Since April of this year, the National Association of Realtors has been saying that the mortgage market crisis is the most critical issue facing the real estate industry, if not the entire economy. Several proposals have been made by the NAR, and many are now being championed by the Bush administration. NAR is favoring these positions on mortgage relief bills:
- Many borrowers have ARM mortgages that have adjusted upward significantly after being lured into the program by a low teaser rate. FHA will offer government backed refinance programs to subprime borrowers who have recently defaulted on their mortgages but have generally good credit and income verification. Currently, FHA underwriting standards prohibit guaranteeing a loan to a buyer who has become delinquent on mortgage payments.
- Freddie Mac and Fannie Mae have already made these adjustments to allow financing for borrowers who are behind on mortgage payments.
- Remove the 3% equity requirement for FHA insured loans. This would allow borrowers with negative equity to refinance to an FHA loan.
- Raise maximum loan limits in high cost areas. Current $362K limit would be raised to $417,000.
- The Bush administration will offer temporary tax relief from mortgage debt forgiveness. Currently, if your lender forgives some of your mortgage debt, a 1099 will be issued, and the amount forgiven will be taxed as income.
- Stepped-up efforts by Treasury and Private Loss Mitigation to identify and help borrowers identified as high-risk for default
What can you do?
Look up your federal congressional representative here and ask for his/her support of these positions.