FRAUD ALERT - Advice on the $8,000 first time homebuyers Tax Credit - Do you chance it???

 

 

Clarification before you read : Yes, you can use the tax credit as part of your downpayment. I have stated this before. If it comes from non-profit organizations or Federal, local, or state agencies. I mentioned this in my other blog, in the bullet points . But just from the few comments and some on facebook, you are missing the POINT. It’s fraud to apply for this tax credit through the IRS, prior to actually buying your home, if you receive the monies from the IRS DIRECTLY.  Please stop reading into HUD, downpayments, etc, etc and understand what is considered FRAUD by HUD and many lenders.

 

 

Do you take the plunge, possibly jeopardizing your career?  If a loan officer told you to jump off a bridge, would you?  You'll see my point below.

 

Who do you listen to?  Where do you get your information from? It's worse now than ever before. I once was able to tell a borrower or a realtor, if you didn't believe me, go call up 5 other loan officers. I would say this, because you would think that you would get at least 3 to 4 people giving you the same answer. PEOPLE.... this is not true anymore. I had two separate examples that took place that 3 out of 4 loan officers gave the same information that was 110% incorrect. Rut row... there goes my theory out the door.

What about all of this hype over the $8,000 first time homebuyers tax credit?  It's gotten way out of hand. I wrote this blog, Tax Credit for downpayment, it's GONE, the story of the $8,000 tax credit. You need to read many of the comments.  Here is a great example of what I am talking about.

 

 

 

Here are 2 examples from comments that I received by a realtor. Keeping in mind, I am not trying to throw them under the bus, but to help educate and bring awareness. How else do we learn and possibly not make mistakes that could be so costly.

 

Example 1 -

"From my understanding from 2 CPA's and mortgage lender that it CAN be done by applying for the credit prior to the closing with an accepted contract.  There are risks like not closing before November 30th.  But this can happen."

OUCH -  No, double ouch.  Okay, so she was able to talk to 2 CPA's and a loan officer that both confirmed this. Okay, so it might be legal from their standpoint. But what about HUD's standpoint and from many lenders and underwriters. Don't they actually have the final say in all of this?  YES, they do !!!

 

 

Example 2 -

"I just wrote up an offer and the loan officer told me that my buyer would be using some of the tax credit for the down payment. So I'm not rescinding my blog post just yet."

My question to this realtor...  What about your fiduciary responsibility to the buyer?  I received an e-mail from this person after asking the same question. Their response?  They know the letter was taken down, but they are looking for an official statement. Huh?  You think HUD or the NAR is going to say, "we screwed up."  ??? Why not call HUD yourself, be proactive.

 

 

In any case, let's study what the IRS says. Here is Form 5405 - The first time homebuyers tax credit form

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As you can see, letter be asks for the date aquired, but tells you to read the instructions. So let's go to that part of the instructions.

 

 

 

 

 

 

 

Wow... enter the date that you acquired the home.  Acquired?  Wouldn't that mean when you bought it and not when you are going to buy it? It states this right under the first sentence. So why are some CPA's, accountants, and loan officers stating that you can get the money before you buy, while still submitting this form. ???  Inquiring minds want to know.

 

Here is my opinion and some facts.  And you can ask such loan officers as Tom Burris and Gerry Suarez, because they have checked also with HUD and with several underwriters with different lenders. Who says what....

• HUD says that it's illegal and they recognize this. But wait, some lenders have allowed this and my buyer has already closed. Keep in mind that HUD still has to insure these loans, so maybe the "shit" will hit the fan in 6 months or so, since this is all still new.

• Underwriters - Gerry and myself have spoken to several underwriters at major lending institutions that have said they will not do this type of loan, if the buyer had received the monies from the IRS, if prior to closing on the home. Not unless it falls into another category. Those categories I have listed in the middle of this blog. Tax Credit - what is allowed prior to closing - Please go to my bullet points in this blog.  This is what is legal and how.

 

 

 

 

We need to stop the bad press. As you can see, this has gotten out of hand and everyone seems to be an expert. Yet, nobody is speaking to the correct experts. Be proactive. If not sure, call HUD yourself. Call a trusted loan officer/expert and not one that claims to be.

 

 

 

Lesson of the Day :   When you hear real estate related news stories, maybe you should check the sources and double check the stories. I could give you 10 examples of this just from what I have read in the last 5 months. As we say, "Buyer Beware"....  how about we say, Realtor/loan officer Beware !!!

 

 

 

 

 

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Experience & Knowledge at its BEST !!!

 

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For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Copyright © 2009 by Jeff Belonger