HUD Mortgagee Letter 2009-15 REPEALED
I recently posted HUD’s mortgagee letter 2009-15. The letter was dated May 11, 2009. It stated that the $8,000 first-time home buyer credit (that’s, of course, not just for first-time home buyers) could be used as collateral allowing the buyer to borrow against the tax credit for the down payment. HUD has taken the letter off its website. My best guess on this is that borrowing against the tax credit violates longstanding FHA rules on that issue. Borrowers must come up with their downpayment on their own.
To avoid confusion I have deleted the letter from my blog. I suspect FHA rules will be quickly modified to allow the borrower to tap into the credit at closing. The $8,000 is a great incentive, but those who would typically qualify for this program tend to need cash for the downpayment. If they will be getting the credit when they file their taxes for that year, what harm would be caused by allowing them to access those funds when they really need them?
Hopefully, the letter will be quickly reinstated with some guidance from HUD and FHA. This reminds me of the saying, “We’re from the governrment and here to help.” Wouldn’t it be nice if it helped more than corporate America? But I digress…..
–Russ DeMott
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