Housing  Secretary Announces Monetization of Tax Credit at Real Estate Summit

Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, said that the Federal Housing Administration is going to permit its lenders to allow homeowners to use the $8,000 tax credit as a downpayment.  According to Donovan, the FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.

Many first-time home buyers do not have the financial capability of saving the funds necessary for the minimum down payment of 3.5% for FHA loans. Access to the $8000 tax credit available from the stimulus package (American Recovery and Reinvestment Act of 2009) will be a viable option and effectively provide 100% financing for qualifying properties.

The National Association of Realtors project that over 50% of homes sold in 2009 will be to first-time home buyers.  Flexible financing options for qualified buyers will increase the number of homes sold and further stimulate the economy.