Help on the Way for Strapped Homeowners
The Senate moved against the worsening mortgage crisis, voting recently to make it easier for thousands of homeowners with ballooning interest rates to refinance into federally insured loans.
The legislation, approved 93-1, would allow the Federal Housing Administration to back refinanced loans for borrowers who are delinquent on payments because their mortgages are resetting to sharply higher rates from low initial "teaser" levels.
The bill also tries to make FHA loans more attractive than risky subprime loans by accepting lower down payments and expanding the eligibility for counseling for homeowners having difficult with their mortgage payments.
The Senate’s proposed changes are especially important now, given the credit crisis that has made it much more difficult and more expensive for people to refinance or get financing to buy a home. Private lenders have been reluctant to make new loans.
Allowing the federal government to insure more and bigger loans should help provide some relief and ease the credit crunch.
The Senate also passed legislation that would allow homeowners to receive mortgage forgiveness from their lender tax free. That’s when a lender allows a homeowner not to pay a portion of their mortgage.
The IRS currently taxes any loan forgiveness as income. The tax forgiveness is available on mortgage indebtedness of up to $1 million.
What do you think? Will this new legislation help the current state of the real estate market and/or the overall economy? We’d love to hear your feedback. Leave us your opinion by clicking on the "Comment" link below.