ECONOMIC STIMULUS PACKAGE

Jorge Gutierrez
Vice-President
Branch Manager~Senior Escrow Officer
Financial Title Company

In this unprecedented forged deal between the bipartisan Congressional leadership and the White House, the stimulus package though, it focuses on the tax rebates for most tax payers, the package aims to create a novation of what the cap is for "jumbo" loans. The current limit of $417,000.00 has been raised to $729,750.00 for a period of one year.

Question :
Is this package effective and immediately enforceable, in short is it already a law?
Answer:
No. The package must first be approved by Congress then it is presented to the Senate then it will be submitted to the President for his approval and signature before it becomes a binding law

Question:
How much is the increase in the conforming law?
Answer:
For one (1) year, the limit would be 125% of an area's median cost, up to $729,750.00 from the current $417,000.00. The proposed package will also increase the limits for Federal Housing Administration loans up to $729,750.00 from the current $362,000.00

Question:
Is this proposal into effect already?
Answer:
No. The proposal was submitted by the bipartisan Congressional leadership to the White House. Note that the proposal must be approved by the Senate. As of today January 31, 2008, the President requested the Senate to approve the bill so as not to cause any delay in its effectiveness. The Senate however submitted their own version of the bill. The media hopes that a result will be arrived at by tomorrow February 1, 2008.

Question:
Will this be of help to Bay area homeowners?
Answer:
Yes. Since the prices of homes in the Bay area is averaging $620,000.00. If the cap is raised to the proposed amount of $729,750.00 then more homeowners and prospective purchasers would qualify for conforming loans at lower interest rates.

Question:
Can you give an example for a clearer understanding?

Answer:
Let me us the example by Senator Barbara Boxer. For a 30 year fixed mortgage of $550,000.00, the monthly savings would be $353.00. For a 30 year fixed mortgage of $650,000.00, the savings would be $417.00 a month.

Question:
Do you believe that this will alleviate the housing problem?
Answer:
Yes and No. My response will be my own personal opinion. This may help those who purchased their homes a year ago but it may not be beneficial to those who purchase their homes in 2005 and 2006 since those who purchased their homes during these periods with subprime loans are faced with a problem. That problem, is that their homes have no equity. Even if the conformed loan amounts are raised, it will not do any good if your property has no equity. In this scenario, the only solution of the homeowner is to get a modification from their current lender.

Question:
What about FHA loans?
Answer:
I believe that this is an area that most homeowners or prospective purchasers should look into. The proposed stimulus package will increase this cap to same level which is $729,750.00. Moreover, the down payment can be as low as 3 percent. The proposal will also this alternative to be available to those who have tarnished or less than excellent credit.

Question:
What about these tax rebates?
Answer:
Both the Congress and the White House are rushing tax rebates of $600.00 to $1,200.00 to most tax filers. The rebates will be higher for families with children. The proposed tax rebates aims to infuse the economy of $150 billion in an effort to avoid recession.

Question:
Do you know when these rebates will be sent to the tax payers?
Answer:
The law makers are hoping to get these rebates or tax relief to be sent out beginning May of this year.

Question:
What about businesses? Will they benefit from this?
Answer:
Yes. The stimulus package proposed that businesses would get $50 billion in incentives to invest in new plants and equipment.

Question:
How will the incentives be distributed based on the financial situations of families?
Answer:
Here is what the bill proposes verbatim:

" "An individual with $2,500.00 in earned income in 2007 would be disqualified because his income fell below the $3,000.00 threshold
" An individual with an adjusted gross income of $23,000.00 and no dependents would be entitled to a rebate of $600.00
" An individual with one child who earned $9,000.00 and owed no taxes in 2007 would qualify for the $300.00 rebate available to individuals who pay no taxes but earned at least $3,000.00, plus an additional $300.00 for the child, a $600.00 rebate
" A couple with no children and an adjustable gross income of $100,000.00 in 2007 would qualify for the full $1,200 rebate
" A couple with an adjusted gross income of $145,000.00 in 2007 and with three children would qualify for the full $1,200.00 for couples, plus $300.00 for each child, a $2,100.00 rebate
" A couple with an adjustable gross income of $160,000.00 in 2007 with two children would qualify for a partial rebate, reduced by 5 percent for every $1,000 in income above the $150,000.00 threshold. An $1,800.00 rebate, $1,200 for the couple plus $300.00 per child would go down by 50 percent for this family, a $900.00 rebate
" A couple with an adjusted gross income of $200,000.00 and four children would be disqualified because their income exceeded $174,000.00, the phase out limit."