Joshua Barre Broker/Owner Westside Properties

The following is the Q & A on Obama administration's housing plan released by U.S. Treasury in Washington.

Questions and Answers for Borrowers about the
Homeowner Affordability and Stability Plan

Borrowers Who Are Current on Their Mortgage Are Asking:

1. What help is available for borrowers who stay current on their mortgage payments but have seen their homes decrease in value?

Under the Homeowner Affordability and Stability Plan, eligible borrowers who stay current on their mortgages but have been unable to refinance to lower their interest rates because their homes have decreased in value, may now have the opportunity to refinance into a 30 or 15 year, fixed rate loan. Through the program, Fannie Mae and Freddie Mac will allow the refinancing of mortgage loans that they hold in their portfolios or that they placed in mortgage backed securities.

2. I owe more than my property is worth, do I still qualify to refinance under the Homeowner Affordability and Stability Plan?

Eligible loans will now include those where the new first mortgage (including any refinancing costs) will not exceed 105% of the current market value of the property. For example, if your property is worth $200,000 but you owe $210,000 or less you may qualify. The current value of your property will be determined after you apply to refinance.

3. How do I know if I am eligible?

Complete eligibility details will be announced on March 4th when the program starts. The criteria for eligibility will include having sufficient income to make the new payment and an acceptable mortgage payment history. The program is limited to loans held or securitized by Fannie Mae or Freddie Mac.

4. I have both a first and a second mortgage. Do I still qualify to refinance under the Homeowner Affordability and Stability Plan?

As long as the amount due on the first mortgage is less than 105% of the value of the property, borrowers with more than one mortgage may be eligible to refinance under the Homeowner Affordability and Stability Plan. Your eligibility will depend, in part, on agreement by the lender that has your second mortgage to remain in a second position, and on your ability to meet the new payment terms on the first mortgage.

5. Will refinancing lower my payments?

The objective of the Homeowner Affordability and Stability Plan is to provide creditworthy borrowers who have shown a commitment to paying their mortgage with affordable payments that are sustainable for the life of the loan. Borrowers whose mortgage interest rates are much higher than the current market rate should see an immediate reduction in their payments. Borrowers who are paying interest only, or who have a low introductory rate that will increase in the future, may not see their current payment go down if they refinance to a fixed rate. These borrowers, however, could save a great deal over the life of the loan. When you submit a loan application, your lender will give you a "Good Faith Estimate" that includes your new interest rate, mortgage payment and the amount that you will pay over the life of the loan. Compare this to your current loan terms. If it is not an improvement, a refinancing may not be right for you.

6. What are the interest rate and other terms of this refinance offer?

The objective of the Homeowner Affordability and Stability Plan is to provide borrowers with a safe loan program with a fixed, affordable payment. All loans refinanced under the plan will have a 30 or 15 year term with a fixed interest rate. The rate will be based on market rates in effect at the time of the refinance and any associated points and fees quoted by the lender. Interest rates may vary across lenders and over time as market rates adjust. The refinanced loans will have no prepayment penalties or balloon notes.

7. Will refinancing reduce the amount that I owe on my loan?

No. The objective of the Homeowner Affordability and Stability Plan is to help borrowers refinance into safer, more affordable fixed rate loans. Refinancing will not reduce the amount you owe to the first mortgage holder or any other debt you owe. However, by reducing the interest rate, refinancing should save you money by reducing the amount of interest that you repay over the life of the loan.

8. How do I know if my loan is owned or has been securitized by Fannie Mae or Freddie Mac?

To determine if your loan is owned or has been securitized by Fannie Mae or Freddie Mac and is eligible to be refinanced, you should contact your mortgage lender after March 4, 2009.

9. When can I apply?

Mortgage lenders will begin accepting applications after the details of the program are announced on March 4, 2009.

10. What should I do in the meantime?

You should gather the information that you will need to provide to your lender after March 4, when the refinance program becomes available. This includes:

• • information about the gross monthly income of all borrowers, including your most recent pay stubs if you receive them or documentation of income you receive from other sources
  • your most recent income tax return
  • information about any second mortgage on the house
  • payments on each of your credit cards if you are carrying balances from month to month, and
  • payments on other loans such as student loans and car loans.

Borrowers Who Are at Risk of Foreclosure Are Asking:

1. What help is available for borrowers who are at risk of foreclosure either because they are behind on their mortgage or are struggling to make the payments?

The Homeowner Affordability and Stability Plan offers help to borrowers who are already behind on their mortgage payments or who are struggling to keep their loans current. By providing mortgage lenders with financial incentives to modify existing first mortgages, the Treasury hopes to help as many as 3 to 4 million homeowners avoid foreclosure regardless of who owns or services the mortgage.

2. Do I need to be behind on my mortgage payments to be eligible for a modification?

No. Borrowers who are struggling to stay current on their mortgage payments may be eligible if their income is not sufficient to continue to make their mortgage payments and they are at risk of imminent default. This may be due to several factors, such as a loss of income, a significant increase in expenses, or an interest rate that will reset to an unaffordable level.

3. How do I know if I qualify for a payment reduction under the Homeowner Affordability and Stability Plan?

In general, you may qualify for a mortgage modification if (a) you occupy your house as your primary residence; (b) your monthly mortgage payment is greater than 31% of your monthly gross income; and (c) your loan is not large enough to exceed current Fannie Mae and Freddie Mac loan limits. Final eligibility will be determined by your mortgage lender based on your financial situation and detailed guidelines that will be available on March 4, 2009.

4. I do not live in the house that secures the mortgage I'd like to modify. Is this mortgage eligible for the Homeowner Affordability and Stability Plan?

No. For example, if you own a house that you use as a vacation home or that you rent out to tenants, the mortgage on that house is not eligible. If you used to live in the home but you moved out, the mortgage is not eligible. Only the mortgage on your primary residence is eligible. The mortgage lender will check to see if the dwelling is your primary residence.

5. I have a mortgage on a duplex. I live in one unit and rent the other. Will I still be eligible?

Yes. Mortgages on 2, 3 and 4 unit properties are eligible as long as you live in one unit as your primary residence.

6. I have two mortgages. Will the Homeowner Affordability and Stability Plan reduce the payments on both?

Only the first mortgage is eligible for a modification.

7. I owe more than my house is worth. Will the Homeowner Affordability and Stability Plan reduce what I owe?

The primary objective of the Homeowner Affordability and Stability Plan is to help borrowers avoid foreclosure by modifying troubled loans to achieve a payment the borrower can afford. Lenders are likely to lower payments mainly by reducing loan interest rates. However, the program offers incentives for principal reductions and at your lender's discretion modifications may include upfront reductions of loan principal.

8. I heard the government was providing a financial incentive to borrowers. Is that true?

Yes. To encourage borrowers who work hard to retain homeownership, the Homeowner Affordability and Stability Plan provides incentive payments as a borrower makes timely payments on the modified loan. The incentive will accrue on a monthly basis and will be applied directly to reduce your mortgage debt. Borrowers who pay on time for five years can have up to $5,000 applied to reduce their debt by the end of that period.

9. How much will a modification cost me?

There is no cost to borrowers for a modification under the Homeowner Affordability and Stability Plan. If you wish to get assistance from a HUD-approved housing counseling agency or are referred to a counselor as a condition of the modification, you will not be charged a fee. Borrowers should beware of any organization that attempts to charge a fee for housing counseling or modification of a delinquent loan, especially if they require a fee in advance.

10. Is my lender required to modify my loan?

No. Mortgage lenders participate in the program on a voluntary basis and loans are evaluated for modification on a case-by-case basis. But the government is offering substantial incentives and it is expected that most major lenders will participate.

11. I'm already working with my lender / housing counselor on a loan workout. Can I still be considered for the Homeowner Affordability and Stability Plan?

Ask your lender or counselor to be considered under the Homeowner Affordability and Stability Plan.

12. How do I apply for a modification under the Homeowner Affordability and Stability Plan?

You may not need to do anything at this time. Most mortgage lenders will evaluate loans in their portfolio to identify borrowers who may meet the eligibility criteria. After March 4 they will send letters to potentially eligible homeowners, a process that may take several weeks. If you think you qualify for a modification and do not receive a letter within several weeks, contact your mortgage servicer or a HUD-approved housing counselor. Please be aware that servicers and counseling agencies are expected to receive an extraordinary number of calls about this program.

13. What should I do in the meantime?

You should gather the information that you will need to provide to your lender on or after March 4, when the modification program becomes available. This includes

• • information about the monthly gross income of your household including recent pay stubs if you receive them or documentation of income you receive from other sources
  • your most recent income tax return
  • information about any second mortgage on the house
  • payments on each of your credit cards if you are carrying balances from month to month, and
  • payments on other loans such as student loans and car loans.

14. My loan is scheduled for foreclosure soon. What should I do?

Contact your mortgage servicer or credit counselor. Many mortgage lenders have expressed their intention to postpone foreclosure sales on all mortgages that may qualify for the modification in order to allow sufficient time to evaluate the borrower's eligibility. We support this effort.

**If you need real estate advice, feel free to contact me or visit www.westsidehomefinder.com. If you are interested in seeing if now could be a good time to refinanance your home, or get pre-qualified for a loan to purchase a property, don't hesitate to contact me or visit www.realpromortgage.com.

Source: The White House Blog

For week ended February 13, 2009

MBA Mortgage Applications Index: increased by 45.7% compare to prior week to 875.3.

The Purchase Index: increased by 9.1% compare to prior week to 257.3, purchase activity is still 28% below its level a year ago.

The Refinance Index: increased by 64.3% to 4,472.9. Refinance activities now accounts for 75% of all mortgage activities.

30-year fixed rate fell by 20 bps to 4.99%

15-year fixed rates dropped by 34 bps to 4.66%

1-year Treasury ARMs dropped by 12 bps to 6.10%

If you need real estate advice, feel free to contact me or visit www.westsidehomefinder.com. If you are interested in seeing if now could be a good time to refinanance your home, or get pre-qualified for a loan to purchase a property, don't hesitate to contact me or visit www.realpromortgage.com.

Source: Mortgage Bankers Association

President Obama pledged $275 billion to a program that includes cutting mortgage payments for as many as 9 million struggling homeowners and expanding the role of Fannie Mae and Freddie Mac in curbing foreclosures. Treasury will buy as much as $200 billion of preferred stock in the two mortgage companies, twice as much as previously promised. Bringing down foreclosure rate will help stabilize housing prices. Treasury will develop loan-modification guidelines for the mortgage industry that will be used for the administration's foreclosure-prevention plan. Banks including Citigroup Inc., JPMorgan Chase & Co., and Bank of America Corp. have agreed to suspend foreclosure proceedings until the Obama plan is adopted.

Bankruptcy Reform

Obama will support revamping US bankruptcy rules to let judges reduce mortgages on primary residences to fair-market value as long as borrowers pay their debts under a court ordered plan. The plan will use $75 billion to match reductions lenders make in interest payments that lower borrowers' payments to 31% of their monthly income. Treasury will share the cost when lenders reduce monthly payments by forgiving a portion of the borrower's mortgage balance.

Incentive

The government said banks accepting U.S. help must adopt loan modification plans. According to White House fact sheet, companies that service mortgages will get $1,000 for each modified loan, and as much as $1,000 for three years when the borrower stays current. Homeowners also are eligible for $1,000 annually for five years for remaining current on their loans. The cash will be applied to reducing the principal balance of the loan.

If you need real estate advice, feel free to contact me or visit www.westsidehomefinder.com. If you are interested in seeing if now could be a good time to refinanance your home, or get pre-qualified for a loan to purchase a property, don't hesitate to contact me or visit www.realpromortgage.com.

Source: Bloomberg

(Update2)

$8,000 is a tax refund. Meaning if you owe less than $8,000 in tax, you still get a full $8,000 tax credit as refund check. Below is 3 scenarios for better understanding.

Scenario 1: If your tax liability is $6,000 and you paid $6,000 from your payroll witholding, you will get the entire $8,000 tax credit as a refund check.

Scenario 2: If your tax liability is $6,000 and you overpaid $1,000 through your payroll witholding, you will get the $8,000 credit plus $1,000 that you overpaid. A total of $9,000 as a refund check.

Scenario 3: If your tax liability is $6,000 and you underpaid $1,000 through your payroll witholding, you will get the $8,000 credit minus $1,000 that you underpaid. A total of $7,000 as a refund check.

Source: Yahoo! Real Estate

This is an update to my previous post about the proposed $15,000 tax credit for home buyer. The outline of the latest $8,000 tax credit is far from the proposed $15,000. However, it is enhanced from the previous $7,500 tax credit that Congress enacted in July 2008.

The following points are based on National Association of Home Builder web site: http://www.federalhousingtaxcredit.com/2009/home2.html

Please visit the link above for detail information.

Here are the key differences
1. $8,000 tax credit does not need to be repaid.
2. The credit is available for homes purchased on or after January 1, 2009 and before December 1, 2009.

The new $8,000 tax credit is similar to the $7,500 tax credit enacted in July 2008:
1. Only FIRST TIME HOME BUYERS are eligible for $8,000 tax credit.
2. Income restriction: Single taxpayers with incomes up to $75,000 and married couples with income up to $150,000 qualify for the full tax credit.
3. The tax credit is equal to 10% of the home's purchase price up to a maximum of $8,000.

If you need real estate advice, feel free to contact me or visit www.westsidehomefinder.com. If you are interested in seeing if now could be a good time to refinanance your home, or get pre-qualified for a loan to purchase a property, don't hesitate to contact me or visit www.realpromortgage.com.

(Update 3)
The Congress has enacted the new $8,000 tax credit for first time homebuyer as part of the effort of The American Recovery and Reinvestment Act of 2009 to stimlate the US economy crisis caused by subprime mortgage and resulted in credit crunch. Please visit my new blog entry for more information.

(Update 2)
Thank you for your interest in this blog. This is still in initial stage and has not been sign into bill yet. Hopefully this will sign into bill and boost our Real Estate Industry. For more info, please visit the following Wall Street Journal links dated February 9, 2009.

http://online.wsj.com/article/SB123414270675561877.html

http://blogs.wsj.com/developments/2009/02/09/faq-senate-stimulus-bills-home-buyer-tax-credit/

This is exciting news for home buyer and real estate industry. The Senate MAY vote on the bill tonight, which includes a provision that would provide homebuyers with a tax credit of $15,000, or 10% of the home's purchase price. Homebuilders have lobbied for a higher tax credit to increase demand and stabilize falling home prices after a $7,500 credit adopted last year failed to help the companies.

Congressional budget analysts project the program would cost $14 billion over the next few years. Senator Jonny Isakson said "If we can convince buyers to come back to the market place and buy these houses, then the houses aren't vacant. It's replaced by an owner-occupant, who is there making payments on a loan and helping all of the other houses around."

Key Points to the New Stimulus Package:

1. $15,000 tax credit applies to ANYONE buying a primary residence during a one-year period beginning on the date of enactment. (1/1/2009 - 12/31/2009) and remain living there for at least 2 years.
2. For those who already qualified for $7,500 new home buyer tax credit. You are NOT eligible for the new program.
3. This $15,000 tax credit DOES NOT need to be paid back. Key distinction from the $7,500 first-time home buyer credit "actually a 17-year repayment which translates into a no-interest loan"
4. This $15,000 tax credit DOES NOT come with income restrictions.
5. You can use this credit for tax year 2008, "to file your taxes as if you purchased your home on December 31, 2008" and could also go into effect as a credit on the following year's tax return.

The market reacts to this exciting news in hopes that the new stimulus package will boost sales. A S&P measure of 15 builders rose as much as 14% to 234.60, the most since Nov 25. Forth Worth, Texas-based D.R. Horton Inc., the second biggest homebuilder by revenue, raised $1.07 or 13 percent, to $9.14. Dallas-based Centex corp., the largest U.S. Homebuilder raised $1.42, 15% to $11.16.

This is the best time to own a home!! With low home prices, low mortgage rate PLUS $15,000 tax credit that DO NOT have to be repaid. This is at prospective home buyer best advantage.

If you need real estate advice, feel free to contact me or visit www.wsprops.com. If you are interested in seeing if now could be a good time to refinanance your home, or get pre-qualified for a loan to purchase a property, don't hesitate to contact me or visit www.realpromortgage.com.

*To Be Updated