On May 14th, HUD announced that first-time homebuyers would soon be able to access their $8,000 federal tax credit when closing on a home through a short-term bridge loan that will cover their down payment on FHA-backed loans.
HUD officials on Monday, May 18th reversed this earlier decision and details backing the 5/14 announcement were withdrawn from the HUD website.
Despite favorable reaction from the real estate industry to the bridge-loan proposal, not everyone was in favor of using the tax credit as collateral on a down-payment loan.
The loans also could have potentially created income-tax issues, according to the IRS officials who derailed HUD's plan.
This doesn't mean that HUD and lawmakers will not allow this in the future. Stay tuned - we'll keep you posted!
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