Can you get an advance on your FHA $8,000 tax credit for 2009?

by Craig
The latest buzz is that the first time homebuyer tax credit can maybe now be accessed in advance of you filing your taxes rather than wait till after you buy the home and then filing your taxes for the credit.  Sort of like getting an advance from your employer on your next paycheck.

So what happened was a letter was published that went to every lender in the country and was put on the HUD website for public viewing saying YES WE WILL ALLOW THIS (advance) ON YOUR FUTURE TAX CREDIT. This is the equivalent of the government saying we are going to MARS -- but we have not built the rocket yet to get us there.

Here was the exact wording that started the stir…

 “We all want to enable FHA consumers to access the tax credit funds when they close on their home loans so that the cash can be used as a down payment. So FHA will permit trusted FHA-approved lenders and HUD-approved nonprofits, as well as state and local governmental entities to "monetize" the tax credit through short-term bridge loans. 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. FHA will be publishing the details shortly.”

It seems like the program will happen but the vehicle to get the money from one governmental agency to the borrower and then have the IRS track it so they know you already got your tax credit in advance, has not really been figured out quite yet.  Who will give the money, how will the IRS track this “advance”, how will your lender get approval to accept your down payment from a govt agency or non profit, How do you apply for it, how long will it take to get you the money etc. etc.

People got so excited that they pulled the letter back off the HUD website until they figure out how to do it.

Here is a bulletin from one of the nations largest banks:

We have received numerous calls and emails requesting guidance on HUD’s recently released Mortgagee Letter 2009-15, which allows government agencies and other authorized entities, including FHA approved lenders, to offer either long-term secondary financing; or “short-term or bridge” loans secured by the anticipated tax credit for first time homebuyers established by the American Recovery and Reinvestment Act of 2009 (ARRA) for purchases and loan closings made prior to December 1, 2009. 

Please be advised that the Mortgagee Letter has been put on hold by HUD Secretary Donovan and has been removed from their website; therefore, until further guidance is received from HUD on using first-time homebuyer tax credits for the downpayment, We will not honor any loans where secondary financing, short-term or bridge loans were originated and secured on future first time homebuyer tax credits.

HUD's website, http://www.hud.gov/groups/lenders.cfm, provides handbooks and Mortgagee letters for the FHA loan program, as well as local information from regional homeownership centers (HOCs).  

Here is another great website that has a searchable feature so you can look up about anything relating to FHA loan questions http://www.fhaoutreach.gov/FHAFAQ/index.jsp  

Here is the pdf on the exact letter that went out then got pulled off the HUD website:
(attached)

Lastly here is a video you might want to see that tells a bit about this premature press release…
https://www.thinkbigworksmall.com/mypage/tbws/8608/856874