The first month of the new HVCC appraisal rules have certainly been entertaining. A petition is circulating, http://www.hvccpetition.com/ . Everyone in Real Estate should sign this even if you think the new rules are a good idea, that means you Mr. Cuomo because this thing is FUBAR. Here's some of the text ( not of my own making ) from an email I received and forwarded to my sphere of influence last Friday:
This is NOT an Appraisal problem, it's an APPRAISER issue. Regulating the entire industry at a higher cost to the consumer is not a better answer than dealing with the "Few" appraisers or lenders who are not ethical and/or following the current rules. HVCC has created an environment where inexperienced appraisers are completing substandard work with a middle man (AMC's) adding no value to the process. The entire HVCC process results in poor service, poor appraisals and slower turn times for the consumer.
It was a long email but it had some great points. One in particular, the "system" doesn't work, period. If a lender is relying on an AMC then they are continuing the problem. A broker I used to work for said today his appraiser is still getting orders demanding a specific value or the deal won't "work". Exactly the thing that was supposed to be stopped.
All of us are now dealing with long order times, flat out rejection of orders, or having reports generated by an appraiser from out of the area. This last issue is especially troubling because of a value is being established by someone that is unfamiliar with the market. This isn't a new problem, it was happening before. It's just magnified by the restrictions in the new rules.
Appraisers coming from scores of miles away where they likely don't have access to the MLS system to determine sold values. And even if they do have access to the local MLS an out of town appraiser won't have an understanding of the subject property's market. The appraiser in closest proximity to the subject property is supposed to get the order. But if a lender doesn't have an appraiser in their system that is located in the same town as the subject home then an out of towner gets the work. Agents love getting phone calls from out of town appraisers. Go ahead ask one about that, it will be a lively conversation.
No doubt there was abuse, collusion and other nasty things going on before. Thanks to WAMU, Countrywide and their respective wholly owned appraisal companies for making every one's life a little more difficult than it should be. If it wasn't for these two (now extinct) company's abuses Loan Officers would still be able to manage one of the most important parts of a transaction. HVCC has outlawed communication between loan officer and appraiser. Sign the petition, write your congressional representative. HVCC is a knee jerk reaction.
Tuesday, June 9, 2009
Saturday, May 30, 2009
Tax Credit as a down payment part 5...FHA Get's a Clue
The way the roll out of how HUD was going to allow the use of the tax credit as a down payment prompted me to joke that Gilligan was going to be the next Secretary of HUD and The Skipper would be put at the helm of FHA. While I still maintain that HUD is a dysfunctional bureaucracy it is refreshing to see that someone(s) in there realized that a free for all use of these funds was not a good idea.
Here's the link to HUD's website, read the mortgagee letter for yourself, you will see that this alleged final version is quite a distance from Sec. Donavan's announcement to the NAR a couple of weeks ago; http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/09-15ml.doc .
News media and other bloggers, me included, are all over this announcement. I want to thank Dan Allen ( http://theallenteam.yourkwagent.com/ ) at Keller Williams Mid Willamette for the tip early Friday morning on this.
The one thing that everyone needs to know is that the borrower will still need to come to the table with the minimum 3.5% down. This credit cannot be used to get a borrower to 100% financing, oh thank goodness. There are a specific set of conditions that need to be followed in connection with this credit. In order to make these funds available at the close of escrow the tax credit has to be monetized. So the borrower will need to take out a second lien or "sell" their tax credit in order to use the funds.
So who is going to carry the second lien? Who can a borrower sell their credit to to get at this money? Good questions, that don't have answers yet, these are certainly not addressed in the mortgagee letter. All the policy announcement states are the conditions under which it can be done. It's these two questions that will determine how long it will be before this is actually implemented by lenders...my guess, 4 to 6 weeks before lenders get this all figured out.
One other item to note. Just because this policy is out doesn't mean every non profit, governmental agency or lender has to participate. And, although 17 states have or are working on implementing this doesn't mean the other 33 states will. Neighborhood Housing entities run by municipalities and established non profits will be the only source of accurate information on this that I would rely on. For now, watch for the scammers there is plenty of money to be made off of people that won't understand what this policy is all about. The usual suspects in my market area ( LOs that have already marketed this, you know who you are ) are making this sound like it needs to be done today. As in Part 1 of this series, I say wait for it. You won't be disappointed.
Here's the link to HUD's website, read the mortgagee letter for yourself, you will see that this alleged final version is quite a distance from Sec. Donavan's announcement to the NAR a couple of weeks ago; http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/09-15ml.doc .
News media and other bloggers, me included, are all over this announcement. I want to thank Dan Allen ( http://theallenteam.yourkwagent.com/ ) at Keller Williams Mid Willamette for the tip early Friday morning on this.
The one thing that everyone needs to know is that the borrower will still need to come to the table with the minimum 3.5% down. This credit cannot be used to get a borrower to 100% financing, oh thank goodness. There are a specific set of conditions that need to be followed in connection with this credit. In order to make these funds available at the close of escrow the tax credit has to be monetized. So the borrower will need to take out a second lien or "sell" their tax credit in order to use the funds.
So who is going to carry the second lien? Who can a borrower sell their credit to to get at this money? Good questions, that don't have answers yet, these are certainly not addressed in the mortgagee letter. All the policy announcement states are the conditions under which it can be done. It's these two questions that will determine how long it will be before this is actually implemented by lenders...my guess, 4 to 6 weeks before lenders get this all figured out.
One other item to note. Just because this policy is out doesn't mean every non profit, governmental agency or lender has to participate. And, although 17 states have or are working on implementing this doesn't mean the other 33 states will. Neighborhood Housing entities run by municipalities and established non profits will be the only source of accurate information on this that I would rely on. For now, watch for the scammers there is plenty of money to be made off of people that won't understand what this policy is all about. The usual suspects in my market area ( LOs that have already marketed this, you know who you are ) are making this sound like it needs to be done today. As in Part 1 of this series, I say wait for it. You won't be disappointed.
Thursday, May 28, 2009
Appraisals, Appraisal Reviews and the New World Order of Closing a Deal
Several closed loans and many conversations with RE agents got me to thinking ( Thanks specifically to Ric Vega, http://ricvega.com/ and Don Bartley at Keller Williams Mid Willamette) about how most buyers have dealt with the issue of appraised value in a RE deal. In the past, borrowers of mine have followed the same pattern: 1, gets an offer accepted, 2, has "x" number of days to complete inspections, 3, negotiates any issue(s) that come up and then, 4, orders the appraisal. The logic was, why spend money on an appraisal if the deal was going to die because the house was a piece of crap. Appraisal gets done, value is at, above or just a wee under sales price...done, buyer has a new home.
Fast forward to 2009. Lenders are bashing on the one last thing that is available, the collateral. In order to be able to sell loans on the secondary market ( or even have the option to at a later time ) lenders must be able to say with more surety than ever that the loans they are doing will not go bad. The pressure on lenders to do their due diligence on a loan is more extreme than many may realize. This is nothing as obvious as qualifying a borrower on income, assets and credit history. Those restrictions, while frustrating to all those who participated in a deal facilitated by a stated income loan in the past, are going to be nothing compared to this. I would suggest we all come to grips really, really soon with the terms "Insufficient Collateral" or "Reduced Value".
Examples? Sure; a re finance client from another lender with 800 FICO scores, a 9% debt to income ratio and 85 months of payment reserves denied on a 50% loan to value transaction. This is what was known as a "make sense" deal. Not any more. A comment by the borrower was, " They wouldn't do a loan for me because they said they wouldn't be able to sell my property when they foreclosed on us. We are never going to miss payment!" A value reduced 15% by a review appraiser from the original value. Used 2 of the same comps but reduced the value of the subject by $5000 because it had a less superior view, both properties are in a residential neighborhood. Did the comp have a view of the neighbor ladies changing room? That could be construed as a superior view by some, but I don't know that it's worth 5 grand.
From my perspective we are seeing another manipulation of values. One that may do more harm than good. The first one, the restrictions on borrower credit, was in reality a very reasonable step to take. But now we are seeing the restriction of credit based on automated criteria in computer models for the valuation of a subject property. The use of Automated Valuation Models is the primary determinant if an appraised value will be subject to additional review. All by itself this has the potential to drive values even farther down than they would fall as a result of normal market forces. It's another vicious cycle that could kill a lot of deals late in the game. The issue will now be that sales transactions will be more likely to fail due to appraisal issues rather than inspection ones.
The reliance on AVMs is understandable, on the surface anyway. Taking the human element out of the valuation process removes any possibility of fraud or other nasty bad things that could happen. These systems are likely to be very robust in their analysis. After all, automated underwriting systems have made all approved loans non defaultable, right? But as with all computer models, garbage in, garbage out. In states where sales prices do not have to be recorded accurately ( or at all ) the quality of the information is at best suspect. Yet, lenders AND investors in mortgages rely on AVMs to quantify the risk associated with a particular property's value. I have argued, successfully and unsuccessfully against their use. For now, the battle continues.
My solution is to suggest the reversal in the order of inspection / appraisal regimen. The borrower should order the appraisal first, see if any value issues arise that may cause them to renegotiate or walk away from their contract, then order the inspection. After all, the appraiser will note any grossly obvious defects in the home that the inspection will no doubt flesh out. For the seller, well you guys are pretty well hosed right now, whether you think so or not. May as well get the really bad stuff out of the way early. Any seller that thinks they can dig their heals in on "their" price better take a look around and have their listing agent to give it to them straight. The first offer you get will be the best and highest one you will get, better take it and hope the borrower's lender doesn't come in and make your listing agent's CMA look like doody.
Fast forward to 2009. Lenders are bashing on the one last thing that is available, the collateral. In order to be able to sell loans on the secondary market ( or even have the option to at a later time ) lenders must be able to say with more surety than ever that the loans they are doing will not go bad. The pressure on lenders to do their due diligence on a loan is more extreme than many may realize. This is nothing as obvious as qualifying a borrower on income, assets and credit history. Those restrictions, while frustrating to all those who participated in a deal facilitated by a stated income loan in the past, are going to be nothing compared to this. I would suggest we all come to grips really, really soon with the terms "Insufficient Collateral" or "Reduced Value".
Examples? Sure; a re finance client from another lender with 800 FICO scores, a 9% debt to income ratio and 85 months of payment reserves denied on a 50% loan to value transaction. This is what was known as a "make sense" deal. Not any more. A comment by the borrower was, " They wouldn't do a loan for me because they said they wouldn't be able to sell my property when they foreclosed on us. We are never going to miss payment!" A value reduced 15% by a review appraiser from the original value. Used 2 of the same comps but reduced the value of the subject by $5000 because it had a less superior view, both properties are in a residential neighborhood. Did the comp have a view of the neighbor ladies changing room? That could be construed as a superior view by some, but I don't know that it's worth 5 grand.
From my perspective we are seeing another manipulation of values. One that may do more harm than good. The first one, the restrictions on borrower credit, was in reality a very reasonable step to take. But now we are seeing the restriction of credit based on automated criteria in computer models for the valuation of a subject property. The use of Automated Valuation Models is the primary determinant if an appraised value will be subject to additional review. All by itself this has the potential to drive values even farther down than they would fall as a result of normal market forces. It's another vicious cycle that could kill a lot of deals late in the game. The issue will now be that sales transactions will be more likely to fail due to appraisal issues rather than inspection ones.
The reliance on AVMs is understandable, on the surface anyway. Taking the human element out of the valuation process removes any possibility of fraud or other nasty bad things that could happen. These systems are likely to be very robust in their analysis. After all, automated underwriting systems have made all approved loans non defaultable, right? But as with all computer models, garbage in, garbage out. In states where sales prices do not have to be recorded accurately ( or at all ) the quality of the information is at best suspect. Yet, lenders AND investors in mortgages rely on AVMs to quantify the risk associated with a particular property's value. I have argued, successfully and unsuccessfully against their use. For now, the battle continues.
My solution is to suggest the reversal in the order of inspection / appraisal regimen. The borrower should order the appraisal first, see if any value issues arise that may cause them to renegotiate or walk away from their contract, then order the inspection. After all, the appraiser will note any grossly obvious defects in the home that the inspection will no doubt flesh out. For the seller, well you guys are pretty well hosed right now, whether you think so or not. May as well get the really bad stuff out of the way early. Any seller that thinks they can dig their heals in on "their" price better take a look around and have their listing agent to give it to them straight. The first offer you get will be the best and highest one you will get, better take it and hope the borrower's lender doesn't come in and make your listing agent's CMA look like doody.
Thursday, May 21, 2009
Tax Credit as a down payment part 4...An alternative announcement from HUD
The same reporter from the Arizona Republic that was the source for my post on Tuesday has updated his article! Not really sure how the guy was able to publish an article that wasn't fact checked by his editor before it was published is a different subject altogether.
What a load. If HUD can't even manage the announcements relating to this fairly significant policy change how can we expect that the entire thing will actually be thought through. Mortgagee Letter 09-15 should have never been released.
Maybe this could be used as an alternative announcement:
Attention all first time home buyers..
We, at HUD, really want to help you out when you buy your first home. We really, really do. In an effort to stimulate the housing market, despite the consequences, we have decided to bow to all the lobbying efforts of the home builders and the NAR.
Starting June 1, 2009 all you need to do is call us at 1-800-GET- CASH. Tell us why you think we should send you tax payer money and you will get a check, it's that easy.
We figure we have lost so much money already a few extra billion won't be too hard to explain. Of course, if you would like to make a donation to our cause please call 1-800-VACUUM. We accept donations in all currencies except US $'s.
I completely understand the motivation for the first and second versions of the 1st time buyer's credits. From my perspective it has gone as advertised. Personally, I have seen more interest from 1st timers since late 2008 than I had in the past 4 years in the business. I don't specifically market to that segment, so for me to have an uptick says that it was working.
As it is right now the program makes sense. Put a little skin in the game now, get a nice little nut from Uncle Sam next April. It is an established fact, when people put their own money into a deal they are less likely to default on a loan. Did I mention that the existing program works?
The housing market is still experiencing pain, OK mostly the sellers. It is called a business cycle for a reason, we cycle up AND down. I am really confused why there are attempts to bring the market back to a place that is even in the vicinity of where we were a year and a half ago. There are a number of people suffering from the effects of it now.
Simply put what we have going on now is an effort to manipulate the RE market by HUD. I don't think we need it.
What a load. If HUD can't even manage the announcements relating to this fairly significant policy change how can we expect that the entire thing will actually be thought through. Mortgagee Letter 09-15 should have never been released.
Maybe this could be used as an alternative announcement:
Attention all first time home buyers..
We, at HUD, really want to help you out when you buy your first home. We really, really do. In an effort to stimulate the housing market, despite the consequences, we have decided to bow to all the lobbying efforts of the home builders and the NAR.
Starting June 1, 2009 all you need to do is call us at 1-800-GET- CASH. Tell us why you think we should send you tax payer money and you will get a check, it's that easy.
We figure we have lost so much money already a few extra billion won't be too hard to explain. Of course, if you would like to make a donation to our cause please call 1-800-VACUUM. We accept donations in all currencies except US $'s.
I completely understand the motivation for the first and second versions of the 1st time buyer's credits. From my perspective it has gone as advertised. Personally, I have seen more interest from 1st timers since late 2008 than I had in the past 4 years in the business. I don't specifically market to that segment, so for me to have an uptick says that it was working.
As it is right now the program makes sense. Put a little skin in the game now, get a nice little nut from Uncle Sam next April. It is an established fact, when people put their own money into a deal they are less likely to default on a loan. Did I mention that the existing program works?
The housing market is still experiencing pain, OK mostly the sellers. It is called a business cycle for a reason, we cycle up AND down. I am really confused why there are attempts to bring the market back to a place that is even in the vicinity of where we were a year and a half ago. There are a number of people suffering from the effects of it now.
Simply put what we have going on now is an effort to manipulate the RE market by HUD. I don't think we need it.
Tuesday, May 19, 2009
Bye Bye Tax credit Down Payment..Sanity Rules at FHA?
Under the heading of something that was too good to be true:
Tax credit ineligible for down payment
Feds reverse rule to assist first-time home buyers
by J. Craig Anderson - May. 19, 2009 12:00 AM The Arizona Republic
Federal officials on Monday reversed an earlier decision to allow first-time home buyers to use an $8,000 tax credit to borrow the down payment on a home.
A week earlier, U.S. Department of Housing and Urban Development Secretary Shaun Donovan had told the National Association of Home Builders that HUD would let banks and local governments offer short-term "bridge loans" to cover the down payment for first-time buyers eligible for the tax credit. The loans would have been available to applicants for federally insured mortgages such as Federal Housing Administration loans.
Lenders, home builders and real- estate agents had reacted favorably to the bridge-loan proposal, saying it would open up the housing market to more first-time buyers.
However, not everyone was in favor of using the tax credit as collateral on a down-payment loan.
"That tax credit should be savings, not debt," said Patricia Garcia-Duarte, executive director of Neighborhood Housing Services in Phoenix.
Garcia-Duarte said the proposal too closely resembled a now-illegal practice known as seller-funded down-payment assistance, which allowed a home's seller to "gift" the down payment to a specific buyer through a non-profit organization.
The loans also could have created income-tax issues, according to the IRS officials who shot down HUD's plan.
Well, well what a surprise! At least there are some sane decisions being made at FHA. So let's recap who wanted this..
Builders....check! Gotta get rid of that pesky inventory that is costing them interest payments every month
RE Agents..check! Gotta get after those first timers 'cause nobody else is even looking in some markets.
Lenders.. how about we change that to LOs looking to make a score. Some that still haven't figured out how to do a loan that isn't stated. Certainly not this one and many others that actually thought this through ( see my post from last week). I redacted part of the post that announced this. There is a quote from an LO that pointed out what I have, it was a bad idea, a very bad idea.
Bridge loan, too funny. First timers are the least educated group of buyers out there and most often need to be walked through the whole process. Not only does the whole process of buying a home look like smoke and mirrors, the lending side can put them down for the count if they don't have someone looking out for their interests.Throw something like this at them and we were headed for disaster.
The whole situation now kind of reminds me of a scene in the first Naked Gun movie. "Move along, there's nothing to see here people. "
Tax credit ineligible for down payment
Feds reverse rule to assist first-time home buyers
by J. Craig Anderson - May. 19, 2009 12:00 AM The Arizona Republic
Federal officials on Monday reversed an earlier decision to allow first-time home buyers to use an $8,000 tax credit to borrow the down payment on a home.
A week earlier, U.S. Department of Housing and Urban Development Secretary Shaun Donovan had told the National Association of Home Builders that HUD would let banks and local governments offer short-term "bridge loans" to cover the down payment for first-time buyers eligible for the tax credit. The loans would have been available to applicants for federally insured mortgages such as Federal Housing Administration loans.
Lenders, home builders and real- estate agents had reacted favorably to the bridge-loan proposal, saying it would open up the housing market to more first-time buyers.
However, not everyone was in favor of using the tax credit as collateral on a down-payment loan.
"That tax credit should be savings, not debt," said Patricia Garcia-Duarte, executive director of Neighborhood Housing Services in Phoenix.
Garcia-Duarte said the proposal too closely resembled a now-illegal practice known as seller-funded down-payment assistance, which allowed a home's seller to "gift" the down payment to a specific buyer through a non-profit organization.
The loans also could have created income-tax issues, according to the IRS officials who shot down HUD's plan.
Well, well what a surprise! At least there are some sane decisions being made at FHA. So let's recap who wanted this..
Builders....check! Gotta get rid of that pesky inventory that is costing them interest payments every month
RE Agents..check! Gotta get after those first timers 'cause nobody else is even looking in some markets.
Lenders.. how about we change that to LOs looking to make a score. Some that still haven't figured out how to do a loan that isn't stated. Certainly not this one and many others that actually thought this through ( see my post from last week). I redacted part of the post that announced this. There is a quote from an LO that pointed out what I have, it was a bad idea, a very bad idea.
Bridge loan, too funny. First timers are the least educated group of buyers out there and most often need to be walked through the whole process. Not only does the whole process of buying a home look like smoke and mirrors, the lending side can put them down for the count if they don't have someone looking out for their interests.Throw something like this at them and we were headed for disaster.
The whole situation now kind of reminds me of a scene in the first Naked Gun movie. "Move along, there's nothing to see here people. "
Wednesday, May 13, 2009
Well that didn't take long! Document for FHA down payment removed
HUD "Pulls" Mortgagee Letter on Tax Credit
The Letter 09-15, the document that addressed the use of the tax credit as a down payment for FHA loans has been pulled from HUD.gov.
Maybe it doesn't mean anything but the guideline brief that had been posted on HUD.gov is no longer available.
Looks like my advice from today's earlier post was fairly accurate. Wait and see what comes of the new policy.
The Letter 09-15, the document that addressed the use of the tax credit as a down payment for FHA loans has been pulled from HUD.gov.
Maybe it doesn't mean anything but the guideline brief that had been posted on HUD.gov is no longer available.
Looks like my advice from today's earlier post was fairly accurate. Wait and see what comes of the new policy.
First Time Homebuyer Credit as a Down Payment..Uncle Sam to RE's rescue
Here's the latest assist from the Federal Government for the real estate market.:
US Department of Housing and Urban Development secretary Shaun Donovan made the announcement yesterday. Donovan’s announcement came at a National Association of Realtors legislative summit, although HUD’s details on the initiative aren’t scheduled for official release until next week. The initiative will allow FHA-approved lenders to monetize the tax credit through short-term bridge loans, letting borrowers access the funds at the closing table.
OK, this sounds really awesome. The web is filled with the expected amount of hyporama on this development. There are no official releases until next week from HUD. What will likely follow is another 2 to 4 week period for all the lenders to figure out how to implement the new policy. I will say it again, there are no official releases until next week.
I have, and anyone in RE, should have some questions and concerns on this new policy. I am not suggesting I am against it, after all I work for a FHA approved lender, but let's take a look at some potential issues that come to mind.
Will a lien be placed on the property at close of escrow? Will it be an IRS lien ( it is a TAX credit ) or will it be a FHA lien similar to ones we see from community non profits that provide buyers credits?
How will the bridge loan be repaid? If all goes well the borrower will have the full credit coming back to them when they do their taxes for 2009. But what happens if the borrower ends up owing taxes? Will the IRS place a lien on the borrower and/or property? Lenders don't like IRS liens, either do title companies.
Is the bridge loan payable in full in the next tax cycle? Or can it be paid back over time like the original $7500 tax credit?
Is it a lien that stays on the property until it is sold?
For the government conspiracy theorists; If the government has a lien on my house can they tell me what I can or can't do to the home?
Agents, better get your addenda forms out 'cause you will be using them. Is the use of the credit determined by the date of the contract for purchase or the potential funding date? I'll bet there will be a shipload of contract extensions done in the next few days.
Questions, lot's of them are not listed here.
So the hype is upon us. But what the hell, who cares about the ramifications, let's just go out and mine our databases for first time home buyers ( like we weren't already! ). I took 15 phone calls on this in the first hour and 15 minutes in the office this morning. I say let's chill out for a bit and get our bearings.
I am contacting my first timers with one piece of advice. Don't do anything, yet. Just like all the other changes we have seen mandated by new government programs in the last few months this not a policy that will be implemented overnight. What I am telling them is the the same advice I give to all buyers, first timers or no.
1) Get your financials together ( 2-2-2 Rule, 2 months pay stubs, 2 months bank statements, 2 years tax returns )
2) Make an appointment with your favorite lender.
3) have them pre approve you in either FNMA's DU or FHLMC's LP.
4) Wait for everything to come out in the wash.
There will be no prize for being the first one to do this. What I will say is don't wait until October to do this. Unless the rules change this credit goes away December 1. If you don't close by November 30 you will have missed the boat.
US Department of Housing and Urban Development secretary Shaun Donovan made the announcement yesterday. Donovan’s announcement came at a National Association of Realtors legislative summit, although HUD’s details on the initiative aren’t scheduled for official release until next week. The initiative will allow FHA-approved lenders to monetize the tax credit through short-term bridge loans, letting borrowers access the funds at the closing table.
OK, this sounds really awesome. The web is filled with the expected amount of hyporama on this development. There are no official releases until next week from HUD. What will likely follow is another 2 to 4 week period for all the lenders to figure out how to implement the new policy. I will say it again, there are no official releases until next week.
I have, and anyone in RE, should have some questions and concerns on this new policy. I am not suggesting I am against it, after all I work for a FHA approved lender, but let's take a look at some potential issues that come to mind.
Will a lien be placed on the property at close of escrow? Will it be an IRS lien ( it is a TAX credit ) or will it be a FHA lien similar to ones we see from community non profits that provide buyers credits?
How will the bridge loan be repaid? If all goes well the borrower will have the full credit coming back to them when they do their taxes for 2009. But what happens if the borrower ends up owing taxes? Will the IRS place a lien on the borrower and/or property? Lenders don't like IRS liens, either do title companies.
Is the bridge loan payable in full in the next tax cycle? Or can it be paid back over time like the original $7500 tax credit?
Is it a lien that stays on the property until it is sold?
For the government conspiracy theorists; If the government has a lien on my house can they tell me what I can or can't do to the home?
Agents, better get your addenda forms out 'cause you will be using them. Is the use of the credit determined by the date of the contract for purchase or the potential funding date? I'll bet there will be a shipload of contract extensions done in the next few days.
Questions, lot's of them are not listed here.
So the hype is upon us. But what the hell, who cares about the ramifications, let's just go out and mine our databases for first time home buyers ( like we weren't already! ). I took 15 phone calls on this in the first hour and 15 minutes in the office this morning. I say let's chill out for a bit and get our bearings.
I am contacting my first timers with one piece of advice. Don't do anything, yet. Just like all the other changes we have seen mandated by new government programs in the last few months this not a policy that will be implemented overnight. What I am telling them is the the same advice I give to all buyers, first timers or no.
1) Get your financials together ( 2-2-2 Rule, 2 months pay stubs, 2 months bank statements, 2 years tax returns )
2) Make an appointment with your favorite lender.
3) have them pre approve you in either FNMA's DU or FHLMC's LP.
4) Wait for everything to come out in the wash.
There will be no prize for being the first one to do this. What I will say is don't wait until October to do this. Unless the rules change this credit goes away December 1. If you don't close by November 30 you will have missed the boat.
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