The Economic Stimulus package approved by the Senate and the House is being sent to President Bush for signature. The $170 billion package which includes tax rebates for millions of working Americans and business owners includes a temporary increase in the conforming loan limit.
The economic stimulus package will allow the Federal Housing Administration, as well as Fannie Mae and Freddie Mac to offer mortgages above the current conforming loan limit of $417,000 to as high as $729,750 in high-cost areas for loans originated between July 1, 2007 and December 31, 2008.
· The FHA limit will increase to as much as $729,750 in high cost areas (to 125% of local median home prices) for loans approved on or before December 31, 2008. In addition, the measure gives the Secretary of HUD the discretion to raise any individual area loan limit by an amount not to exceed $100,000.
· The GSE limit will be increased up to $729,750 for loans originated after July 1, 2007 to December 31, 2008. Currently Fannie Mae and Freddie Mac are capped at $417,000. It appears the formula mirrors that used by FHA, with GSE loan limits increasing to 125% of the local median home price, but not to exceed $729,750.
The stimulus package also will deliver tax rebates of $600 to $1,200 to taxpayers, and $300 checks to disabled veterans and seniors.
SB 1055 (Machado) Cancellation of Mortgage Indebtedness would provide limited conformity to federal income tax laws by mortgage debt relief only for tax years 2007 and 2008. Recently, the federal government enacted the Mortgage Debt Relief Act of 2007 that permits 3 years of mortgage debt relief by not requiring borrowers to pay income tax on debt forgiven in a “short” sale. This statute will apply to tax years from January 1, 2007 through January 1, 2010.
A Foreclosure Prevention Workshop for present and future homeowners will be hosted by State Senator Bob Dutton on Saturday, February 23rd from 10 a.m. to 12 noon at the California University, Riverside (UCR) Extension Campus, 1200 University Avenue in Riverside. UCR is a co-host of the free workshop that will be presented by the State and Consumer Services Agency, the Department of Consumer Affairs, and the Department of Business, Transportation and Housing.
The key speakers at the event will be Carrie Lopez, Director, Department of Consumer Affairs and Heather Peters, Deputy Secretary, Department of Business, Transportation and Housing. Secretary Dale Bonner is also invited to speak to the attendees. In addition, there will be representatives from other state agencies that deal with real estate and home mortgages along with experts from the fields of credit counseling, loan servicing, and lending practices. Attendees are encouraged to bring their loan documents, delinquency notices and any questions they may have.
A Federal Reserve survey indicates the rise in mortgage defaults and construction costs are making the process of obtaining a home or building construction loan more difficult. More than half of the U.S. lenders who responded to the January 2008 Senior Loan Officer Opinion Survey reported having tightened standards for prime mortgages during the quarter, an increase of 40 percent from the Fed’s survey conducted during the previous quarter.
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