The secretary of HUD made an announcement Monday and a HUD/FHA letter was published on the website Monday night stating the the $8000 could be used for upfront down payment (although the mortgage letter was vague at best and has been removed from the site).
BUT……..the new director of HUD pulled that Mortgagee letter Thursday morning and it is no longer even available on the HUD website because it appeared to violate a federal law that became effective October 1, 2008.
Link below for FHA mortgagee letters
http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/
This theoretical program is now off the table…….and cannot NOT be used until there is a real concept of how to offer borrowers with real answers as to where the money might come from.
Before this happens there will need to be:
1. State agencies approved who have funds for the down payment . Note – Texas is working on this currently and we will probably have more information by June 1, 2009.
2. A Change to the HUD guidelines on the time frame that is allowable for a bridge loan as current guidelines state that loans must be amortized over 10 years with no balloon so this would have to be revised.
3. A change to the IRS guidelines allowing the refund to be assigned to a state or non-profit entity.
It is also important to know that some mortgage companies in the area have already closed loans in which they allowed the buyer to use the $8000 as their down payment. The problem is that those loans cannot now get insured or securitized. As of right now (today), buyers cannot close an FHA or Conventional loan using the $8000 as a down payment
From Doug Martin DFW Mtg
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