HUD Pulls Letter Allowing for Monetization of $8,000 Tax Credit

By now this is old news and no surprise to those in the mortgage industry. It seems that when HUD Secretary Shaun Donovan announced the monetization of this tax credit so buyers could use it for their down-payments, he forgot to check with his own FHA lending guidelines. It's an idea that sounded good to a lot of people and could have helped the real estate recovery but would be; one, challenging to implement and two, difficult to sell the paper on the back end, i.e. monetize the tax credit and you may not be able to monetize the entire loan.

And, really, after everything we've been through in the last two years, should we be risking our fragile recovery by putting first time home-owners into homes they can barely afford with no money out of their own pockets? I think the HUD Secretary had good intentions and was bowing to political pressure - but this idea should stay on the shelf for now.

 

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