2008 Housing Bill Highlights

2008 Housing Bill

 

The Housing Bill has been signed by the President. There is a tremendous amount of discussion about the new Bill and the possible positive and negative ramification on New Home Sales, Resale’s, Mortgages and Foreclosures. Here are some highlights of the Bill.

 

·         The Bill takes effect October 1^st 2008

·         Tax Credit for 10.00% of the purchase price up to a maximum of $7,500 for First Time Home Buyers (have not owned a home in the last 3 years) to stimulate demand among first time buyers. The tax credit is actually an interest free loan. If you decide to take the tax credit you have to pay it back over a 15 year period in the form of a tax increase of $500 per year.

·         Permanently increase “conforming loan” limits. The bill would permanently increase the cap on the size of mortgages guaranteed by Fannie and Freddie to a maximum of $625,500 from $417,000. The FHA maximum loan limits for certain high-cost areas would also increase to $625,500.

·         This Bill eliminates all seller-funded down payment assistance programs for FHA loans, like Nehemiah. This will certainly eliminate some potential buyers from the market. In Las Vegas this type of program represents as much as 50% of the sales for some of the major home builders, so the loss of this program will surely impact all sales in the Las Vegas market.

·         FHA minimum down payment will be increased from the current 3.00% to 3.50%.

·         FORECLOSURES – This piece is a little tricky but I will try to explain the nuts and bolts of it as I understand them. The bill encourages lenders to forgive some of the debt owed on a mortgage down to 90% of the homes current appraised value on homes purchased between January, 2005 and June, 2007. Example – You purchased a home for $400,000 and put a 5% down payment of $20,000. You got an ARM loan and now the payment has gone up. You currently owe $380,000 and now it is only worth $300,000 based on a current appraisal. Under this law the lender could forgive everything you owe above $270,000, which is 90% of the current $300,000 value. The lender would forgive $110,000 in debt and you could pay off the loan for $270,000. That allows you to find a new lender that will underwrite and approve a new FHA mortgage.                                                                         

·         SO WHAT IS THE CATCH YOU ASK – Lenders won’t sign off on a workout unless they think that they’ll lose less money on that than they would by allowing a home to go through the costly foreclosure process. The FHA Mortgage Insurance Premium on these loans is expected to be a hefty 3.0% upfront and 1.5% annually. Also, if you decide to use this program you will have to share your home-price appreciation with FHA. If you sell the house or refinance the loan in one year or less from the time you refinanced into the FHA loan, FHA gets 100% of the house price appreciation. The FHA’s cut decreases by 10% each year for the next 5 years, but never drops below 50% of the appreciation, no matter how long you own your home. Is it pricey? Yes. Is it better than losing a home? Definitely.

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Cheryl Washington
Your Real Estate Concierge
209-513-1169
Relocatewithcheryl@yahoo.com

House passes housing bill

The House is expected on Wednesday to pass a $300 billion housing rescue bill aimed at helping troubled homeowners avoid foreclosure and supporting mortgage giants Fannie Mae and Freddie Mac.

If the bill is then passed by the Senate and signed by President Bush, who today withdrew his threat to veto the legislation, thousands of at-risk borrowers will be able to refinance their unaffordable old mortgages into new, low-cost fixed-rate loans insured by the Federal Housing Administration.

The Congressional Budget Office estimates that 400,000 borrowers with $68 billion in loans may benefit from the program – but the bill allows for as many as one or two million borrowers to participate in the program.

Here’s what homeowners need to know.

Who’s eligible?

Qualified borrowers must live in their homes and have loans that were issued between January 2005 and June 2007. Additionally, they must spending at least 40% of their gross monthly income on all household debt to be eligible for the program

They can be up-to-date on their existing mortgage or in default, but either way borrowers must prove that they will not be able to keep paying their existing mortgage – and attest that they are not deliberately defaulting just to obtain lower payments.

Before a homeowner can get an FHA-backed mortgage they must first retire any other debt on the home, such as a home equity loan or line of credit. Borrowers are not permitted to take out another home equity loan for at least five years, unless it’s to pay for necessary upkeep on the home.

To get a new home equity loan, borrowers will need approval from the FHA, and total debt cannot exceed 95% of the home’s appraised value at the time.

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Cheryl Washington
Your “Hook-Up” to the best Realtors in the Valley
Mobile: 209-513-1169
relocatewithcheryl@yahoo.com

California Governor announces program to help valley residents buy homes

First-time home buyers will be able to purchase foreclosed houses in Stanislaus, San Joaquin and Merced counties at discount prices and with reduced-rate loans, Governor Arnold Schwarzenegger announced today.

The new Community Stabilization Home Loan Program will finance the purchase of nearly 100 foreclosed Northern San Joaquin Valley homes, plus hundreds of others elsewhere in California.

The governor said the $200 million program will “pump up” the region’s economy, which has been reeling from escalating foreclosures and declining home values.

“This program will not only make it easier for families to purchase their first home, but will also help stabilize neighborhoods that have homes sitting empty,” Schwarzenegger said. “No one single effort can solve our nationwide housing crisis, but together these measures make an important difference in California’s neighborhoods.”

He announced the new program this morning while standing in front of a foreclosed home in Stockton.

The program will be run by the California Housing Finance Agency. It will partner with for lenders who will sell bank-owned properties at least 12 percent below their estimated value.

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Cheryl Washington
Your Real Estate Concierge
mailto:relocatewithcheryl@yahoo.com
Mobile: 209-513-1169

Here’s the link for more information: www.calhfa.ca.gov/homeownership/programs/cshlp.htm