Foreclosure Rescue Bill Passes Senate Banking Committee

The Senate Banking Committee today just passed , the foreclosure rescue bill.  The test vote was 83-3.  The bill is set to have a final vote by the senate later today.  There are still areas that may need working on, and Pres. Bush could veto.
My take on what the bill contains is:
  1. A requirement for the lender to reduce the loan by 10% of what is the current market value.
  2. That it is only available for adjustable mortgages that have reset and the borrower is not able to keep up, but previously the payments were on time.
  3. There are equity share requirements when the property is sold in the future.  Starting with all equity paid to the lender, and a gradual decrease of equity paid as time goes on.
  4. Also, there is a tax credit for first time home buyers up to $7,500.  I will cover buyer benefits of the bill in a future post.
There is also planned a revamp of Freddie Mac and Fannie Mae.  Those two agencies would be insuring the new loans.  The bill is not suppose to impact the US taxpayer.

I welcome your insight and comments on this.
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UPDATE:  The foreclosure rescue bill was signed on July 30th and will be in effect on Oct. 1, 2008
  • The lender has to agree to write off the loan to be adjusted to 90% of the current value (after new appr.)  It is up to the lender whether they agree to it or not.
  • 31% or more of your monthly income is currently spent on your mortgage payment.
  • A 3% FHA exit fee is charged when selling or refinancing the loan.
  • If the property with an FHA refinanced loan is sold withing a year, 100% of equity goes to the lender.  After that it is reduced by 10% each year.  At year 5 it is 50% of equity to be paid back.  It then stays at that rate.

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See this post:
Does the FHA REALLY Think They Will Get The Equity?

Posted by Kathleen Couch at 6/24/2008 12:36 PM and is filed under Foreclosures
 

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