REALTOR® Insider DC News and Events Report
HUD Announces Guidance for Use of Tax Credit on FHA Loans
Environment Report
Homeowners' Insurance Bill Reintroduced
Federal Tax Report
Bills Introduced to Extend, Expand Homebuyer Tax Credit
Housing Report
High Volume May Impact Approval Time for Rural Development Loans
HUD Announces Guidance for Use of Tax Credit on FHA Loans
In his speech at the National Association of REALTORS® Housing Summit on May 12, 2009, US Department of Housing and Urban Development (HUD) Secretary Shaun Donovan announced a program that allows borrowers to use the first-time homebuyer tax credit for a down payment or closing costs on a FHA-insured mortgage. The Secretary said "We think the policy is a real win for everyone, ensuring that borrowers can tap into the numerous organizations that are already part of the FHA network to receive this additional benefit."
The details of the program were announced today in Mortgagee Letter 2009-15. Government entities and instrumentalities of government may provide a second mortgage. Currently, 10 state housing finance agencies offer a product buyers can use that will effectively monetize the tax credit for down payment purposes. These states are Colorado, Delaware, Idaho, Kentucky, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, and Tennessee. State Associations are encouraged to work with their respective housing finance agency to implement similar programs. The 3.5 percent down payment may also be a gift from a family member, employer or nonprofit, charitable organization.
The original guidance permitted lenders and HUD-approved nonprofits and lenders to offer bridge loans via second lien financing or short term loans. Guidance released today allows lenders to offer the monetized tax credit for down payments in excess of 3.5 percent, closing costs and interest rate buy downs. Mortgage industry leaders have indicated that this type of product may not be immediately available to consumers. Lenders will need some time to develop documentation for what will effectively be personal loans to the home buyer.
Mortgagee Letter 2009-15: Using First-Time Homebuyer Tax Credits
NCSHA State HFA Programs
Jerome Nagy 202-383-1233, Megan Booth 202-383-1222
back to top
Homeowners' Insurance Bill Reintroduced
Rep. Ron Klein (D-Fla.) introduced H.R. 2555, the Homeowners' Defense Act to reduce the cost and increase the availability of homeowner's insurance for natural catastrophe. This proposal, which builds on legislation approved by the House of Representatives in 2007, establishes a federal backstop for state-based reinsurance funds. This year, the bill's prospects have improved as President Obama supports the concept. NAR supported the previous version of the legislation as one of many ways to advance the broader congressional debate over natural disaster insurance, and is carefully reviewing this latest iteration for consistency with NAR policy. Mr. Klein offers a more detailed description and link to the bill itself on his legislative website.
View a detailed description of the bill
Austin Perez 202-383-1046, Helen Devlin 202-383-7559, Russell Riggs 202-383-1259
back to top
Bills Introduced to Extend, Expand Homebuyer Tax Credit
Several House members have introduced bills reflecting their support for the homebuyer tax credit and urging that it be expanded and extended. NAR is saluting their efforts, but has not endorsed any particular approach. The bills have differing details, but, taken together, all would have beneficial effects on the housing market. NAR anticipates additional bills in the near future. The bills introduced so far:
- H.R. 2562: Ron Kind (D-WI) and 3 bipartisan cosponsors. The bill extends the tax credit through December 1, 2010, but limits the extension to individuals who served for 3 months or more in the military during 2009.
- H.R. 2606: Eddie Bernice Johnson (D-TX). The bill expands the credit to all purchasers, not just first-time purchasers. The bill extends the credit through December 31, 2010. Her bill also eliminates the repayment feature that applies to the $7500 2008 tax credit.
- H.R. 2619: Kenny Marchant (R-TX). The bill makes the credit available to all purchasers and also extends the credit through June 30, 2010. The bill also provides a temporary $3000 tax credit that has the effect of refunding the closing costs associated with refinancing a mortgage, so long as the refinanced amount was no greater than the outstanding balance on the mortgage being refinanced.
Linda Goold 202-383-1083, Megan Booth 202-383-1222, Kenneth Trepeta 202-383-1294
back to top
High Volume May Impact Approval Time for Rural Development Loans
Rural Development announced that many state and field offices are encountering record high volume of new loan activity for the Single Family Housing Guaranteed Loan Program (SFHGLP). Because of this, delivery of new loan approvals within the standard 48-hour turnaround time may not be met by Rural Development in all cases. Rural Development staff must review each loan commitment request to determine eligibility for the SFHGLP as part of the quality control process. Rural Development staff must also issue final Loan Note Guarantees on these same files after loan closing, upon receipt of the Lender's closing package. Rural Development recognizes the importance of expediting all requests for loan approvals (Conditional Commitments) and Loan Note Guarantees and will work to ensure they occur in a timely and accurate manner.
USDA Rural Development
Megan Booth 202-383-1222, Kenneth Trepeta 202-383-1294
back to top
Go to archived weekly reports >>
Last Updated: 05/29/2009 Bira de Aquino
