Stimulating the Market

This week we’ll briefly outline the new federal housing legislation to help stimulate the failed housing market and take a peek at the state’s law to address the foreclosure issue.

The Federal program, which became active in late July, provides the following: 

Tax relief to first time homebuyers in the amount of a $7,500 tax credit. This will be issued providing it is used by July 1 of next year. The credit must be paid back, interest free, at a rate of $500 per year over 15 years.

Homeowners who claim the standard tax deduction can receive a tax relief of $500 for single and $1,000 if married. 

Bonds will be made more attractive to investors potentially lowering the cost to develop affordable housing.

For some owners here on the cape…the capital gains you claim when selling your second or vacation home may be impacted if you used it as a primary residence for a certain period of time leading up to the sale.

Lendors will need to provide revised disclosure statements early in the process and provide mortgage documents no later than seven days prior to closing.

Freddie Mac and Fannie Mae will increase their lending amounts to markets with higher property values.

Homeowners facing foreclosure will now be able to take advantage of federally backed mortgages to get out of aggressive mortgage products.

Senior Citizens will benefit by an increase in the monthly payouts for reverse mortgages.

Veterans are protected from the foreclosure process until nine months after they return from active service

Communities hit by the demise of foreclosed properties will share a redevelopment fund to restore vacant homes.

We’ll see how the federal program works out. It is a massive step in the right direction to help correct the soft real estate market and rescue suffering homeowners trying to save their properties.

The state law which delays property foreclosures seems to be working. The law which became active May 1st, is designed to give homeowners a 90 day grace period before being foreclosed upon.

There were 2308 new foreclosures in June of 2007. This June there were only 350 according to The Warren Group, a Boston based real estate data publishing company. The law may be working. However, the overall number of foreclosures are due to double this year compared to 2007.

Completed foreclosures have dropped 19.5% from May to June. More time is needed in order to determine the results of this law.