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Advocacy
Detailed guidance on the federal government's plan to provide short-term loans to borrowers using the First-Time Homebuyer Tax Credit was announced this week. The short-term loan program, which would effectively monetize the first-time homebuyer tax credit by permitting eligible lenders to make bridge loans collateralized by the borrower's expected tax credit, was announced by HUD Secretary Shaun Donovan at the NAR Real Estate Summit earlier in the month.
At the summit, Donovan said the loans would enable Federal Housing Administration (FHA) consumers to access the tax credit funds when they close on their home loans so that the cash could be used as a down payment.
For more information, read the
HUD Mortgagee Letter 2009-15 that details how FHA will permit its lenders to provide a short-term bridge loan that will let qualified home buyers use the tax credit to either make a larger down payment above the FHA required 3.5 percent, cover closing costs, or buy down their interest rate.
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