Haven’t heard of a “buy and bail” scenario?  It goes something like this:

Until now, people who decided to rent their home instead of sell it were allowed to claim 75% of the rent on their current property as “income”, which they could use  as income towards the purchase of another home.

There have been people exploiting that to avoid selling their home, and then letting their previous home fall to foreclosure, leaving their lender holding the bag. (This sort of thing is also known as “mortgage fraud” in certain circles…)

The new guidelines are designed to prevent people from doing that.  You can still qualify to use that rental income as revenue towards purchasing another home, but only if you have at least 25% equity in your previous home.

For people with rental properties as investments, this shouldn’t affect you much.  What this does affect is people looking to move their primary residence and don’t have enough equity to sell.  The concept of renting your home until the market gets better may no longer be a possibility.

If you have any questions about how this decision may affect you, please feel free to give me a call!

~Jonathan Benya- Realtor
Century 21 New Millennium
9405-A Chesapeake St
La Plata, MD 20646
301-609-9000
301-653-8116
Southern Maryland Real Estate Blog

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There’s been quite a few stories this evening about the Fannie Mae/Freddie Mac Takeover(Socialization) this evening.  The first question on many people’s minds is: What Does This Mean To Me?

I’m not going to muse on the repercussions of holding their stock (ask the wall street analysts, but it doesn’t look good), but I do want to look at what this means for ordinary folk like you and I that may have a mortgage backed by the lending giants.

You see, the purpose here is to PREVENT Fannie and Freddie from going under.  They’ve lost over 3 billion dollars in the last 3 months,  and the Government has stated they would step in to financially back them in order to prevent failure.

If the Government steps in as expected, first and foremost, the government will be financially insuring the losses here (This may add a billion or 3 to the national debt, but hey, who’s counting?).

If you’ve got a note with them now, this is designed to protect you.  It will ensure that they remain solvent enough to operate.  But what about people looking to possibly get a note through Fannie or Freddie?  Well, this might be the biggest (perhaps only) winner out of the whole deal, and here’s why:

Government control over these entities is going to ensure, without a doubt, their financial solvency.  Government regulation will likely allow mortgage rates to remain lower than they would be if the groups financial stability remained threatened.

This could become a great step in helping the housing market recover, but it’s going to come at the expense of ALL taxpayers, and the bill is certain to be in the Billions.  If you’re getting ready to purchase a home, keep your eye on what happens to the mortgage rates next week, and be ready to lock in if the rate takes a dip!

~Jonathan Benya- Realtor
Century 21 New Millennium
9405-A Chesapeake St
La Plata, MD 20646
301-609-9000
301-653-8116
Southern Maryland Real Estate Blog

In order to apply for this program, you must:

• Have a loan originated prior to 2008
• Be paying paying more than 31% of your monthly income on your mortgage
• The program qualifies for PRIMARY RESIDENCE ONLY
• Have your income verified

The program will not take effect until October, 2008, runs through September, 2011, and here’s the kicker (There’s always a catch, right?):

Lenders can pick and choose which loans to refinance under the program!

This means that if your lender isn’t in the mood to adjust your loan, you’re out of luck!  The catch is that the bank WILL be losing money on the deal, as the loan is essentially going to be giving owners 10% equity (Loans can only be up to 90% LTV), so I would imagine that even though 400,000 people are theoretically “eligible”, far fewer are going to be given a break as the lenders will be eating crow on the deal.

This isn’t a free money deal for the homeowners, however:

If you sell during the next five years, you must agree to share 50
percent of any profits from the resale with the government. What’s
more, homeowners can only retain equity gains based on a sliding scale.

The homeowner would have zero equity from a sale in the first year,
with the amount rising 10 percent in each succeeding year and capping
at 50 percent from a sale in year five and thereafter.

The equity must be repaid because the maximum amount on the new loans will be capped at 90 percent of the current market value.

This has a big impact on OUR area because of all the military families in the area that are struggling to make payments.  If you get re-assigned in a year, you lose all of your financial gain in the home!

The entire 694-page bill can be viewed at: http://www.house.gov/apps/list/press/financialsvcs_dem/hr3221_bill_text.pdf

Want more information on the new bill, and what it means to you?  Call Jonathan Benya at 301-653-8116 and I’ll be more than happy to help explain what to do and how to do it so you can take advantage of this opportunity!

~Jonathan Benya
Century 21 New Millennium
9405-A Chesapeake St.
La Plata, MD 20646
301-653-8116
301-609-9000
http://www.teambenya.com

    For Charles County and Calvert County, the new limit for a FHA loan on a single family home is $729,750.  For those of you who know the area well, that’s an astronomical number when you consider the average sales price of a home is closer to $300k!

St. Mary’s County is considerably lower, the new limit is now $400,000, and while St. Mary’s is considerably cheaper to live in, this is still a remarkable change.

    Also, Prince George’s County has been adjusted to $729,750 as well.  The biggest benefit for buyers is likely to be in P.G. County, and hopefully this will help to keep loan rates down as less people will have to consider Jumbo financing.

~Jonathan Benya
Century 21 New Millennium
9405-A Chesapeake St
La Plata, MD 20646
301-609-9000
301-653-8116
Waldorf and Southern Maryland Real Estate
www.teambenya.com