April 01, 2009 – (RealEstateRama) — The Alabama House of Representatives passed the Home Buyers Initiative Act (SB 367) on Tuesday. On a vote of 101 to 0, the measure has cleared its last legislative hurdle and now heads to Governor Riley for signature.
The Act creates a mortgage guarantee fund to offset certain losses by investors who hold Alabama mortgages that are foreclosed. The guarantee fund will have two sources of revenue. First, the fund will receive $6 million from the Alabama Capital Improvement Trust Fund. This is the only time proceeds will be used from the Alabama Capital Improvement Trust Fund. Second, the fund will receive the proceeds from 1 percent of the cost of every home financed by this program. This 1 percent fee will be paid by the homebuyer. However, they will not be required to pay Private Mortgage Insurance (PMI), which can cost as much as 3 � percent of the home price.
The loan program is aimed at middle-class Alabama families. Total borrower income cannot exceed $98,230, which is 190 percent of the state median income. Loans offered are 30-year, fixed rate, 101 percent loan-to-value loans with strict qualifying criteria. The loans can be used to buy new or existing homes. ??
Other criteria include:
– Eligible home buyers must have a minimum credit score of 620.?
– Eligible home buyers’ total debt ratio cannot exceed 50 percent of their gross monthly income.
– Eligible home buyers must complete a pre-purchase home buying counseling course.
The program will be administered by the Alabama Housing Finance Authority.