Jeremy's Blog

Make sure you read the WHOLE thing!

NEW HUD Mortgagee Letter 2009-15

What Happened?????

You may have heard that HUD published Mortgagee Letter 2009-15, Using First-Time Homebuyers Tax Credits for the Down payment. To outline what this letter said:

In Section II, FHA Guidance, HUD permits the following:

The Tax Credit: Short-Term Loan:

Entities that can offer the tax credit advance with short-term loans: Federal, state, and local governmental agencies and nonprofit instrumentalities of government, FHA-approved nonprofits, and FHA-approved mortgagees may provide short term or “bridge loans” secured only by the anticipated tax credit due the homebuyer as collateral.

Well that all sounds great right? Of course and I have received many calls asking about it, but there is a catch . . . .

The Mortgagee Letter making this changes has vanished from HUDS website as they have rescinded the change. What does that mean? It means it never happened, doesn't exists, we cant do it!

I mention this because NAR even sent out an email talking about the change. The bottom-line is that until further notice this is not an acceptable source for down payment in HUDS eyes. I will say that the change is more than likely coming and I will let you know when it happens.

Call me with questions!

(269) 598-3975

Is the refi boom over?  Not yet but it sure looks like it could soon be.  Mortgage rates saw a major increase yestarday of nearly .5%.  Why???

Basicaly, it is finally hitting home that the Fed has a serious problem; the problem is how to keep mortgage rates down, the housing markets are the key to any economic recovery and one of the keys to getting the housing sector back on track is keeping mortgage rates affordable and low. It was widely thought that buying $1.25T of MBSs would do it. Not the case, the problem is that there is just too much debt.  Who then will fund our deficits and the Obama Administration's aggressive fiscal budgets? The US is completely dependent on foreign investments to fund our debt and that point is beginning to take front page. Big hit in the equity markets this afternoon on the hard hits taken in the mortgage markets. Without lower mortgage rates the economy isn't going to recover at the pace recent thoughts had developed. If housing and home prices are not stabilized there isn't going to be much of a recovery based on the timeframe markets had been expecting.

Hold on tight the ride is just begining!  This is what happens when you SPEND< SPEND< SPEND!

www.jeremydrobeck.com

FHA has not yet republished the mortgagee letter on monetizing the tax credit for the downpayment. Since we are receiving numerous inquiries about the status of the letter, we are providing this update. We do expect it soon (possibly today) and do not expect significant changes.

We believe the reason for the delay is more administrative in origin than substantive. First, the Secretary did announce the policy at an NAR meeting last Tuesday. He wouldn't have made this statement if there was any doubt about the policy being implemented. Apparently since the tax credit was part of the stimulus bill, it required review by other Obama administration officials (possibly OMB). FHA staff inadvertently published the letter without obtaining the necessary concurrence and the Secretary was not aware of it (See bold below).

In his speech, Secretary Donovan outlined the main points of the program. He said:

"We all want to enable FHA consumers to access the tax credit funds when they close on their home loans so that the cash can be used as a downpayment. So FHA will permit trusted FHA-approved lenders and HUD-approved nonprofits, as well as state and local governmental entities to "monetize" the tax credit through short-term bridge loans. We think the policy is a real win for everyone, ensuring that borrowers can tap into the numerous organizations that are already part of the FHA network to receive this additional benefit. FHA will be publishing the details shortly."

We have also received inquiries about the proposed program.

1. Lender loan type

While a government entity or an approved nonprofit can provide a second mortgage, an approved lender can only provide a short-term loan that is secured by the anticipated tax credit. FHA is limited by law from permitting mortgage lenders from taking second mortgages on FHA loans for downpayment purposes.

2. Seller participation in the loan transaction

We have received inquiries about seller participation in these transactions. It is important to consider the law passed last year with regard to the termination of the seller funded downpayment assistance program. It prohibits sellers or any other interested third parties from providing funds necessary for the downpayment. We encourage you to discuss this matter with your attorneys. See the legislative language below.

C) Prohibited Sources (For Downpayment)

In no case shall the funds required by subparagraph (A) (i.e. cash investment) consist, in whole or in part, of funds provided by any of the following parties before, during or after closing of the property sale:

(i) The seller or any other person or entity that financially benefits from the transaction."

(ii) Any third party or entity that is reimbursed, directly or indirectly, by any of the parties described in clause (i)."

www.jeremydrobeck.com

Revised FHA Appraisal Guidelines in Effect
for Appraisals Done after April 1, 2009

New Appraisal Rules: Coming to a Sale Near You