Tax Credit For First Time Buyers Bridge Loan
Please refer to our post: Will FHA Offer Short Term Bridge Loan For The $8000 Housing Tax Credit Or Not?. In this post we suggested that the early interpretive ramblings people have been making about FHA pulling their mortgagee letter: Mortgagee Letter 9-15 may be falsely pointing at FHA’s retraction of HUD Secretary Shaun Donovan’s pre-announcement of a short term bridge loan to allow first time home buyers to monetize their $8000 home buying tax credit. It now seems as though our assessment is accurate.
According to a report by the Seattle Post-Intelligencer real estate reporter: Aubrey Cohen HUD Spokesman Lemar Wooley reported that “the Arizona story is wrong. Nothing has changed. We are just waiting for the technical details to be finalized.”
Speculation About The FHA – HUD Short Term Bridge Loan “Technical Details”
- Some of the technical details may be that FHA approved lenders and other approved entities may offer tax credit short term bridge loans collateralized by the home versus the promise of the housing tax credit that the first time home buyer is due on their 2010 tax return. This is speculation, but it could be what FHA is working on.
- Another take on the details could be that in fact FHA underwriting guidelines are being modified to allow additional more flexible sources of down payment. With looser FHA guidelines, the expected first time home buyer tax credit could be used as a form of collateral for the short term bridge loan. As of current guidelines, a loan on real property collateral is an acceptable source of down payment. Real property collateral could a house or car that the borrower owns.
Again, we will keep you posted as new developments on this story roll out.
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This will be amazing if the house passes this bill. With Home buyers being able to buy with no money out of pocket, I can’t image what this will do to the real estate market. And how long will it take for buyers to receive the money? That’s the question for agents. Do agents want to waist time on buyers like this, because it could take months to receive the money?
Daniel,
The bill is passed that authorizes the tax credit for first time home buyers. This was the American Recovery and Reinvestment Act of 2009. If this is the bill you are referring to. If not, I do not know of another bill, rather some executive policy statement from HUD/FHA is what we’re waiting for.
We’re really waiting for is the HUD – FHA to clarify how they intend to allow authorized FHA lenders and other HUD approved non profit counseling agencies to offer the short term bridge loan. Once this is clarified, lenders will be able to lend money rather quickly. This tax credit policy is only good through the end of November 2009 for first time buyers.
While it is the case that right now, first time buyers are not able to get access to this tax credit money until long after they buy their home when they file their 2010 tax return. This means that those home buyers who do not have enough cash for down payment must find a way to get their down payment and closing costs to buy a home now. There are ways to get at this money: see Down Payment Help – What Can I Use For My Down Payment?.
I hope this provides some further clarification on this for you.