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Mortgage Tax Relief and Lower Down Payments

With the turn in the economy, also comes call for changes in mortgage restrictions.

Source: National Association of Realtors

Call for Action: Mortgage Forgiveness Tax Relief
During the NAR Conference & Expo in New Orleans, NAR launched an all-member “Call for Action” (CFA) on “The Mortgage Forgiveness Tax Relief Act.”  This bill would extend an expired provision that has helped millions of distressed American families by allowing tax relief for homeowners when lenders forgive some portion of the mortgage debt they owe.  The provision expired last Dec. 31st and it is imperative to get it extended before impacted homeowners have to file their 2014 income tax.  The Call for Action asks all REALTORS® to contact their Member of Congress and United States Senators and urge an immediate vote when the “Lame Duck” session begins following the election.

Fannie Mae and Freddie Mac to Accept Lower Down payments At the 2014 REALTORS® Conference and Expo, Federal Housing Finance Agency Director Mel Watt announced that Fannie Mae and Freddie Mac are working on “sensible and responsible” guidelines to ensure borrowers who take out low-down-payment loans can afford to repay them. Director Watt stated that there are creditworthy borrowers who have enough income to afford monthly mortgage payments but not a large downpayment and closing costs. He said FHFA will offer loans with as little as 3 percent required up front from borrowers. Additionally, because downpayment size is not the best indicator of whether a borrower has the ability to repay, Fannie Mae and Freddie Mac will also evaluate the full financial picture of a borrower, including credit histories and other compensating factors. Director Watt said that Fannie Mae and Freddie Mac will also soon offer mortgages with loan-to-value ratios of 95% and 97%. However, he stressed that the new loan products will be “targeted in scope,” and only available to creditworthy borrowers.