Received this from my top Mortgage Consultant and thought it would be a good idea to share.There has been a lot of activity this week attempting to solve the historic economic problems. No one expects this to cure the problem overnight but it could reduce the damage.These two plans have a dramatic effect on our business. Let me try and make them easy to understand.The $787 billion Economic Stimulus Package.Here is how the Economic Stimulus Package affects our business:The Fannie and Freddie loan limits will be raised to $727,000 in high cost areas.The first-time homebuyer tax credit will be raised to $8,000 with no payback.Many were hoping this would be $15,000 as first passed through the Senate but it's settled at $8,000. You have to buy a home between January 1, 2009 (yes, it's retroactive) and December 31, 2009. You have to be a first-timehomebuyer or have not owned a home in the last three years. To get the full benefit, you have to make less than $75,000 as a single tax payer or $150,000 as married taxpayers.If you sell the home before you have been there three years, you have to forfeit the credit or pay it back if you already wrote it off. This credit is different than the $7,500 one first-time buyers got in 2008. Right now, that credit has to be paid back. However, there is some discussion that it may not have to be repaid. If the repayment provision in the new home buyer tax credit is made retroactive back to April 9th 2008, when that plan first took place. This detail is still to be finalized.Interest rates should stay lowRates have been driven down to historic lows since late November. This is a direct result of the Government buying hundreds of billions of dollars in mortgage-backed securities.The Economic Stimulus package calls for the Government to buy another $200-300 billion of mortgage paper from Fannie and Freddie. We could see historically low rates through the end of the year.The Homeowner Affordability and Stability Plan (Obama Plan).You can read the plan here:http://www.treas.gov/initiatives/eesa/homeowner-affordability-plan/FactSheet.pdfThe complete details will be announced on March 4th.The plan seeks to help as many as 9 million Americans avoid foreclosure by restructuring or refinancing their mortgages.The program is intended to help responsible homeowners who are experiencing financial hardship and may be at risk of losing their homes to foreclosure. Lenders will not be forced to participate. Its voluntary.Here are the highlights:Right now if you want to refinance, and your loan amount is over $287,500, you need around 20% equity in your home. The new plan allows homeowners who are current on their mortgage to refinance through Fannie and Freddie up to 105% of the value of their home.This means if you owe $200,000 on your home and it's only worth $190,000 you can now refinance. The 105% financing includes your closing costs up to 4%.If you are late on your mortgage, the Government is now introducing a new standardized form of note modification. This is NOT a principal reduction. Your loan amount will not change. This is modifying your existing loan.If you currently owe $250,000 on your mortgage and your home is worth $175,000 you would be modifying your $250,000. Not getting a new mortgage for less.The Government will be financially incentivizing homeowners and loan servicers who modify mortgages successfully. If you modify your loan under this plan and make your payment on time for five years, you may be eligiblefor up to $5,000 in reduction of your mortgage debt.The lenders who participate in the plan will be agreeing to let you modify your loan to 38% of your gross income. This means if you make $4000 per month, they will be agreeing to lower your payment to $1520. Then theGovernment will step in and help you lower your payment to 31% or $1240. They will pay the lender the difference out of the $75 billion in the fund.You need to be able to document your income. This will be challenging for some self-employed borrowers.The government is also investing hundreds of billions in Fannie and Freddie to keep them solvent and aggressive in making loans, while keeping mortgage rates low.If you seek relief under the plan, the home must be your primary residence. Investment properties and second (vacation) homes are not eligible.The loan must be a conforming loan.The homeowner must be able to qualify for a 30-year fixed mortgage payment with their current income.You must be employed to take advantage of the refinance. If you are not, you may be eligible for the modification still.You may be eligible for a loan modification in this plan even if you have not been late yet or missed a payment.Let's say you have a first and second mortgage. Under this plan, you may be eligible to modify the first lien so long as the second agrees to re-subordinate the second if necessary.The plan also calls for changes to personal bankruptcy provisions. This plan will allow bankruptcy judges to modify mortgages written in the past few years.If you have any questions, please don't hesitate to contact me.Have a great day!!Best regards,Aaron GordonHome Loan Consultant / Sales ManagerCountrywide Bank, FSBCell: (702) 283-2333Office: (702) 304-8900Secure eFax: 1-866-905-792210190 Covington Cross Drive #190Las Vegas, NV 89144email: aaron_gordon@countrywide.comweb: http://countrywidelocal.com/aarongordon
Another detail about the first time buyer credit which I love is the fact that the use of bond money does not make you ineligible for the credit. A few of my buyers from last year are just now finding out that the bond money they used for down payment assistance last year dis-qualified them from claiming the $7500 credit on thier taxes.
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