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FHA Changes for Oct 1 2008

August 28th, 2008 8:08 AM

•Seller-funded DAP programs for FHA loans ends October 1, 2008

• Requires a 3.5% down payment and a maximum LTV that cannot exceed 100% (including mortgage insurance premium)

• Applies a 12-month moratorium on the risk-based pricing introduced on July 14, 2008

• Revises loan limit calculations for FHA and Conventional Conforming Loans, effective January 1, 2009

• FHA said the upfront premiums charged to most borrowers will be 1.75% of the loan amount, effective Oct. 1.

Posted by Ariel Segall on August 28th, 2008 8:08 AMPost a Comment (0)

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The $7,500 First-Time Home Buyer Tax Credit

August 28th, 2008 8:18 AM

What is the First-Time Home Buyer Tax Credit?

The Tax Credit is part of the Housing and Economic Recovery Act of 2008, signed into law on July 30, 2008.

The intent of the tax credit is two fold:

• To provide a financial resource for home buyers in the year that they purchase a home

• To provide a stimulus to the housing market and the economy, helping to stabilize home prices and increase home sales

The law provides a tax credit equal to ten percent of the qualified home purchase price. The credit is capped at $7,500.

The credit is essentially an interest-free loan. Home buyers are required to repay the credit to the government, without interest, over 15 years in equal installments or when they sell the house.

Who is Eligible?

• First-time home buyers, defined as a buyer who has not owned a principal residence in the previous three years

• U.S. citizens who file tax returns

• Eligible properties include any single family home that will be used as a principal residence (including condos and co-ops)

• To qualify, buyers must close on the sale of the home between April 9, 2008 and June 30, 2009

Income Limits

• The full $7,500 credit is available for individuals with modified adjusted gross income (per IRS definition) of no more than $75,000 ($150,000 forcouples filing jointly)

• A partial credit is available for individuals with modified adjusted gross income between $75,000 and $95,000 (between $150,000 and $170,000 for couples filing jointly)

Is the Tax Credit “Refundable?”

• Yes. The credit reduces the income tax liability for the year of purchase

• The credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit

Payback Provisions

Home buyers claiming a $7,500 credit would repay the credit at $500 per year via their tax returns. They do not have to begin repayments until two years after the credit was claimed

• If the home owner sells the home, the remaining credit would be due from the profit of the home sale

• If there is insufficient profit from the sale, the remaining credit payback would be forgiven

Posted by Ariel Segall on August 28th, 2008 8:18 AMPost a Comment (0)

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Mortgage Servicers Set Monthly, Quarterly Records for Helping Homeowners Avoid Foreclosure

August 28th, 2008 8:11 AM

The HOPE NOW Alliance, a national alliance of mortgage

servicing companies, investors and non-profit counseling

agencies formed to help at-risk homeowners facing foreclosure

or difficult adjustable-rate mortgages, announced that

mortgage servicers helped a record number of homeowners

avoid foreclosure in June 2008 and the second quarter of 2008.

The HOPE NOW Alliance estimated that on an industrywide

basis:

• The total number of foreclosures prevented since July

2007 has risen to approximately 1.9 million.

• In June, more than 181,000 workouts were completed

and in the second quarter 2008, servicers completed

more than 522,000 workouts – which include loan

modifications and repayment plans.

• So far, HOPE NOW has sent almost 1.9 million letters

to consumers who may be at risk of losing their homes.

• About 18% of homeowners receiving the HOPE NOWcoordinated

letters have contacted their servicer, 6 times

more than the routine 2-3% response rate servicers

receive when they send their own mailings.

Posted by Ariel Segall on August 28th, 2008 8:11 AMPost a Comment (0)

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President Signs Housing and Economic Recovery Act of 2008 Into Law

August 28th, 2008 8:10 AM

Heralded as the most sweeping housing reform since the

“New Deal,” the Housing and Economic Recovery Act of

2008 includes the creation of a strong regulator for Fannie

Mae and Freddie Mac, changes in conforming and Federal

Housing Administration (FHA) loan limits, a comprehensive

modernization plan for FHA, and the HOPE for Homeowners

plan, which may help as many as 400,000 distressed homeowners

by refinancing them into government-backed loans.

To qualify for the HOPE for Homeowners plan, eligible borrowers

must have spent more than 31% of their monthly

income on their mortgages as of March 1, 2008. The troubled

loan must have been originated no later than Jan. 1, 2008, and

be secured by the borrower’s primary residence. Additionally,

the borrowers must also be able to verify their income.

Another part of the plan is the first-time homebuyer credit

for qualifying homebuyers for purchases on or after April 9,

2008 and before April 1, 2009. The refundable tax credit is

equal to 10% of the purchase price of a residence and not to

exceed $8,000. It requires taxpayers who receive the credit to

repay it over 15 years in equal installments by imposing a

surcharge on the taxpayer’s annual income tax.

While questions remain about when major provisions of the

bill will actually be implemented, the HOPE for Homeowners

program is scheduled to start Oct. 1, 2008 and be available

through September 2011. Lenders’ participation in the program

is voluntary.

Posted by Ariel Segall on August 28th, 2008 8:10 AMPost a Comment (0)

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What is HOPE for Homeowners - The Housing and Economic Recovery Act of 2008

August 28th, 2008 8:07 AM

•It is a provision that creates a refinance program to help distressed borrowers. If the borrower is eligible and if the current lender agrees, the borrower may be eligible for a partial write-down of their mortgage debt and a new 30-year fixed rate loan for up to 90% of the current appraised value.

•This is a voluntary program. No servicers or originators are mandated to participate.

No financial rescue program for investors or lenders. Investors and/or lenders will have to take significant losses in order for borrowers to benefit from the loans refinanced with government insurance. However, these losses may be less than the losses associated with foreclosure.

No financial rescue program for borrowers. Borrowers will be required to share their new equity and future appreciation with FHA. These loans will also be subject to other fees such as the annual FHA mortgage insurance premium.

Posted by Ariel Segall on August 28th, 2008 8:07 AMPost a Comment (0)

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FHA Raises Its Premiums to Insure Repayment of Mortgages -- Wall Street Journal

August 28th, 2008 8:05 AM

Wall Street Journal, By James R. Hagerty

August 27, 2008

The Federal Housing Administration, a U.S. agency that is rapidly shouldering more of the risk on home loans, raised the premiums it charges for insuring that mortgages will be repaid.

In a posting on its Web site Tuesday, the FHA said the upfront premiums charged to most borrowers will be 1.75% of the loan amount, effective Oct. 1. That is up from the 1.5% that was in effect until July 14, when the FHA adopted a "risk-based" pricing system that created a range of charges depending on borrowers' credit scores and the amount of the down payment or equity they owned in the homes. In late July, Congress approved a housing bill that included a provision requiring the FHA to revert to a standard premium at least until Oct. 1, 2009.

Posted by Ariel Segall on August 28th, 2008 8:05 AMPost a Comment (0)

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