$8,000 Tax Credit at Settlement??

I am being asked a lot of questions regarding HUD’s announcement about using the $8,000.00 tax credit as a down payment at settlement. Let me give you the current facts as I understand them:

--A HUD mortgagee letter was issued earlier this week that stated that FHA approved lenders (that’s us) may provide short term bridge loans to consumer’s that are eligible to receive the first time homebuyer tax credit of $8,000.00. This is now an acceptable form of cash to close.

--The next day, Tuesday, HUD rescinded the mortgagee letter and removed it from their site. It has not been re-posted yet.

--Almost all major banks and lenders have done away with their bridge loan programs years ago. Bridge loans were commonly used in the 90’s for relocating homebuyers. Bridge loans were also used for some C/P loans as well when building a new home.

--Bridge loan terms were typically onerous and very expensive. Most LTVs usually precluded them as well.

--I think the reason HUD pulled the mortgagee letter is that they realized they jumped the gun. A bridge loan is secured against something. I’m wondering how to secure a loan against a potential tax credit/refund???

I'll will update everyone as soon as new information is released.