JERRY NAGY & MEGAN BOOTH NATIONAL ASSOCIATION OF REALTORS® Federal Housing Response

Federal Housing Programs FHA  Loan limits equal to 125% 2008 median home price – up to $729,750  3.5% downpayment – 6% seller concessions allowed  MIP = 1.75 upfront/ annual/1.50 refi  No minimum credit score  Loan limits – VA  Loan limits equal to 125% 2008 median home price – up to $1,094,625  Zero-downpayment  Fees = 2.15% on zero-down (3.3% for repeat) – no fee if service-connected disability  No minimum credit score  Loan limits - RHS  Income eligible up to 115% local area median income  Flexible downpayment (including zero-down)  Eligible areas -

Specific Loan Programs 203k rehabilitation mortgage  FHA Energy Efficient Mortgages  FHA  Freddie Mac/Fannie Mae Location Efficient Mortgages  Freddie Mac/Fannie Mae HECM  FHA HECM for Purchase  FHA

Homebuyer Tax Credit $8000 Tax Credit for first time homebuyers* *may not have owned a home in previous 3 yrs Any single family residence (including condos and coops) that is a principal residence Income Limits ($75,000-$95,000/$150,000-$170,000) Recapture if sold in first 3 years Effective January 1, 2009 – November 30, 2009

Use of the Tax Credit According to 2008 IRS Tax Tables  A single filer would need $46,600 in taxable income to have an $8,000 tax liability  A couple would need $58,600 in taxable income to have $8,000 in tax liability The median household income in 2007 was $50,233.00

Example #1 Example #2 Nick and Nora file a joint return. Withheld= $11,000 Actual Tax Liability = $9,800 Homebuyer Tax Credit = $8,0000 Result: $1,200 regular refund + $8,000 tax credit = refund of $9,200 Cesar and Maria file a joint return. Withheld = $5,000 Actual Tax Liability == $7,200 Homebuyer Tax Credit = $8,000 Result: Owe $2,200 additional, + $8,000 tax credit = $5,800 refund. Examples of the Tax Credit

Homeowners in Trouble Hope for Homeowners GSE Refinancing GSE Loan Modification Other Resources HOPE (4673)

HOPE for Homeowners (H4H) Updates being debated in Congress Effective October 1, 2008 Voluntary for lender and homeowner New loan at 90% (93%) current appraised value FHA must approve loans and borrowers National loan limit of $550,400 (Incentives to lenders/servicers) More information at

GSE “Responsible Homeowners” Refinancing Will allow refinancing for families who owe more than 80% the value of their home Designed for those making on-time payments, but have had their home value fall Loans must be for less than conforming loan limit Estimated to help 4-5 million homeowners

GSE “Responsible Homeowners” Refinancing EXAMPLE In 2006, the family took out a 6.5% 30-year fixed rate mortgage for $207,000 on a house appraised at $260,000. Home is now worth $221,000, and they owe $200,000. They would have a hard time refinancing because they don’t have 20% equity. They could refinance into today’s rates (near 5.1%), reducing their annual payment by $2,300. Existing Mortgage Refinancing Balance$199,584$203,575 Remaining Years2730 Interest Rate6.50%5.16% Monthly Payment$1,308$1,113 Savings$196 per month, $2,347 per year

Homeowner Stability Initiative For homeowners who are at risk of foreclosure Shared effort to reduce mortgage payments  Lender must reduce interest rate, so that the payment is no more than 38% of income  Federal government will further reduce interest rate to bring the ratio down to 31%  Interest rate stays low for 5 years, then gradually increased up to conforming rate at time loan was made  Payment incentives to homeowners to reduce principal (up to $1000/year) for up to 5 years  Incentives for servicers to participate and for lenders/servicers to reach borrower before delinquent  Partial guarantees Guidelines for Loan Modifications

Example of Homeowner Stability Initiative In 2006, the family took out a 7.5% 30-year subprime mortgage of $220,000 on a home worth $230,000. Today they owe $213,431, but their home is only worth $189,000. One member of the family also had had their working hours reduced, lowering their income. Existing Mortgage Loan Modification Balance$213,431 Remaining Years27 Interest Rate7.5%4.42%* Monthly Payment$1,538$1,132 Savings$406 per month, $4,870 per year

What do Homeowners Do? As of March 4, the programs are available The information a homeowner will need to provide:  #1- call lender and ask if you are Freddie/Fannie Loan  Gross monthly income of all borrowers, including pay stubs  Most recent income tax return  Information about any second (or third) mortgages  (only the first mortgage will be modified)  Payment information on all credit cards  Any payments on other loans (student, car)

CDBG – Neighborhood Stabilization Program $4 billion allocated to states/localities based on foreclosure rate, # of subprime mortgages, # homes in default or delinquency – additional $2b allocated in ARRA – competitive bid Funds provided through the CDBG Program Funds used to:  Provide financing  Purchase  Manage  Repair  Resell foreclosed and abandoned properties Homes must be:  used to assist individuals and families with incomes at or below 120% of area median income.  Twenty-five percent of funds must be used for households with incomes at or below 50% of area median income.

Resources for More Information