FHA-approved lenders received the go-ahead to develop bridge-loan products that enable first-time buyers to use the benefits of the federal tax credit upfront, according to guidance from the U.S. Department of Housing and Urban Development on so-called home buyer tax credit loans.
Although the HUD guidance allows the bridge loans to be used in conjunction with FHA first mortgage financing, few lenders are expected to create bridge-loan products. There are a number of reasons for this. First, the loans must be structured as personal loans rather than as second mortgages or mortgage-backed lines of credit because of statutory restrictions. Second, the limited time-frame of the tax credit program--it's set to expire before Dec. 1 of this year--leaves little time for lenders to set up and operate programs profitably.
Given these limitations, despite the announcement by HUD, the best opportunity for buyers to leverage the tax credit for up-front assistance is through programs set up by some state housing finance agencies. About a dozen state housing finance agencies (public bodies that are instrumentalities of state government) have developed their own tax credit bridge loan programs, so buyers in states whose HFAs offer such programs can monetize the tax credit upfront to cover all or part of their downpayment.
Information on the state HFAs that offer tax credit bridge loans is available at the Web site of the National Council of State Housing Agencies.
No comments:
Post a Comment