Create of a national mortgage insurance fund to be administered by HUD.
Create a national mortgage servicing company (NMSC) to service any mortgages that go in to default.
Coverage & Loan Guarantees
Banks, Savings & loans and mortgage lenders would be insured from loss for 100% of the mortgage balance at time of default.
Mortgages may be issued for up to 100% of the value of the property on home purchases. Mortgages may be issued to refinance existing mortgages for up to 100% of the current loan(s) value. No equity is required for refinances.
Contributions to fund
All new mortgages to be insured by the fund would pay 1% of the amount financed to the fund. This amount may not be financed. All mortgages insured by the fund pay .5% of the original amount financed annually to the fund for life of loan.
Fund Payouts
Mortgages that default would be purchased by the fund and assigned to NMSC.
NMSC would make every effort to help homeowners retain the property or foreclose when necessary.
Eligibility Requirements
Adjustable Rate Mortgages not eligible for insurance
Investment and second homes not eligible
Loan amounts to $650,000 higher limits in some states.
Consumer credit is not a factor to be considered.
Applicants must show an ability to repay loan.
Applicants must have 24 month rental or mortgage history with no more than one (1) thirty (30) day late.
Maximum debt to income ratio of 43%.
Current homeowners must sell and close current property before closing on a property to be insured by the fund. Prevents homeowners from buying another property and defaulting on current property.
Liquidity
Mortgages insured by the program would be eligible for sale to Fannie Mae and Freddie Mac. Mortgages would be packaged as securities and sold to investors.
Tax Law Changes
Temporarily suspend all taxes assessed relating to home purchases.
Mortgage backed securities would be exempt from Federal income tax.