SAHBA Home Hints
September 21, 2008
Housing Stimulus Bill Could Help Homeowners Avoid Foreclosure
Last week's SAHBA Home Hint informed readers of The Housing & Economic Recovery Act of 2008 (H.R. 3221) in regards to a $7,500 tax credit for first-time new home buyers. However, not only does this new bill help first-time new home buyers, but the bill could help home owners avoid foreclosure.
Here's a glimpse at some details:
Q: What exactly will the bill do?
A: Qualifiers can cancel their old mortgage and replace it with a fixed, 30-year loan for up to 90% of the home's current value. The decision to write loans remains with the banks, to take a loss on the existing loan to avoid a costly foreclosure.
Q: Who is eligible?
A: Borrowers who spend more than 31% of their monthly income on their mortgage. The troubled loan must be on the borrower's primary residence and income must be verified.
Q: When does the program start?
A: October 1 through September 2011.
Q: Since lenders decide which loans to refinance, what should consumers do?
A: Check with the company servicing the mortgage.
Q: Is there anything an owner can do to improve chances of being selected?
A: No. The best step is to keep payments as current as possible. NOT paying the mortgage will NOT increase chances of being selected. If the situation deteriorates enough, the bank may reject any new loan. For the next six months, closely track expenses and income in order to forecast cash flow and gain control of finances.
Q: Who offers credit counseling help?
A: The Hope Now Alliance at 1-888-995-HOPE.
Q: What if a home is sold after a refinance?
A: For sales during the next five years, consumers must agree to share 50% of any profits with the government. Homeowners will retain equity based on a sliding scale, i.e. zero equity from a sale in the first year, rising 10% each succeeding year. The equity must be repaid because the new loan automatically gives the troubled owner 10% equity in the home.
Q: Where can consumers find more details?
A: FHA web site: www.fha.com.
SAHBA represents about 750 member businesses and 40,000 jobs serving the residential construction industry in Pima and Cochise counties.
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