Monday, March 16, 2009

Oregon Not Set Up to Fund $8000 Tax Credit Through Closing

It is with regret that I report the findings of my quest to find a way for qualified Oregon home buyers to utilize the $8,000 tax credit recently approved, and apply it to their down payment on home purchases.

The State of Oregon does not have the necessary revolving fund needed in order to be able to advance the $8,000 Federal Tax Credit to buyers through this state's housing programs, such as the Purchase Assistance Loan and/or Oregon Bond Loan. Oregon Bond Loan is already struggling to sell the mortgage revenue bonds that fund the RateAdvantage and CashAdvantage programs, and the RateAdvantage program is about to do the way of the CashAdvantage, Down Payment Assistance and Purchase Assistance Loan programs which all ran out of funds in 2008, and still remain unavailable to qualified Oregon home buyers. The State of Oregon's focus is to fund the Oregon Bond Loan and other existing programs, so starting a new program like establishing a Revolving Fund to help pass through these $8,000 tax credits to qualified Oregon first time home buyers is out of the question.

But, all is not lost, Oregon home buyers! Even though funding has not been released for the USDA Guaranteed Rural Housing program by some lenders, if you buy a qualified property under this fantastic No Money Down program that is a government backed 30 year fixed rate loan, there are still lenders that WILL close on this program right now, letting you get the jump on what just might be a very busy Spring/Summer buying season here in the Rogue Valley in Southern Oregon.

If you have discovered like many first time home buyers that prices have come to levels that make the monthly costs of owning a home almost equivalent to renting one, and want to take the plunge while interest rates are low and before the $8,000 tax creditis no longer available to you (sunsets after December 1, 2009), call me. I'd love to sit down and run through the numbers of the various programs that might be available to you, and tell you about the many wonderful tools available to help you enjoy the many benefits of homeownership. Schedule your free consultation today!

See you at the closing table!

Karen Cooper - OR/CA Mortgage Consultant -

REAL Help for Struggling Homeowners On The Horizon?

Although the Making Home Affordable Program is to be made available to struggling homeowners April 4, 2009, and official announcement went out March 4th from the Federal Housing Finance Agency, the banks and mortgage companies have not yet figured out the details of the Home Affordable Modification or Home Affordable Refinance programs. A call made to Countrywide Home Loans today to inquire about Note Modification through the "Making Home Affordable" program resulted in being directed to call back at the end of March. I hope they get on this soon, as some of the people I've been talking to have been teetering on the edge trying to hang on for quite a while now.

I'm getting calls from existing customers who are hearing reports on the recent housing stimulus package released March 4th, so I figured it was time to call in and find out for myself what homeowners are facing when they initiate the process of obtaining a note modification. I was happy to discover that one of the questions asked by Countrywide's automated system was to inquire if the call was being made by the individual or by a "third party", which hopefully means the banks and mortgage companies are cracking down on the many note modification transactions that homeowners have the ability to (and should!) take care of themselves.

CBS Marketwatch. Com published an article that gave more detail than has been available up to this point. Highlights are:

For Note Modifications-
-There are incentives now for removing second liens on loans modified under this program
-There is a refinance option for homeowners who have an existing mortgage owned by Fannie Mae or Freddie Mac if their current loan-to-value ratio is above 80%
-Mortgages with an unpaid principal balance of up to $729,750 may be eligible for the program
investor-owned properties may not participate (I've read a contradiction to the investor owned criteria, today)
-This program is scheduled to expire by the end of 2012
-Servicers will receive an up-front fee of $1,000 for each modification, which in turn may be passed through the program participants as "pay for success" fees paid for still-performing loans of $1,000 per year going to homeowners who make their payments on time int he form of principal reduction payments of $1,000 each year for up to five years
-Lenders receive bonus fees if modifications are made while a homeowner is still current on their mortgage payments

For refinances-
-Lenders must reduce monthly payments on mortgages so that the borrower's payment is no greater than 38% of income
-The government shares the burden of reducing payments to 31% of the homeowner's income
-To reach the 31% target, interest payments will first be reduced down to as low as 2%
-If the rate is still above 31%, then the life of the loan can be extended up to 40 years. Only then would the plan forbear principal at no interest to meet the target.

More details need to be ironed out, and I know I have many questions still, like does the 31% include tax and insurance payments? How is income calculated for homeowners whose income is self-employed/commissioned/bonus income? My guess is it will be the same automated underwriting system criteria we've had in Desktop Underwriter for Fannie Mae loans.

So, as unpalatable as all the stimulus bills and bailout programs have been, SOMETHING needs to be done to stem this fast descent we're seeing with our economic downturn. Do you think these programs will help? If not, do you have better ideas?

See you at the closing table!
Karen Cooper - OR/CA Mortgage Consultant -