From a Lenders Perspective: Housing & Economic Recovery Act of 2008: HR-3221: The Housing Bill

I just got out of a training class yesterday from the corporate powers to be, and this is the layout of this new housing bill from my point of view.

1. Down Payment Assistance is going away September 30, 2008. Officially the funds will be available for a client who if is in final approval and under contract by September 30, 2008. This time frame is an area of a grey state of mind. Already our correspondent lending channels are interpreting this differently. My opinion is to have a contract and loan closed by 9/30/2008 so you take no chances of losing these down payment assistance funds. If you wait until the last minute to write the offer and try to close into October, you are taking a chance of interpretation by the lender on the date this starts. Of course any contract after October 1, 2008 signed will NOT be eligible for down payment assistance. I hope I made that clear as mud.

2. First-Time Home Buyer Tax Credit: I actually like this piece on the bill. The credit is available for first-time home buyers who purchase a home between April 9, 2008 and before July 1, 2009. The definition of a first-time home buyer is anyone who has not owned principal residence during the three year period prior to the purchase. The credit is up to $7,500.00 or 10% of the sales price capped at the $7,500.00. The income restrictions to qualify are $75,000.00 single Adjusted Gross Income or $150,000.00 Adjusted Gross Income. You can take the tax credit on the 2008 or 2009 tax return. Now the tax credit must be paid back, so it really works like an interest free loan from Uncle Sam.

3. Minor Changes to FHA. The down payment requirement starting October 1, 2008 will be 3.5%. Also the upfront FHA insurance and monthly premiums will be changing again on October 1, 2008, the chart is to come, we have not heard an actual amount yet.

On the lending side of things these are the basic changes. For questions, please feel free to call me.