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BEWARE CHANGES IN FHA LOANS AND DOWN PAYMENT ASSISTANCE REQUIREMENTS |
An E-News Bulletin
Compliments of RGS Title, LLC – 08/27/2008
AND DOWN PAYMENT ASSISTANCE REQUIREMENTS
The real estate industry is experiencing unprecedented change in rules, regulations and laws, as well as the market itself. The recently enacted HOUSING AND ECONOMIC RECOVERY ACT OF 2008 (HR 3221) has several significant changes, including provisions for taxpayers to deduct a portion of their property taxes, even if they do not itemize; a first-time buyer tax credit up to $7,500; increasing loan limits for FHA and Conventional loans to $625,000.00 (after the interim increase currently in effect expires at the end of this year); HOPE for Homeowners Act of 2008 – a voluntary program to induce lenders to participate in distressed loan bailouts; and the FHA Modernization Act of 2008.
Particularly in the next few weeks, however, Realtors are advised to be aware of changes in loan requirements that will be effective for FHA 203(b) mortgages approved for credit after October 1, 2008. The down payment requirement will be increasing to 3.5% and cannot be provided by the seller or any other person or entity that financially benefits from the transaction, nor by a party or entity that is reimbursed by the Seller or other such financially benefitted person or entity. Transactions utilizing many popular programs, such as Nehemiah, AmeriDream and Genesis for example, may be in jeopardy if they are not finalized prior to October 1, 2008. If you currently have such a deal in the pipeline, it is advisable to review with your borrowers and lenders the timetable and be sure it will be completed before the prohibition affects it. Being proactive and addressing this issue early could be the critical key to bringing these transactions to a successful close.
The information in these materials was prepared by the law firm of Shreves Schudel Devol Saunders Jackson Clarke and Parello, PLLC in its capacity as general counsel to RGS TITLE LLC. It is not intended nor should it be relied upon as legal advice, without consulting independent counsel for specific advice on your particular circumstances.