Feds reverse reversed ruling to assist 1st-time buyersPosted by Jolenta Averill, Broker on Tuesday, June 2nd, 2009 at 10:06am.
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!
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Jolenta Averill, Principal
Lake & City Homes Realty