2009 Stimulus Package

I recently read an article from a broker with over 50 years experience in the Real Estate Industry that shared his knowledge and insight through the roller coaster ride of real estate and lending, which he still occasionally dabbles in even though currently retired. His positive and upbeat demeanor really struck a cord with me as my entire industry has and continues to be impacted by the many changes in the market place. Mr. Geary Jones final words of wisdom?

"Have a good attitude. Be positive. During one slow period, people would ask, "How's business? And I'd say "Unbelievable". If you want to think things are bad, then they will be bad. But don't say anything that is untrue. Life is better when you tell the truth. You can sleep at night. If you get a reputation for not telling the truth, you might as well walk out the door."(REALTOR Magazine article by Wendy Cole, Feb. 2009).

Will the truth set us free with Obama's Stimulus Plan? Although this remains to be seen as the plan officially rolls out March 4, 2009, I have highlighted some main points that may affect current homeowners.

President Barack Obama officially announced the Homeowner Affordability and Stability Plan on February 19, 2009 to assist more than 7 million families refinance, restructure or modify their existing home loans to avoid Short Sale or Foreclosure situations. In summary, the complete outline is estimated to become available for lenders and borrowers by March 4, 2009. The major points of the plan include but are not limited to the following:

1) Government Sponsored Enterprise (GSE) refinancing for Homeowners impacted from falling home prices:
* Fannie Mae and Freddie Mac (GSE) will allow refinancing for many homeowners with loans owned or held by GSEs. Streamline refinancing should become available for borrowers with loan-to-value ratio's between 80-105% which have not been allowed to refinance under prior guidelines.
2) "At Risk" Homeowners-$75 Billion Homeowner Stability Initiative:
This program has been designed to assist homeowners reduce their monthly mortgage payments to an affordable payment that will aid their current financial situation. In assisting "At Risk" homeowners from defaulting on their current mortgage loans and curbing the foreclosure ratio, the $75 billion from TARP and GSEs will assist between an estimated 3-4 million homeowners. Additional details of the plan include:
a) Reduction of Interest Rates - The debt-to-income ratio for the monthly mortgage cannot exceed 38%. The federal aid will be used to match dollar-for-dollar further reducing the debt-to-income ratio down to 31%.
b) After 5 years the rate may increase to the loan rate on the applicable promissory note or rate at the time of modification.
c) Lenders may assist in principal reduction with federal assistance to share the cost at up to the $ amount the lender(s) would receive for interest rate reductions.
d) Incentives:
Loan Servicers: Will receive up to $1,000 up front for loan modifications.
Borrowers: Monthly mortgage balance reduction up to $1,000 for 5 years.
Lenders: Under the Obama plan, the Treasury Dept. will discourage lenders from foreclosing by establishing an insurance fund up to $10 billion to limit their loss if home prices decline more than anticipated.

The Stability Initiative will impact only owner-occupied properties and limited to the Freddie/Fannie Mae Conforming Limits. Also the plan focuses on "At Risk" homeowners who are "upside down" or "underwater"and those homeowners who have missed any payments and are not currently delinquent.

I will outline main points for First Time Homebuyers shortly. Please keep posted to the BLOG and until next time, "Every good thought you think is contributing its share to the ultimate result of your life". - Grenville Kleiser