First Time Home Buyers - Market Update

By now, most of you have heard that the New Housing and Economic Recovery Bill, which has just passed the House and the Senate, eliminates seller-funded down payment assistance with FHA transactions (Nehemiah, AmeriDream, Genesis) - effective October 1^st, 2008.

The new bill also includes an available tax refund of $7500 for first-time home buyers, who purchase by July 1, 2009. The refund, however, is really an interest-free loan, which must be paid back over 15 years in equal installments. It's not yet clear to us exactly when the buyer can get the money (prior to purchase? After filing tax return for year of purchase?).

FYI, there is some confusion over exactly when the door will officially be closed on the Down Payment Assistance Program. People are asking:

"Must the transaction be fully funded and closed by October 1^st, or is a borrower safe, as long as they have underwriting approval for the deal by Oct. 1?"

"Are we really talking September 30 as the deadline?"

On pages 479 - 481 of the bill, the elimination of down payment assistance is cited (SEC. 2113) with an end date of October 1, 2008. The specific language, however, states that the law "shall apply only to mortgages for which the mortgagee has issued credit approval for the borrower on or after October 1, 2008."

So...this indicates that loans not yet settled - but approved prior to October 1^st (meaning September 30 or earlier) - should be fine.

Here's a link to a an informative update from "getdownpayment.com", created and maintained by Nehemiah Corporation of America: http://www.getdownpayment.com/updates/legislativeinfo.asp

And, here's a link to a "Call to Action" campaign page by Nehemiah, which you may find interesting: http://capwiz.com/nehemia/issues/alert/?alertid=11709431

AmeriDream, Inc. has its own postings on the subject, as well: http://www.ameridream.org/