeff;

I thank you for the update some things are too good to be true. Good Luck!

Hi Jeff -- What a mess.  HUD and NAR should team up and hire a competent PR firm.

Hey everyone – Please read this comment by Gerry Suarez – It’s very important -

http://activerain.com/blogsview/1075899/using-first-time-homebuyer-tax-credits-for-the-downpayment-it-s-gone-the-story-of-the-8-000-tax-credit#4663332

BRUCE & MARY .... . I agree 110% and if I was a consumer, I would be very scared in who to trust thanks.

DAN..... I think anything could be better and help out in this real estate market. What ticks me off is that the gov't and HUD should have thought this through a year ago when the Tax Credit was first introduced. Are they idiots?  People need money to buy... getting it after a closing will only help a few, not the masses.  thanks

CHERIE..... . now I am confused... you stated that you contacted HUD, and received an e-mail?  Seriously, forget about the e-mail.  When did you receive that?  In regards to contacting HUD?  The yo yo that you talked to, has no clue then.  If I contacted HUD to question this and they told me that it was still a go, I would have then asked why the mortgagee letter, ML 09-15, was taken off the site. We need to question people and not just accept answers just because one said so. Just my opinion.  thanks    PS>.. please send me the e-mail that you received. jbelonger@ihmci.com

HANS.... .  those dancing on the roof tops?  Now what are they doing?  In regards to the Colorado program?  Big question for you, in which I think I know the answer. There needs to be clarification here.... don't be like HUD... ;o)   It's a state bond program that lenders can participate in, right?  But there are usually income and or credit restrictions on these. Question, what are the rates on the 1st mortgage for these?  thanks

MATT.... . 2 things... premature or not..  anyone can say that it will happen or appear, even after it's been rescinded. Just like low life sales people, they will tell you what you want, until the smoke clears. And then what?  I will just wait and not hold my breath.

In regards to HUD giving the Memphis area builders the go ahead?  Someone is leading you on.  You can already do this, as a non-profit organization. The big things about the bridge loan that was stated in the letter, which was wrong by HUD.. was having a FHA approved lender to be allowed to give a bridge loan for the down payment... but the builders leagues?  They can already do this and don't need the letter or anyone's approval or go ahead.  This has been a basic HUD guideline for a llloooonnngggg time.  thanks

JOAN..... people won't listen, even if it was the truth.  And I am sure those that found out the truth, there will be some that will still pass this bogus information out, in hopes that it will happen. And even if it doesn't, if they get great google juice and searched well, they will pick up more clients and then try to work with them.  A great example of this ??  Loan officers that give clients lower rates than they can get now, in anticipation that rates drop further, based on the gov'ts promises from months ago. I just lost a client that was promised something that won't happen. I know, because we all get our money from the same place and nobody, and I mean nobody, could beat me out by $5,000. thanks

I just wrote up an offer and the loan officer told me that my buyer would be using some of the tax credit for the down payment. So I'm not rescinding my blog post just yet.

Maybe one day in the near future, they will make up their minds and set forth some guidelines and set them in stone. Great Post.

GERRY.....  thanks for clarifying to a few others.  In regards to the Memphis area thing with the builders....  you and I know this is legal, without the mortgage letter, if done through a non-profit. We just need to keep spreading this, until HUD comes out with something different... if they do.  thanks.. PS>. and I never have a problem with you jumping in.

BETTINA.... . thanks for stopping by and for your support. PS.. some good things can be true, just not in this case.  ;o)

STUART.... . my pleasure and thanks for stopping by.

ROB..... Ah, there could be worse with egg on thy face.  Just throw it back at the NAR and HUD and blame it on them..  that shouldn't be hard for now, right?

DONNE... . oh well.  How did you do with the explaining?  Good responses?  bad?   thanks

BOB......  well, for many it was a bummer I guess. But I have been screaming about this since last year, when the $7,500 tax credit came out.  I thought it was common sense that these tax credits wouldn't really work as well as they had hoped they would.  Why?  Many buyers need the money up front. What was the gov't thinking?  Are they that stupid?   Seriously.. let's think about that for a moment. They talk about trying to stimulate the economy. I just don't get it and their reasoning.

MELISSA.... . I think many us agree that this was too good to be true. But there are still ways to make this work and to be creative. You just need a very above average loan officer.  thanks

Well it sure pays to check the facts and then double-check. Thanks for clearing this up for those of us who were about to talk it up. I love these statements when they say more details to follow. That was the detail that made me hesitate. Almost sounds like the sensationalism rampant on CNN's and FOx's Breaking News.

http://www.irs.gov/newsroom/article/0,,id=206293,00.html

The above link is a FAQ from IRS.gov. Which clearly states that you cannot claim the credit until you close.

We asked HUD the same question and they said it was NOT ALLOWED!!

Desperate people are committing fraud all over right now.

I also believe that a realtor coaching a buyer into such actions are also committing FRAUD!!!

This is getting a little annoying. "I talked to a lender and ..." Well, I'm a lender who actually knows what is happening in my industry because I depend on ACCURATE and LEGAL information to feed my family and keep my employees satisfied. Chances are they didn't talk to a LENDER they talked to a loan officer who works for someone who has no clue or refuses to share information down the line. As Jeff and Gerry have both stated filing and ammended tax return BEFORE purchasing the home is absolutely against the spirit AND the letter of the 5405 and if anyone calling themselves a CPA is advising differently they are advising to Break The Law and if THIS lender discovers you I will report you as is my duty under the law that gives me the license to be a lender.

This is too funny, Jeff. My broker e-mailed me this info 4 days after I was aware of it when it was announced. Glad you posted this so I could direct him to it.

Well, my apologies, I read it and I was wrong as they seem to have changed their position.  I do believe they will try to make provisions for this to happen, but until the process is in place and changes are made to make it happen, I will stay tuned to your posts. 

Thanks Jeff

Would the FHA Guidelines also apply to someone wishing to augment a 'conventional loan' down payment or could such a bridge loan be used?   Assuming they could come up with 5% and get a conventional loan.

Jeff - Here's some links to posts I wrote about it:

NAR, You Silly Old Goat...Why Would You Let This Be Emailed To Every Realtor® After Yesterday?

(This was my response to the mess that this created and the subsequent email I received from NAR once again announcing the info - 3 days later.)

Questions About The First Time Home Buyer Tax Credit

(This was my post based on the constant keyword searches I was seeing involving questions and misinformation about the First Time Home Buyer Tax Credit.)

FRAUD ALERT - Advice on the $8,000 first time homebuyers Tax Credit - Do you chance it??? (RE-BLOG)

(This is my re-blog of your post with a bit of commentary attached to it.)

I hope I was the "Matt" you were referring to when you said post the links.  If not, delete away!

TERI..... it is a shame when those that have a large following talk, yet when it's wrong of misleading, that it just ruins the industry even more. Now we have 50 million chickens running around with their heads cut off, instead of 20 million.. lol  thanks

BRIAN & MARIE..... . I felt weird putting myself out there, considering that it was written in stone at the time.  But I guess HUD finally realized the same. You just have to wonder who actually reviews their work before posting it to the public.  thanks

JASON C. .... . my pleasure and I hope this gets out to many more that think differently right now. We need to get the word out.  thanks for stopping by.

DARIN..... I am not sure if I was up late last night or any other night.. lol  I am trying to get back to some semi normal schedule. But in regards to your statement about LTV and CLTV issues?  Not really... it doesn't matter, because in what HUD was proposing and what is currently acceptable, there are no CLTV restrictions, not with FHA mortgages. Yes, with other types of mortgages. In any case, I haven't really received too many calls or e-mails on this topic. Probably because I have many clients that follow my blogs... so then there is not need to ask. But I do know we need to get this out to the public...  especially after most news agencies put out the other misinformation. thanks

UNKNOWN.... . no, I haven't seen that, but when I get done here, I will take a look at it.  thanks

CHRISTIANNE.... . what kind of post were you going to write?  That they finally put a good program out there to help buyers?  I just wrote a blog today on what is legal, on how to use the tax credit. Please read that, that might help.

CINDY.....  well, you can easily blame the media, HUD, and the NAR... point the finger at them. You were just repeating news that you would think was accurate. But there should be lesson learned with this one also. But I would bet many will ignore that lesson & message.  thanks

ANN..... my personal opinion about the gov't and HUD?  This just says that we need better leaders. Sure, people make mistakes, but this was just more than a simple mistake. Not sure how they overlooked this one.  thanks

VAR Buzz led me here - and for a good reason, too!  What a superbly written post!  I had heard the buzz, but this is the most comprehensive explanation I've seen.

This just out from NAR:

http://www.realtor.org/RMODaily.nsf/pages/News2009051801?OpenDocument&LID=RONav0019

Let's see what happens...

Jeff, wow, amazing how things can go through these kind of changes this quickly.  As always thanks for keeping us up on what is the most current and correct mortgage info!

Jeff...Thank you for your timely blogging.  I was in the middle of updating First-time Homebuyer Info on my website, when I came across your comments about the rescinding.  I had just been to the HUD site where the latest press release dated 5/29 with the headline about Donovan's announcement, "RECOVERY ACT'S HOMEBUYER TAX CREDIT CAN IMMEDIATELY HELP THOUSANDS OF FIRST-TIME HOMEBUYERS TO BUY A HOME".  I also went to Realtor.org and didn't find any info to the contrary.  BTW, the link from Pat & Wayne doesn't work:
http://www.realtor.org/RMODaily.nsf/pages/News2009051801?OpenDocument&LID=RONav0019

Jack, it worked when it first came out, or obviously I wouldn't have posted it, so my bad and thx for pointing it out. Anyway, it's irrelevant now with HUD's new announcement.

There is a "First Time Home Buyer Tax Credit" up to $8,000.  Why don't they allow people who are having trouble making their mortgage payments, due to job loss, loss of hours or other economic conditions, and use this same tax credit to help subsidize their mortgage payments?  This would save $Millions$ in Foreclosure costs .....

Its amazing to me how many agent and lender sites I see with the wrong info on the tax credit.

The government plays in area's that they do not understand.  I would bet that most of the advice that congress gets is from agents that are selling upper end property.  This really ruins the ability for good legislation to be written for the average homeowner and first time home buyer.

If congress really wanted to do the correct thing, they would spend time on the street with agents that work with first time homebuyers.

JoeNiece.com