Will the the Housing and Economic Recovery Act of 2008 (July 30, 2008) provide the much needed support for homeowners in the Hudson Valley? Only time will tell as various financial institutions continue to feel the fall out on Wall Street.
The highlights of the new law permit the Federal Housing Administration to guarantee up to $300 billion in new 30-year, fixed-rate mortgages on loans made to borrowers who are facing foreclosure and who may owe more than the home is worth. This is a common problem in Dutchess, Putnam, Ulster and Rockland Counties.
Under the new law, the United States Government offers government insurance to lenders who voluntarily reduce mortgages for at-risk homeowners to 90 percent of the property’s current value. The lender then forgives some of the face value of the mortgage principal, bringing the balance down, but the government would potentially share in the upside when the property appreciates.
Other provisions of the life saver include, (1) FHA, Fannie Mae and Freddie Mac loan limits will be capped at $625,000 – more than a 50 percent increase over the previous conforming loan limit; (2) $4 billion dollars in grant money will be available to communities to purchase distressed properties and rehabilitate them for resale; (3) the government can infuse capital or buy into Fannie Mae and Freddie Mac; (4) First-time homebuyers will receive a refundable tax credit, almost an interest-free loan of up to $7,500 (paid back over 15 years).
Obviously, these are complicated and new programs designed to lighten the load of everyday homeowners in the Husdon Valley. Contact your mortgage, legal and financial professionals to assist you.