$8,000 Tax Credit not to be used for Down Payment
I posted some information last week on the blog regarding talks about the possibility of using the Government’s $8,000 tax credit as a down payment. Unfortunately those talks were quickly extinguished. Please see articel below that was posted early this week.
Federal officials on Monday reversed an earlier decision to allow first-time home buyers to use an $8,000 tax credit to borrow the down payment on a home. A week earlier, U.S. Department of Housing and Urban Development Secretary Shaun Donovan had told the National Association of Home Builders that HUD would let banks and local governments offer short-term “bridge loans” to cover the down payment for first-time buyers eligible for the tax credit. The loans would have been available to applicants for federally insured mortgages such as Federal Housing Administration loans.
Lenders, home builders and real- estate agents had reacted favorably to the bridge-loan proposal, saying it would open up the housing market to more first-time buyers.
However, not everyone was in favor of using the tax credit as collateral on a down-payment loan.
“That tax credit should be savings, not debt,” said Patricia Garcia-Duarte, executive director (of Neighborhood Housing Services in Phoenix)
http://www.azcentral.com/arizonarepublic/business/articles/2009/05/18/20090518biz-downpayment0519.html#). Garcia-Duarte said the proposal too closely resembled a now-illegal practice known as seller-funded down-payment assistance, which allowed a home’s seller to “gift” the down payment to a specific buyer through a non-profit organization (
http://www.azcentral.com/arizonarepublic/business/articles/2009/05/18/20090518biz-downpayment0519.html# Phoenix loan originator Dean Wegner was among the housing-industry professionals who had expressed enthusiasm about the bridge-loan plan. Wegner said the program would have boosted local home sales, but he added that the bridge loans likely would have come with a high interest rate