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To use the tax credit as a down payment:
- FHA approved mortgages only
- This is considered a tax credit advance
- The tax credit can only be purchased by FHA-approved mortgagees and FHA-approved nonprofit organization as well as federal, state, and local government agencies.
- There are only 6 states set up with an FHA-approved nonprofit agency to provide the purchaser with the tax credit advance, and Michigan is not one of them.
- Even though lenders are allowed to set up a tax credit advance, none are doing it because of the risks and extra work involved.
Why are the lenders or a 3rd party in Michigan not yet involved? Some of the reasons are because of the due diligence required. This includes the following be performed by the entity providing the tax credit advance: 1) require the homebuyer to draft and provide the IRS form 5406, 2) contact the borrower’s employer and review paystubs to confirm there are no garnishments, 3) review credit history to ensure there are no unpaid student loans or other obligations that could offset the credit, 4) review previous tax returns and IRS tax assessments letters to determine that the borrower does not have any unsettled obligations to the IRS. FHA-approved nonprofit agencies are allowed to charge a fee for this service, just like the old Ameri-Dream program, but are required to document all fees paid to them along with maintaining an FHA case file for each tax credit they perform.
For more detailed information visit www.hud.gov , mortgagee letter 2009-15
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Pre-approvals
Buyers need to obtain a MORTGAGE Pre-approval before spending time and energy driving all around looking at homes. You need to understand how the process works so that you don't get caught making a common mistake. DO NOT get all excited about buying a home until you certain that you can be approved for the house on which you're ready to write an offer. It can be very disheartening to fall in love with a home only to be denied the loan needed to purchase.
INTEREST RATES change from week to week and this translates to more or less purchasing power.
Mortgage approvals are mostly based on MONTHLY PAYMENTS not purchase price. TAX & INSURANCE ESCROW payments are added to the payment for PRINCIPLE & INTEREST to determine the total.
Understanding the process, getting specifics in writing and relying on true professionals can remove many of
the unpleasant surprises in the pre-approval and home buying process.
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What Happens if the Lender Cannot Produce the Note
A growing number of homeowners around Ann Arbor and Washtenaw County are using a foreclosure defense that may help them retain their homes. It’s called “Produce the Note” (as also being jointly advocated by The Consumer Warning Network) and we want you to know this is not a mere technicality that should be treated lightly by the lender or by the Court.
Everyone needs to understand the importance of this issue. When a lender can’t produce the original note, allowing a foreclosure to proceed puts the homeowner at risk of owing that debt again to another party in the future. Therefore, great caution must be taken before a judge can allow someone who can’t produce the original note to cash in on your home.
What if Your Lender CAN’T Produce the Note?
So, what happens when the lender tells the Court it can’t produce the original note, because it is lost? Let’s start with the basics. If a lender wants to foreclose on a property, it has to be able to show that it is, in fact, the appropriate person to whom the money is owed. That right to foreclose belongs ONLY to the person who has legitimate POSSESSION OF THE ORIGINAL NOTE - not a copy, not an electronic entry, but the original note itself with the original signature of the person(s) who allegedly owes the money along with appropriate raised notary seal and signature. So, if you are faced with a foreclosure, you have every right to demand that the person or entity trying to take your property, first prove to the Court that they have the legal right do to so in the first place by proving they have legal possession of the original promissory note.
The law states, an original mortgage note is much like legal tender and should be guarded and protected as such by the person holding such an asset. Loosing an original mortgage note is like loosing a $100 bill or a gift card or a lottery ticket. What if I scratched that million dollar ticket and just stuck it somewhere and misplaced it? Do you think I could just show up at lottery headquarters and claim my prize without having the winning ticket? The same principle applies to the person or entity claiming to be the legal holder of an original mortgage note. He who holds the note holds the key.
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