New Housing Rescue Bill

A new bill was submitted to Congress and the President on Wednesday, July 23rd. This is another attempt for the Feds to step in and try to assist with the problem of foreclosures. This new bill will help up to 2 million borrowers refinance their current mortgages with an FHA (Federal Housing Administration) loan. This should help borrowers save money with these refinancing programs. First time home buyers will receive a tax credit and states would be authorized to issue an additional $11 billion to refinance subprime loans.

To qualify for this assistance, borrowers must live in their homes and have financed the property between January 2005 and June 2007. At least 40% of their gross monthly income must be going towards their household debt. Borrowers must show that they are not able to continue making payments to qualify for this assistance. If any home equity lines of credit are on the house, they must be paid off before borrowers receive this assistance. The total debt cannot be in excess of 95% of the home’s appraised value at the time of appraisal. There are little up front costs for borrowers for this refinancing option, but consumers must agree to certain terms including an insurance premium of 1.5% of the principal annually to the FHA.

The bill was passed to Congress and the President on Wednesday. Both are expected to sign this bill.