HUD Secretary Donovan announced today new rules for the monetization of the tax credit for first-time home buyers.  Click here to see the letter.  There are some obvious conditions, such as no cash back to the buyer.  It seems that it cannot be applied as a downpayment, except in excess of the 3.5% FHA minimum down.  There are some other, more subtle provisions.  Any processing fee to monetize cannot exceed 2.5% of the amount involved.

New Jersey will be coming up with some new rules of its own to monetize the tax credit with regard to the MFA (Mortgage Finance Agency) loans.  But unless they do something about the interest rate (currently much higher than the market), not many people will care.

Read the letter, but don't commit it to memory.  It may change again.  Keep in mind that the tax credit disappears on December 1 of this year.  To be eligible you must close on the property before then.  The clock is ticking and homes are selling....