HOT OFF THE PRESS!

The US Department of Housing and Urban Development has released a letter today regarding all eligible for the First Time Home buyer Tax Credit of $8,000 as defined in The American Recovery and Reinvestment Act of 2009 (Recovery Act).

The letter goes on to give information on how the credit works and the latest update, per FHA defining its position, allowing it to be used towards the downpayment requirement for a home. This is achieved through several different ways – through a secondary lien on a property for the amount of the credit, this would mean that when the borrower received their credit check they use it to pay off the secondary lien. Another method discussed is the Purchase of a Tax Credit – this means that an entity can purchase the credit (subject to regulated fees and conditions) – this entity could be a local government organization, Federal or State level organization or private company. FHA will carry out strict due diligence on every organization.

This letter is of the greatest importance as statistics show that in 2008, 41% of all home purchases were made by first time homebuyers. In the first quarter of 2009, that number was 53% (according to NAR).

These new guidelines are definitely welcome allowing first time home buyers to take advantage of the credit in the most flexible way. Additionally, this document clears up any uncertainty and creates a structure to deal with the process with checks and balances.

Make sure to read a copy of the letter here.

We will bring you more detail as it is released!

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