Clarification before you read : Yes, you can use the tax credit as part of your downpayment. I have stated this before. If it comes from non-profit organizations or Federal, local, or state agencies. I mentioned this in my other blog, in the bullet points . But just from the few comments and some on facebook, you are missing the POINT. It’s fraud to apply for this tax credit through the IRS, prior to actually buying your home, if you receive the monies from the IRS DIRECTLY. Please stop reading into HUD, downpayments, etc, etc and understand what is considered FRAUD by HUD and many lenders.
2nd UPDATE – 9:01 pm 5/16/09 : I am not here to throw people under the bus. But I am getting comments and e-mails telling me that this is allowed or that some clients have done this, one who even works for the IRS, and that they would never do anything illegal. Two things on that…
1st – You assume this. Do you know how many people that have worked for the IRS, the trade commission, stock brokers, lenders, and loan officers that have a huge responsibility & should be ethical… yet these same people in these industries that have committed fraud.
2nd – I never said that it’s FRAUD in the eyes of the IRS. But Lawrence Bland, comment #6, makes this statement. FRAUD - I said that HUD and many investors, lenders, and underwriters have stated that this is fraud. And if you think about it, this is what matters most, because without them, the deal doesn’t close anyhow. I know my blog is long, but Ken Cook summarizes it well in his comment. Ken Cook’s Comment
Do you take the plunge, possibly jeopardizing your career? If a loan officer told you to jump off a bridge, would you? You'll see my point below.
Who do you listen to? Where do you get your information from? It's worse now than ever before. I once was able to tell a borrower or a realtor, if you didn't believe me, go call up 5 other loan officers. I would say this, because you would think that you would get at least 3 to 4 people giving you the same answer. PEOPLE.... this is not true anymore. I had two separate examples that took place that 3 out of 4 loan officers gave the same information that was 110% incorrect. Rut row... there goes my theory out the door.
What about all of this hype over the $8,000 first time homebuyers tax credit? It's gotten way out of hand. I wrote this blog, Tax Credit for downpayment, it's GONE, the story of the $8,000 tax credit. You need to read many of the comments. Here is a great example of what I am talking about.
Here are 2 examples from comments that I received by a realtor. Keeping in mind, I am not trying to throw them under the bus, but to help educate and bring awareness. How else do we learn and possibly not make mistakes that could be so costly.
Example 1 -
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"From my understanding from 2 CPA's and mortgage lender that it CAN be done by applying for the credit prior to the closing with an accepted contract. There are risks like not closing before November 30th. But this can happen." |
OUCH - No, double ouch. Okay, so she was able to talk to 2 CPA's and a loan officer that both confirmed this. Okay, so it might be legal from their standpoint. But what about HUD's standpoint and from many lenders and underwriters. Don't they actually have the final say in all of this? YES, they do !!!
Example 2 -
"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."
My question to this realtor... What about your fiduciary responsibility to the buyer? I received an e-mail from this person after asking the same question. Their response? They know the letter was taken down, but they are looking for an official statement. Huh? You think HUD or the NAR is going to say, "we screwed up." ??? Why not call HUD yourself, be proactive.
In any case, let's study what the IRS says. Here is Form 5405 - The first time homebuyers tax credit form
As you can see, letter be asks for the date aquired, but tells you to read the instructions. So let's go to that part of the instructions.
Wow... enter the date that you acquired the home. Acquired? Wouldn't that mean when you bought it and not when you are going to buy it? It states this right under the first sentence. So why are some CPA's, accountants, and loan officers stating that you can get the money before you buy, while still submitting this form. ??? Inquiring minds want to know.
Here is my opinion and some facts. And you can ask such loan officers as Tom Burris, Ken Cook, and Gerry Suarez, because they have checked also with HUD and with several underwriters with different lenders. Who says what....
- HUD says that it's illegal and they recognize this. But wait, some lenders have allowed this and my buyer has already closed. Keep in mind that HUD still has to insure these loans, so maybe the "shit" will hit the fan in 6 months or so, since this is all still new.
- Underwriters - Gerry and myself have spoken to several underwriters at major lending institutions that have said they will not do this type of loan, if the buyer had received the monies from the IRS, if prior to closing on the home. Not unless it falls into another category. Those categories I have listed in the middle of this blog. Tax Credit - what is allowed prior to closing - Please go to my bullet points in this blog. This is what is legal and how.
LINK for - TAX CREDIT FORM 5405 and instructions
We need to stop the bad press. As you can see, this has gotten out of hand and everyone seems to be an expert. Yet, nobody is speaking to the correct experts. Be proactive. If not sure, call HUD yourself. Call a trusted loan officer/expert and not one that claims to be. Again, keep in mind that you can use the $8,000 tax credit for the downpayment and get these monies before you apply for the tax credit with the IRS.... BUT... this in regards to specific circumstances that I have mentioned. And if you get the money the correct way from other sources. This blog is not about this. Please read the other blog. What this blog is about is that if you don't get the money from other sounrces prior to closing, and that you just apply for the money itself, prior to closing, this is the FRAUD part. Please understand the difference. Many of the commenters below have confused themselves on these issues.
Since I was trying to clarify several things, Tom Burris made this comment, which details what I was trying to convey. Please read : Tom Burris's comment -
Lastly, I want to share this which comes directly from the IRS site in regards to the $8,000 tax credit : This was supplied by Matt Stigliano - The IRS questions & answers :
Q. I am in the process of buying a home. I expect to close the deal before December 1, 2009. Can I claim the first-time homebuyer credit now? That would allow me to use the refund for a down payment.
A. No. You may not claim the credit in anticipation of a purchase that has yet to happen. Until you have finalized the purchase of your home, which for most purchasers occurs at the time of the closing, you do not qualify for the credit. IRS news release 2009-27, First-Time Homebuyers Have Several Options to Maximize New Tax Credit, contains details for filing options if the home is purchased after April 15, 2009.
Lesson of the Day : When you hear real estate related news stories, maybe you should check the sources and double check the stories. I could give you 10 examples of this just from what I have read in the last 5 months. As we say, "Buyer Beware".... how about we say, Realtor/loan officer Beware !!!
LEGAL WAY of obtaining your tax credit before settlement. Please read : $8,000 First time homebuyers tax credit informartion. Please go down about 1/2 way, next to the 1st picture with the calculator and the money showing. It talks about reducing your deductions.
My Series on the First time homebuyers $8,000 tax credit - Everything you need to now, from start to finish - What's allowed and what's not allowed :
- The $8,000 tax credit for first time home buyers - The basics - What to know about it - Understanding what the tax credit is all about.
- Use a 6 month gift from a relative to buy a home, thanks to the Tax Credit - How to get creative in using the tax credit and some FHA mortgage guidelines in helping you use this tax credit to your advantage.
- Using First-Time Homebuyer Tax Credits for the Downpayment - It's GONE !!!! - The story of the $8,000 tax credit - The bottom line, you can't use the actual tax credit as your downpayment.. for your downpayment, unless you get it from other sources prior to buying the house and receiving the tax credit.
- FRAUD ALERT - Advice on the $8,000 first time homebuyers Tax Credit - Do you chance it??? - This explains to you that it's fraud if you directly obtain the money from the IRS before you actually purchase the house. Even HUD and many lenders/investors acknowledge this also.
- The $8,000 tax credit for First Time Homebuyers - How & when to get it legally - So how can the tax credit be received legally for your downpayment? Just be careful of those that promise other ways not mentioned. I talk about what is illegal in the previous blog above. Please click the link.
- The First time homebuyer $8,000 tax credit has been AMENDED - May 29th, 2009 - Buyer, beware !!! You still need 3.5% of your own money for the down payment. It can't come way of an upfront loan through the tax credit.
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For more information on FHA loans, please go to this link. The FHA Expert
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For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!
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For more information on FHA loans, please go to this link. The FHA Expert
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Copyright © 2011 by Jeff Belonger of Infinity Home Mortgage Company, Inc
Acquired is right... that would be past tense.. correct? meaning having already done - right??? yep not going to risk my clients, myself or any of my team with trying to sneak something under the radar and hoping it works. Not the way I work or want to work. No thank you.
Always go to your lender expert that you trust, and do your own research. I went to two of mine and there was no confirmation, just checking and within 24 hours that mortgagee letter was gone.
Too many desperate realtors and loan officers are advising FRAUD on this.
Thanks for making this clear, Jeff.
I’ll be back to reply to any and all comments. Spending time with my nieces and nephews. thanks
Jeff - While I admit to being one of the dum dums who blogged about this, when actually asked about it by clients or anyone else, I always said that the details haven't been released yet and that I would try and find out as much as I could.
Having done what you and others have done, initially, I also didn't find any underwriters and/or FHA lenders who actually have a plan yet on how to implement this. However, I did speak to a few people that indicated that there is a plan being discussed. No details yet but it will probably be some sort of short-term bridge loan for the amount of the tax credit that the borrower may eventually be qualified for.
I'm going to, of course, keep tabs on anything new developing buts seems the state of CA is trying to do something (CA FIRST TIME BUYERS: You May Be Able To Use Your Tax Credit Towards Your Down Payment).
Great Post. I have spoken directly with the IRS, and until it changes. YOU CAN NOT CLAIM THE TAX CREDIT UNTIL YOU HAVE ACTUALLY BOUGHT THE PROPERTY. Let me repeat this people, YOU CAN NOT CLAIM THE TAX CREDIT UNTIL YOU HAVE ACTUALLY BOUGHT THE PROPERTY. Doing otherwise could be considered FRAUD. Call the IRS yourself. Great Post Jeff.
It is CLEAR from talking to FHA and the IRS -- AT THIS TIME YOU CANNOT USE THE TAX CREDIT AS A DOWN PAYMENT! Fortunately, one of the first article about the possibility of using the tax credit as a down payment pointed out this was not a done deal because the IRS had not signed off on this! As Jeff wrote a post, and I Kept commenting, others just wouldn't believe this. I hope that the misinformation will stop unless and until there is further "official" notice. It is unfortunate that NAR jumped the gun and didn't read the information and analysis available on line.
It was kinda like "If it sounds too good to be true...'. And since there was a big announcement (for ONE day) on it, some individuals have decided to ignore other (newer) information. These are the people we have to worry about.
Jeff, I am so glad you took the time to post this so people can understand this tax credit with better clarity.
Jeff - As I have done on several forums and comments sections, I will again quote the IRS:
Q. I am in the process of buying a home. I expect to close the deal before December 1, 2009. Can I claim the first-time homebuyer credit now? That would allow me to use the refund for a down payment.
A. No. You may not claim the credit in anticipation of a purchase that has yet to happen. Until you have finalized the purchase of your home, which for most purchasers occurs at the time of the closing, you do not qualify for the credit. IRS news release 2009-27, First-Time Homebuyers Have Several Options to Maximize New Tax Credit, contains details for filing options if the home is purchased after April 15, 2009.
I've been fighting this one since day one, when I read about it in Showcase magazine (wish I still had the original issue so I could quote it - this was back with the $7,500 tax credit). I had a long talk with one of my lenders and my broker and we all came to the conclusion that even if this was 100% possible (which it is not), that it's bad advice to any client. Just imagine, what if something goes wrong and you don't purchase the house (turned down for a loan, inspections reveal something you can't come to agreement with the seller on, someone backs out, last minute the bank pulls the loan on you, etc.). Now you have either $7,500 or $8,000 of the IRS' money. Do you really think they're going to just shurg their shoulders and say "oh well?" I think we all know the answer to that. I think, based on things I've heard about some people already doing this, that we will be seeing fallout from this in the coming months.
Thanks for being a voice of reason. I appreciate it and I know many others do.
Thanks Jeff. We pulled the 'good news' off the shelf immediatily. What a shfit in 24 hours. You are so right in 'knowing' the correct source and correct information.
Enjoy the kids.......laugh and play!
Thanks for the information. I agree it would have been really nice if NAR would have read in entirety before announcing using the $8,000 has down payment,
Hi Jeff ~ many, many thanks for explaining this. I will pass this along, as there are many still confused about this.
Hi Jeff. This is great info. Thanks!
Jeff, thank you for continuing to post regarding this subject. Marti
Jeff,
I assume you received the e-mail from NAR stating that the current HUD Secretary said (on May 12th) that FHA IS going to permit lenders to allow first time homebuyers to use the $8000 as a downpayment. Hmmmmm......I guess it depends on what your definition of the word "IS" is....???
I have heard that builders ARE allowing the buyers to receive the tax credit at the time they close....are you aware of that and, if so, how are they able to do that????
Keep up the good work!
Edith Schreiber - Dallas, Texas
To paraphrase Mr. Rogers, "Can you say vicarious liability? I knew you could.
Jeff and Edith,
I also read the HUD Secretary's news release to the NAR on May 12th. So, I too am confused. It either is or it isn't going to happen. If suggesting that it may soon happen and referring buyers to Shaun Donavan's announcement to NAR (post) is fraud, then, I have committed fraud, and done it in print. The plan is for lenders to "monetize" the credit through a short term bridge loans, to be repaid when they file and receive their credit.
So no need to falsify documents or say you purchased a house before you actually did to get the money. I am not sure how it will all work, but I will be talking with attorney's, CPAs, and lenders to make sure it is all on the up and up before I suggest it to any buyers. I just figured, if NAR and HUD post it, it may be true.
This tax credit is drawing alot of buyer out, and pushing them over the fence. That is a good thing, and is helping to clear up some of the short sales on the market right now around here.
I think this money is best used after the closing to update the house. I think people should find there own DP and apply to get the tax credit ASAP after closing.
And people wonder when the economy's real estate market is going to get out of it's rut. With so many people skirting the law, we're never getting out of the rut!
This comment is to Edith:
Jeff & I discussed this letter at length with several other top loan officers. We also consulted with HUD. And if you read the letter again, it says that certain agencies will be able to offer bridge loans(a Tax Credit Advance) to be applied towards down payment.... Not the Tax Credit itself.
These entities were mentioned: Federal, state, and local government agencies, nonprofits instrumentalities of government and FHA-approved nonprofits may assist homebuyers that are eligible for the tax credit.
No where in the letter does HUD advocate committing tax fraud or mortgage fraud by taking the Tax Credit before closing on the home. The IRS has stated: "You claim the Tax Credit after you close"! A HUD letter does not supercede the IRS rules enacted by Congress.
My company contacted HUD a while back long before this letter and HUD issued an opinion to us. Their opinion is that anyone taking the tax credit early has committed fraud. As a reputable lender, we do NOT condone fraud and welcomed their clarity.
As far as the builders.... Who the heck knows what they are doing. But, I can tell you that we have many underwriting guidelines in place to combat past fraudlent activities by builders.
Tax Credit for down payment? It cannot legally be done!!
Tax Advance(bridge loan) by the above mentioned agencies? It has been rescinded until further notice!!
Jeff & Tom..
NHBA is still talking about the use of Tax credit--thank goodness we switched to Resale in 2008
Is this another announcement from Washington that gets rescinded / changed before the Ink is dry; at some point I hope that Michigan gets it's act together clarifies through a HUD of MI statement; we have loads of SS & Foreclosure/ Auction houses. This is a mess that could & should have been avoided; Thanks for taking on this important item & for directing toward a solid understanding. We are staying away from this until fully explained from HUD, FHA, et all.
Jeff. hope that your fun time WAS fun
Tom..thanks for stepping up / im
So that's what Form 5450 looks like. Thanks for the highlights!! I can't believe people would try to obtain this credit without actually having met the test.
Jeff, you realize that there are people who will continue to think otherwise.
That is why the IRS has begun auditing returns with this form. They are auditing them this year.
Also, they are investigating tax preparers (read, e.g., CPA's) who prepared more than a specific number of 5405s relative to total returns prepared -- I have not heard what that percentage is.
I wonder how many people can actually pull this off without meeting the requirements..
Jeff, lots of buyers who might not qualify without the $8,000. have been very hopeful about being able to use it up front. I think that being conservative about this and not trying to spend it before you even get it can save a lot of future trouble.
I'm tired of dealing with it. Let's see, 10 years as a HUD approved lender - not loan officer, not broker - a HUD lender. The NAR (a REAL ESTATE membership organization) has released a statement by the Secretary of HUD (the NEW Secretary of HUD who has no experience in anything other than "affordable" multi-family housing) making a statement he did not have the authority or power to back up. I have more experience than he does with HUD and immediately recognized the statement as a "hope" based on communications within HUD that have been going around since the FTHB tax credit was signed into law several months ago.
Some people are going to continue to argue with you Jeff. They will continue to be wrong and continue to ill advise their customers. You and I both know builders have a huge history of operating outside of the law (settlement kickbacks, required lending partners, illegal cash back at closing) and the reason people don't believe you is because HUD fails (or refuses) to prosecute most of these offenders.
Essentially HUD is a screwed up government organization and the leadership there has their own political careers far ahead of the stability of the housing market. This is not true for those who are employed there necessarily, just the directors and deputy directors. You and I both know what happened that led up to the demise of seller funded DPA through the non-profits who made that possible. You and I both know the books are cooked on the numbers so you and I must accept that a few people will tell you to kiss-off even though you are absolutely right and they are undeniably ... wrong.
Peace, Jeff. Take care of your clients and let other people's clients be led astray - we can't save them all and on this issue, quite frankly, even though I know vastly more about HUD lending (and secondary market sales, and liability on the issuance of HUD loans, and fiduciary responsibility to my investors) than anyone at NAR and evidently HUDs own Secretary, there are a few who refuse to accept it.
Hey Jeff,
Good info for us all. I've got to mention, I don't think I've seen as much confusion on anything in a very long time as this.
Thanks for spelling it out so we all understand it
I noticed a real estate office this morning when I was dropping my son off at scouts had on their sign marquee in front of their office...USE YOUR 8K TAX CREDIT FOR YOUR DOWN PAYMENT!!! Ruh Roh...I would get that off there if I were them! Thanks for yet another good post on a very critical situation. Appreciate the time you are putting into this.
So many people are announcing it. Even my realtor association is announcing it.
Jeff, thanks for stopping by my blog recently, you have been away and it's obvious you have been working! You have an incredible ability to explain the maze of technicalities in all of these new programs (and keep up with the changes too). Thanks for shedding light on an often complex set of guidelines!
Your help is most appreciated, and I'm glad that you and a few other folks are on top of this thing. I will advise my clients to ignore the hype until further notice. I can't say the same for my colleagues who have been led to believe it by the powers that be....
Jeff - Thank you for explaining the facts.
I just had a first-time buyer ask me this very question - so thanks for clarifying!!!
Hi Jeff~ Have fun with your nieces and nephews! As far as the tax credit from the IRS BEFORE the purchase.... those people will have to pay it back and with interest! IRS is NOT funding down payments, period. They will only reimburse.
It is beyond imagination the level of incompetence at the Federal level. Why can't HUD or the IRS hold a press conference and clear all of the confusion? With all of the complaining about the last administration, I am not seeing the improvements.
Jeff, Thanks so much for the obvious hard work you put into this post. It is very much appreciated!
Excellent update and info, Jeff. There is a lot of bad information and misunderstanding floating around. Appreciate the link to the form and instructions, too.
Jeff
1 - I was told that the 5/11 Mortgagee letter allowing the loan program (or advanced tax credit) through non-profits, states or localities, was recalled. It was rumor, but I couldn't find the mortgagee letter on HUDs web site, it seems to have been removed. And, I am not aware of anyone offering this - and I am assuming the qualified non profits would be Nehemiah and Ameridream, but I don't see anything on their web sites, either. If this is real, can you direct me somewhere that it is being done?
2-The "get the tax credit in advance" theory that is legal (I guess) is adjusting your withholdings until you accumulate the tax credit by not having it withheld, and then evening up after you buy. i hadn't heard of anyone filing to receive the tax credit payment in advance. I just don't understand - why don't they have to send something similar to a 1098 that is completed by the closing company at the closing table.
VALERIE.... . yes, acquired, which would be past tense. But here is the kicker... I haven't seen anything, read anything, or have heard anything that the IRS considers this fraud. You would think so, by the statement that I mentioned above. Besides, we hear stories that people have received the money prior to closing, but has anyone seen any of these forms filled out? Are people putting dates down a whole month prior to filling out the form? Hey, the IRS doesn't ask for a HUD... But I will say this, that so many seemed to not have paid attention to... HUD and many lenders/underwriters have stated that it's fraud. And in all honesty, this is most important to me, because without them, the loan is dead. So, with what I just said, are we assuming so much? thanks
HEATHER.... . yes, go to your trusted loan officers. But from what I have been reading in the last 48 hours, many of them seem to have gotten this wrong. Or do they actually know, and they are just trying to bait the borrower in, so they can work with buyers now or down the road? I think 50% of them do this anyhow...
TOM B. .... . I would agree with your statement and I am glad that we have talked about this. I guess the main point that people keep failing to realize is that it's HUD and many lenders saying that this is fraud. Even if the IRS isn't, who cares. They aren't approving, funding, or insuring these loans.... period.
JEFF BELONGER.... . I hope you had a great time with your lovely nieces & nephews..
YES Jeff, I did... thanks for asking... it was a good time today. Especially with the two youngest that are twins, barely 1 years old. A great day indeed. ;o)
DONNE..... . you made part of this statement. "However, I did speak to a few people that indicated that there is a plan being discussed."
I have a problem with this. If you talk to anyone at HUD, they say they don't know and can't make any statements. So I call their bluffs... unless they know Brian Montgomery of HUD, or Director Donovan. Seriously, it's speculation and HOPE. I won't say squat or assume squat until it's in a mortgagee letter AND when there are a few investors buying those loans.
In regards to the CA state programs? Again, many of you all are missing this point. It's done on the state level, so they can give money as a 2nd to be used with their 1st as bond monies, and use the money as a down payment. And yes, you can close on these deals. But from how I read it with the IRS, you still shouldn't be applying for the money until after you close on the loan. Just my overall opinion. thanks
ARISE mortgage aka LAWRENCE ...... . I am glad that you have actually spoken to someone at the IRS. By reading their instructions, it would be safe to say that applying for the credit before you clause, would be considered fraud. thanks for the feedback.
JOAN.... hey, I am not perfect... I don't know everything. But I am really getting sick and tired of the misinformation, still, even today. Even when I tell people that it's not true, I know first hand. They call me out... and tell me that I don't know what I am talking about.. lol Oh well, those just want to falsely advertise, so they can get more buyers. I would rather do it the correct way. thanks
I tell clients they may qualify to amend their 2008 return and get a refund, but I also mention that they need to check with an accountant. There is no way in hell that I would ever give tax advice to a client.
Think I will park and see all the comments on this one.. Can make on a little gun shy over this topic ;)
Phew... thats a mouth full Jeff. Great post. This is one that I am COMPLETE on board with. If you file for the Tax Credit before you have purchased a home, then you are wrong. Period. The tax credit is for first time home BUYERS ... not first time home SHOPPERS. If you have not purchased, you have no right to this money yet.
Hi Jeff -- This could be some scary stuff, and it really should be straightforward. Hopefully a clarification will come very soon so everyone is on the same page and doing the right thing.
What a fiasco.
Why is it when you give somebody an inch, they try to take a foot?
Rules are rules. I really hope people are not taking advantage of the situation but it sounds like there may be a lot of this going on.
Jeff - Thanks for clarifying this. It can get a little muddy with all the misinformation out there. Great post!
JIM & MARIA....first off, thanks for reblogging this. We need to get this message out, even though some people will abuse this or mislead others. And yes, what ticks me off the most are those that are ignoring these messages... and still putting misinformation out there, just to get new business. SAD and SCARY.
TONY.... . my pleasure and thanks for stopping by.
MATT..... thanks for reblogging this and thanks for that question & answer. How dumb of me not to put this in my blog originally. I even included it in another blog of mine, when doing one on information on the tax credit itself.
On another note, I wish you had a link to that article. And yes, we need to keep fighting this fight. Thanks for your in depth comments, feedback, and for your continued support.
ANNA... . it's been now 72 hours or more, and people are still spreading the wrong info. Even those that know it's wrong. We just need to keep spreading this ourselves. Thanks.. and yes, I did have a good time with my nieces and nephews. Thanks for asking.
MARY.... my pleasure... but in regards to NAR, I don't think it would have mattered. It's easy to blame it on HUD and to just say that they were repeating what they read. Hell, so many other professionals do the same, why for some stop.. right? We just need to spread this around, the truth.
ANN...... my pleasure and thanks for reblogging this. Yes, we do need to spread this around and to get people to understand this. thanks
BETH.... . hi.. and thanks for the compliment and for stopping by.
STEVEN & MARTI... . my pleasure and let's keep this message going around. It's already bad out there... but why confuse and scare the buyers even more. thanks
Jeff, excellent post. I so appreciate you posting the form and highlighting the field when did you purchase from the IRS. Gosh that in and of itself speaks the truth.
I will believe it when the new IRS form is released.
Thanks Jeff for the clarification. With all the contradictory information we have been reading, I appreciate your highlighted information. Have a great week!
Mary
Jeff, you are a true professional and such a lifesaver. Thank you for being such a reliable source for information on this mess. Thank you thank you thank you!
Jeff - Anytime! You wrote a great post that deserved a re-blog. Not just for you and your blog, but for the sake of anyone that might stop by my blog and take a moment to learn a little bit about something that I consider one of the most confusing/misinformed/rumor-filled topics of the day. I'll be reading a lot more of your blog now (although I've been here in the past a few times) - consider me subscribed.
Jeff, I have had so many people contact me in the past 24 hours and all of them have the wrong information. I have referred them to your blog post for clarification. If that doesn't work, then they are on their own. Thanks for this timely and important post.
Jeff: Thanks for the post and clarification. I remember when I mistakenly blogged about this last Fall and you and Gerry were kind enough to correct me. Of course, we'd all like to see a formula for buyers to be able to utilize the tax credit and I know they're trying to work on it. But, for now, the borrower needs to have some skin in the game. And that's not a bad thing! Take care.
Hay Jeff,
Im on vacation and still following this "drama"...Omg....why would ANYONE put the cart before the hourse, and RUSH the information out there before it is fully understood...Oh yeah, the Fed Gov has been doing it for years...sorry..I forgot.
And regarding the comment about BUILDERS...WHO the heck knows what they are doing...They could be giving the buyer and 8000 closing cost credit for cripes sake, and calling it the 8000 builder tax credit...who knows! It's kinda like the diamond market, mark it up, and give em a credit! YIPEE!!
Even if they DO get this worked out, why would we allow this credit in a loan on an FHA loan vs. anything else anyway?? I thought the WHOLE POINT was to get AWAY from borrowers not having any real money into a deal! It still gives them the ability to walk away without any TRUE financial obligation. What they should do, is PENALIZE them for walking away from a no downpayment or low downpayment program! LOL
Following this closely! It is clear, people are freaking out! Everyone should listen to YOU, TOM BURRIS, and definitley Ken Cook !!! Great info!
Darin
Jeff - In researching this plan, I did not call HUD or speak with any HUD reps. I called and spoke with many of my FHA lending sources as well as a few city, county and state agencies that are currently offering down payment assistance to low-medium income first timers.
It was in talking to one of my FHA lenders that they spoke of a program that they are trying to develop with one of the state agencies. In speaking with a rep from this agency, they mentioned that they are in the process of putting a program that will be available to participating lenders to offer to eligible borrowers. The program they are working on will be some sort of short-term bridge loan.
Once again, I did not get my info from HUD or any HUD rep. Having learned my lesson earlier this week that HUD, and to some degree FHA, are not the ones that will be turning this plan into an actual program. It is participating lenders and/or city, state and/or state agencies that will be the ones to put this plan into action.
Frankly I'm in agreement with what HUD has decided on. I don't think a buyers should be able to use the $8,000 for a down payment. The buyer should have some "skin in the game" as the footballs saying goes before getting any money.
Patricia Aulson/Portsmouth NH Real Estate
Jeff, You are a lifesaver, as someone stated above. You always write so that we can UNDERSTAND all of the changes. I appreciate it so much.
It is so hard to keep up with change, after change. I'm almost afraid to give buyers any information about mortgages anymore. I wish you were licenced in Alabama! Getting anywhere with that yet?
Well, after reading this post if they didn't know the "real deal" they sure as heck know now! Nice one Jeff.
This seems so clear to me ... but we all know how quickly misinformation can spread online. I have a feeling we'll be putting out these fires right up until November 30.
Jeff,
This has got to be one of the best posts you've ever written, and not just because you mention me-lol.
You really did your homework on the 5405 and it's sure hard for people to question the accuracy when it's in an IRS document. I noted in your other post I will be calling the Memphis Area HBA today and see if I can get the details of their program. You know of the program I'm working on down here, and that it's on the up and up.
Great work on this very timely series dude. Thanks for the recognition and I'm glad I was able to help.
Gerry Suarez, Jr.
Your FHA Loan Pro!
Jeff - Thank you again for clearing up so much confusion! I first heard about this from a homebuilder sales rep...I wonder if they are still trying to do it? I am glad I have been keeping up with your (and Matt's) blogs! Have a great week!
Jeff; THANKS! ~ JC
Thank you Jeff, great information...
I read somthing today (5/30/09) NYSAR email (Realtor.org), I will copy it so you can see...I love to hear your comments..
Daily Real Estate News | May 29, 2009 |
FHA-approved lenders received the go-ahead to develop bridge-loan products that enable first-time buyers to use the benefits of the federal tax credit upfront, according to eagerly awaited guidance from the U.S. Department of Housing and Urban Development on so-called home buyer tax credit loans that was released today.
Under the guidance, FHA-approved lenders can develop bridge loans that home buyers can use to help cover their closing costs, buy down their interest rate, or put down more than the minimum 3.5 percent.
The loans can't be used to cover the minimum 3.5 percent, senior HUD officials told reporters on a conference call Friday morning.
Thus, buyers applying for FHA-backed financing with an FHA-approved lender that offers a bridge-loan program can get a bridge loan to bring down the upfront costs of buying a home significantly but would still have to come up with the minimum 3.5 percent downpayment............
Here is a story, similar to the May 29th Realtor.org story
http://www.builderonline.com/mortgages-and-banking/breaking-news-borrowers-with-fha-mortgages-can-use-tax-credit-at-closing.aspx
There has been an incredible amount of flip flopping on this issue. I think I will advise my borrowers to wait for additional clarification that only the dimension of time may bring:)
Jeff,
Great blog! I will tell you that my son,a first time buyer, recently purchased a home in feb 2009. He has just received the tax credit (3 mo later); so you are right, from our point of view. He did not get this money for about 3 months after home was purchased. I am also a new loan officer. I love all the relevant info you are sending out! So informative! Keep it up!
Great post. You've done your part to keep agents, brokers, and consumers out of jail. If only people will read it.
Always with the drama! No wonder we can't get the real estate market going! Let's do it legally and be sure we don't give out the wrong information!
Thanks for the good info.
As always, keeping us informed Jeff - As a mortgage professional that gets questions on this issue nearly every day I appreciate all the (accurate) info I can get.
Jeff ... thanks for clarifying. The First time homebuyer $8,000 tax credit has been AMENDED - May 29th, 2009 - Buyer, beware !!! You still need 3.5% of your own money for the down payment. It can't come way of an upfront loan through the tax credit.
Keep up the good work.
Thanks Jeff, for opening my eyes....FRAUD sounds like such a dirty, word.
Hi Jeff, thanks for explaining all this information! You are right, we need to be proactive about this; call hud if necessary to get the real facts. thanks for sharing