UPDATE UPDATE UPDATE
JEFF BELONGER wrote a fantastically superlative piece on this subject today (5/14/2009) highlighting the issues which were brought to light yesterday and gives updates that a essential to all agents, members of the NAR and not. It's a MUST READ!
That is incorrect, sort of. The tax credit cannot directly be used as down payment.
Specific HUD approved agencies may loan the money to the buyers as a second lien to the buyer. HUD approved lenders, like my Novation Mortgage, may offer a bridge second with no lien against the property in anticipation of the return of the funds at the time of the dispensation of the tax credit.
PLEASE STOP THE BAD INFO.
The Tax Credit CANNOT BE USED AS DOWN PAYMENT. It is a LOAN against the tax credt.
As a lender you are making a huge challenge of "well my agent says" for me and us - using incorrect verbiage.
Here's the Mortgagee letter in case some do not have it:
Read Section II starting on Page 2
UPDATE: It was obvious to me on 5/13 (yesterday) the information from NAR being repeated by agents was incorrect. Today the information is completely changed. Just another boggle in a new administration that needs to be curtailed.