To read the entire news release: http://www.hud.gov/release.cfm?content=pr09-072.cfm
Here are some excerpts from today’s release:
Today’s announcement details FHA’s rules allowing state Housing Finance Agencies and certain non-profits to “monetize” up to the full amount of the tax credit (depending on the amount of the mortgage) so that borrowers can immediately apply the funds toward their down payments. Home buyers using FHA approved lenders can apply the tax credit to their down payment in excess of 3.5% of appraised value or their closing costs, which can help achieve a lower interest rate. To read the FHA’s new mortgagee letter, visit HUD’s website: http://www.hud.gov/
Current law does not permit approved lenders to monetize the tax credit to meet the required 3.5% minimum down payment, but under the terms of today’s announcement, lenders can now monetize the tax credit for use as ADDITIONAL down payment, or for other closing costs, which can help achieve a lower interest rate.
You can “bet the farm” companies will be springing up that will offer you help in “monetizing” your tax credit (for a fee of course). Expect it to look the tax refund loans some tax preparation agencies market. For every FHA borrower who is assisted through the tax credit program, FHA will collect the name and employer identification number of the organization providing the service as well as associated fees and charges. FHA will use this information to track the business closely and will refer any questionable practices to the appropriate regulatory agencies, as necessary.
Buyers financing through state Housing Finance Agencies and certain non-profits will be able to use the tax credit for their downpayment via secondary financing provide by the HFA or non-profit.
NOTE: Remember lenders run via computers and it will take a while to get the programming up to speed before they will be able to close transactions using the tax credit. If your state housing finance agency doesn’t already have a program keep an eye on their website for updates.
