I recently posted that Secretary of HUD, Shaun Donovan, had announced that FHA was going to allow the $8,000 Tax Credit to be used as down payment, or "monetized" and got a lot of flack from the "experts" in the field that it had been withdrawn and that there was no way this was going to happen. At the time, I knew that the announcement was premature, but knowing what I believed was going on behind the scenes, was pretty certain that this actually would come about.

Today, a new "Mortgagee Letter" from HUD was published that announces the same program and gives some of the guidelines. Granted, the ability to use the money is still a bit of planning away, but this proves that the program will be in existance and that HUD really does want to see people have acces to this money for their down payment. Now, spread the word. By the time your clients find their home, have everything in place to buy it, the program will have the kinks worked out.....at least I hope it will. Unfortunately, being the government doing the job on this, they seem to have made it very strange. It appears that the buyer will still have to come up with the 3.5% down and use the tax credit for closing costs or additonal down payment. Stand by for details as all of this works out>

About the author: Fred Chamberlin is a Senior Mortgage Consultant with Alpine Mortgage Planning, Eugene OR and the author of three blogs, Eugene Loan Guy, FHA Loans Oregon and No Money Down OR WA CA. He is also a contributing member of Positive Real Estate Professionals and My FHA Mortgage Blog.