The news gets better.(Mortgage Lending)

And the news kept getting better last week for those looking to buy that first home. The U.S. Department of Housing & Urban Development is going to allow the nation's mortgage lenders to make bridge loans available --essentially allowing homebuyers to borrow their down payment and repay it from their $8,000 federal tax credit.

Speaking last Tuesday at the National Association of Realtors Real Estate Summit, HUD Secretary Shaun Donovan said the Federal Housing Administration's policy on the "monetization" of the first-time homebuyer tax credit would soon be published.

He said the new tax credit "is not only a tremendous opportunity for first- time homebuyers, but also an enormous benefit for communities struggling to deal with an oversupply of housing.

"According to estimates by the National Association of Home Builders, this new tax credit will stimulate 160,000 home sales across the nation--101,000 of which will be first-time buyers who will receive the credit. Another 59,000 existing homeowners will be able to buy another home because a first-time buyer purchased their home."

To enable FHA consumers to access the tax credit funds when they close on their home loans so the cash can be used as a down payment, he said, FHA will permit FHA-approved lenders and HUD-approved nonprofits, as well as state and local governmental entities, to "monetize" the tax credit through short-term bridge loans.

Chuck Quick, president of Pulaski Mortgage Co. of Little Rock, said he had noticed an upsurge of interest.

Although, he said, there hasn't been as many inquires as he first expected, he does see them picking up, based on his company's strong purchase business the past couple of months.

The new bridge loan, which will let lenders allow homeowners to use the $8,000 tax credit as a down payment, will help spur business, Quick said.

A tax credit approved by Congress last year had to be repaid, making it essentially an interest-free 15-year loan. That was the biggest complaint, said Scott McElmurry, president of Bank of Little Rock Mortgage Corp. But the new one is a true tax credit.

He, too, has seen an increase in business coming from people asking about the credit.

"It's one more encouragement," McElmurry said, to buying a home.

He said Bank of Little Rock Mortgage has had record activity the first four months of the year with a rising trend in purchases rather than refinancings. In March 50 percent of the company's mortgages were purchases, far ahead of the national trend, in which nearly 75 percent are refinancing arrangements.

Kathryn Sims, senior vice president at First Security Bancorp. of Searcy, said April saw the best month for mortgage closings in quite some time, but most of the business was refinancings. She said the tax credit had stirred a lot of interest, but she wasn't sure how much it contributed to the jump in closings last month.

Keith Smith, Midwest regional manager for Regions Financial Corp., said the tax credit was helping, but "it's just a little slower than what we would like."

"We're clearly seeing buyers starting to look at houses and ask questions," he said. "Momentum is building."

Mortgage lenders and real estate firms are just now getting the word out to make consumers aware of the tax credit's benefits, he said. The tax credit is very consumer friendly and easy to take advantage of, he said. And the availability of a bridge loan will be a great incentive to put more renters in homes.

Joel Cheatham, senior vice president at Simmons First National Corp. at Pine Bluff, who heads the bank's mortgage offices, said it has been a "gangbuster year" so far, but he's unable to tell if the tax credit is the reason.

"Some are purchases that were in play and just fell in the buyers' laps," he said. "But it has spurred some to get off the fence and see what's available."