If you’ve been looking for a way to pay for energy improvements to your house, two little-publicized new mortgage programs could provide you the cash you need.
Both the Federal Housing Administration and mortgage investor Fannie Mae recently have launched startups in the energy conservation arena. Here’s a quick overview, with some pros and cons:
FHA’s new program is called “PowerSaver” and allows eligible owners to borrow up to $25,000 at fixed rates between 5 percent and 7 percent for as long as 20 years to finance high-efficiency windows and doors, heating and ventilating systems, solar panels, geothermal systems, insulation and duct sealing, among other retrofits.
Though officially a pilot program, HUD Secretary Shaun Donovan estimates that 30,000 PowerSaver loans will be closed in the next two years. [more]

You may have seen reports that the federal government is proposing new mortgage finance rules under which only home purchasers who can afford a minimum 20 percent down payment on a conventional loan would get a shot at the best available interest rates and terms.

That is correct, and it’s deeply sobering news for large numbers of first-time and moderate-income buyers who can’t come up with that much cash or afford to pay higher rates.

But some of the other requirements that federal agencies and the Obama administration are proposing in the same plan have gotten much less attention, yet could prove just as troublesome for consumers: [more]

With hundreds of thousands of homeowners having negotiated loan modifications or short sales or been foreclosed upon during the past year, the Internal Revenue Service has issued fresh guidance on how to handle canceled mortgage debt in the upcoming tax season.

It’s a huge issue, widely misunderstood by consumers, and involves potentially billions of dollars of tax liability.

When most debts are canceled by a creditor, such as unpaid balances on student loans or credit cards, the forgiven amounts are treated as ordinary, taxable income by the Internal Revenue Code. But under a special exemption adopted by Congress covering distressed home mortgages, many owners can escape the ultimate double-whammy: Getting kicked while you’re down, hit with extra taxes because your mortgage went seriously delinquent or you lost your house. [more]

Picky, picky, picky! Are today’s first-time homebuyers passing up great deals because they insist on flawless “move-in ready” houses requiring little or no changes — even at the starter-home price levels where shoppers traditionally have been willing to factor future fix-ups and renovations into their offers? Or are they simply reflecting market realities? They see record inventories of houses sitting unsold, they’ve got plenty to choose from and they may not have the money, time or inclination to do fix-ups after making the purchase. [more]

Just because President Barack Obama’s latest budget proposal calls for rollbacks in mortgage interest deductions solely for high-income taxpayers, should a homeowner assume that all of his or her write-offs are secure from attack? Absolutely not. In fact, those tax benefits — from capital gains exclusions to home equity and second-home interest deductions — might be more vulnerable to broad-based cutbacks during the next two years than at any time in decades.
Here’s why: An influential, bipartisan group of lawmakers on Capitol Hill — led by a so-called “gang of six” in the Senate — is drafting a legislative framework that would essentially seek to implement much of the president’s deficit-reduction commission report released last December. [more]

Thousands of homeowners associations and condominiums around the country just sidestepped a potentially costly problem: Earlier this month, a federal agency backed off its controversial plan to make obtaining mortgages in their communities much more difficult, and to dry up a key source of revenue that associations use to pay for improvements and property maintenance. A proposal last August by the Federal Housing Finance Agency would have effectively banned the covenanted transfer fees that many homeowners associations collect when houses or condos resell. Typically, the fees range anywhere from one-quarter of 1 percent of the resale price of the house to three-quarters of a percent. The revenues are then spent on anything from community improvements — upgrading roads, bike paths, recreation facilities — to building up required capital reserves. [more]

One loan officer describes it as a “financial colonoscopy” on your credit, and he suggests that anybody applying for a mortgage be prepared for it.

What he’s talking about is the combined effect of new credit transparency standards that have been imposed on lenders by mortgage giants Freddie Mac and Fannie Mae. As of Feb. 1, Freddie Mac began requiring lenders to dig back 120 days into your credit bureau files to detect any “inquiries” — signs of your applying for credit anywhere else — and then to check out whether any applications were approved. If they resulted in significant new debts, your mortgage deal could be affected, and your lender might have to revise the terms or the rate you’re being offered. [more]

From the December issue: When the Federal Reserve recently rolled out its plan to pump $600 billion into the credit markets, many homeowners and buyers might have figured that since mortgage interest rates are now likely to fall again, why not postpone the loan application they were contemplating? Fed Chairman Ben Bernanke offered implicit support for that scenario when, in a Washington Post op-ed on Nov. 4, he wrote that as a by-product of the $600 billion infusion, “lower mortgage rates will make housing more affordable and allow more homeowners to refinance.” But wait a minute: Haven’t 30-year fixed mortgage rates been hovering around 4.25 percent, the lowest level on record since April 1951? Aren’t 15-year mortgages just above 3.6 percent? How much lower could rates possibly go?
[more]

Here’s a homeowner credit torture scenario that might have happened to you, and now has a major real estate lobby on Capitol Hill demanding immediate reforms.

Say you’ve had a solid payment record on just about all your accounts — three credit cards, your first mortgage, home equity line and other important monthly bills. The last time you checked, your credit scores were comfortably in the 750s. Suddenly you get a notice from the bank that because of “market conditions,” your equity line limit has been cut from $60,000 to $35,000, slightly above the $30,000 balance you’ve got outstanding. Then one of your credit card issuers hits you with more bad news: Your $20,000 limit has been reduced to $10,000. Your balance on the card, meanwhile, is about $9,000.

Guess what happens to your credit scores in the wake of the bank cuts? You might assume that nothing happens; you haven’t been late, you haven’t missed a monthly payment. You’re a good customer. [more]

You’ve probably seen the headlines about the fast-spreading foreclosure mess — moratoriums on home sales, calls for congressiona [more]