Makes Sense to ACT Now!

The Housing and Economic Recovery Act of 2008…

…and how it impacts YOU!

Joe LO

XYZ Mortgage Company

Disclosure: All loans subject to credit approval and property appraisal. Programs, rates, and terms subject to change without notice. For ARM loans, rate may increase after settlement. Prequalification is not a commitment to lend, a condition of loan approval, or an application for credit. Pre-approvals will result in a loan decision subject to conditions. Consult a tax advisor regarding the deductibility of interest.-- a Division of National City Bank

Why this new law?• To help a sluggish housing market recover

• To strengthen an also sluggish US economy

• To provide additional benefits to current homeowners, and encourage home purchases

• To help prevent more foreclosures, which weaken home prices nationwide

• To prevent “bad actors” from participating in the professional business of home loan lending

Let’s Break it Down

• FHA “Modernization” – several changes

• New Tax Credits and Incentives

• Conforming “Jumbo” loan changes

• Hope for Homeowners in trouble

• New Quality Standards for Mortgage Lenders

Seller Paid Down Payment Assistance

• Going, going… not gone yet, but slated to be eliminated October 1, 2008

• Why? These loans have triple the chance of default and foreclosure over traditional FHA loans

• Bills already in progress to resuscitate, but all guarantees are off

• If You Want It – Get It Now!

More Cash Needed Ahead• For FHA financing, minimum cash

investment is increasing from 3% to 3.5%• Mortgage Insurance costs will likely be

increasing too• HUD in process of clarifying details and

when this will take effect• Bottom line… Act now to get best benefits

before changes take place!

Good News…Did Someone Say Tax Credits?• Calling All First Time Home Buyers

– Or Any Non-Homeowner in the Past Three Years– Good for Buyers From April 9, 2008 Through July 1,

2009

• Tax Credit Up to $7,500– 10% of Sales Price up to a Maximum of $7,500– Must be Primary Residence– Income Limits $75K for Singles or $150K for Couples– Phases Out at $95K and $170K Respectively

The Fine Print

• The Tax Credit is generous…but is actually an interest-free loan, must be Paid Back Over 15 Years at $500 per year

• If home sold early, repayment of loan is limited to amount of appreciation

• If you die…the good news is that your loan is forgiven. The bad news is…that you are dead.

Tax Benefits for Current Homeowners

• For whom? Those who own a home but currently file the EZ form, or do not itemize their tax deductions

• Most homeowners itemize deductions – but this will help some individuals

• May be able to deduct real estate property taxes, up to a maximum of $500 for a single person, $1000 for married

Who You Calling “JUMBO”?• “JUMBO” loans are those larger loan amounts, above a

preset limit set by Fannie Mae and Freddie Mac, presently at $417K

• In recent times, Fannie and Freddie have temporarily allowed more favorable interest rates on loan amounts normally considered to be “Jumbo”

• This benefit was set to expire, but has been extended• However, the maximum limits have decreased

– First Capped at $417,000 – No Change– Maximum Caps Pulled back to $625,500 – Few Markets Hit

Here– Capped for Others at 115% of Local Area Median

Hope for Homeowners• Who will this impact? Homeowners who are “upside-

down” in their homes, ie: they owe more than the property is currently worth… and are headed for trouble

• Very detailed eligibility guidelines

• Must agree to split all future equity built up in the home with the government, 50/50

• Foreclosed homes drag down property values for everyone… so this is good news for all homeowners

The Heat is On…Originators• Federal Licensing Requirements are Coming,

and Will Improve the State of the Mortgage Industry Overall

• No Crooks Allowed

• Smarter Mortgage Professionals Ahead

• Have to Be in Good Shape – Financially That Is

• Working With a True Professional is Always Key

ACT NOW. WHY?• Home prices are low – and most experts believe a

bottom in real estate is here• Remember – you can’t see a “bottom”, until it is already

in the rear view mirror• Home loan rates still exceptionally low• Benefits of this legislation will not last forever… why

miss this opportunity?

I am a professional that is on your side.

Let’s make your dream of homeownership come true!