Making Home Affordable: New Plan to Help Struggling Home Owners

I'm a little late writing about this, but better late than never right?

Finally, there is a plan in place with some details on how the US Treasury is going to try to help as many of the estimated 9 million or so troubled home owners as possible. In a Treasury Department press release the details were summarized. It is yet unclear to me whether or not loan originators (like me) are going to be involved in the process, or if it will just be the loan servicers. To clarify, a loan servicer is the person you write the check to every month. Once they take your money, they take their cut and distribute the money to the investors who own your loan. Until now, many servicers have been unwilling to help struggling families until they were severely late on their mortgages, or even in foreclosure. Now, the government is adding a cash incentive for banks to help consumers work it out. Banks really have yet to embrace the new program and put it in motion, but help is on the way.

Apparently, all banks that are receiving federal assistance are going to be required to participate in the program. I guess that's the power that hundreds of billions of dollars buys you, right? I read today that Fannie and Freddie are outlining the details in their selling guides now and the refinances should start somewhere around April 4th (my birthday) or so.

I will keep all of you posted on details as I read and digest them. There is a lot of information flying around out there, but the reality is, only a very small percentage of it really matters. There are countless programs and changes that have been proposed and even enacted- but unless the banks hopped on board, they just didn't matter.

On a positive note- I think all of this is very exciting and think that we are definitely headed in the right direction and will see some good news soon!

Maybe the Most Significant Government Site in History

I just caught wind of the site recovery.gov. You are immediately greeted by a message from President Obama explaining the purpose of the site. Now, I don't want to get political- this just isn't the correct venue, but this is exciting. The government has spent a lot of our hard earned (and apparently easily lost) money already with TARP and various bail-out's of different institutions. Now we are going to foot the bill for the new recovery plan which has a hefty $780 Billion price tag. Ouch! Obama has the right idea- American people are smart. Give us the opportunity to know what is going on and participate in the process, and we'll surprise you. There are only 583 (don't quote me, I'm going off memory here) Senators and Representatives, a Vice President and a President. There are around 300 million of us. I think it's safe to say that they're spending our money and we have a right to know where it's going. Now we'll know. I love that the administration is embracing technology and making the government more accessible for the people. Yes, I know that many will argue that the elderly are disenfranchised by the inclusion of technology, but seriously, give me a break. The Internet is the greatest tool humankind has ever built. Let's use it.

Take the time and check out the site. It's your money.

recovery.gov

First-Time Home Buyer Tax Credit

Okay, you want some free money from the government? All you have to do is go out and buy a house! -and hopefully use me for your financing :)

Here are the basics:

• The tax credit is for first-time home buyers only.
• The tax credit does not have to be repaid.
• The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.
• The credit is available for homes purchased on or after January 1, 2009 and before December 1, 2009.
• Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.

There you go! I've gotten a lot of questions about this one, so feel free to comment with yours and I'll respond in the blog so that everyone can see the answers.

Obama Housing Plan

There's been a lot going on lately (as I'm sure you know) so I haven't been writing as much as I'd like. President Obama signed in to law the American Recovery and Reinvestment Act of 2009 and there are some major changes on the horizon for the housing industry. A few days ago a document was released on the US Treasury web site that outlines the administration's plan to help/save the housing market. It's definitely worth looking at and reading for yourself. Click here to view the document.

There are three main ways the govt. is planning on helping out.

First, they are going to try to help people refinance in to lower interest loans. Many people are having trouble refinancing now because the values of their house has gone down and they no longer qualify with the stringent requirements laid out by the banks. Big brother is going to try to help you out.

Second, the govt. is going to try to get your servicer to work with you if your drowning by incentivizing them to modify your loan. They are not going to use any of the $75M earmarked for this to help out investors or speculators- this is just for the people that live in their homes and can't make their payments. I think that this is the most noble part of the plan. Now they are going to talk to you and try to work something out BEFORE you default on your loan. I think this could really save our butts if they roll it out right.

Third, they are going to strengthen Fannnie and Freddie (FNMA, FHLMC) by increasing the total amount of loans they can fund be $50B to $900B. That's a lot of money. There are other parts of this- including the rumor of possibly nationalizing the agencies, but we'll see.

If you read the full document (3 pages) you will notice that there aren't really any details. They are slated to release the plan details on or around March 4th. I'll know more then!