House Panel Votes to End Two Foreclosure-Prevention Programs

Last week, the House Financial Services Committee approved two bills that would terminate two foreclosure-prevention programs. The panel passed by a 32-23 vote legislation (H.R. 839, “HAMP Termination Act”) that would end the Home Affordable Modification Program that offers incentives for lenders to modify troubled borrowers’ mortgage loans, in the wake of serious concerns about the program’s effectiveness and cost. H.R. 839 would amend the Emergency Economic Stabilization Act of 2008 to terminate the authority of the Secretary of the Treasury to provide new assistance under the Home Affordable Modification Program, while preserving assistance to homeowners who were already extended an offer to participate in the Program, either on a trial or permanent basis.

HAMP has suffered from myriad problems since its launch in February 2009, including low enrollment and high rates of re-default on modified mortgages. House Rep. Patrick McHenry (R-NC), who introduced the bill, has called the program an “epic failure”. The ranks of supporters of the bill are thinning, even among Democrats, a group of whom recently sent a letter to Vice-President Biden urging immediate action to help struggling homeowners, and calling efforts to date “inadequate” and a “critical problem”. Growing dissatisfaction with HAMP on both sides of the aisles suggest that the bill could possibly garner passage even in the Senate, where Democrats maintain a slim majority. The White House has threatened a veto of all bills that terminate emergency loan and mortgage modification measures.

The committee also approved by a 31-24 vote a bill (H.R. 861) that would terminate the Neighborhood Stabilization Program that provides money for state and local governments to help clean up blighted properties and redevelop them. The NSP has received $6 billion to enable state and local governments to purchase and either rehabilitate or destroy distressed properties in their jurisdictions. Local governments in areas hard-hit by foreclosures claim that the program helps them to cope effectively with the fallout from the housing downturn, which has left thousands of homes empty and prone to vandalism, squatters and blight. Critics of the NSP have claimed that the program fails to address the needs of troubled homeowners, and incentivizes banks and property owners to “dump” distressed properties onto taxpayers.

In related news, on March 10th, the House also voted on legislation H.R. 830, the Federal Housing Assistance (FHA) Program Termination Act that would end the FHA Refinance Program that enables underwater borrowers to refinance into less-costly Federal Housing Administration-insured mortgages. It is scheduled to go to the Senate soon; however, the Obama administration is opposed to the passage of the bill and according to the White House’s official website, “If the President is presented with H.R. 830, his senior advisors would recommend that he veto the bill.” You can read the statement here: http://www.whitehouse.gov/sites/default/files/omb/legislative/sap/112/saphr830h_20110308.pdf

The House also passed bill H.R. 836, the Emergency Mortgage Relief Program Termination Act. This program was created to help homeowners who have lost jobs to continue making mortgage payments. The bill now goes on to be voted on in the Senate. Keep in mind that debate may be taking place on a companion bill in the Senate, rather than on this particular bill. You can read the full text of the bill here: http://www.gpo.gov/fdsys/pkg/BILLS-112hr836eh/pdf/BILLS-112hr836eh.pdf

All these legislation will greatly impact the housing recovery initiatives that we as Realtors support. To find out how these changes will affect you either as a seller or buyer, contact us today at 702-285-1990.

FHA SHORT REFINANCE OPTION: POTENTIAL RELIEF FOR UNDERWATER HOMEOWNERS

Is your home worth less than you owe? On September 7, 2010, the US Department of Housing and Urban Development (HUD) will begin offering its Federal Housing Administration (FHA) Short Refinance Option. The HUD press release states that: “The FHA Short Refinance option is targeted to help people who owe more on their mortgage than their home is worth - or 'underwater' - because their local markets saw large declines in home values. Originally announced in March, these changes and other programs that have been put in place will help the Administration meet its goal of stabilizing housing markets by offering a second chance to up to 3 to 4 million struggling homeowners through the end of 2012.”

In order to be able to participate in the Short Refinance Option, a homeowner/borrower:

1. Must owe more on their mortgage than their home is worth and be current on their existing mortgage.
2. Must have their mortgage through any non-FHA lender.
3. Must qualify for the new loan under standard FHA underwriting requirements and have a credit score equal to or greater than 500.
4. Must be using this option on their primary residence.
5. The borrower's existing first lien holder must agree to write off at least 10% of their unpaid principal balance, bringing that borrower's combined loan-to-value ratio to no greater than 115% and all lien holders must agree to the terms.
6. The new FHA-guaranteed loan must have a loan-to-value ratio of no more than 97.75%.

The FHA press release also says the FHA Short Refinance program is voluntary and “requires the cooperation of all lien holders”. This program is not automatically open to any homeowner who is underwater on a conventional home loan; as stated previously, the borrower must meet all guidelines and satisfy other typical FHA loan underwriting prerequisites.

Furthermore, the press release states that: “To facilitate the refinancing of new FHA-insured loans under this program, the U.S. Department of Treasury will provide incentives to existing second lien holders who agree to full or partial extinguishment of the liens.” Interested homeowners should contact their lenders to determine if they are eligible and whether the lender agrees the write down a portion of the unpaid principal.

If you need assistance in determining your eligibility for the FHA Short Refinance program, please give us a call at 702.285.1990 and we would be happy to evaluate your individual situation.

FHA RAISES CLARK COUNTY LOAN LIMIT TO $400,000

Just hot off the press, we are excited to share this very good news to all of you, courtesy of my preferred lender Aaron Gordon at Countrywide Home Loans.

As part of the Obama mortgage plan, that FHA has raised the loan limit to $400,000 in Clark County and $325,000 in Nye County.

You can find details at https://entp.hud.gov/idapp/html/hicost1.cfm

This means buyers looking for homes up to $412,000 can now qualify with as little as 3.5% down. This is one ray of hope that we have been waiting for to boost the housing industry and hopefully, be the catalyst for a much needed market stability.

Stay tuned for details on rates. If you or someone you know has been putting off the decision to buy a home, I can’t think of a better reason than this! The market is primed for qualified buyers: there is a sizeable amount of great inventories, mortgage rates are at an all-time low, and financing is available for responsible borrowers. It’s a win-win situation for buyers and sellers.

Please feel free to contact me if you have any questions at 702.285.1990. The Dulcie Crawford Group aspires to be your trusted Realtor for life!