Greetings,

Today President Obama announced The Homeowner Affordability and Stability Plan (HASP), the administration’s plan to help homeowners. Highlights include: 

  • Low cost refinancing options for homeowners currently with high LTV’s.
  • Homeowner Stability Initiative to provide loan modifications to lower payments to more sustainable levels.
  • Establish clear and consistent guidelines for loan modifications.
  • Strengthening confidence in FNMA/FHLMC by increasing funding and expanding the size of their portfolios.

Given the high profile the media is giving this you will probably get some questions.  It is important to stress that although announced today it will take some time for the appropriate agencies to formulate their policies surrounding this plan. 

Overall this is a positive for the housing market and the economy in general.  Next up will be the Treasury Department’s expansion of TALP (son of TARP) to include the purchase of non-agency MBS’s.  This should provide relief to the jumbo market similar to what Treasury buying did to conforming rates in late 2008.

Now, about the new tax credit and how it affects mortgage revenue bond financed lending (Oregon Bond): 

Last year, Congress provided taxpayers with a refundable tax credit that was equivalent to an interest-free loan equal to 10 percent of the purchase of a home (up to $7,500) for first-time home buyers. The provision applies to homes purchased on or after April 9, 2008 and before July 1, 2009. Taxpayers receiving this tax credit are currently required to repay any amount received under this provision back to the government over 15 years in equal installments, or, if earlier, when the home is sold. The credit phases out for taxpayers with adjusted gross income in excess of $75,000 ($150,000 in the case of a joint return).

The new bill eliminates the repayment obligation for taxpayers that purchase homes after January 1, 2009, increases the maximum value of the credit to $8,000, and removes the prohibition on financing by mortgage revenue bonds, and extends the availability of the credit for homes purchased before December 1, 2009. The provision would retain the credit recapture if the house is sold within three years of purchase. Click here for the details.

This is a lot of information to digest. More information and more data will follow as it becomes available. Don't hesitate to call if you have any questions.