Obama has his hands full and so does our congress as Americans are facing extremely tough economic times. There are two Bills in the House of Representatives that if passed and ultimately pass the Senate and are signed into law by President Obama will help many American families
On this historic day we have witnessed the swearing in of the first African American President of the United States of America and all Americans are hopeful. President Obama has his hands full and so does our congress as Americans are facing extremely tough economic times. There are two Bills in the House of Representatives that if passed and ultimately pass the Senate and are signed into law by President Obama will help many American families.
The first Bill pertains to senior borrowers. When Congress passed H.R. 3221, the Housing and Economic Recovery Act of 2008, one of the provisions was to raise the national limit of the Home Equity Conversion Mortgage (HECM or “Heck-um”), also known as a reverse mortgage, to a single national limit. This helped many borrowers nationwide as the old limits started at just over $200,000 and capped at a maximum of $362,790.
The new limit would establish a single limit for the entire country higher than the existing highest limit. But the Legislation was extensive and not even all member of Congress knew exactly what they passed. The two Senators from California alone, Diane Feinstein and Barbara Boxer both issued letters with different limits based on their understanding of the new legislation!
After HUD reviewed the legislation, they made the decision to raise the limit to the lower of the limits being discussed, $417,000. While this amount helped many borrowers nationwide, it was not much benefit to senior borrowers in higher cost markets where the limit was only raised from $362,790 to $417,000.
Add to that pressure the total collapse of all jumbo reverse product with the credit crisis and soon many senior borrowers found themselves without adequate means as their 401K and stock market funds disappeared and there was no viable alternative to relieve them of their higher mortgages.
However, there is now a Bill containing a provision to raise the HECM limit through the end of 2009 to $625,500 which has been introduced in the House of Representative according to the National Reverse Mortgage Lenders Association (NRMLA). If ultimately passed and signed into law, senior borrowers with higher valued properties who cannot get relief now due to the limits of the Reverse Mortgage Program may find relief in a higher limit.
A second Bill which has been introduced in The House of Representatives which may bring hope to all borrowers seeking to purchase a home is H.R. 600 which will restore Down Payment Assistance Programs. The current form of the Bill can be viewed here: http://www.sgadpa.com/docs/HR600.pdf.
This is another Bill which is a long way from being passed, but those looking to purchase a home had a vehicle as late as September of last year (loans actually had to fund by October 1, 2008) by which they could utilize the Down Payment Assistance Program (DPA) and purchase a property with 100% financing. If this Bill should ultimately pass and be signed into law, qualified buyers whose only obstacle to homeownership will again have a vehicle to purchase a home utilizing FHA financing.
Considering how drastically the costs of homes have dropped in many areas of the country and how low interest rates are right now, this could not be a better scenario for those looking to purchase in this market. Young, first-time buyers would be able to buy more house with the current rates and a viable DPA than at any time in the recent past.
So as the nation welcomes our 44th President, we also welcome the news of legislation which will help homeowners and prospective homeowners of all ages. As we have great hopes for this President and his administration, we also have hope that our legislators move swiftly on these pieces of legislation.
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