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Great News For First-Time Homebuyers

May 13, 2009
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The Group, Inc

The Group Guaranteed Mortgage forwarded this information to Group Realtors this morning.
The attached article is an announcement that FHA will permit the $8,000 tax
credit to be used as a downpayment for new home buyers. This is very good news
for first-time homebuyers who lack downpayment money.
Click here to read the article.

Donovan Says FHA to Permit $8,000 Tax Credit as Downpayment

Secretary Shaun Donovan yesterday said FHA would permit lenders to allow
first-time borrowers to use the $8,000 tax credit recently put into law as all
or part of a downpayment on a home. Donovan’s remarks at the National Association of Realtors’
legislative meeting in Washington represented the second major news announcement for HUD this week;
earlier this week, Donovan announced that HUD had withdrawn its “required use”
provision in final Real Estate Settlement Procedures Act rules.

“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,” Donovan said. “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.

Donovan cited estimates by the National Association of Home Builders that the tax credit
could stimulate 160,000 home sales across the nation, of which 101,000 could be
first-time buyers using the tax credit. Another 59,000 existing homeowners could buy another home because
a first-time buyer purchased their home, he said.

Donovan said FHA will publish details of the plan shortly.

 

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