Just a short update to make sure the latest information is available on the site – even though what I’m about to tell you isn’t really “information” yet in my view!
According to a report in Realtor Magazine, HUD spokesman Lemar Wooley has stated that the proposal is still on track. As I suspected from the fact that the original Mortgagee Letter 09-15 was fairly fuzzy on the details, it appears they just got a little ahead of themselves.
Sorry to be a little late with this update, but I’ve been trying for several days to figure out the real scoop on exactly what happened. For the first time that I can ever remember, FHA actually published a mortgagee letter on their website and then just removed it.
Usually the process of revoking a Mortgagee Letter would involve issuing another Mortgagee Letter with updated rules. Looks like someone at HUD may have gotten ahead of themselves!
Here are the full details on how the monetization of the $8000 first time homebuyer tax credit will work for FHA loans. You can obtain the full HUD Mortgagee Letter 2009-15 here.
I have been receiving emails and even phone calls asking for the location of the HUD Mortgagee Letter about this all morning so I thought I needed to go ahead and post the details that I have. [Details are now available here]
As a loan officer, I first began using seller paid down payment assistance programs with my customers almost as soon as the program was available in my area. I remember very clearly the feeling I had at the time that the programs could not last long before HUD put a stop to them. I told every customer I prequalified for the first couple of years that they better hurry up and find a home because their down payment program couldn’t possibly last very long.
On January 19, Scott Syphax of the Nehemiah Foundation announced that Congressman Al Green has introduced HR 600, a bill to restore seller assisted down payment programs to the FHA loan universe. Here is a link to the press release. I haven’t seen the final bill. It seems to be a “lite” version of H.R .6694 introduced in the last Congress. It reintroduces tiered mortgage insurance premiums, often referred to as ‘risk based mortgage insurance premiums” although this bill does not seem to refer to them that way.
The seller assisted non-profit down payment assistance programs are officially gone for FHA loans as of October 1st 2008. These programs were easy to use and could be funded quickly and thus became extremely popular.
But they aren’t the only game in town.
There are literally thousands of federal, state, county, local and charity based grant programs available all over the country. During the last few real estate boom years, sellers had no patience with waiting while potential buyers jumped through all the hoops necessary to qualify for these programs, but times are different now. Those sellers who once had no patience have now had their home for sale by owner, listed and expired with 3 different real estate agents and on the market for over a year. They will jump at any buyer they can get and do whatever they can to help sell that buyer their home. They will now wait 45 days for a buyer to get qualified for down payment grants.
