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GOLD FORTUNE REALTY
our client's needs, and we
work hard to realize their
dreams as if they were
our own.
GOLD FORTUNE REALTY
HUD No. 09-072
Lemar Wooley
(202) 708-0685
Friday
May 29, 2009
DONOVAN ANNOUNCES RECOVERY ACT'S HOMEBUYER TAX CREDIT CAN
IMMEDIATELY HELP THOUSANDS OF FIRST-TIME HOMEBUYERS TO BUY A HOME
FHA plan will stimulate new home sales and help stabilize housing market
WASHINGTON - Speaking to the National Association of Home Builders Spring Board of
Directors Meeting, U.S. Housing and Urban Development Secretary Shaun Donovan
today announced that the Federal Housing Administration (FHA) will allow homebuyers
to apply the Obama Administration's new $8,000 first-time homebuyer tax credit toward
the purchase costs of a FHA-insured home. Donovan said that today's action will help
stabilize the nation's housing market by stimulating home sales across the country.
The American Recovery and Reinvestment Act of 2009 offers homebuyers a tax credit of
up to $8,000 for purchasing their first home. Families can only access this credit after
filing their tax returns with the IRS. 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
percent 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.
"We believe this is a real win for everyone," said Donovan. "Today, the Obama
Administration is taking another important step toward accelerating the recovery of the
nation's housing market. Families will now be able to apply their anticipated tax credit
toward their home purchase right away. At the same time we are putting safeguards in
place to ensure that consumers will be protected from unscrupulous lenders. What we're
doing today will not only help these families to purchase their first home but will present
an enormous benefit for communities struggling to deal with an oversupply of housing."
Currently, borrowers applying for an FHA-insured mortgage are required to make a
minimum 3.5 percent downpayment on the purchase of their home. Current law does not
permit approved lenders to monetize the tax credit to meet the required 3.5 percent
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. Buyers financing through state
Housing Finance Agencies and certain non-profits will be able to use the tax credit for
their downpayments via secondary financing provided by the HFA or non-profit. In
addition to the borrower's own cash investment, FHA allows parents, employers and
other governmental entities to contribute towards the downpayment. Today's action
permits the first-time homebuyer's anticipated tax credit under the Recovery Act to be
applied toward the family's home purchase right away. Unlike seller-funded
down-payment assistance, which was a vehicle for abuse, this program will allow
homebuyers to shop for the best home price and services using their anticipated tax
credit.
According to estimates by the National Association of Home Builders, the
Administration's homebuyer tax credit will stimulate 160,000 home sales across the
nation - 101,000 of which will be first-time buyers who will receive the credit. Another
59,000 existing homeowners will be able to buy another home because a first-time buyer
purchased their home. Given FHA's current market share, it's estimated that thousands
of families will be able to purchase a home by allowing the anticipated tax credit to be
applied toward their purchase together with an FHA-insured mortgage.
Homebuyers should beware of mortgage scams and carefully compare benefits and
costs when seeking out tax credit monetization services. Programs will vary from
organization to organization and borrowers should consider whether the services make
sense for them, as well as what company offers the most suitable and affordable option.
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.
Lemar Wooley
(202) 708-0685
Friday
May 29, 2009
DONOVAN ANNOUNCES RECOVERY ACT'S HOMEBUYER TAX CREDIT CAN
IMMEDIATELY HELP THOUSANDS OF FIRST-TIME HOMEBUYERS TO BUY A HOME
FHA plan will stimulate new home sales and help stabilize housing market
WASHINGTON - Speaking to the National Association of Home Builders Spring Board of
Directors Meeting, U.S. Housing and Urban Development Secretary Shaun Donovan
today announced that the Federal Housing Administration (FHA) will allow homebuyers
to apply the Obama Administration's new $8,000 first-time homebuyer tax credit toward
the purchase costs of a FHA-insured home. Donovan said that today's action will help
stabilize the nation's housing market by stimulating home sales across the country.
The American Recovery and Reinvestment Act of 2009 offers homebuyers a tax credit of
up to $8,000 for purchasing their first home. Families can only access this credit after
filing their tax returns with the IRS. 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
percent 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.
"We believe this is a real win for everyone," said Donovan. "Today, the Obama
Administration is taking another important step toward accelerating the recovery of the
nation's housing market. Families will now be able to apply their anticipated tax credit
toward their home purchase right away. At the same time we are putting safeguards in
place to ensure that consumers will be protected from unscrupulous lenders. What we're
doing today will not only help these families to purchase their first home but will present
an enormous benefit for communities struggling to deal with an oversupply of housing."
Currently, borrowers applying for an FHA-insured mortgage are required to make a
minimum 3.5 percent downpayment on the purchase of their home. Current law does not
permit approved lenders to monetize the tax credit to meet the required 3.5 percent
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. Buyers financing through state
Housing Finance Agencies and certain non-profits will be able to use the tax credit for
their downpayments via secondary financing provided by the HFA or non-profit. In
addition to the borrower's own cash investment, FHA allows parents, employers and
other governmental entities to contribute towards the downpayment. Today's action
permits the first-time homebuyer's anticipated tax credit under the Recovery Act to be
applied toward the family's home purchase right away. Unlike seller-funded
down-payment assistance, which was a vehicle for abuse, this program will allow
homebuyers to shop for the best home price and services using their anticipated tax
credit.
According to estimates by the National Association of Home Builders, the
Administration's homebuyer tax credit will stimulate 160,000 home sales across the
nation - 101,000 of which will be first-time buyers who will receive the credit. Another
59,000 existing homeowners will be able to buy another home because a first-time buyer
purchased their home. Given FHA's current market share, it's estimated that thousands
of families will be able to purchase a home by allowing the anticipated tax credit to be
applied toward their purchase together with an FHA-insured mortgage.
Homebuyers should beware of mortgage scams and carefully compare benefits and
costs when seeking out tax credit monetization services. Programs will vary from
organization to organization and borrowers should consider whether the services make
sense for them, as well as what company offers the most suitable and affordable option.
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.
HUD NEWS RELEASE