You Did It! Congress Restores FHA Loan Limits

YOU DID IT! Last night Congress restored the loan limits for the Federal Housing Administration (FHA) for two years. As you know, in late September the FHA, Fannie Mae; and Freddie Mac loan limits were reduced in 42 states pricing potential home buyers out of the American Dream of home ownership and holding back the housing recovery. NAR immediately went to work with the goal to get the loan limits restored in Congress. For weeks that goal seemed unlikely. You, and countless other REALTORS® like you along with YOUR leadership and YOUR management team worked to educate Congress that well-qualified buyers didn't need yet another hurdle to access affordable mortgage financing. They finally listened. Because we were persistent. And because we were right. The reinstated FHA loan limit formula and cap change will help make mortgages more affordable and accessible for hard-working, middle-class families in 669 counties in 42 states and territories, where the average loan limit reduction after the reset last month was more than $68,000. The provision reinstates the FHA loan limits through 2013 at 125 percent of local area median home prices, up to a maximum of $729,750 in the highest cost markets, the floor will remain at $271,050. However, Congress chose not to apply the loan limits restoration to Fannie Mae and Freddie Mac. Fannie-and-Freddie-backed mortgages will remain at 115 percent of local area median home prices up to $625,500. The bill also provides for a short-term extension of the National Flood Insurance Program through December 16, 2011. NAR will continue to press Congress to use the additional time to complete their work on a five-year reauthorization of the program, which ensures access to affordable flood insurance for millions of home and business owners across the country. I know that when we work together we can accomplish anything we set our minds to in order to preserve, protect and defend the American Dream of Home Ownership. Because of your excellent work, I am continually reminded that “REALTORS® are the Heart of the Deal.” With much appreciation, Moe Veissi 2012 President NATIONAL ASSOCIATION OF REALTORS®

Should I walk away from my home?

(Originally published October, 2010)

My Selling Savannah Now newsletter, which is currently more read than my website, generated a reader question:
"Joseph, my home is valued far less than what I paid for it and I can't afford my mortgage payments. I am tired of struggling; should I just walk away?"

Dear Reader, The answer is NO!

Please consider all your options. Perhaps you could rent a room in your house for $500 a month. Could you rent your home and downsize to an apartment?  Have you explored all refinancing options? If your lender agrees, you can renegotiate the interest rate, the number of payments and even the balance due. Talk with your lender about obtaining permission to sell the house for less than the balance due on the mortgage in a short sale. Talk with a lawyer about bankruptcy. Please do not walk away. Here's three reasons why.

Even though the Whitehouse officially rejected a foreclosure moratorium on October 12, 2010, that is not a "green light" to have your home foreclosed on. This is an election year and, as we've seen so far, a foreclosure moratorium is still a big issue in battleground states.

And remember that on June 24, 2010 Fannie Mae amended policy "to encourage borrowers to work with their servicers and pursue alternatives to foreclosure." And by "encourage" they meant punish defaulting borrowers who walked away and did not have that capacity to pay or did not complete a work-out alternative in good faith with their lender.

Punish how? By making the borrower ineligible for a new Fannie Mae loan for seven years starting on the foreclosure date.

Now that this policy is in place, I'm willing to bet it will become more stringent to encourage even more people to pursure foreclosure alternatives.

Lastly, Georgia is a judicial foreclosure state and deficiency judgments are allowed. This means that if you walk away a lender can sue you for the difference between what you owe on the house and what it is worth. And this could occur years down the road after you've gotten back on your feet.

Go over your budget carefully and do your research. Walking away seems easy, but in the long run it definitely is not.
http://www.fanniemae.com/newsreleases/2010/5071.jhtml?p=Media&s=News+Releases&searchid=1287691844653