FHA Still Going Strong

From Realty Times of October 20, 2008

Washington Report: FHA Still Going Strong by Kenneth R. Harney

The country's top housing official has an urgent message for potential home buyers: You may have heard that the credit markets were "frozen," but FHA has been open for business throughout the credit squeeze, and so are Fannie Mae and Freddie Mac. In fact, FHA's volume has tripled and the agency is now insuring well over a hundred thousand new loans a month.

In an exclusive one-on-one interview with Realty Times, Housing and Urban Development Secretary Steve Preston said that FHA, Fannie and Freddie -- who account for a combined 90 percent plus share of the entire U.S. mortgage market -- "have kept liquidity alive" for home buyers -- and have virtually unlimited funds for new mortgages.

"There is no credit crisis" for individual home buyers who have at least three percent to put down, documentable employment, and at least a moderately good credit record, said Preston.

Business loans and various other types of credit may have been more difficult to obtain in recent weeks, Preston told Realty Times, but thanks to the government's backing of the three biggest sources of mortgages, buyers and refinancers of houses have had no unusual problems.

Preston and HUD are playing key roles in the $700 billion financial system bailout plan now getting underway. Preston is one of just five members of the Financial Stability Oversight Board that oversees the entire effort. HUD's main task in the weeks ahead, he said, will be to either refinance or help work out thousands of delinquent subprime and underwater homes financed by private lenders during the boom years.

The agency's new "Hope for Homeowners" program, which started October 1, allows it to cut the principal debt, monthly payments and interest rates of delinquent loans through refinancings into fixed-rate FHA mortgages.

In the interview, Preston emphasized the importance of a new, $3.9 billion program that has received virtually no attention in the press, but which could have huge positive impacts on neighborhoods and communities struggling with large numbers of foreclosures.

Congress authorized HUD to provide funds and other assistance to local governments to buy, fix up, resell or rent out foreclosed houses that are dragging down local property values.

Known as the Neighborhood Stabilization program, it offers not only roles for local governments to fight housing blight, but also provides opportunities for alert realty agents, rehab contractors, builders and investors to be involved -- profitably -- in the turnaround efforts.

If you're interested, talk to your city or county housing and community development officials for details. Though HUD will be providing the funds, local officials will be calling the shots.



.

FHA Extends Financing for Immediate Purchase of Foreclosed Homes

From RISMedia Real Estate News, Bush has announced a policy to expedite immediate sale of vacant foreclosed properties.

FHA IMMEDIATE SALE OF FORECLOSED PROPERTIES

A little speed up of clearing vacant properties will reduce vandalism, neighborhood blight and loosen up some of the funding needed to get through the housing crisis.
.
.
.

MORTGAGE RELIEF UPDATE & TAX CHANGES

The following is provided courtesy of Bob Martin, Artisan Mortgage:

Update # 1 - Mortgage Relief Passed by Congress & Signed Into Law by the President!

On Thursday, December 20th, President Bush signed into law a bill passed by Congress: HR 3648 –Mortgage Forgiveness Debt Relief Act of 2007. The three major points are:

· Elimination of the “phantom tax” on foreclosures, short sales or other discharges of debt on a primary residence. Consider this scenario: A property is worth $250,000, and the mortgage balance is $300,000. Under the old rules, if a lender forgave the $50k difference as part of a foreclosure, short sale, refinance or loan modification, the borrower had to claim the $50k as income and pay federal income taxes on that amount. The new law eliminates this “phantom tax”, and the forgiven debt is no longer treated as taxable income to the borrower, as long as certain requirements are met, such as the discharged mortgage balance must be on the taxpayer’s principal residence (no investors or 2nd homes).

· The tax deduction for mortgage insurance premiums is now extended until December 31, 2010 instead of expiring at the end of 2007. The same rules apply as before in terms of the income limitations, etc. If you have questions about these rules please contact Artisan Mortgage for more information.

· The capital gains exclusion is now $500,000 instead of $250,000 for an unmarried individual who sells their primary residence within 2 years of the time their spouse has died. This new guideline applies to sales after December 31, 2007, and provides relief for widows and widowers by giving them a 2 year window from the time their spouse has died to sell their home and receive the $500,000 exclusion. Of course, the same rules apply as before, where the individual(s) need to have lived in the home as their primary residence for 2 out of the last 5 years.

Update # 2 – AMT (Alternative Minimum Tax) Relief Passed by Congress

Congress passed AMT relief on Wednesday, December 19. The President has indicated a strong willingness to sign this bill into law, and it is currently awaiting his signature. Under this one year patch, approx. 20 million taxpayers have escaped the clutches of the AMT. However, approx. 3.5 million taxpayers are still expected to be subject to the AMT.

Bob Martin
Artisan Mortgage
Certified Mortgage Planning Specialist
(623) 518-4401
bmartin@artisanloans.com

NAR THANKS BUSH FOR SIGNING DEBT BILL

The NAR statement on Realtor.org includes the following:
"Today's bill will ensure that any debt forgiven on a mortgage secured for a principal resisence will not be taxed."

The full statement follows:

Bush Signs Mortgage Forgiveness Bill
Again, I encourage anyone having difficulty with their mortgage contact their lender first in the interest of working out a solution. Many unscroupulous people are pretending to assist those in difficulty while creating an even worse problem for their own benefit. Trust your lender first!

And check the December 7 entry in this blog for further info on assistance.

WOW - A TOUGH VIEW OF MORTGAGE HELP!

From Realty Times, one man's view of the Bush "Plan" for helping homeowners facing serious mortgage problems.

The Bush Foreclosure Plan: Who Really Benefits?

Let's hope the view of the writer is a bit overstated. Time will tell.

The bottom line, irrespective of the article, contact your lender early to try to work out a solution. Lenders will have a hard time getting money for new loans if they carry too much "bad" paper, so there is some motivation on them to convert your loan to a "good" loan.