Thanks for visiting The Mortgage Reports. To stay absolutely current on mortgage markets and important guideline changes, be sure to take my free daily email alerts.

UPDATE: The First Time Home-Buyer Tax Credit was expanded and extended. The information in this post may be inaccurate. Read the updated First-Time Home Buyer Tax Credit post instead.

The $8,000 First-Time Home Buyer Tax Credit expires December 1, 2009.

If you're planning to claim use the credit and haven't started looking for a home, your clock is officially ticking.  You must be closed on your new home on or before December 1.

Because purchase closings come 60-days standard, therefore, your $8,000 is in jeopardy unless you go under contract prior to October 2, 2009.  That's 73 days from now.

Use it or lose it, as they say.

The First-Time Home Buyer Tax Credit is part of the American Recovery and Reinvestment Act of 2009.  In it, Congress authorized a first-time homebuyer tax credit of up to $8,000 for home buyers meeting certain qualifying criteria.  The program's goal was to stimulate entry-level home purchases and, by most measures, the plan has been successful.

First-time home buyers accounted for about one-third of all home resales in May.

Now, the IRS definition of "first-time home buyer" may be different from what you expect.  According to the IRS, a first-time home buyer is anyone who has not owned a "main home" in the last 3 years with "main home" defined as a home in which a person has lived "for most of the time".  Main homes can include traditional homes, houseboats, trailers and other residence types.

For couples -- married or otherwise -- both home buyers must be first-timers to be tax credit-eligible.

Moreover, not every first-time home buyer is eligible for the $8,000 First Time Home Buyer Tax Credit.  Some notable exclusionary cases include first-time home buyers who:

• File taxes separately and whose adjusted gross income exceeds $95,000
• File taxes jointly and whose adjusted gross income exceeds $170,000
• Acquire property from a mother, father, spouse or child
• Acquire property from an entity in which they're a majority owner
• Acquire the home by gift or inheritance

And then, the First-Time Home Buyer Tax Credit may not deliver the full $8,000.

The tax credit is limited to 10 percent of the home's purchase price the it also diminishes as home buyer income rises.  Tax credit phase-outs start at $75,000 for homebuyers filing separately and $150,000 on joint returns.

Assuming you qualify, though, the good news is that it's easy to claim your tax credit.

1. Buy and close on a new, "main" home before December 1, 2009.
2. Submit IRS Form 5405 with your 2009 tax returns in April 2010.

That's it.

Meanwhile, the program does come with some gotchas.  For example, If you sell your home, or cease to use it as your "main home" within 36 months of purchase, the IRS will require a full payback.  There are only a few allowable exceptions to this policy and you shouldn't count on being granted one.

Not moving in the next 3 years? Don't worry about it.

If you're a first-time home buyer and have questions, you're welcome to anytime. I'll answer your questions and if I don't lend in your state, I can refer you to loan officers that I trust who do.

And lastly, please don't just take my word for it on tax issues. I am a loan officer and not an accountant. I can offer basic guidance, but paying a professional for expert advice is often the right way to go. If you don't have an accountant you trust or you're not using the free filing and tax audit services of TurboTax or something, call or email me for a recommendation.

In February 2009, Fannie Mae rescinded a rule that kept real estate investors from financing more than 4 properties at a time.  The move increased the maximum properties financed limit to 10, giving investors a ticket to the nation's REO and Foreclosure Party.

In its widely-celebrated official announcement, Fannie Mae said upping the financed-property limit could stabilize housing nationwide. 

"Experienced investors play a key role in the housing recovery", it noted.

3 months later, however, the 5-to-10 Properties Financed program is proving to be a bust.  Despite Fannie Mae's explicit endorsement of  investor loans -- mortgage lenders are choosing to keep the investor-friendly program off their books.

Well, most of them anyway. 

Although the 5-to-10 Financed Properties program is approved by Fannie Maelenders, only a select crowd of mortgage lenders are making it available.  This is a cause for consternation among the real estate investor set.  Long-standing relationships don't seem to count for much when a bank won't do investor loans as a matter of policy.

And it's silly, really.  Fannie Mae is agreeing to buy the loans; the banks should be willing to do them. 

Fannie Mae's guidelines are pretty clear.  The national group will purchase and guarantee investor mortgages where the applicant meets the following criteria:

• Owns between 5-10 residential properties with financing attached
• Makes a 25 percent downpayment on the property; 30 percent for 2-4 unit
• Minimum credit score of 720
• No mortgage lates within the last 12 months on any mortgage
• No bankruptcies or foreclosures in the last 7 years
• 2 years of tax returns showing rental income from all rental properties
• 6 months of PITI reserves on each of the financed properties

And then, as a last step to reduce fraud, Fannie Mae's 10-financed property program requires applicants to sign a 4506-T -- a form giving lenders permission to verify the submitted-with-the-loan tax returns against the official, IRS-filed version of the same.

So, why don't all bank participate in the 5-to-10 Properties Financed program? 

The probable answer is that underwriting a 5-property-owning investor's mortgage application is hard work.  Versus a traditional homeowner that needs just a basic W-2 and paystub for an approval, a bona fide real estate investor submits complex tax returns with far more details to reconcile and verify.

The time to underwrite a non-owner-occupied mortgage application is multiples bigger than to underwrite a primary residence one.  And because the bank gets paid the same amount by Fannie Mae on both loans, it only makes sense that the banks are sticking to what's most profitable for them. 

Less work, same profit. You know which way the banks will go on that one.

But, remember -- there are banks participating Fannie Mae's 5-10 Properties Financed program .  If you have between 5 and 10 properties financed and want to purchase a new home, or refinance an existing one, let your first call be to your loan officer or bank.  Ask them for help. Then, if that call comes up empty, call or . 

My investors do allow up to 10 properties financed and I'd be happy to get you started.