I realize there is some confusion as HUD released Mortgagee Letter 2009-15 and then removed it from the FHA/HUD website. This announcement stated that qualified First-Time Home Buyers who want to take advantage of the available tax credit of up to $8,000 now have another option available to them to help them become homeowners and have access to the funds prior to closing.
I understand that some lenders are putting the news out that this is available but at this time Mortgagee Letter 2009-15 has been rescinded.
It's clear that first-time home buyers have been having a major impact on the housing market this year. The National Association of Realtors announced that first-time buyers, who typically account for less than 40% of home sales each year, have been especially busy...in March, homes that were purchased by first-timers accounted for 53% of all sales, and this percentage is expected to hold true for all of 2009.
With home affordability higher than ever, available tax credits and some of the lowest interest rates ever recorded for home loans, who can blame them? Particularly as a first-time buyer, there may never be a better time to buy a home than right now.
However, the availability of a tax credit, while a great incentive, does not put the money in the hands of a buyer before they buy. HUD's announcement now allowed for prospective and qualified home buyers to borrow the money from approved agencies and lenders prior to closing.
At this time there are still no details on what is happening. I believe we should see more news on this week so that we may have some clarity.
I am mot exactly sure what HUD was thinking by doing this. Obviously something happened that changed their mind. I am not sure that this is a good idea, However I hope that smarter people are making these decisions. I can only make my decision off what I see everyday as I work with first time home buyers. Please understand that my intentions is not that I don't want to help first time buyers out, but rather would like to see the industry continue to go down the path of responsible lending practices. If someone is not able to raise 3.5% for a down payment via gift or savings to purchase a home, I have concerns that they may not be able to overcome any hardship in the future. I understand the goal of this initiative is to assist the market with absorption of foreclosures and also help the dream of home ownership. The other way I look at this is if someone does not have the financial resources or wherewithal to come up with 3.5% what is going to happen to them if they get into financial trouble in the future? Do they not have family or friends to help them out?
One thing I have seen in my mortgage career is that for those that work for what they want - they can make it happen. Making sacrifices to get what you want is not new - just a time tested action plan that works and helps you to appreciate what you have. We are still coming out a time where this was not the case. Lets not go backwards.