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Federal Housing Response. JERRY NAGY & MEGAN BOOTH NATIONAL ASSOCIATION OF REALTORS®. Federal Housing Programs. FHA Loan limits equal to 125% 2008 median home price – up to $729,750 3.5% downpayment – 6% seller concessions allowed MIP = 1.75 upfront/.5-.55 annual/1.50 refi

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Federal Housing Response

JERRY NAGY & MEGAN BOOTH

NATIONAL ASSOCIATION OF REALTORS®


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Federal Housing Programs

  • FHA

    • Loan limits equal to 125% 2008 median home price – up to $729,750

    • 3.5% downpayment – 6% seller concessions allowed

    • MIP = 1.75 upfront/.5-.55 annual/1.50 refi

    • No minimum credit score

    • Loan limits – https://entp.hud.gov/idapp/html/hicostlook.cfm

  • VA

    • Loan limits equal to 125% 2008 median home price – up to $1,094,625

    • Zero-downpayment

    • Fees = 2.15% on zero-down (3.3% for repeat) – no fee if service-connected disability

    • No minimum credit score

    • Loan limits - http://www.homeloans.va.gov/docs/2009_county_loan_limits.pdf

  • RHS

    • Income eligible up to 115% local area median income

    • Flexible downpayment (including zero-down)

    • Eligible areas - http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do


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Specific Loan Programs

  • 203k rehabilitation mortgage

    • FHA

  • Energy Efficient Mortgages

    • FHA

    • Freddie Mac/Fannie Mae

  • Location Efficient Mortgages

    • Freddie Mac/Fannie Mae

  • HECM

    • FHA

  • HECM for Purchase

    • FHA


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Homebuyer Tax Credit

  • $8000 Tax Credit for first time homebuyers*

    *may not have owned a home in previous 3 yrs

  • Any single family residence (including condos and coops) that is a principal residence

  • Income Limits ($75,000-$95,000/$150,000-$170,000)

  • Recapture if sold in first 3 years

  • Effective January 1, 2009 – November 30, 2009


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Use of the Tax Credit

  • According to 2008 IRS Tax Tables

    • A single filer would need $46,600 in taxable income to have an $8,000 tax liability

    • A couple would need $58,600 in taxable income to have $8,000 in tax liability

  • The median household income in 2007 was $50,233.00


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Examples of the Tax Credit

Example #1

Example #2

  • Nick and Nora file a joint return.

    Withheld= $11,000

    Actual Tax Liability = $9,800

    Homebuyer Tax Credit = $8,0000

  • Result: $1,200 regular refund + $8,000 tax credit = refund of $9,200

  • Cesar and Maria file a joint return.

    Withheld = $5,000

    Actual Tax Liability == $7,200

    Homebuyer Tax Credit = $8,000

  • Result: Owe $2,200 additional, + $8,000 tax credit = $5,800 refund.


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Homeowners in Trouble

  • Hope for Homeowners

  • GSE Refinancing

  • GSE Loan Modification

  • Other Resources

    1 888 995 HOPE (4673)


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HOPE for Homeowners (H4H)

  • Updates being debated in Congress

  • Effective October 1, 2008

  • Voluntary for lender and homeowner

  • New loan at 90% (93%) current appraised value

  • FHA must approve loans and borrowers

  • National loan limit of $550,400

  • (Incentives to lenders/servicers)

  • More information at www.fha.gov/hopeforhomeowners


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GSE “Responsible Homeowners” Refinancing

  • Will allow refinancing for families who owe more than 80% the value of their home

  • Designed for those making on-time payments, but have had their home value fall

  • Loans must be for less than conforming loan limit

  • Estimated to help 4-5 million homeowners


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GSE “Responsible Homeowners” RefinancingEXAMPLE

  • In 2006, the family took out a 6.5% 30-year fixed rate mortgage for $207,000 on a house appraised at $260,000.

  • Home is now worth $221,000, and they owe $200,000.

  • They would have a hard time refinancing because they don’t have 20% equity.

  • They could refinance into today’s rates (near 5.1%), reducing their annual payment by $2,300.


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Homeowner Stability Initiative

  • For homeowners who are at risk of foreclosure

  • Shared effort to reduce mortgage payments

    • Lender must reduce interest rate, so that the payment is no more than 38% of income

    • Federal government will further reduce interest rate to bring the ratio down to 31%

    • Interest rate stays low for 5 years, then gradually increased up to conforming rate at time loan was made

    • Payment incentives to homeowners to reduce principal (up to $1000/year) for up to 5 years

    • Incentives for servicers to participate and for lenders/servicers to reach borrower before delinquent

    • Partial guarantees

  • Guidelines for Loan Modifications


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Example of Homeowner Stability Initiative

  • In 2006, the family took out a 7.5% 30-year subprime mortgage of $220,000 on a home worth $230,000.

  • Today they owe $213,431, but their home is only worth $189,000. One member of the family also had had their working hours reduced, lowering their income.


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What do Homeowners Do?

  • As of March 4, the programs are available

  • The information a homeowner will need to provide:

    • #1- call lender and ask if you are Freddie/Fannie Loan

    • Gross monthly income of all borrowers, including pay stubs

    • Most recent income tax return

    • Information about any second (or third) mortgages

      • (only the first mortgage will be modified)

    • Payment information on all credit cards

    • Any payments on other loans (student, car)


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CDBG – Neighborhood Stabilization Program

  • $4 billion allocated to states/localities based on foreclosure rate, # of subprime mortgages, # homes in default or delinquency – additional $2b allocated in ARRA – competitive bid

  • Funds provided through the CDBG Program

  • Funds used to:

    • Provide financing

    • Purchase

    • Manage

    • Repair

    • Resell foreclosed and abandoned properties

  • Homes must be:

    • used to assist individuals and families with incomes at or below 120% of area median income.

    • Twenty-five percent of funds must be used for households with incomes at or below 50% of area median income.


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Resources for More Information

  • www.realtor.org/governmentaffairs

  • www.fha.gov