2009  Homeowner Affordability and Stability Plan for Arizona

President Obama outlined the housing portion of the stimulus plan in Mesa Arizona today.  Mesa, Arizona with a Jan 08 - Jan 09 depreciation rate of 44%.  Yes, that is 44% in the most recent 12 month period.  You can imagine that as a full-time REALTOR living and working in Mesa Arizona I was very eager to hear what plans this housing portion of the stimulus plan might offer to help curb the downward spiral we are in.  While specific details on the plan will not be available until March 4^th some major things were addressed today.

This is what I heard…

US Treasury is hoping to help as many as 3 to 4 million homeowners avoid foreclosure by providing mortgage lenders with financial incentives to modify existing first mortgages.  New modified payments will not be allowed to exceed 31% of the borrower’s monthly gross income.  (great news!)

Lender’s are NOT required to modify a loan

Let’s hope that financial incentive from the government to be announced March 4th is a good one because the last time the mortgage companies were offered the opportunity to modify loans on a volunteer basis the whole thing fell flat.

Through Fannie Mae and Freddie Mac homeowners will be allowed to refinance their existing loans up to 105%.  This will help those homeowners that would like to refinance to lower payments and take advantage of lower interest rates (especially those caught in unreasonable Adjustable Rate Mortgages) but have been unable to do so because they do not have 20% equity in their homes.  Quite a lot of Arizona families might need to be giving this some serious consideration.  Only first loans are eligible and the home must be an owner/occupied home to qualify – no investment properties.

First Time Home Buyer’s Tax Credit of $8,000 available for purchase made from January 1, 2009 – December 31, 2009.

This credit was changed quite a bit during those final days of negotiating in DC.  The final credit resulted in a credit that need not be paid back if you reside in the home for at least 3 years. 

FHA limits will return to the temporarily elevated ones of 2008

This means our current FHA loan limit of $271K will be elevated back to $346k.  The FHA product is useful in getting the housing market moving again, because the FHA product offers buyers more flexibility. 

[Here is the problem I always come back to when dealing with banks and distressed homeowners… Banks are effectively lame, dumb and blind when it comes to responding to the current workload they have.  It takes them literally MONTHS (yes that is plural) to even assign someone to look at a homeowner’s case, let alone start processing it through layers and layers of reviews and approvals.   How does this plan address or tackle that harsh reality?]