The proposed $15,000 tax credit for all home buyers is gone from the plan. The updated first-time buyer tax credit now stands at $8,000, and is effective between 01/01/09 - 12/31/09. The credit does not have to be repaid unless the home is re-sold within 3 years.
Homeowner Affordability and Stability Plan mostly helps with refinancing. It is designed to assist homeowners who wish to refi, but can't because the value of their homes has fallen so sharply. Changes are coming to current underwriting rules. The plan would require that lenders incur the first largest losses to modify existing mortgages. Lenders will have to agree to participate. Lenders who accept TARP funds in the future will be required to comply with the plan; this may stop lenders from accepting future TARP funds. $500-$1000 incentives to borrowers, servicers and lenders to participate in the plan. Industry guidelines to be established to assist borrowers with loan modifications before they get behind on their payments. Additional dollars for mortgaged-backed securities from FNMA/Freddie Mac.
The plan will hopefully keep mortgage rates lower for longer period of time.
The plan hopes to promote liquidity and stability in the mortgage markets. (The $500 billion infusion from last Thanksgiving had the same goal and has not yet been effective; hence more funds are required.)
Final details of the plan are to be released on March 4th.
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