One of our readers asks:

The short answer is “Yes.  This will be an ignored opportunity, like Hope For Homeowners“.

The long answer is that the new HUD Secretary, Shaun Donovan, stuck his foot in his mouth by not checking with lenders before HUD issued the directive.  Cut the guy some slack, though.  His prior job, as NYC Housing Czar, dealt less with lenders than it did with developers and Federal agencies.  He probably thought he could “will” loan guidelines by fiat instead of collaborating with participating lenders.  He’s a bright guy so I doubt we’ll see the same mistake again.

The current law provides for the first-time home buyer tax credit to be offered to buyers who complete their purchase prior to November 30, 2009.  This means that properties should be in escrow by Labor Day to be certain the deal closes in a timely manner.  Frankly, HUD-approved lenders don’t see value or profit in this short window of opportunity.

There is talk about increasing the first-time home buyer tax credit to $15,000 and enacting it for a one year period.  Should that happen, and HUD issues an updated mortgage letter allowing that credit to be “monetized” through a loan, there might just be a large enough market for the lenders to find a solution.

If you’re frustrated that the HUD-approved lenders won’t play ball, understand that legislating loose loan guidelines is how we got into this whole mortgage mess.  Anytime the Government mandates lenders to make risky loans, it’s a recipe for disaster.

Brian Brady is referred to as “America’s #1 Mortgage Broker” on Google.  Mr Brady is a San Diego-based mortgage banker and broker, funding loans nationwide.  He has a specialty in VA home loans and has helped over 900 families buy or refinance homes over 15 years.  He can be reached at (858)-777-9751