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Have You Heard

Thursday, October 1, 2009

Home Buyers Offered Advance on Tax Credit

First-time home buyers who are eligible for up to $8,000 in tax credits under the American Economic Recovery and Reinvestment Act can apply for a bridge loan or cash advance on the credit. The money can be used for a down payment, closing costs or other loan expenses.

To be eligible for the tax credit and advance, applicants can not have owned a primary residence within three years prior to the purchase, can not have a modified adjusted gross income over $95,000 (single taxpayers) or $170,000 (joint taxpayers), must apply for FHA-insured mortgages, and must purchase the home between Jan. 1, 2009 and Nov. 30, 2009.

Organizations eligible to provide bridge loans are federal, state or local government or nonprofit agencies considered to be instruments of government.

CFED is promoting the credit. Visit their web site at and click on the “Act” tab and then “Advocacy.”

Fed Adjusts Disclosure Trigger

The Federal Reserve Board recently published its annual adjustment of the dollar amount of fees that trigger additional disclosure requirements under the Truth in Lending Act. This applies to home mortgage loans that bear rates or fees above a certain amount.

The dollar amount of the fee-based trigger has been adjusted to $579 for 2010. The adjustment is effective Jan. 1, 2010. This adjustment does not affect the new rules for “higher-priced mortgage loans” adopted by the Board in July 2008. Coverage of mortgage loans under the July 2008 rules is determined using a different rate-based trigger.

Fed Distributes Information on “Protecting Tenants” Act

The Board of Governors of the Federal Reserve System recently asked its Consumer Affairs officers to distribute information to supervised institutions regarding the “Protecting Tenants at Foreclosure Act of 2009,” which became effective May 20, 2009.

This new law protects tenants from immediate eviction by individuals
or entities that become owners of residential property through the foreclosure process. It also extends additional protections for tenants with Section 8 vouchers.

The law, which expires Dec. 31, 2012, is self-executing: No federal agency has authority to issue regulations implementing the law or to interpret the law. Given the importance of the protections this law provides to tenants, examiners are instructed, as part of consumer compliance examinations, to evaluate an institution’s awareness of the law, its efforts to comply and its responsiveness to addressing implementation deficiencies. Examination procedures to be used in connection with consumer compliance examinations can be found at .

The purpose of the “Protecting Tenants at Foreclosure Act” is to ensure that tenants facing eviction from a foreclosed property have adequate time to find alternative housing.

Under the law, the immediate successor in interest at foreclosure must: (a) provide bona fide tenants with 90 days notice prior to eviction; and (b) allow bona fide tenants with leases to occupy property until the end of the lease term. (Exception: The lease can be terminated on 90 days notice if the unit is sold to a purchaser who will occupy the property.) The law does not affect any state or local law that provides longer time periods or other additional protections for tenants.

A lease or tenancy is bona fide if the tenant is not the mortgagor or the parent, spouse or child of the mortgagor, the lease or tenancy is the result of an arms-length transaction, and the lease or tenancy requires rent that is not substantially lower than fair market rent or is reduced or subsidized due to a federal, state or local subsidy. The law does not cover tenants facing eviction in a nonforeclosed property, tenants with a fraudulent lease, tenants who enter in lease agreements after a foreclosure sale or homeowners in foreclosure