Money in the Wind--No More Seller-Assisted Down Payment Programs

The House of Representatives has voted, with the Senate soon to follow, giving $300 billion in assistance to FNMA and Freddie Mac.

The legislation passed yesterday by the House would authorize Paulson to bail out Fannie and Freddie while placing few restrictions on them. Fannie and Freddie debt totals about $5 trillion, which would cause world-wide catastrophe if they failed, and the projected $25 billion cost to U.S. taxpayers over the next two years may not happen anyway, per the Congressional Budget Office, only a 50% chance, if you want to take comfort in that. Lawmakers said they expected the Senate to approve the measure later this week, and the White House said President George W. Bush would sign it into law.

Included in this is the elimination of seller-assisted down payment programs such as the HART, AmeriDream, and Nehemiah programs. These programs allowed a process where the seller could contribute to a 3rd party non-profit entity funds which were then sent over to the buyer via escrow, who could apply them for his/her down payment. These "seller-assisted" programs are now blamed for the loss of $4.6 billion in FHA's funding reserves, to the current level of $16.4 billion. Traditionally, down payment funds are from the buyer's own sources, but in these particular programs sellers were allowed to help the buyer who had little or no money. When buyers have less money in the deal, they are considered at much higher risk of loan default, and in still current down payment programs, a requirement is for the buyer to have a minimum of 1% of their own funds contributing to the purchase.

The current temporary loan limit of $729,000 would be changed to a permanent level of $625,000 for conventional and FHA loans, and allows a tax refund for first-time homebuyers of up to 10% of the home's purchase price, but no more than $7500, but the refund is basically a tax-free loan which must be paid back over 15 years.

There is much more to this proposal, which will probably be signed into law by President Bush who has dropped his opposition to it, and made effective possibly October 1.

How this bill can help you. Here's some of what homeowners need to know. Qualified borrowers must live in their homes and have loans that were issued between January 2005 and June 2007. Additionally, they must be spending at least 40% of their gross monthly income on all household debt to be eligible for the program. Click on the article to read more about eligibility for this FHA program which, if passed, will be available through FHA approved lenders.

Please contact me for more information.

Julia Huntsman, Broker Associate, e-PRO®, REALTOR®
All California Brokerage, Inc.
562-896-2609
mailto:ocean@surfside.net
http://www.juliahuntsman.com

http://www.longbeachrealestate.listingbook.com

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California FHA Loan Limits Now Up to $729,750!

A new and long-awaited temporary loan amount increase from $362,790 to the conventional loan maximum of $729,750 passed yesterday (until end of 2008)!

Per the Los Angeles Time: "The California counties at the new maximum level for FHA loans are Alameda, Contra Costa, Los Angeles, Marin, Monterey, Napa, Orange, San Benito, San Francisco, San Mateo, Santa Barbara, Santa Clara, Santa Cruz and Ventura. "

This could make FHA loans available to 30,000 additional Californians. FHA loans are characterized by low down payments of 3% and not as driven by FICO scores as conventional loans are.

Additional loan limits in Orange and Los Angeles Counties are:

1 unit 729,750
2 units 934,200
3 units 1,129,250
4 units 1,403,400

If you are considering purchasing a new house, condo or units for yourself, please contact me for a lender referral. Not all lenders specialize in FHA loans, so it's important to find someone who is experienced in these government loans. Call me at 562-896-2609, or you can go online in the meantime and search properties at http://www.juliahuntsman.com/ or try a new type of property search at http://www.longbeachrealestate.listingbook.com/ .

FHA Loan Bill May Increase Loan Limits

The FHA Modernization Bill passed by the United States Senate on December 13 will bring changes that have been fought for long and hard. FHA loans are currently limited to $359,900 in Southern California (loan amounts are regionally based), and 3% down on top of a $359,900 loan amount does not meet most of the housing market in this region. Per California Association of Realtors, "the U.S. Senate on Dec. 14 approved legislation designed to modernize the Federal Housing Administration’s mortgage insurance program by increasing loan limits, and helping troubled borrowers with subprime loans refinance into federally insured mortgages." "The bill, which has the support of the Bush administration, also would reduce the required minimum down payment for an FHA-insured loan from 3 percent to a flat 1.5 percent of the appraised value of a home. "

If passed, new FHA loan features will also streamline condo purchases, and increase loan limits to $417,000 (the current conforming loan limits for non-FHA loans). Expect these changes to be taking effect in January after the final issues are worked out between the Senate and the House.

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