Tax Credit Could Cause More Problems For FHA
Of course it might and this has been addressed before with the down payment assistance programs that FHA eliminated awhile ago. If someone needs the tax credit for the down payment it is most likely because they don’t know how to save money. Someone that can’t save money shouldn’t buy a home until they are able to.
The statistics speak for themselves and it was clearly shown that the delinquencies on the borrower who used the down payment assistance were much higher.
“The problem is that the FHA insures mortgages of homes below certain price levels with such a low down payment that it can be funded solely by the refundable tax credit. And, as we’ve seen in the recent housing crisis, buyers with no skin in the game are more likely than others to default on their mortgages when the value of their home falls below their mortgage balance.”