FHA/HUD Rescinds Tax Credit Monetization

I just received word today from Kimberly Kahl, the Executive Director for the National Association of Exclusive Buyer Agents that HUD has rescinded the monetization of the First Time Homebuyer Tax Credit.

From Kimberly's email today:


"According to contacts with both FHA and HUD, Mortgagee Letter 2009-15, which stated that first-time homebuyers would be allowed to use the tax credit for their downpayment, has been rescinded. On a phone call with FHA, I was told, "The mortgagee letter has been rescinded for the time being.” NAEBA President John Sullivan was told something similar when contacting HUD. Neither FHA nor HUD gave further details. If we hear anything further, we will let you know." --Kimberly Kahl, CAE --NAEBA Executive Director--


So close and yet so far! I hope HUD reconsiders. This was a great idea that could have helped many first time homebuyers.

FHA Close to Monetizing First Time Homebuyer Tax Credit!

In a video news report by Frank Garay and Brian Stevens of ThinkBigWorkSmall.com, they reported the news that HUD is getting close to allowing the monetization of the First Time Homebuyer Tax Credit. In his prepared remarks, Secretary of HUD, Shaun Donovan, cited an estimate by the National Association of Home Builders that this new 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.

When FHA allows the monetization of the new tax credit, this means that HUD will allow FHA-approved lenders, HUD-approved non-profits, as well as state and local governmental entities to "monetize" the tax credit through short term bridge loans. In short, the tax credit can become part of a homebuyers' down payment!