I am both a Mortgage Broker and Realtor and have studied this bill as closely as I can. The bailout that they are offering is great if you are successful at convincing the original lender holding the note to take a huge cut (short) in order to refinance the first. Then, the owner has to share their profits with the FHA once they sell their home! It's a sliding scale but it never goes away - they will always have at least a 50% obligation to the FHA on the profits of their sale.
The $7500 tax credit is tricky because it has to be paid back over a 15 year span. The Buyer will not get it in time for their closing so it's really not helping the Buyer up front to secure a loan. But, it is Interest Free money so as long as the Buyer is aware that it has to be paid back, it's not a bad deal. The method of repayment is of question at this time. They may collect it in your tax return; they may not. I'm not sure about that yet and I don't think congress is either.
Check with a mortgage broker to see which types of loans apply. FHA is the best at the moment. You can even get up to $35,000 to fix up a home you buy now. That is financed into your mortgage amount. You have to purchase the property as a primary residence.
Sandra Potter, CRS, GRI
Prudential Colorado Real Estate
360 S. Monroe St., Suite 500
Denver, CO 80209
That's an interest-free loan and home ownership instead of renting. It's a good thing.
I think everyone taking advantage of it has to be sure and be well informed of the pay-back provision, if you don;t take time to understand it, the reality of it later could be bitter sweet
I also support tightening regulations on mortgage brokers to help avoid the widespread predatory lending practices that are now being prosecuted. Many borrowers were told at the last minute at the closing table that the fixed rate mortgage for which they had applied and been approved was "pulled at the last minute" and that the borrower was being offered a ARM loan. Of course, they were sitting there with their moving truck on the way to the new house. When those ARM loans escalated above the initial teaser rates, and property values declined, they were upside down in a mortgage they could no longer pay. These situations have fed the short sale and foreclosure problems. Granted, we also had over investment because flipping had been so profitable for several years. At any rate, there are many affordable homes right now, and the $7500 credit should increase the buyer pool, reduce inventory, and gradually stabilize the market. What is your opinion?
Have you read the Barron's Magazine article about the Case-Shiller Report on the real estate market? It is quite scholarly and easily available online. They predict mid 2009 for the beginning of recovery. Read the reasons why.