Months ago there was some buzz regarding the most recent stimulus and funds that would be available for grants to those who wish to purchase a foreclosure. The information has been fairly vague for some time, but there is now some specific (not too specific) information on the program.

The Neighborhood Stabilization Program (NSP) is a part of the Housing and Economic Recovery Act of 2008. The program allocates $3.92 Billion nationwide to local state and city governments to help reinvest into areas with abandoned homes. Implementation of the program will come on October 5th, 2009.

Most recently there has been some news that the Salem/Keizer area has $845,564 available for those areas. Today I will be attending a State of Oregon webinar to learn the specifics of the program and will report the information for qualifications, etc as soon as possible.

For now it’s good to know homes have to be in specific areas (we have a map of acceptable areas), income for the borrowers cannot exceed 120% of the areas median income for the given family size and the money will be given in a form of a grant which will be used to help with a down payment and will require the buyer live in the

Today the Federal Reserve Board announced they will not be raising the federal funds rate.  The rate will remain at zero to .25 percent.  More importantly to the mortgage rate market they announced that they will extend the purchase of mortgage backed securities (MBS) until the end of the year through March 2010.

The implementation of MBS purchases by the Feds on November 26, 2008 has helped mortgage rates remain historically low for nearly a year.  The low rates have been a healthy companion to the first time homebuyer tax credit in 2009.  These two government sponsored tools explain the increase in housing activity this year.

The good news for now: there is still time to make an offer and qualify for the first time homebuyer tax credit and rates will likely remain low as long as the government is throwing $10-$20 billion, yes billion, a week to the MBS market.

As always, if you have questions about current rates or a scenario, give me a call or shoot me an email.

Check out this 4 minute clip from CNBC today.  Existing home sales were reported to see a downward trend for the month of August.  For today, this helped rates take a dip lower than we’ve seen in a couple of weeks.  The positive housing activity is refreshing, but as mentioned in my post yesterday the government has a major roll in our current upward trend in sales and downward trend in rates.  As the expense to tax payers begins to fade away we are sure to a change in our current trends.