Hi folks. I am writing today to pick your collective brains a little. Have you heard that the House of Representatives recently passed a bill, H.R. 5830, named the Federal Housing Administration (FHA) Housing and Homeowner Retention Act?
From what I've read, and understand, this Bill will give distressed Homeowners an opportunity to refinance with FHA at 90% of value IF their current Lender will agree to a short payment.
One of the caveats is that the FHA will own a piece of the action. When the borrower sells they will either pay, from any profits, a 3% exit fee (a percentage of the original loan amount) to the FHA or a declining percentage of any net proceeds, attributed to appreciation, (from 100% in the first year to 50% in year 4 or after) whichever is larger.
I guess this FHA participation, in the appreciation, is to prevent speculators and second homeowners from participating. This Bill is designed specifically to keep folks in their homes.
My first thought is WOW!!! How great would this be to assist folks that are facing foreclosure who are in a short sale position? How receptive will lenders be to accepting a short sale at 90% of value?
Then I start thinking about FHA owning a piece of the appreciation. Basically they would now be an equity partner to the homeowner.
OK, I need to get my head around this. You can find Bill H.R. 5830 here. Please help me to understand the pros an cons of this Bill. What are your thoughts?
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