I know this is not “new” news, but the closer we get to October 1st the more I get irritated about the passing of housing bill HR 3221.
But the bill will help millions of people,… help first-time-homebuyers purchase homes,…help people save their homes,… make positive changes to FHA so more people can be helped,… help people stay out of foreclosure…….RIGHT??
Well, the fact of the matter is that even though there are some good points to the massive housing bill recently signed, it falls far short of the help that is truly needed to steer us out of this mess. The most obvious are the changes to FHA. FHA has this year been a loan program of choice for those without 10% or more to put down and has been used more this year than the last several years combined; a loan program for the first-time homebuyer and many others. After rumors that the down payment requirements may be lowered to perhaps 1.5% to allow more hard working people to qualify for a loan, the change that was agreed upon was to increase the minimum down payment from 3% to 3.5%. Not a big change, but clearly in the wrong direction. Another change was the elimination of the use of down payment assistance programs such as Nehemiah. The result, fewer people being able to purchase a home.
What about this tax credit I heard about? True, first time homebuyers would be able to qualify for a tax credit of up to $7,500 if their income is less that certain limits; but how does a tax credit next year help someone to purchase a home today?!? Oh and by the way…..it is really a loan that will need to be paid back over the next 15 years.
What about the $300 billion allocated to FHA to help homeowners who are facing foreclosure to refinance to low rate loans? Question: how did the last short sale you worked on go? This is nothing more than a “short refi”. With the legislation, it will still be up to the lenders to be willing to “write off” the amount of negative equity in the property to allow the owner to re-finance the home for a maximum of 90% of the newly appraised value. Guess what? You will still be working with the dreaded loss mitigation department – yup, that will work just fine.
It is more and more apparent that the legislation was and is, for the most part, political posturing.