Ro Troia

The Rescue Plan Could Save Our Housing Market

Even Boulder Colorado is struggling in our current economic state.  In relation to real estate, my customers are worried.  Clients are telling me that they feel the strain on their pocketbooks.  Buyers fear loan rejection and homeowners are pricing their homes low in order to sell.  Can the recently passed Economic Stabilization Act of 2008 save us?  While the rescue plan doesn’t directly address the decline in property values, it could set the stage for the housing market’s recovery.  Read more about how this act could benefit the real estate industry in several ways.Ways it can help homeowners…

A Troubled Asset Relief Program (TARP) will be put into effect.  This program purchases and guarantees the troubled assets from financial institutions that hold mortgages and/or mortgage backed securities.

Stricter regulations. When the Treasury or other Federal agency rescues problem mortgages from financial institutions, they will be required to work with lenders and mortgage servicers to find ways to avoid foreclosures. 

According to the National Association of Realtors, all federal agencies are required to work with servicers to facilitate loan modifications that will consider the net present value of the mortgage.

Existing mortgages can be changed to include:

• revisions in principal
• interest rate
• period for repayment

More ways the Emergency Act will benefit the housing market and homebuyers…

It will get money into the financial system quickly and since the credit markets are nearly frozen, the legislation lets the government buy troubled loans and mortgage securities.  These funds are to be available to provide new mortgages with detailed and monitored lending standards.

 

In my opinion don’t worry, because loans are still flowing.  With good credit, a down payment, and a steady income, you can get a loan and buy a home.  And if you can’t put 20% toward a down payment you can qualify for a conventional type loan.  A 10% down payment with good credit can secure an insured loan which means you pay mortgage insurance.  There’s FHA type loans which are becoming a force to be reckoned with.  Right now, FHA is pretty much the only body that offers 30-year fixed-rate mortgages with consumer-friendly credit standards and 3.5% down payments.  It’s possible that the Federal Housing Administration will continue to explode in home loans especially with the bailout.

Homes that are priced right, are selling.  And the bailout may provide more relief measures aimed at homeowners facing foreclosure.  Realtors, homeowners, and borrowers all can breath a sigh of relief.

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This entry was posted on Sunday, October 5th, 2008 at 7:37 pm and is filed under Buyer's Corner, Market Conditions, Selling Thoughts, Trends. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

1. paul nader vets united said at October 5th, 2008 at 7:48 pm

   Barack John
   Left and rights of passage
   Black and whites of youth
   Who can face the knowledge
   that the truth is not the truth?
   Obsolete Absolute

   Ron Ralph
   Cruising under your radar
   Watching from the satellites
   Take a page from the red book
   and keep them in your sights
   Red alert Red alert

   USN

2. DiscoStu said at November 12th, 2008 at 9:59 pm

   I’m just glad mortgage rates are dropping here in Australia, after the constant rises under the previous conservative government, it’s nice to be paying a little less at last!

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