Update: The Arizona Republic reported on this on May 19th. On May 24th, four days after we posted here, our own San Diego Union Tribune ran this article announcing the exciting new down payment source and citing the previous May 12th announcement. I sense they may have an opening for a fact checker.
Update to the update: Heather says it well.
Earlier this week, Twitter was abuzz with the news that HUD would be allowing the $8000 first-time home buyer tax credit to be used toward a buyer’s down payment. Not so fast. Within hours, retractions were flying.
The email I received this morning reminded me I should probably share the latest with our three readers, just in case they missed the excitement. From Michelle Morris, PHH Home Loans:
As you know HUD made an announcement on May 12 that they were going to allow homeowners to use the $8000 tax credit as down payment monies by empowering state agencies, non profits and HUD approved Mortgagees to lend the monies to home buyers. HUD drafted HUD Mortgage Letter (2009-15), however, the letter was never officially released. HUD has since reversed their position on allowing the monetization of the tax credit over concerns that the proposal too closely resembles the now illegal practice of seller funded down payment assistance programs. IRS officials were also concerned that the proposal could create income tax issues.
The government may continue to seek other alternatives associated with boosting affordability and circumventing the 3.5% down payment requirement, but until further notice they have apparently killed this initiative.
So, there. Back to saving box tops.