HOUSING RESCUE BILL FACTS What is This?
On Oct.1st, 2008, a $300 billion dollar housing rescue bill will go into effect. FHA approved lenders can make loans for homeowners who have a bank that is willing to write down the value of the existing loan to 90%. The current lender is not obligated to participate in this program. They can volunteer if they feel that taking a loss is more beneficial to them long term. Any homeowner who goes through this program must qualify under FHA specified guidelines so income, assets, credit scores and employment history will still be a major part of the approval process.
Who is Qualified?
Approximately 400,000 homeowners and their loans made against owner‐occupied homes will participate in this program. For any trust deed or mortgage to qualify, they must have been taken out between Jan. 1st, 2005 and June 30th, 2007. Also, the homeowner must prove that their Debt‐to‐Income is at least 31% or higher (If it's too high though, would a new lender want it?). Any home equity loan or line of credit must be closed before proceeding with the FHA loan. Borrowers are not permitted to take out another home equity loan for at least five years, unless itʹs to pay for necessary upkeep on the home.
What Does It Cost?
Typical refinance fees can be rolled into the loan. A 1.5% FHA mortgage insurance premium fee will be charged to the client annually. In the event that a client refinances or sells the property after this FHA‐loan is complete, the following fees will take place:
•3% exit fee
•100% of all profits paid to FHA if refinanced or sold within 1st year
•90% of all profits paid to FHA if refinanced or sold within 1st and 2nd year
•80% of all profits paid to FHA if refinanced or sold within 2nd and 3rd year
•70% of all profits paid to FHA if refinanced or sold within 3rd and 4th year
•60% of all profits paid to FHA if refinanced or sold within 4th and 5th year
•50% of all profits paid to FHA if refinanced or sold after 5 years
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