May 22, 2018

REALTORS® Spur Federal Action

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REALTORS® Spur Federal Action

The Obama administration piggybacks on NAR meetings to launch housing initiatives

When REALTORS® talk, policy makers listen. In May, when more than 8,000 REALTORS® gathered in Washington, D.C., for the 2009 REALTORS® Midyear Legislative Meetings, Shaun Donovan of the U.S. Department of Housing and Urban Development made a key announcement that HUD would allow the first-time buyer tax credit to be used for a down payment or closing costs, at least for FHA-backed loans. It’s a move that the NATIONAL ASSOCIATION OF REALTORS® had been advocating for months.

"We think the policy is a real win for everyone," Donovan told REALTORS®. "Borrowers can tap into the numerous organizations that are already part of the FHA network to receive this additional benefit."

Under the program, borrowers using the FHA for their first mortgage financing can apply for a bridge loan that uses their tax-credit proceeds as collateral. The loan can be used to cover their closing costs, buy down their interest rate, and cover their down payment over and above the FHA’s required 3.5 percent minimum. They’ll have to cover the minimum down payment themselves or tap other assistance. (For more on how the tax credit works, read "Two More Steps Forward," page 5.)

Donovan and Timothy Geithner, the U.S. Treasury secretary, also used the timing of NAR’s Midyear Meetings to announce another major initiative that REALTORS® had been seeking: a standardized template for the unwieldy short-sale process. As a bonus, the initiative came with an incentive of up to $1,000 to help persuade mortgage servicers and secondary lien holders to make the sales happen. It’s too early to know the impact of the initiative, but it’s hard to dispute the need.

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