Obama Administration - Reduced Federal Role in Housing Market

Your Distressed Property and Short Sale Expert in Maryland
 The Obama Administration is proposing to reduce the Federal Government's role in the US housing market. Here is a synopsis:

Fees: Fannie Mae and Freddie Mac negotiate negotiate the insurance for mortgages that are included in mortgage interest rates. FHA charges an upfront, and a monthly, Mortgage Insurance Premium, to cover default costs.
In the future, the administration proposes raising the insurance rates, and thus the interest rates charged to buyers, whose loans are bought by Freddie and Fannie.  FHA will raise it's monthly MIP to 1.15% from .90%, costing home buyers using FHA financing and extra $34 per month on a $170,000 mortgage.

 Loan Sizes: Most parts of the country have a ceiling of $417,000 for a GSE/FHA loan, with high housing costs areas, such as the DC area, having a ceiling as high as $729,750, allbeit at a slightly higher interest rate. Any mortgage over those ceilings are "Jumbo" and must be private loans,
On October 1st, the maximun GSE/FHA mortgage cannot exceed $625,500 in high housing cost markets, with further reductions probable for FHA mortgages.

 Down Payments:  Fannie and Freddie demand at least 5% down and PMI(Private Mortgage Insurance) for loans where the mortgage exceeds 80% of the value of the property bought. FHA requires at least 3.5% down.
Down payments will gradually rise to at least 10% of the loan for Freddie and Fannie loans, with FHA to rise to 5% down.

Mortgage Interest Deductions: Most homeowners can deduct their mortgage interest on their Federal Income Taxes. This favors upper income homeowners since they more often itemize their income taxes.
The administration did not address this  issue except to say the mortgage interest deduction can discourage investments in other areas of the economy.

Troubled Homeowners: Many home purchases in the past decade have had a first and second mortgage. Due to dropping housing values, when a homeowner becomes distressed, the second loan often has no equity in the property to cover it in a default. - upside down.

The administrtation proposes that there be provisions for modifying second loans when a borrower falls behind on a first mortgage.

That doesn't sound like a reduction of government in the housing industry.!

Dennis
Keeping People From Experiencing Foreclosure
www.MarylandDistressedProperties.com
www.Frederick-MontgomeryCountyHomes.com

Dennis Helmstetter, Associate Broker/Realtor
Certified Distressed Property Expert
Real Estate Teams LLC
O: 301-695-3020
C: 240-409-3966
E: dhelmstetter@mris.com

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