Mortgage-Guy.com

Here is the direct quote from HUD Secretary Sean Donovan’s May 29, 2009 press release: “Home buyers using FHA-approved lenders can apply the tax credit to their down payment in excess of 3.5 percent of appraised value or their closing costs, which can help achieve a lower interest rate.” (emphasis added)

HUD has re-published Mortgagee Letter 2009-15 entitled “Using First-Time Homebuyer Tax Credits”. Remember, they originally published it then recanted. This Mortgagee Letter does have some changes that provide the regulatory framework for monetizing the $8000 first time homebuyer tax credit. However, it will be interesting to see if the public can make this possible.

While HUD’s announcement does set out a framework for the policy, HUD does not provide the money. That is obviously going to be an issue making this program work. Don’t run out and purchase a home thinking you are going to have a check waiting for you.

So who can come up with the money for the buyer? Non-profits or lenders could but, coming up with the money to make these loans when the tax credit proceeds cannot be assigned to a third party is very slim. (another nice provision) This would require that the non-profits or lenders advance the money to the buyer in hopes that the buyer, who is not obligated to, hands over their tax refund check when they get it. With the old seller paid down payment assistance(you know the one’s that are now prohibited, the borrower never put their hands