The Real Estate Encyclopedia
Economic Stimulus Plan
Category - Real Estate Information Sources - General Real Estate Information
The Economic Stimulus Plan has been signed by President Bush as off 2/13/2008 and is now law.

The GSE’s (Government Sponsored Entities ~ Fannie Mae and Freddie Mac) and HUD (Dept. of Housing and Urban Development) now need to determine how they will implement these changes and communicate the product and process guidelines to mortgage investors and lenders. All Lenders are now waiting for formal communication of the guidelines before finalizing their approach to the new legislation.

For Conventional Conforming Business

Here’s what we can tell you thus far for Conventional Conforming loans… again nothing is final until Fannie Mae/Freddie Mac and HUD make their formal announcements.

Fannie Mae and Freddie Mac need to consider many factors as they determine how to implement the new products. Once they have, lenders will send a formal announcement with the details.  The general target for release by the GSE’s (Government Sponsored Entities ~ Fannie Mae and Freddie Mac) is the beginning of April.  Because it is a temporary measure, this will not be as quick and easy as past increases to the maximum loan limits that were tied to home price appreciation.

Below are some high level details that Fannie and/or Freddie have provided to date:

    * The new legislation sets maximum loan amounts based on calculations tied to the HUD Median House Price amounts:
    * The maximum loan limit will be increased to 125% of the HUD Median House Price based on Metropolitan Statistical Area (MSA) up to 175% of the current conforming limit, never to exceed $729,750 for a single-family property
          o The new loan limits will not be uniform across the country
          o HUD is required to publish revised median house prices to implement the legislation within the next 30 days
    * Product parameters will be more restrictive than conforming products:
          o Full Documentation and Full Appraisals will be required
          o 660 minimum credit score
          o 90% LTV maximum for primary residence purchases and rate/term refi’s (lower LTV limits for investment properties,  second homes, and cashout refi’s)
          o 0x30 on all mortgage debt in past 12 months
          o 12 months minimum seasoning for cashout refinances since prior refinance
          o Full project review required on condos
          o The declining markets policy will be in effect (5% reduction of maximum LTV / CLTV for properties located within a declining market)
          o Product types will likely be limited to 5-yr ARMs (P&I and IO), 15- and 30-yr fixed P&I products
    * There will be special Pricing and Delivery requirements
          o Pricing will not be the same as current conforming product (we expect pricing to be somewhere between current jumbo and conforming pricing)
          o Because of the special requirements, lenders will release new products to identify these separately

Please note: the abovementioned product parameters are based on preliminary guidance only and are subject to change by Fannie Mae and/or Freddie Mac.

For FHA Business

We have not received any information as to whether or not HUD will impose any additional LTV, credit, or documentation requirements beyond standard guidelines for FHA products. As we become aware of these details, we will let you know.

Regarding HUD Sales Price Limits, the following describes how HUD derives their limits and how this new Law impacts these calculations.

For most areas, FHA limits are set at 95% of the median home price for the area.  However, there are Floor and Ceiling limits that are applied to low and high cost areas.

    * Floor: The 1-unit “Floor” will now be $271,050 (currently $200,160)
          o The “Floor” is derived from calculating 65% of the conforming limit for 1-unit properties (previously calculated using 48%)
          o The “Floor” is used for areas in which 95% of the median home price is less than $271,050
    * Ceiling: The 1-unit “Ceiling” will now be $729,750 (currently $200,160)
          o The “Ceiling” is derived from calculating 175% of the conforming limit for 1-unit properties (previously calculated using 87%)
          o The “Ceiling” is used for areas in which 95% of the median home price exceeds $729,750

As is the case for GSE’s (Government Sponsored Entities ~ Fannie Mae and Freddie Mac) eligible loans, exact limits per Metropolitan Statistical Area (MSA) cannot be determined until HUD releases the latest Median Sales Prices per MSA and confirms each MSA’s maximum loan limit


Economic Stimulus Payments - When will you receive payment

As you probably know, the United States Congress passed and President George W. Bush recently passed into law the Economic Stimulus Act of 2008, which will provide economic stimulus payments for many households. Under this new law, you may be entitled to a payment of up to $600 ($1,200 if filing jointly), plus additional amounts for each qualifying child.

Many of my clients have asked when they will receive their checks. The answer depends in part on whether you chose to have direct-deposit or paper check when filling your 2007 tax return. The answer also depends on the last two digits of your Social Security Account Number (SSN). The table below outlines the current schedule of payments.

For filers who choose DIRECT DEPOSIT, the schedule is as follows.
Last two digits of your SSN are between 00 and 20: the payments will be transmitted on May 2nd
Last two digits of your SSN are between 21 and 75: the payments will be transmitted on May 9th
Last two digits of your SSN are between 76 and 99: the payments will be transmitted on May 16th

For filers who choose PAPER CHECK delivery, the following schedule applies.
Last two digits of your SSN are between 00 and 09: the payments will be mailed on May 16th
Last two digits of your SSN are between 10 and 18: the payments will be mailed on May 23rd
Last two digits of your SSN are between 19 and 25: the payments will be mailed on May 30th
Last two digits of your SSN are between 26 and 38: the payments will be mailed on June 6th
Last two digits of your SSN are between 39 and 51: the payments will be mailed on June 13th
Last two digits of your SSN are between 52 and 63: the payments will be mailed on June 20th
Last two digits of your SSN are between 64 and 75: the payments will be mailed on June 27th
Last two digits of your SSN are between 76 and 87: the payments will be mailed on July 4th
Last two digits of your SSN are between 88 and 99: the payments will be mailed on July 11th

Please remember: the amount of your rebate depends on your personal situation and income. Please consult your tax advisor if you have questions regarding the amount of your rebate.

 
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Real Estate Information Sources - General Real Estate Information
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