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American Housing Rescue and Foreclosure Prevention Act

The American Housing Rescue and Foreclosure Prevention Act will help homeowners and potential home buyers by offering many incentives to refinance and purchase new homes. Through this new Act, the government is hoping to stimulate the real estate market so the areas of the country where prices dropped the most will have a chance to recover. This is why they are offering multiple tax incentives for homeowners.

If you are wondering how the new American Housing Rescue and Foreclosure Prevention Act can help you, the following is a list of the new requirements for people who want to use the FHA to refinance their home loans:

• The mortgage must be within the FHA Loan limits. The new limit is $625,500.
• The FHA must hold the primary mortgage lien on the property. People who have more than one lien on their property will need to consolidate those loans and pay them off with their FHA Loan at the time they refinance.
• The FHA Loan is based on the current appraised value of the home. The FHA is willing to finance up to 90% of the current appraised value, and if you owe more than this amount you may be able to get a financial break. The FHA is willing to work with lenders who would like the FHA-guaranteed loan and are willing to take a monetary loss on the current mortgage in order to refinance with the FHA. Talk to your lender to see if they are willing to use this new program.
• You must meet normal income loan requirements. The FHA may look past credit problems due to unfavorable past loan conditions, but you will still need to meet income to debt ratio guidelines set forth by the FHA.

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You must meet these requirements in order to use the new FHA program and get relief on your high mortgage payments or to get out of default and avoid foreclosure. For more information, go to the HUD website

See a related article: FHA Loan Types