ECONOMIC STABLIZATION ACT - WHAT IT MEANS TO YOU

My wife asked a very important question this morning - so what does this new Act do for the housing market?

I then read the entire Act and wrote a blog of the Act in a NUTSHELL.  Then realized that I have not discussed what the Act will do for Realtors and distressed homeowners.  The Act is not the cure-all.  The Act authorizes the creation or expansion of governmental entities and departments to deal with the housing crisis.  Implimenting these provision is what will create the "cures".  Assuming the "cures" are in place, this is what I see:

Realtors -

Opportunity is the catch all phrase.  Opportunity to take a part of the disposition and management of loans purchased by the government through loss mitigation services of property management of abandoned properties.  Opportunity to service REO properties. Opportunity for disposition (sale) of REO properties.

Mortgage Brokers - 

Refinance Opportunity is for the placement of FHASecure loans under the HOPE program.  A possible Opportunity for brokers to negotiate restructuring of the existing loan under the new Economic Stabilization Act that mandates reductions of principal and recasting of interest and term of loan.

Distressed Homeowners -

Primary Homeowners have the most options, which include the Hope program as well as renegotiation of the existing terms of your mortgage so that the mortgage again becomes affordable.  This is NOT designed to be a windfall and you can expect the government program to have strict guidelines for qualification so there is no "profiteering".

Investor Homeowners should expect limited help, but there is no distinction in the Act for the renogiation of existing loans to make them more affordable and allow cashflow from what were to be income producing rental properties.  Expect some "shared appreciation mortgage" concepts to be used where the government lender shares with you the "upside" profits on the sale or refinance of the property in the future.

The goals of the Act are two-fold.  One is to create some economic stimulus through "freeing up" locked illiquid assets held by investment firms and lenders, so theoretically they can again extend credit or buy up "safer" mortgage backed paper.  Two is to create a slow down in the rates of foreclosure by giving alternative plans to homeowners and lenders that were to foreclose, and thereby reduce the inventory of homes on the market because of the need to unload properties that homeowners cannot afford and lenders have to re-sell.

How this will actually occur is going to be created in the next few months - there will be a flurry of activity and we all need to keep a keen eye on this developing opportunity.

Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make.  This article is for information purposes and is not specific advice to any one reader. 

Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660  RPZ99@FLORIDA-COUNSEL.COM - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide!  Shortsales@Florida-Counsel.com  Webpage www.florida-counsel.com