$8000 FTHB Tax Credit Cannot be used For Downpayment As of Today
The SECRETARY of HUD made an announcement Monday and a HUD/FHA letter was published on the website Monday night stating the the $8000 could be used for upfront down payment (although the mortgage letter was vague at best)…the new DIRECTOR of HUD pulled that Mortgagee letter Thursday morning and is no longer even available on the HUD website because it appeared to violate a federal law that became effective October 1, 2008.
Here is the hyperlink to all Mortgagee Letters: Notice ML 09-15 has been pulled.
This theoretical program is now off the table and cannot NOT be used until there is a real concept of how to offer to your borrowers with real answers as to where the money might come from.
Before this happens there would need to be:
1. State agencies approved WITH MONEY for the down payment (Note that Texas IS working on this currently and we will probably (note that I said probably) have more information by June 1, 2009)
2. A Change to the HUD guidelines on the timeframe that is allowable for a loan….currently must be amortized over 10 years with no balloon.
3. A change to the IRS guidelines allowing your refund to be assigned to a state or non-profit entity.
It is also important to know that some mortgage companies in the area have already closed loans in which they allowed the buyer to use the $8000 as their down payment.
The problem is that those loans cannot now get insured or securitized. As of right now (today), buyers cannot close an FHA or Conventional loan using the $8000 as a down payment.