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liverichly
6079 Posts |
 Posted - 07/02/2009 : 11:04:19 AM
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I didn't see any mention of this before but TBW officially is accepting use of the $8k FTHB credit towards closing, here is their information:
HUD First-Time Homebuyer Tax Credit
HUD recently released Mortgagee Letter 2009-15 regarding the use of the First-Time Homebuyer Tax Credit. The program provides up to $8000 tax credit to qualified first-time homebuyers.
Although the program allows certain entities covered by Section 528 of the National Housing Act to use their current authority to offer tax credit advances with second liens, TB&W will not provide the second lien. The Second Lien must be provided by an FHA approved non-profit agency or Federal, State, or Local government agency or instrumentality.
Use and approval of the first-time homebuyer tax credit is the responsibility of the entity providing the secondary financing. All documentation must be submitted to the entity providing the secondary financing. TB&W will only approve the use of the secondary financing being provided by the approved entity.
TB&W will begin to accept this type of secondary financing immediately. |
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CoralSnake
12474 Posts |
Posted - 07/02/2009 : 11:14:41 AM
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| So the question remains- who is funding the 8k? |
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liverichly
6079 Posts |
Posted - 07/02/2009 : 11:19:06 AM
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| Well, at least Part B is figured out... just need Part A. |
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KipW
933 Posts |
Posted - 07/02/2009 : 11:32:53 AM
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quote:
Originally posted by CoralSnake
So the question remains- who is funding the 8k?
http://www.ncsha.org/section.cfm/3/34/2920 |
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jjohns
60 Posts |
Posted - 07/02/2009 : 12:08:09 PM
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| Do they lend outside of Colorado Kip? |
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KipW
933 Posts |
Posted - 07/02/2009 : 1:15:33 PM
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Look further down and you will see a total of 13 states at the time.
Other states are said to be in the process of implementing this program. |
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kevinloans
592 Posts |
Posted - 07/02/2009 : 1:46:35 PM
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so they don't allow it in CA yet?
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kellamtom
1163 Posts |
Posted - 07/02/2009 : 6:12:05 PM
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| the borrower still needs the 3.5 into the transaction, so i say just keep the 8k and get the seller to pay the closing cost |
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Ebby
36 Posts |
Posted - 07/06/2009 : 10:16:06 AM
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quote:
Originally posted by kellamtom
the borrower still needs the 3.5 into the transaction, so i say just keep the 8k and get the seller to pay the closing cost
According to who? HUD allows the credit to be used for down payment, as does IRS...so is it just the lenders/investors that won't let it be used for the down payment? |
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eddieinab
681 Posts |
Posted - 07/06/2009 : 10:21:57 AM
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| FHA won't and many lenders a placing overlays to prevent the client from NOT having 3.5% of "skin in the game"! |
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Ebby
36 Posts |
Posted - 07/06/2009 : 10:58:26 AM
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Well according to HUD mortgagee letter 2009-15 (dated 5/15/09), FHA not only allows the credit to be used for down payment, but allows seconds to be done for the credit in advance.
So it's just the lenders that won't allow it. Or am I missing something?
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liverichly
6079 Posts |
Posted - 07/06/2009 : 11:00:42 AM
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quote:
Originally posted by Ebby
Well according to HUD mortgagee letter 2009-15 (dated 5/15/09), FHA not only allows the credit to be used for down payment, but allows seconds to be done for the credit in advance.
So it's just the lenders that won't allow it. Or am I missing something?
You are missing the part in that mortgagee letter that states:
• Pursuant to 12 U.S.C. 1709(b)(9), the homebuyer’s downpayment required for eligibility for FHA insurance may not consist of any funds (including funds derived from a sale of the homebuyer tax credit) provided by the mortgagee, the seller, or any other person or entity that financially benefits from the transaction (or by any third party or entity that is reimbursed, directly or indirectly, by the financially benefiting person or entity). Accordingly, the proceeds of the sale of the tax credit to FHA approved mortgagees, the seller, or any other person or entity that financially benefits from the transaction (or any third party or entity that is reimbursed, directly or indirectly, by the financing benefiting person or entity), may not be used to meet the 3.5% minimum downpayment, but may be used as additional downpayment, buying down of interest rate, or other closing costs |
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eddieinab
681 Posts |
Posted - 07/06/2009 : 11:21:10 AM
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| Nice Job Shane! |
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bpmurtiff
48 Posts |
Posted - 07/06/2009 : 11:55:50 AM
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| ultimately, the $8k is sent to the borrower, thus leaving a gaping hole in the likelihood that the bank gets the funds back. Who want's to be first? |
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Ebby
36 Posts |
Posted - 07/06/2009 : 4:07:37 PM
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quote:
Originally posted by liverichly
quote:
Originally posted by Ebby
Well according to HUD mortgagee letter 2009-15 (dated 5/15/09), FHA not only allows the credit to be used for down payment, but allows seconds to be done for the credit in advance.
So it's just the lenders that won't allow it. Or am I missing something?
You are missing the part in that mortgagee letter that states:
• Pursuant to 12 U.S.C. 1709(b)(9), the homebuyer’s downpayment required for eligibility for FHA insurance may not consist of any funds (including funds derived from a sale of the homebuyer tax credit) provided by the mortgagee, the seller, or any other person or entity that financially benefits from the transaction (or by any third party or entity that is reimbursed, directly or indirectly, by the financially benefiting person or entity). Accordingly, the proceeds of the sale of the tax credit to FHA approved mortgagees, the seller, or any other person or entity that financially benefits from the transaction (or any third party or entity that is reimbursed, directly or indirectly, by the financing benefiting person or entity), may not be used to meet the 3.5% minimum downpayment, but may be used as additional downpayment, buying down of interest rate, or other closing costs
That only applies to purchases of the tax credit, not to secondary financing:
Secondary Financing
Consistent with existing FHA policy, FHA will permit entities covered by Section 528 of the National Housing Act to use the current authority to offer tax credit advances with second liens in a manner consistent with the requirements in 12 U.S.C. 1709(b)(9). Eligible government agencies and instrumentalities of government are described in handbook HUD-4155.1 5.C3 and 5.C4.
Conditions:
• The tax credit advance, when combined with the FHA-insured first mortgage may not result in cash back to the borrower.
• The second lien may not exceed the total amount needed for the down payment, closing costs, and prepaid expenses.• Secondary financing may be “soft” (silent) or require a monthly repayment.
• If payments are required, they must be included within the qualifying ratios and, when combined with the first mortgage, cannot exceed the borrower’s reasonable ability to pay.
• Payments must be deferred for at least 36 months to not be included in the qualifying ratios.
• If the tax credit advance loan has a short term for repayment, it must also provide that if the borrower fails to repay by the designated deadline, principal and interest payments begin automatically or the loan converts to a “soft” second.
• The secondary financing may not require a balloon payment before ten years.
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Ebby
36 Posts |
Posted - 07/06/2009 : 4:13:01 PM
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Sorry, I forgot to add that several states have these things set up; Florida's went into effect 7/1/09.
Which I guess answers my original question: The lenders/investors, only, are not allowing people to borrow their own money for down payment. |
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davidfr
2245 Posts |
Posted - 07/06/2009 : 4:33:45 PM
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quote:
Originally posted by Ebby
Sorry, I forgot to add that several states have these things set up; Florida's went into effect 7/1/09.
Which I guess answers my original question: The lenders/investors, only, are not allowing people to borrow their own money for down payment.
Do you have any info about this you can post? |
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Ebby
36 Posts |
Posted - 07/06/2009 : 6:56:39 PM
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| http://www.floridahousing.org/Home/HousingPartners/LocalGovernments/FL_HOP.htm |
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Ebby
36 Posts |
Posted - 07/06/2009 : 7:00:48 PM
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This one has the date. http://www.floridarealtors.org/NewsAndEvents/n1-070109.cfm
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nowbroker
2588 Posts |
Posted - 07/09/2009 : 10:33:27 AM
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Just got a memo from Flagstar, they will also allow the $8,000 credit to be used for down payment and closing costs, subject to the proper program from a non-profit. Here is the wording:
GOVERNMENT ENTITIES AND INSTRUMENTALITIES OF GOVERNMENT
The American Recovery and Reinvestment Act of 2009 provides a tax credit of up to $8000.00 to
first-time homebuyers who purchase a home on or before November 30, 2009. Government entities
and FHA-approved non-profit agencies that are considered instrumentalities of government may
provide tax credit advances with a second lien. The tax credit advance may be used to make the
down payment and pay closing costs, discount points and pre-paid expenses.
Consistent with existing FHA Policy, Flagstar will allow tax credit advances with second liens from
eligible governmental agencies and instrumentalities of government as long as the organization is
also on Flagstar’s list of eligible community second programs. To make certain a non-profit agency
is both FHA-approved and an instrumentality of government, refer to the appropriate homeownership
center’s list of approved non-profit agencies.
CONDITIONS
#56256;#56510; Tax credit may not result in cash back to the borrower
#56256;#56510; Amount of tax credit may not exceed the total of the down payment, closing costs, discount
points and pre-paid expenses
#56256;#56510; Second liens may be silent or require a monthly payment
#56256;#56510; To be excluded from the ratios, payments must be deferred at least 36 months
#56256;#56510; Payments included in the ratios must not exceed the borrower’s ability to pay
#56256;#56510; Second lien must not require a balloon payment before ten years
#56256;#56510; If the tax credit advance has a short term for repayment, it must require principal and interest
payments to begin if the borrower fails to repay the loan by the designated date
#56256;#56510; The source, amount and repayment terms must be included in the file, and the borrower must
acknowledge on the second lien note and mortgage that he or she understands and agrees to
the term
PURCHASE OF TAX CREDIT
While FHA also allows approved mortgagees to “purchase” the tax credit to provide closing cost and
pre-paid expense assistance, Flagstar Bank is not purchasing any tax credits and will not allow any
credit other than from government entities and instrumentalities of government.
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regineia
405 Posts |
Posted - 07/09/2009 : 11:18:47 AM
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| WHICH LENDER ARE DOING THIS? |
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ShamWow
171 Posts |
Posted - 07/09/2009 : 11:32:40 AM
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quote:
Originally posted by regineia
WHICH LENDER ARE DOING THIS?
The lenders who are doing this are listed above. The problem is finding an entity to fund the actual Tax Credit. To be used in place of the 3.5% FHA requires down it must be a state, local or federal entity who will assume the 2nd lien position on the loan. Otherwise your client will still need the 3.5% down. |
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