• Up to $8,000 (10% of the purchase price) paid out over one tax year by decreasing your tax bill or increasing your tax refund
• Must not have owned a home for 3 years
• Must be your primary residence
• Unlike the tax credit of 2008, the new federal tax credit is not a loan and will not have to be repaid (if you live in your home at least 3 years)
• Must close escrow between January 1 and December 1, 2009
• Income limits of $75,000 for a single filer and $150,000 for joint filers. Some reduced credit available for incomes up to $20,000 higher than the limits
Friday, February 27, 2009
New Home Buyer Tax Credit
The CBIA-sponsored homebuyer tax credit signed into law in February will take effect March 1 and is available to buyers of new homes for a year. SB 15XX (Ashburn) authorizes:
• A tax credit of up to $10,000 (5 percent of home price or $10,000, whichever is less) for the purchase of a newly constructed, previously unoccupied home.
• Available March 1, 2009, through March 2010, or whenever funding authority runs out – whichever comes first ($100 million was allocated to program).
• Allocated by the state’s Franchise Tax Board on a first-come, first-served basis (details still to be worked out).
• Paid out to home purchasers over three tax years in equal amounts (i.e. $3,333 for 2009, $3,333 for 2010, etc.)
• Purchasers must reside in the home for at least two years.
• There are no income limitations that have to be met by purchasers.
• There is no first-time homebuyer requirement.
• There is no repayment requirement (unless the purchaser sells, rents out, etc. before two years expire).
Thursday, February 26, 2009
Mortgage industry sees increasing demand
RALEIGH The housing market might still be struggling, but business is booming for the mortgage industry. With interest rates low, many homeowners are refinancing their mortgage to save money. That has mortgage companies working around the clock to keep up with skyrocketing demand. For the past couple of months, the phones have rung nearly off the hook at DNJ Mortgage, keeping ...more
Wednesday, February 25, 2009
Why the Economy is Sinking
Root causes. It's what this is all about.
Not what you read in the papers. Not
what you see on TV. And NOT what our
President and Congress are targeting.
The root cause of this economic disaster is
the same now as it was when this whole mess
started over a year ago.
It's bad home loans.
So the spendulous, I mean, the stimulus bill is
NOT going to work. Because it does nothing to
address the root cause of the economic disaster.
I don't care if you dump $50 Trillion into shovel
ready projects. Unless you fix the home mortgage
problem, it's not going to bail out the banks,
who's bad loans have created a cash shortage.
Which created the credit crunch.
Which stopped consumer spending.
Which crashed the economy.
See the issue? The stimulous bill targets the
symptoms, not the problem.
If you only treat the symptoms, the problem never
goes away. It only gets worse.
And the president's new initiative for mortgages?
Not even a drop in the bucket.
One blot on your credit record and you can forget about a mortgage
Bankruptcy could ruin your chances of getting a loan for the next 10 years, writes Laura Howard. Even neglecting to pay a phone bill could put lenders off Share Borrowers with a chequered credit history were never top of a mortgage lender s
favorites list, but the recession could leave them facing a 10-year sentence of being entirely ineligible for a home loan. Last week, solicitor and repossession ...
The Independent
Tuesday, February 24, 2009
Obama goes 'all in' on mortgage plan
President Barack Obama's $275 billion mortgage plan removes any lingering doubt about his bold, "all in" strategy to rescue the U.S. economy.
The plan may not do much for Silicon Valley borrowers: More than 60 percent of the home loans in California in recent years won't qualify for help because they aren't held by Fannie Mae or Freddie Mac, the government-sponsored mortgage giants. But stemming the tide of foreclosures across the country is essential to stop the free fall of the national economy. What's good for the nation eventually will be good for the valley.
Mercury News Editorial
Monday, February 23, 2009
Many borrowers paying premium to refinance
Lender approval dependent on 5 key factors
By Jack Guttentag
Inman News
It is unusual to have a refinance boom in the middle of a foreclosure crisis. In the 1930s, which was the last time we had a foreclosure crisis comparable in magnitude to this one, lenders were so spooked by the foreclosures that there was almost no refinancing. That changed only after the creation of the Home Owners Loan Corporation (HOLC) in 1933, which refinanced many borrowers at the government's risk.
more
February 20, 2009
Following several months of debate and delays, our state representatives in Sacramento delivered a 2009-2010 budget to Governor Schwarzenegger today. The governor is expected to sign the budget as presented. Although details are sketchy, the budget appears to raise existing sales tax levels by 1 percent, and places a 0.25-percent income tax increase across the board. Under provisions included in the new budget, the vehicle license fee will increase from 0.65 percent to 1.15 percent of a vehicle’s value.
The budget also includes: a tax credit (equal to the lesser of 5 percent of the purchase price, or $10,000) for the purchase of a single-family residence that has never been occupied, as a principal residence, between March 1, 2009, and March 1, 2010; and a 90-day additional delay in foreclosure sales, intended to force lenders to implement a proactive workout program that rewrites loans in default.
The state budget package also includes a limit on future spending as a trade-off for new taxes; this would have to be approved by voters in a statewide ballot at a special election on May 19. This approach also contemplates $5.5 billion in short-term loans and voter approval of a plan to borrow $5 billion this year against future lottery revenues at the same statewide ballot election.
Fearful that special interests may try to derail the effort at the ballot box, a provision has been included in the budget to extend the major new taxes by one to three years if the spending cap is approved by the voters. Voters also would have to approve some shifting of existing special funds for mental health services and child development programs to help balance the budget.
Should California receive more than $9.2 billion in federal aid, the income tax increase would fall from 0.25 percent to 0.125 percent, and $950 million in planned spending cuts to several programs, including in-home care and Medi-Cal, would be eliminated.
At the demand of Senator Maldonado (R-Santa Maria) -- who cast the final vote needed to pass the budget -- three additional propositions will be placed before the voters. If approved, these would institute an open primary system, prevent legislators from getting paid if the budget is not passed on time, and will stop salary increases to legislators if the state is operating in the red.
Although both the process and the result have left a lot to be desired, having a balanced budget in place is critical for our state in these challenging times. Our Sacramento staff and our member volunteers will continue to monitor, advocate, and report on the actions of our elected representatives in Sacramento. We’ll keep you apprised of additional information as it becomes available.
February 19, 2009
Homeowner Affordability and Stability Plan Details
Yesterday, President Obama unveiled the Homeowner Affordability and Stability Plan, which will offer assistance to as many as 9 million homeowners, while attempting to prevent the destructive impact of foreclosures on families and communities.
The plan contains three main components, and only applies to primary residences. The loans referenced in the plan cannot exceed Freddie Mac/Fannie Mae conforming loan limits. I’ve outlined the plan in greater detail below.
The first component is directed toward homeowners suffering from falling housing prices who still have equity in their homes, but no longer have the 20 percent equity needed to refinance. Under the plan, homeowners who have conforming loans owned or guaranteed by Freddie Mac and Fannie Mae will be allowed to refinance their homes, even if they do not have 20 percent equity left in the house. The U.S. Treasury Dept. estimates that about 5 million homeowners will be helped by this portion of the program.
The second component, known as the Homeowner Stability Initiative, is designed to assist homeowners who are “underwater” on their mortgages. The $75 billion initiative will bring together lenders, servicers, and the government so that all stakeholders share in the cost of the modification. Primary mortgages would be reduced to monthly payments that do not exceed a 38 percent debt-to-income ratio, with the costs of doing so borne by the lender. The government and lender then would split the costs of further reducing the monthly payments until they were at a 31 percent debt-to income ratio. An important aspect of the initiative is that homeowners do not have to be delinquent to participate.
The Homeowner Stability Initiative also will create incentives for servicers, mortgage holders, and homeowners. Servicers would receive an up-front fee of $1,000 for every eligible modification meeting the initiative’s guidelines. Guidelines are scheduled to be released by March 4. Mortgage holders will receive an incentive payment of $1,500, and servicers $500, for modifications made on loans that are current but at risk of imminent default.
The final aspect of the Homeowner Stability Initiative is creating clear and consistent guidelines for loan modifications. The Obama Administration plans to work with federal agencies, banking and credit union regulators, and the private sector in order to develop loan modification guidelines that can be implemented across the entire mortgage market. While adoption of the guidelines will be voluntary for the private sector, all financial institutions receiving Financial Stability Plan assistance going forward will be required to implement the loan modification guidelines.
The government estimates that between 3 and 4 million homeowners will benefit from the Homeowner Stability Initiative component of the plan.
The third component of The Homeowner Affordability and Stability Plan is supporting low mortgage rates by strengthening Fannie Mae and Freddie Mac. The Treasury Dept. plans to increase their Preferred Stock Purchase Agreements with both Fannie Mae and Freddie Mac from its current $100 billion in both entities to $200 billion in each. The Treasury Dept. also will continue to purchase Fannie Mae and Freddie Mac mortgage-back securities in order to help promote stability and liquidity in the marketplace. Additionally, the Treasury Dept. will increase Fannie Mae and Freddie Mac’s portfolios by $50 billion, for a total of $900 billion. The Obama Administration will work with Fannie Mae and Freddie Mac to support state housing finance agencies in serving home buyers, such as CalHFA. Funding for this will not come from TARP money but from the Housing and Economic Recovery Act.
While some of the details still are being developed, such as the modification guidelines, the Obama Administration plans on using programs and funding already allocated for The Homeowner Affordability and Stability Plan and will need little legislative approval for programs under the plan.
We’ll keep you updated on the Homeowner Affordability and Stability Plan as more details and information become available to us.
February 18, 2009
Obama to unveil $75B mortgage relief plan
PHOENIX - President Barack Obama’s plan to tackle the foreclosure crisis will spend $75 billion in an effort to prevent up to 9 million Americans from losing their homes.
In tandem, the Treasury Department said it would double the size of its lifeline to Fannie Mae and Freddie Mac. The government, which seized the mortgage finance companies last fall, said Wednesday it would absorb up to $200 billion in losses at each company.
The plan, which Obama is releasing later Wednesday, is more ambitious than initially expected — and more expensive. It aims to aid borrowers who owe more on their mortgages than their homes are currently worth, and borrowers who are on the verge of foreclosure.
. .
more
Mortgage industry, appraisers chafe at new rules
Feb.
17 -- Many real estate professionals are still trying to catch their
breath from the ever-changing pace of the nation's housing industry, but
they don't have long because on May 1 the industry will change big time
and not all for the better, according to some local professionals.
Effective May 1, mortgage brokers can no longer order appraisals.
Instead, they must use a designated pool ...
Watch out for standards in Obama's mortgage fix plan
The Obama White House is expected to roll out a $50 billion homeowner relief package next week, one that could subsidize lenders who make interest rate cuts on troubled loans, as Newsday reports. But the big thing to watch is how the package would establish industry standards for modifying loans and also how it might be used to get the financial industry s support to pass a bill allowing bankruptcy ...
Newsday
Feb. 13, 2009
U.S. Senate passes the American Recovery and Reinvestment Act of 2009
Late this evening, the U.S. Senate passed the American Recovery and
Reinvestment Act of 2009 by a 60 to 38 vote. Earlier today, the stimulus package
passed the U.S. House of Representatives in a 246 to 183 vote. Today’s votes
followed several days of negotiations by the House, Senate, and White House,
with the final tab for the stimulus bill coming in at $787.2 billion.
On the housing front, the good news is that the legislation resets the
conforming loan limit cap at $729,750, up from $625,500. Numerous counties in California experienced a
marked decrease in their conforming loan and FHA limits on Jan. 1, and the
stimulus bill reinstates 2008 loan limits through Dec. 31, 2009.
The bill also increases the first-time home buyer credit from $7,500 to $8,000,
and removes the requirement that the credit be paid back if the buyer stays in
the home for at least three years. It also extends the expiration date for the
credit from July 1 to Dec. 1, 2009. Homebuyers must have purchased a home after
Jan. 1, 2009, and before Dec. 1, 2009, to be eligible for the $8,000 credit.
C.A.R. and NAR have long advocated for higher conforming loan limits. The
conforming loan limit provisions and other housing elements in the stimulus
package are a step in the right direction for our industry and all Californians.
The stimulus package also contains $308.3 billion in appropriations spending,
including $120 billion on infrastructure and science and more than $30 billion
on energy-related infrastructure projects. It also allocated an additional $267
billion for direct spending, including increased unemployment benefits and food
stamps; and provides $212 billion in tax breaks for individuals and businesses.
Now that the stimulus package is approved and is on its way to President Obama
for signature, it is our hope that Congress will turn its attention toward
helping homeowners remain in their homes and will take immediate steps directed
specifically at stemming the ongoing foreclosure crisis.
February 12, 2009
SURVEY FINDS ADJUSTABLE-RATE MORTGAGES FALL OUT OF FAVOR
Freddie Mac recently released the results of its 25th Annual Adjustable-Rate
Mortgage (ARM) Survey of prime loans. The survey revealed large premiums for
initial interest rates on Treasury-indexed ARMs; a continued decline in ARMs'
share of overall lending; and a greatly reduced market for traditional one-year,
Treasury-indexed ARMs.
"Our survey found that starting rates for conforming one-year ARMs averaged 1.76
percentage points above their fully indexed rate, the largest rate premium
observed since Freddie Mac began collecting ARM data in 1984," said Frank
Nothaft, Freddie Mac vice president and chief economist. "Further, rates on
30-year, fixed-rate mortgages had fallen to 50-year lows and were near or below
initial rates on ARM products. As a consequence, by December the ARM share of
loan applications had fallen to 3 percent, the lowest recorded in our survey."
Only 21 percent of lenders quoted a conforming one-year ARM, the smallest share
in 25 years, compared with 96 percent of lenders offering the product in 1999,
according to the survey. Hybrid ARMs, which have an extended initial fixed-rate
period before adjusting annually, are the most common ARMs available.
More info
The New Rules of Reverse Mortgages
February 10, 2009
Reverse mortgages allow qualified borrowers to tap the equity in their home, pay off their existing mortgage balance--and all the while live in their home as long as they're able. Now, recent changes in a federal loan program may make reverse mortgages attractive to millions more senior homeowners by raising the dollar value of homes that qualify for the program and extending it to the purchase of new homes. The federal program allows consumers to pay a one-time insurance premium, which guarantees that they'll receive the stream of income they are promised when executing the reverse mortgage. With retiree nest eggs hurt by declining investments and continuing weakness in home values, backers of the program see it as an increasingly attractive way for cash-strapped seniors to remain in their homes while receiving income from the properties. However, reverse mortgages sold without the federal guarantee have created image problems for the industry in the past. Even with federal involvement, the products are still complex and carry high fees, which is why it's important for consumers to understand what they're getting. Here are some things to carefully consider when deciding if a reverse mortgage is right for you.
. .
complete article
February 9, 2009
After Brief Respite, Mortgage Rates Jump
Mortgage interest rates began after their 11-week reprieve into sub-5 percent territory. They have since in the last several weeks shown an upward creeping trend before jumping in the week ending Feb. 5, according to the Primary Mortgage Market Survey, a weekly rate survey released Thursday by Freddie Mac (FRE: 0.52 0.00%). The data show that 30-year fixed-rate mortgages (FRMs) averaged ...
HousingWire.com
February 6, 2009
Mortgage refinancing: Who should? And who shouldn't?
The Business Review (Albany) Related News Q: With mortgage rates falling below 5 percent, who should refinance? Who should hold off? Interest rates have dropped to their lowest points in decades. Suddenly, homeowners are beginning to refinance again in big numbers. But a lot has changed since the last refi boom, which took place in the crazed days of the housing bubble. This time around, refinancing ...
Business Review Albany
February 5, 2009
FREDDIE MAC LAUNCHES NEW WORKOUT PLAN FOR HIGH-RISK LOANS
Freddie Mac yesterday announced a new Workout Strategy For High Risk Loans pilot program designed to keep more at-risk borrowers in their homes by employing third-party servicers that specialize in servicing Alt-A and other types of higher risk mortgages.
Under the new pilot, a selected portfolio of higher risk mortgages that is at least 60 days delinquent will be given to a specialty servicer for intensive attention using the full range of Freddie Mac workout opportunities, including the Streamlined Modification Program developed with the Federal Housing Finance Agency, Fannie Mae, and the HOPE Now Alliance, according to a Freddie Mac statement.
Initially, the pilot will target an estimated 5,000 reduced documentation loans from California, Nevada, and other states with high delinquency rates. Although Alt-A loans were made to borrowers with strong profiles and represent a fraction of Freddie Mac's single family portfolio, the loans account for half of its seriously delinquent mortgages. Freddie Mac will determine whether to broaden or modify the strategy after reviewing the pilot's June results.
More info
February 2, 2009
DEC. HOME SALES INCREASED 84.9 PERCENT; MEDIAN PRICE FELL 41.5 PERCENT
Home sales increased 84.9 percent in December in California compared
with the same period a year ago, while the median price of an existing
home fell 41.5 percent, C.A.R. reported yesterday. "Sales continue to be
strong, exceeding 500,000 units for the fourth consecutive month, and
year-to-date sales are nearly 27 percent above last year," said C.A.R.
President James Liptak. "California home buyers benefited during the
last half of 2008 from the high-cost loan limit of $729,750, which fell
to $625,500 as of Jan. 1. The restoration of the high cost loan limit to
the previous level would not only help a housing market still struggling
to turn around, but also make financing more affordable for home
buyers."
Closed escrow sales of existing, single-family detached homes in
California totaled 544,580 in December at a seasonally adjusted
annualized rate, according to information collected by C.A.R. from more
than 90 local REALTOR® associations statewide. Statewide home resale
activity increased 84.9 percent from the revised 294,520 sales pace
recorded in December 2007. Sales in December 2008 increased 5.9 percent
compared with the previous month.
The median price of an existing, single-family detached home in
California during December 2008 was $281,100, a 41.5 percent decrease
from the revised $480,820 median for December 2007, C.A.R. reported. The
December 2008 median price fell 2 percent compared with November's
revised $286,850 median price.
More info
February 1, 2009
Residential mortgage lenders believe recovery may come by year-end