Archive for the ‘Fannie Mae and Freddie Mac Bail Out propositions’ Category

NAR is urging Congress to include the following four provisions in any future legislation:

• Make the $7500 tax credit available to all purchasers and eliminate the repayment requirement.
• Make the 2008 FHA, Fannie Mae and Freddie Mac loan limits permanent.
• Get the Emergency Treasury bank relief program back on track.
• Permanently bar banks and banking conglomerates from engaging in real estate brokerage.

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Expansion of First-time Home Buyer Tax Credit.

The tax credit available to first-time home buyers was increased from $7,500 to $8,000 for homes purchased between January 1, 2009, and December 1, 2009. Also, the credit no longer needs to be paid back as long as the buyers live in the home without selling it for at least 3 years.

“The previous version of the credit expired on July 1, 2009, and required home buyers to pay the funds back over a 15 year time frame,” Nicholas said.

The income limitations remain the same ($75,000 for single tax payers claiming the full credit and $150,000 for married tax payers), as do most other qualification requirements. Also, the credit remains refundable. “This means that first-time home buyers who owe less than $8,000 in taxes for the year are still eligible for the full $8,000 credit when they file their tax returns, and the IRS will write them a check for the difference between $8,000 and their actual tax bill,” Nicholas said. “In fact, the credit can be claimed on your 2008 tax returns that you file by April 15 of this year, even if you buy the home in 2009.”

There is one catch, however: if you bought the home in 2008, the credit remains $7,500, and it still needs to be paid back over a 15 year timeframe beginning in 2011 when you file your 2010 returns.

The initiative has come down from Fannie Mae and Freddie Mac to their network of servicers to halt all foreclosure and eviction proceedings between Nov. 26 2008 and Jan. 9, 2009, meant to give a recently announced rescue plan a chance to take affect.

The move is expected to give Fannie and Freddie additional time put in action the new streamline modification recently announced and set to launch December 15th. The plan enables delinquent borrowers to get a modified mortgage that lowers payments to no more than 38% of their gross incomes.

“By delaying these real estate foreclosure sales, the nation’s servicers will have the opportunity to work with more borrowers who could qualify for a modification under the new proposed bail out program,” said Freddie Mac CEO David M. Moffett.

The foreclosure suspension affects only a small percentage of homeowners facing foreclosure over the next two months. Although Fannie and Freddie mortgages account for more than half of all real estate mortgages, they have relatively few of the most risky subprime loans at the center of the foreclosure crisis in todays market.

The Fannie, Freddie plan was unveiled on Nov. 11. Eligible homeowners are defined bellow:

• Homeowners must be 90 days or more late in their mortgage payments
• owe at least 90% of their home’s current value
• cannot be an investment property, must be owner-occupied
• have not filed for bankruptcy.

The mortgage rate could be lowered to as little as 3% for the first five years of the loan. Then, it would increase by 1 point (1%) each year until it reaches either the market rate or the original interest rate, whichever happenis to be lower.
Phoenix Investment Property associates will continue to provide details of this plan and many others as the new year approaches.

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