Feds reverse reversed ruling to assist 1st-time buyers

Posted by Jolenta Averill on Tuesday, June 2nd, 2009 at 12:06pm.

OK - follow the bouncing ball....
The FHA initially indicated they would allow the $8K tax credit to be used towards a down payment.
Then they reversed that decision and decided to NOT allow it.....
But it appears they have now reversed their reversal and once again WILL allow it......at least for today!

Below is a copy of the Mortgagee Letter from FHA dated 5/29/09 which outlines how they will allow this to work, and if you ask me it is typical "government-ease" for language and the requirements to follow seem to me to very complicated to the point where I wonder how many lenders are going to want to meet those requirements, ie: validating all eligibility requirements for the tax credit are fulfilled and review previous tax returns and IRS tax assessments letters to determine that the borrower does not have unsettled obligations to the IRS (which would diminish the credit) and contacting the borrower's employer to confirm there are no outstanding garnishments....just little things like that!  
It still seems to me that it would be much easier for the borrower to simply obtain gift funds from a relative and then simply pay that relative back when they get their $8,000 credit back.....much less hassle involved and no worry about having to calculate monthly payments or "fee" for monetizing their credit.
I am checking with my lenders to see if any of them are going to do/allow this, just because FHA allows it doesn't necessarily mean that the individual lenders have to accept it....and again, I'm not convinced this is necessarily the best way to handle this situation but I do realize that some buyers may not have any options to get $8000 in gift funds so this may be their only option...
Anyway, thought you'd like to see this and I will keep you posted.
Have a great day!

Hi, and welcome to our Madison real estate blog. Whether you're a consumer, journalist or Realtor, we encourage you to share your thoughts by leaving a comment. Here you'll find relevant local and national real estate information, as well as market statistics, insight, and information about a variety of neighborhoods and real estate listings. If you'd like more information about anything in particular, please use the contact form and I'll be happy to help.

Jolenta Averill, Principal
Lake & City Homes Realty
(563) BUY-SOLD

6 Responses to "Feds reverse reversed ruling to assist 1st-time buyers"

Bruce Wagg wrote: Thanks for keeping us updated, Jolenta. I'm going to check with my lenders and see what they are doing in the Easy Bay.

Posted on Wednesday, June 3rd, 2009 at 10:27pm.

Tim wrote: Government Bureaucracy at its finest! Such complex rules are exactly what is not needed to help the real estate industry recover. Let's make it easy on those willing to dip their toe in the market, and that means simple incentives.

Posted on Friday, June 5th, 2009 at 4:13pm.

Ashlee in FW wrote: The ball and our government go hand in hand. Always bouncing around!! I am with Tim. All it takes for people to get their feet wet and start buying houses again, is to give them incentive! And now they have it!

Posted on Tuesday, June 9th, 2009 at 6:00pm.

Wohnen auf Zeit wrote: The government is still working to find some programs to assist the housing market. This proposal would allow more first time buyers to enter the market. Thanks Jolenta for bringing us up-to-date on the change.

Posted on Wednesday, June 10th, 2009 at 5:37am.

Del Mar Realtor wrote: This is great news for first-time home buyers. I posted about this first-time home buyer credit on my blog too. The "final" guidelines were announced on May 29. To qualify, buyers must not have owned a home in any of the last three years. So it will actually help more than just first-time buyers, even though that's the intention. Also, these purchases must be made before November 1, 2009 so it is a short-term measure to stimulate homes sales and the real estate market in general. It's great news for people who were thinking of jumping in and buying discounted homes in the first place. Now they have added incentive.
All the Best!

Posted on Thursday, June 11th, 2009 at 3:24pm.

La Jolla Homes For Sale wrote: The news release on the HUD website provides an estimate from the National Association of Home Builders, which states that this first-time home buyer tax credit will stimulate approximately 160,000 home sales in the U.S. Of these, approximately 101,000 will be first-time buyers who receive the tax credit. The remaining 59,000 will be move-up buyers who will first sell their home to a first-time buyer and then purchase another home. So this is a substantial benefit to a great number of people, not just to the recipients of the tax credit. Also note that the tax credit applies to home purchases complete BEFORE December 1, 2009 so the deadline to complete a purchase is actually November 30, 2009 at 11:59pm. Thank you for your post!

Posted on Friday, June 12th, 2009 at 8:42am.

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