Help for Homeowners Facing Foreclosure
I recently wrote an article for the Community Impact Newspaper to offer insight about the newly passed American Recovery and Reinvestment Act of 2009. This Act offers help to homeowners facing potential foreclosure or who could be in danger of foreclosure due to inability to refinance. The article in its entirety is below and I welcome your comments and feedback.
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Worried about losing your home to foreclosure or want to refinance at a lower interest rate, help is here! American Recovery and Reinvestment Act of 2009 and Making Home Affordable Program
Due to the current state of the economy many homeowners find themselves facing potential foreclosure on their home. Others have managed to keep up with their house payments only to find that they could not qualify to refinance their loan at a lower interest rate. Additionally there are first time homebuyers wondering if they can afford to purchase in this economic climate. Help for all three of these situations is being offered through the passage of the American Recovery and Reinvestment Act of 2009 and the Making Home Affordable Program. The Recovery Act bundled with the Home Program offers broad stroke help in many areas of housing and is not limited to the three scenarios covered in this article. For more information please visit the National Association of REALTORS website: http://www.realtor.org/ and search “Making Home Affordable,” and “American Recovery and Reinvestment Act.”
The American Recovery and Reinvestment Act has many facets including: Homebuyer Tax Credit, Loan Limits, Neighborhood Stabilization, Commercial Real Estate, Rural Housing (such as USDA qualifying properties), and several others. The Homebuyer Tax Credit is an $8,000 tax credit on homes purchased on or after January 1, 2009 through December 1, 2009. This credit does not have to be repaid and is filled with your tax return using form 5405. In 2008 a tax credit was enacted of $7500 for homes purchased between April 9th, 2008 and Dec. 31, 2008. The 2008 credit had to be repaid and was more like a loan than a true credit. Only first time homebuyers or buyers that have had ownership interest in a home in the past 3 years are eligible for either version of this credit. This cannot be used as down payment on the home and income restrictions apply. You are encouraged to seek the advice of a tax adviser to determine your eligibility and visit http://www.irs.gov/ to download forms.
The Making Home Affordable Program was introduced by President Obama on Feb. 18th, 2009 and seeks to provide assistance for existing home owners that have found themselves in trouble. Two keys elements of the program include: Home Affordable Refinance Program and the Home Affordable Modification Program.
Home Affordable Refinance program is available to homeowners that are current on their mortgage payments but have been unable to refinance in the past. Many of these homeowners had a decrease in their home’s value causing their “Loan to Value” ratio to go above 80%. (Determine eligibility by visiting www.Fanniemae.com/loanlookup or www.freddiemac.com/mymortgage ). This program allows homeowners to work with their mortgage company to reduce their interest rate but does not reduce the total amount owed on your loan.
Home Affordable Modification includes similar features to the Refinance plan but is available to homeowners that are behind in mortgage payments by more than 30 days or have been overdue multiple times over the past 12 months. This program also offers benefit to homeowners whose payments have become unaffordable. If you had an adjustable rate mortgage, have experienced other hardship such as layoffs, divorce, illness, etc than this may be the help you need. Proof of hardship will be required. You are strongly encouraged to contact your mortgage company if you think you qualify for this program.
At this time only conventional loans qualify for the Refinance and Modification programs but FHA, VA, and USDA changes are coming so check with your mortgage company. Contact your mortgage servicer (the company that you pay your mortgage payments to) and ask about the Making Home Affordable Programs. Other stipulations for either Refinance or Modification include: mortgage must be backed by Fannie Mae or Freddie Mac, loan must have originated prior to Jan. 1, 2009, unpaid principal must be less than $729,750, borrower must have income deemed able to support new mortgage payments, and the owner must occupy the home and not use as a rental property.
Do not fall for mortgage scams! These programs do not require any upfront fees (other than closing costs). Never, ever pay your mortgage to someone that is not your lender and never sign over the “deed” to your home to someone promising to expedite the process for you. Be very aware that predators are taking advantage of the economy and preying on people that are uninformed. Educate yourself on the programs that are available to you and only work with licensed, reputable, and designated participants.
Nicole Boynton is a REALTOR with Sky Realty, Inc – Licensed to do business in the State of Texas. Nicole specializes in Round Rock and Central Texas Homes and can be reached via email at Nicole@RRTX.info or http://www.rrtx.info/
Resources to learn more about the “Making Home Affordable Program”
Detailed Program Description from Treasury Dept: http://austintxrealestateagent.com/default.asp_Q_f_E_cpg_A_pg_E_Articles
Main Website for the Program: http://makinghomeaffordable.gov/
Determine if you are eligible for the plan: http://makinghomeaffordable.gov/eligibility.html
National Association of REALTORS Foreclosure & Response Program: http://REALTOR.org/foreclosure
Find more information on the government plans to stabilize our economy and housing: http://financialstability.gov/
Payment Reduction Estimator: http://makinghomeaffordable.gov/payment_reduction_estimator.html
Resources for the $8,000 First Time Homebuyer Tax Credit
IRS Guidance on filing for the credit: http://www.irs.gov/newsroom/article/0,,id=205416,00.html
Frequently asked questions on the Tax Credit: http://austintxrealestateagent.com/virtualoffice_files/FAQFirst%20Time%20Homebuyer%20$8K%20Credit.pdf
IRS Form 5405: http://austintxrealestateagent.com/default.asp_Q_f_E_cpg_A_pg_E_Articles
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