Tax Credit for Homebuyers
First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.
The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.
Tax Credit Versus Tax Deduction
It’s important to remember that the $8,000 tax credit is just that… a tax credit. The benefit of a tax credit is that it’s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a homebuyer were to owe $8,000 in income taxes and would qualify for the $8,000 tax credit, they would owe nothing.
Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little income tax liability. For example, if a homebuyer is liable for $4,000 in income tax, he can offset that $4,000 with half of the tax credit… and still receive a check for the remaining $4,000!
Phaseout Examples
According to the plan, the tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.
To break down what this phaseout means to homebuyers who are over those amounts, the National Association of Homebuilders (NAHB) offers the following examples:
Example 1: Assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time homebuyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.
Example 2: Assume that an individual homebuyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.
For those tracking the math in the examples above, you may be wondering where the “$20,000” came from—that is, why you divide “$10,000 by $20,000” in the first example and “$13,000 by $20,000” in the second example. Here’s where the $20,000 comes into play:
The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.
In other words:
• $170,000 – $150,000 = the $20,000 in the first example
• $95,000 – $75,000 = the $20,000 in the second example
Remember, these are general examples. You should always consult your tax advisor for information relating to your specific circumstances.
Homes that Qualify
The tax credit is applicable to any home that will be used as a principal residence. Based on that guideline, qualifying homes include single-family detached homes, as well as attached homes such as townhouses and condominiums. In addition, manufactured or homes and houseboats used for principal residence also qualify.
Higher Loan Amounts
More good news – there is an extension on the additional tier of conforming loan amounts which had been first established in 2008. This tier of home loans are those greater than $417,000, and with a maximum that depends on the area, but is not greater than $729,750. These loans will again be eligible for rates that are slightly higher than conforming loan rates, but less expensive than the standard “jumbo” loan rates.
FHFA News Release -
http://www.mortgagemarketguide.com/download/022309_final.pdf
Additional Housing-Related Provisions
Tax Incentives to Spur Energy Savings and Green Jobs — This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.
Landmark Energy Savings — This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.
Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing—This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs.Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8) to increase energy efficiency, including new insulation, windows, and frames.
Expanding Housing Assistance—This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.
More Help for Homeowners in the Future
Another thing to keep an eye on in the coming weeks is President Obama’s plan to help struggling borrowers before they are faced with a default on their mortgage.
According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.
While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That’s because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.
The Economic Stimulus Plan is huge, and impacts a number of industries. I’ve highlighted some of the major provisions that may impact you now and in the future.
As always, if you have any questions or would like to discuss how this may specifically impact you, I’d be happy to sit down with you. Just call or email me to set up an appointment.
Wednesday, February 25, 2009
Wednesday, February 4, 2009
Why the smart people are refinancing and buying NOW!
A great article came my way through email this afternoon. It described exactly what’s going on in the market today with our interest rates and why we might or might not see 4%. The Federal Reserve recently said that it plans to continue purchasing large quantities of Mortgage Backed Securities to provide support to the mortgage and housing markets, and "it stands ready to expand the quantity of such purchases and the duration of the purchase program as conditions warrant".
The statement is true, the concern is as always, the media will take their own spin on the words; telling the customers their own version. Something along the lines as: "Good news, the Fed's words on continuing their purchasing program mean that rates will continue to drop lower, and remain low into the Summer" Some people hearing this will delay and try to wait it out until a “lower rate” comes around. Bad move!
Here's the truth.
Yes, the Fed has been buying Mortgage Bonds, but if you look at what they are purchasing, they are buying a lot of FNMA 30-yr 5.5% and 5.0% Bonds...which won't have much of an impact on present interest rates. Why? First, see the Fed's purchases for yourself by hitting this link: Direct Link to View Fed Mortgage Bond Buying - http://www.newyorkfed.org/markets/mbs/index.html.
So why is the Fed buying these Bonds? Well if you think about it, it's very smart of the Fed...and maybe even a little sneaky...because 5.5% Bonds actually represent outstanding mortgages with rates of 6 - 6.50%, which are precisely the loans being refinanced at today's great interest rates.
Stay with me here...
With rates at present low levels, many of the mortgages in these FNMA 5.5% pools being bought up by the Fed will be refinanced and paid, thus giving the Fed a quick recoup on some of their investment. And this is likely a big reason why the Fed said they could continue this purchasing program beyond June, if necessary. Bottom line, the Fed buying these higher rate coupons will not necessarily help rates to move lower, as their actions do not impact the loans being originated at today's low rates.
Here's the most important part.
Sometimes I talk to clients who are in a situation where it makes sense to refinance right now, and save $250 per month for example. But when they hear the media throwing around teases of lower rates ahead, they decide to hold off on making the decision to save the $250 per month right now, in the hopes of gaining another $30 per month in additional savings with a lower rate than where we stand presently. Now clearly, rates could turn higher, and this window of opportunity could pass them by entirely.
The clincher is this:
Even if those clients ultimately are correct in timing the market, and eventually grab that lower rate and save another $30 per month - think of what they have lost by waiting. While they delayed, they lost the savings they could have gained by taking action sooner - or in the example used, $250 - for every single month they waited. So even if they got lucky and obtained the rate they were looking for, it could take years to make up what they lost by waiting.
I don't want anyone to miss an opportunity by either waiting, or not understanding what is at stake. Let's talk further on this - call or email me and let's discuss what this might mean for you.
Tuesday, February 3, 2009
Friday, January 23, 2009
Demand For Reverse Mortgages Climbs
By JILIAN MINCER
As the credit crisis has worsened, more seniors have turned to federally insured reverse mortgages to tap home equity and, in some cases, to prevent foreclosure.
While still a very small share of the borrowing market, demand for these mortgages climbed in 2008 as credit tightened and retirement savings plunged. The market is expected to grow significantly as loan amounts increase and baby boomers with inadequate savings tap their home equity to fund retirement. Consumer groups, however, warn that fees are high and the cash sometimes is misused.
"Americans have the bulk of their assets tied up in their homes, even now," says Greg McBride, senior financial analyst at Bankrate.com. "The demand for reverse mortgages is increasing by the day."
The Federal Housing Administration approved 115,176 loans in 2008, up 6.4% on a calendar-year basis.
Loan providers expect a jump in closings this year because a bill passed in July by Congress created a nationwide $417,000 equity limit for FHA reverse mortgages, also known as Home Equity Conversion Mortgages (HECMs).
Consulting firm Reverse Market Insight reported that Miami is the No. 1 market for reverse mortgages, followed by Los Angeles, Tampa, Fla., Santa Ana, Calif., and Baltimore.
As the name implies, reverse mortgages enable a person 62 or older to convert home equity into cash without selling a house. The older the person, and the more valuable the home, the more money they could borrow.
"It gives people another lever to pull," says McBride. "Reverse mortgages let you tap into the value of your home."
Peter Bell, president of the National Reverse Mortgage Lenders Association, says, "If the goal is to stay in the home, this is an excellent tool."
Unlike a home-equity line of credit, consumers don't need to have income or high credit score to apply for a reverse mortgage. They must own all or almost all of their home. The amount of money from the reverse mortgage depends on the person's age, appraised value of the home and current interest rates. A person must receive mandatory counseling before applying for the loan to ensure that they consider other options such as selling their home.
Payments can be set up as an annuity or a line of credit. The fees are high, with limits of $6,000 plus closing costs. The FHA guarantees the loans and ensures the homeowner that payments will be made as long as the borrower remains in the home. The FHA also guarantees the lender that it will receive its full payment.
"People who thought their retirements were set are finding out they don't have the resource they thought they would," says Bronwyn Belling, reverse mortgage specialist at the AARP Foundation, an affiliated entity of AARP. "It's a really valuable way to help make ends meet and to stay in their own homes."
But she warns that the decision should be delayed as long as possible and should not be made lightly because the fees are high.
Bell says the current economy has contributed to the demand. There are more cases of people who can't or don't want to sell their homes in the current market.
Today, a growing number of the borrowers are using the federally insured loans to free up monthly cash and to avoid foreclosure. McBride says consumers also use the extra cash for a repair or to pay taxes if they convert a traditional IRA into a Roth IRA.
The credit crisis has dried up the availability of private reverse mortgages with much higher limits, says Bell.
In some places home values have fallen so much that many seniors do not qualify for the loans.
Wealthy homeowners had been using the cash for a variety of reasons including to purchase second homes, distribute assets and purchase insurance policies.
Consumers shouldn't use the loans if they're not going to be in the homes for at least a couple of years because the upfront costs are high. Someone could expect to pay $15,000 or more in upfront fees and then additional monthly costs as well as the interest.
One of the biggest mistakes is using the money too early. The average rate of the borrower has declined to 73.1 years from 76 years in 2000.
"We're also starting to hear more reports that people are being encouraged to use the loan proceeds to invest unnecessarily in long term care insurance, shoddy home repairs or annuities that didn't pay until someone is over age 100," says Belling of AARP.
http://online.wsj.com/article/SB123264214889606533.html
As the credit crisis has worsened, more seniors have turned to federally insured reverse mortgages to tap home equity and, in some cases, to prevent foreclosure.
While still a very small share of the borrowing market, demand for these mortgages climbed in 2008 as credit tightened and retirement savings plunged. The market is expected to grow significantly as loan amounts increase and baby boomers with inadequate savings tap their home equity to fund retirement. Consumer groups, however, warn that fees are high and the cash sometimes is misused.
"Americans have the bulk of their assets tied up in their homes, even now," says Greg McBride, senior financial analyst at Bankrate.com. "The demand for reverse mortgages is increasing by the day."
The Federal Housing Administration approved 115,176 loans in 2008, up 6.4% on a calendar-year basis.
Loan providers expect a jump in closings this year because a bill passed in July by Congress created a nationwide $417,000 equity limit for FHA reverse mortgages, also known as Home Equity Conversion Mortgages (HECMs).
Consulting firm Reverse Market Insight reported that Miami is the No. 1 market for reverse mortgages, followed by Los Angeles, Tampa, Fla., Santa Ana, Calif., and Baltimore.
As the name implies, reverse mortgages enable a person 62 or older to convert home equity into cash without selling a house. The older the person, and the more valuable the home, the more money they could borrow.
"It gives people another lever to pull," says McBride. "Reverse mortgages let you tap into the value of your home."
Peter Bell, president of the National Reverse Mortgage Lenders Association, says, "If the goal is to stay in the home, this is an excellent tool."
Unlike a home-equity line of credit, consumers don't need to have income or high credit score to apply for a reverse mortgage. They must own all or almost all of their home. The amount of money from the reverse mortgage depends on the person's age, appraised value of the home and current interest rates. A person must receive mandatory counseling before applying for the loan to ensure that they consider other options such as selling their home.
Payments can be set up as an annuity or a line of credit. The fees are high, with limits of $6,000 plus closing costs. The FHA guarantees the loans and ensures the homeowner that payments will be made as long as the borrower remains in the home. The FHA also guarantees the lender that it will receive its full payment.
"People who thought their retirements were set are finding out they don't have the resource they thought they would," says Bronwyn Belling, reverse mortgage specialist at the AARP Foundation, an affiliated entity of AARP. "It's a really valuable way to help make ends meet and to stay in their own homes."
But she warns that the decision should be delayed as long as possible and should not be made lightly because the fees are high.
Bell says the current economy has contributed to the demand. There are more cases of people who can't or don't want to sell their homes in the current market.
Today, a growing number of the borrowers are using the federally insured loans to free up monthly cash and to avoid foreclosure. McBride says consumers also use the extra cash for a repair or to pay taxes if they convert a traditional IRA into a Roth IRA.
The credit crisis has dried up the availability of private reverse mortgages with much higher limits, says Bell.
In some places home values have fallen so much that many seniors do not qualify for the loans.
Wealthy homeowners had been using the cash for a variety of reasons including to purchase second homes, distribute assets and purchase insurance policies.
Consumers shouldn't use the loans if they're not going to be in the homes for at least a couple of years because the upfront costs are high. Someone could expect to pay $15,000 or more in upfront fees and then additional monthly costs as well as the interest.
One of the biggest mistakes is using the money too early. The average rate of the borrower has declined to 73.1 years from 76 years in 2000.
"We're also starting to hear more reports that people are being encouraged to use the loan proceeds to invest unnecessarily in long term care insurance, shoddy home repairs or annuities that didn't pay until someone is over age 100," says Belling of AARP.
http://online.wsj.com/article/SB123264214889606533.html
Monday, January 12, 2009
More oil is put into storage...
More oil is put into storage, waiting for prices to rise
Record contango pushes up oil inventories; Cushing stockpiles at the highest
By Moming Zhou, MarketWatch
Last update: 2:01 p.m. EST Jan. 12, 2009Comments: 25NEW YORK (MarketWatch) - A record amount of crude oil has been put into storage as investors and producers waited for oil prices to rise in the following months, in the hope that they can sell their oil at dearer prices.
Futures trading on the New York Mercantile Exchange indicated that a barrel of oil might fetch a much higher price in a few months. At Friday's closing, crude for July delivery was more than $13 higher than February crude, a gap that's never been seen between the two months' contracts.
Contango, or the situation where the price of a far future delivery commodity is higher than a nearer future contract, isn't surprising, with price difference typically representing the cost of storage and the time value of money.
But when the price spread is greater than the storage cost, "there is an opportunity to arbitrage at a profit without risk," said James Williams, an economist at energy research firm WTRG Economics. "Typically contango leads the storage buildup," he added.
Crude prices, currently nearly $110 lower than the record high above $147 hit in July, are expected to rise in the second half of the year as international economic stimulus efforts breathe life into the global economy and major producers cut output, analysts said. Instead of selling oil at a depressed price amid sluggish demand, more producers and investors are hoarding oil for future sales.
"When the market flips into contango, meaning the current month is less expensive than the month going forward, people start putting crude into storage," said Jeff Mower, editor-in-chief at Platts Oilgram Price Report. Contango "creates a financial incentive to store more barrels."
Record crude has been stocked at Cushing, Okla., the delivery point for futures traded on the Nymex. Cushing inventories jumped to 32.2 million barrels in the week ended Jan. 2, more than 9 million, or 40%, higher than a month ago, according to the U.S. Energy Information Administration.
That's the highest level since at least April, 2004, when the EIA started collecting Cushing data.
Super contango
The ongoing economic turmoil has pummeled oil prices and created contango that hasn't ever been seen. On Dec. 19, the expiring January contract ended at $33.87 a barrel, $8.49 lower than the February contract. That's the widest contango between two successive months' contracts, according to energy information provider Platts.
With price gas that big, oil investors can pocket lucrative profits by simply buying the January contract, taking the physical oil delivery and storing it, and at the same time selling the February contract.
Meanwhile, the oil storage business thrived as energy players sock away plentiful crude to wait out the current price trough.
Bruce Macphail, director of contract terminals at Enbridge, said the company's 15.5 million barrel storage capacity at Cushing is nearly full. He said the company holds contracts with a variety of energy companies ranging in length from six months to several years. Read more on oil storage.
As the current contango is expected to widen, Cushing inventories could rise further, analysts said. Storage capacity at Cushing stands at around 42 million barrels, according to Platts.
Rising inventories
Beyond Cushing, oil stockpiles are also on the rise across the nation.
Total U.S. commercial inventories, or oil held by producers, refineries and other users, jumped 6.7 million barrels in the week ended Jan. 2 from a week ago to hit 325.4 million, the highest level since May, 2008.
Refineries, meanwhile, are scaling back their production to wait for demand and prices to rise. U.S. refineries operated at 82.5% of their totally capacity of 17.6 million barrels a day at the end of last year, the lowest utilization rate since October, 2008.
Futures markets indicated gasoline prices will rise in the following months. On the Nymex, the September reformulated crude contract closed at $1.3817 Friday, or 24% higher than the February contract.
At the pump, regular gasoline averaged at $1.79 a gallon Monday, up 13 cents from a month ago, according to AAA's Daily Fuel Gauge Report.
Moming Zhou is a MarketWatch reporter based in New York.
Record contango pushes up oil inventories; Cushing stockpiles at the highest
By Moming Zhou, MarketWatch
Last update: 2:01 p.m. EST Jan. 12, 2009Comments: 25NEW YORK (MarketWatch) - A record amount of crude oil has been put into storage as investors and producers waited for oil prices to rise in the following months, in the hope that they can sell their oil at dearer prices.
Futures trading on the New York Mercantile Exchange indicated that a barrel of oil might fetch a much higher price in a few months. At Friday's closing, crude for July delivery was more than $13 higher than February crude, a gap that's never been seen between the two months' contracts.
Contango, or the situation where the price of a far future delivery commodity is higher than a nearer future contract, isn't surprising, with price difference typically representing the cost of storage and the time value of money.
But when the price spread is greater than the storage cost, "there is an opportunity to arbitrage at a profit without risk," said James Williams, an economist at energy research firm WTRG Economics. "Typically contango leads the storage buildup," he added.
Crude prices, currently nearly $110 lower than the record high above $147 hit in July, are expected to rise in the second half of the year as international economic stimulus efforts breathe life into the global economy and major producers cut output, analysts said. Instead of selling oil at a depressed price amid sluggish demand, more producers and investors are hoarding oil for future sales.
"When the market flips into contango, meaning the current month is less expensive than the month going forward, people start putting crude into storage," said Jeff Mower, editor-in-chief at Platts Oilgram Price Report. Contango "creates a financial incentive to store more barrels."
Record crude has been stocked at Cushing, Okla., the delivery point for futures traded on the Nymex. Cushing inventories jumped to 32.2 million barrels in the week ended Jan. 2, more than 9 million, or 40%, higher than a month ago, according to the U.S. Energy Information Administration.
That's the highest level since at least April, 2004, when the EIA started collecting Cushing data.
Super contango
The ongoing economic turmoil has pummeled oil prices and created contango that hasn't ever been seen. On Dec. 19, the expiring January contract ended at $33.87 a barrel, $8.49 lower than the February contract. That's the widest contango between two successive months' contracts, according to energy information provider Platts.
With price gas that big, oil investors can pocket lucrative profits by simply buying the January contract, taking the physical oil delivery and storing it, and at the same time selling the February contract.
Meanwhile, the oil storage business thrived as energy players sock away plentiful crude to wait out the current price trough.
Bruce Macphail, director of contract terminals at Enbridge, said the company's 15.5 million barrel storage capacity at Cushing is nearly full. He said the company holds contracts with a variety of energy companies ranging in length from six months to several years. Read more on oil storage.
As the current contango is expected to widen, Cushing inventories could rise further, analysts said. Storage capacity at Cushing stands at around 42 million barrels, according to Platts.
Rising inventories
Beyond Cushing, oil stockpiles are also on the rise across the nation.
Total U.S. commercial inventories, or oil held by producers, refineries and other users, jumped 6.7 million barrels in the week ended Jan. 2 from a week ago to hit 325.4 million, the highest level since May, 2008.
Refineries, meanwhile, are scaling back their production to wait for demand and prices to rise. U.S. refineries operated at 82.5% of their totally capacity of 17.6 million barrels a day at the end of last year, the lowest utilization rate since October, 2008.
Futures markets indicated gasoline prices will rise in the following months. On the Nymex, the September reformulated crude contract closed at $1.3817 Friday, or 24% higher than the February contract.
At the pump, regular gasoline averaged at $1.79 a gallon Monday, up 13 cents from a month ago, according to AAA's Daily Fuel Gauge Report.
Moming Zhou is a MarketWatch reporter based in New York.
Friday, January 9, 2009
US FED: Rosengren Supports Expanded FHA Mortgage Lending
Thomson Financial News
Washington, Jan 08 2009 (IFR) - Boston Federal Reserve Bank President Eric Rosengren today said he supports expanded access to Federal Housing Administration (FHA) lending programs, among other fiscal and monetary efforts to boost the sagging US housing market.
'Making these programs more accessible to borrowers and banks would help ensure that low and moderate income borrowers can obtain financing, which should help stabilize the market for lower-priced homes,' Rosengren said in comments this evening before the Massachusetts Mortgage Bankers Association.
Yahoo! Buzz'Since many banks have been raising their minimum credit score to qualify for mortgages, the FHA may be able to provide loans for borrowers whose credit history is not up to current thresholds, yet have the capacity to make payments,' he added.
He also recommended that Fannie Mae (nyse: FNM - news - people ) and Freddie Mac (nyse: FRE - news - people ) work to provide a secondary market for mortgages that reflect the lower costs of funds in many credit markets. 'Further exploration of the GSEs options for pricing and programs may result in additional support to the mortgage market,' Rosengren said.
As for the role of the Fed in all of this, Rosengren cited the central bank's November announcement that it would buy up GSE debt obligations and mortgage backed securities.
'While any extension of direct government assistance to borrowers has potential 'moral hazard' problems, the mere potential for such problems should not automatically derail proposals that are likely to keep temporarily troubled borrowers in their homes,' he said.
Rosengren noted that the economy has contracted 'quite significantly' in the final quarter of 2008, and may continue to do so over the first half of 2009. He warned that holiday sales 'fell short of expectations for many retailers,' and said it's a sign that consumers are spending less.
Washington, Jan 08 2009 (IFR) - Boston Federal Reserve Bank President Eric Rosengren today said he supports expanded access to Federal Housing Administration (FHA) lending programs, among other fiscal and monetary efforts to boost the sagging US housing market.
'Making these programs more accessible to borrowers and banks would help ensure that low and moderate income borrowers can obtain financing, which should help stabilize the market for lower-priced homes,' Rosengren said in comments this evening before the Massachusetts Mortgage Bankers Association.
Yahoo! Buzz'Since many banks have been raising their minimum credit score to qualify for mortgages, the FHA may be able to provide loans for borrowers whose credit history is not up to current thresholds, yet have the capacity to make payments,' he added.
He also recommended that Fannie Mae (nyse: FNM - news - people ) and Freddie Mac (nyse: FRE - news - people ) work to provide a secondary market for mortgages that reflect the lower costs of funds in many credit markets. 'Further exploration of the GSEs options for pricing and programs may result in additional support to the mortgage market,' Rosengren said.
As for the role of the Fed in all of this, Rosengren cited the central bank's November announcement that it would buy up GSE debt obligations and mortgage backed securities.
'While any extension of direct government assistance to borrowers has potential 'moral hazard' problems, the mere potential for such problems should not automatically derail proposals that are likely to keep temporarily troubled borrowers in their homes,' he said.
Rosengren noted that the economy has contracted 'quite significantly' in the final quarter of 2008, and may continue to do so over the first half of 2009. He warned that holiday sales 'fell short of expectations for many retailers,' and said it's a sign that consumers are spending less.
Thursday, January 8, 2009
MORTGAGES: Tenth Straight Decline Sends 30-Year Mortgage To New Low
CHICAGO (Dow Jones) -- Long-term mortgage rates dropped again this week, with the 30-year fixed-rate mortgage hitting a fourth consecutive record low in the history of Freddie Mac's weekly survey.
The 30-year mortgage averaged 5.01% for the week ending Jan. 8, down from last week's 5.10%. The mortgage averaged 5.87% a year ago. The rate hasn't been lower since Freddie Mac's Primary Mortgage Market Survey began in 1971. The survey covers conventional, conforming mortgages.
"Interest rates for 30-year fixed-rate mortgages fell for the tenth week to a fourth consecutive record low due in part to the Federal Reserve's recent purchases of mortgage-backed securities issued by Freddie Mac, Fannie Mae and Ginnie Mae," said Frank Nothaft, Freddie Mac chief economist, in a news release.
"On Nov. 25, 2008, the Federal Reserve announced that it planned to purchase up to $500 billion of these securities by the end of June of this year. For the sake of comparison, there were roughly $4.7 trillion of such securities backed by home mortgages available as of Sept. 30, 2008.
The low rates, now nearly 1.5 percentage points below their level in October, have brought savings to those buyers brave enough to enter the housing market these days. The lower 30-year rate brings the monthly payment on a $200,000 loan down by $184 from the October peak, Nothaft pointed out.
Rates on 15-year fixed-rate mortgages also dropped, averaging 4.62% this week, down from 4.83% last week and 5.43% a year ago. The mortgage hasn't been lower since June 13, 2003, when it averaged 4.60%.
Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 5.49%, down from 5.57% last week and 5.63% a year ago. And 1-year Treasury-indexed ARMs averaged 4.95%, up from 4.85% last week but down from 5.37% a year ago.
To obtain the rates, the 30-year fixed-rate mortgage required payment of an average 0.6 point, the 15-year fixed-rate and 5-year ARM required an average 0.7 point and the 1-year ARM required an average 0.5 point. A point is 1% of the mortgage amount, charged as prepaid interest.
On Wednesday, the Mortgage Bankers Association reported that the volume of mortgage applications filed last week was down a seasonally adjusted 8.2% compared with the week before, due to a drop in refinance applications.
Freddie Mac (FRE) also joined with Fannie Mae (FNM) Thursday in saying they are extending a temporary foreclosure and eviction suspension on single-family homes to further work with servicers to modify mortgages.
Fannie and Freddie said they will extend the suspensions until Jan. 31. In November, Fannie and Freddie said they would not foreclose on occupied homes or evict homeowners from Nov. 26 to Jan. 9 to implement a streamlined mortgage modification program.
(END) Dow Jones Newswires
01-08-09 1215ET
Copyright (c) 2009 Dow Jones & Company, Inc.
The 30-year mortgage averaged 5.01% for the week ending Jan. 8, down from last week's 5.10%. The mortgage averaged 5.87% a year ago. The rate hasn't been lower since Freddie Mac's Primary Mortgage Market Survey began in 1971. The survey covers conventional, conforming mortgages.
"Interest rates for 30-year fixed-rate mortgages fell for the tenth week to a fourth consecutive record low due in part to the Federal Reserve's recent purchases of mortgage-backed securities issued by Freddie Mac, Fannie Mae and Ginnie Mae," said Frank Nothaft, Freddie Mac chief economist, in a news release.
"On Nov. 25, 2008, the Federal Reserve announced that it planned to purchase up to $500 billion of these securities by the end of June of this year. For the sake of comparison, there were roughly $4.7 trillion of such securities backed by home mortgages available as of Sept. 30, 2008.
The low rates, now nearly 1.5 percentage points below their level in October, have brought savings to those buyers brave enough to enter the housing market these days. The lower 30-year rate brings the monthly payment on a $200,000 loan down by $184 from the October peak, Nothaft pointed out.
Rates on 15-year fixed-rate mortgages also dropped, averaging 4.62% this week, down from 4.83% last week and 5.43% a year ago. The mortgage hasn't been lower since June 13, 2003, when it averaged 4.60%.
Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 5.49%, down from 5.57% last week and 5.63% a year ago. And 1-year Treasury-indexed ARMs averaged 4.95%, up from 4.85% last week but down from 5.37% a year ago.
To obtain the rates, the 30-year fixed-rate mortgage required payment of an average 0.6 point, the 15-year fixed-rate and 5-year ARM required an average 0.7 point and the 1-year ARM required an average 0.5 point. A point is 1% of the mortgage amount, charged as prepaid interest.
On Wednesday, the Mortgage Bankers Association reported that the volume of mortgage applications filed last week was down a seasonally adjusted 8.2% compared with the week before, due to a drop in refinance applications.
Freddie Mac (FRE) also joined with Fannie Mae (FNM) Thursday in saying they are extending a temporary foreclosure and eviction suspension on single-family homes to further work with servicers to modify mortgages.
Fannie and Freddie said they will extend the suspensions until Jan. 31. In November, Fannie and Freddie said they would not foreclose on occupied homes or evict homeowners from Nov. 26 to Jan. 9 to implement a streamlined mortgage modification program.
(END) Dow Jones Newswires
01-08-09 1215ET
Copyright (c) 2009 Dow Jones & Company, Inc.
Tuesday, December 23, 2008
US Home Sales Decline
By Alan Rappeport in New York
Published: December 24 2008 02:00 | Last updated: December 24 2008 02:00
The pace of sales of existing homes in the US slowed by 8.6 per cent last month, as buyers retreated from the market in spite of falling prices.
Home resales fell to an annual rate of 4.49m in November, down 10.6 per cent year-on-year, the National Association of Realtors (NAR) said yesterday. The median price of an existing home plummeted 13.2 per cent year-on-year to $181,000 (£123,000), the sharpest decline since record-keeping began in 1968.
http://www.ft.com/cms/s/0/53f41a0a-d15b-11dd-8cc3-000077b07658.html
Published: December 24 2008 02:00 | Last updated: December 24 2008 02:00
The pace of sales of existing homes in the US slowed by 8.6 per cent last month, as buyers retreated from the market in spite of falling prices.
Home resales fell to an annual rate of 4.49m in November, down 10.6 per cent year-on-year, the National Association of Realtors (NAR) said yesterday. The median price of an existing home plummeted 13.2 per cent year-on-year to $181,000 (£123,000), the sharpest decline since record-keeping began in 1968.
http://www.ft.com/cms/s/0/53f41a0a-d15b-11dd-8cc3-000077b07658.html
Friday, December 19, 2008
Looking to Repair Bad Credit Due to Late Credit Card/Consumer Lates
STAY AWAY FROM FAST CREDIT REPAIR AND LOOK INTO REFINANCING INTO AN FHA LOAN!
If you’re looking to repair your credit due to consumer lates your best option may be through an FHA loan.
Getting an FHA loan will allow you to pay off the bad debt and allow you to build credit back up by paying on your mortgage!
Don’t think you qualify for an FHA loan?
Don’t worry! First contact your local lender who specializes in FHA mortgages and talk with that person about refinancing into an FHA secured loan. FHA has lower qualification standards than a conventional mortgage –so in return it makes it easier to qualify and get you back on track.
Through an FHA loan you are allowed lates on consumer debts and as long as your credit score is 580 or above you can refinance up to 95% Loan to Value without huge penalties to the interest rate!
If you’re looking to repair your credit due to consumer lates your best option may be through an FHA loan.
Getting an FHA loan will allow you to pay off the bad debt and allow you to build credit back up by paying on your mortgage!
Don’t think you qualify for an FHA loan?
Don’t worry! First contact your local lender who specializes in FHA mortgages and talk with that person about refinancing into an FHA secured loan. FHA has lower qualification standards than a conventional mortgage –so in return it makes it easier to qualify and get you back on track.
Through an FHA loan you are allowed lates on consumer debts and as long as your credit score is 580 or above you can refinance up to 95% Loan to Value without huge penalties to the interest rate!
Thursday, December 18, 2008
Consumers Get Important New Credit Card Protections
WASHINGTON, Dec 18, 2008 /PRNewswire-USNewswire via COMTEX/ -- Office of Thrift Supervision Adopts New Rules to Safeguard Consumers; Federal Reserve Board and National Credit Union Administration Set To Act Later Today
New rules adopted by the Office of Thrift Supervision today will help protect consumers from certain abusive credit card lending practices that can result in excessive fees and interest rate charges. The rules were developed in conjunction with the Federal Reserve Board and National Credit Union Administration, which are expected to adopt the same regulations later today. The new regulations will go into effect on July 1, 2010.
http://www.marketwatch.com/news/story/Consumers-Get-Important-New-Credit/story.aspx?guid=%7B46CE1908-6639-4EE8-AB21-877184C1D438%7D
New rules adopted by the Office of Thrift Supervision today will help protect consumers from certain abusive credit card lending practices that can result in excessive fees and interest rate charges. The rules were developed in conjunction with the Federal Reserve Board and National Credit Union Administration, which are expected to adopt the same regulations later today. The new regulations will go into effect on July 1, 2010.
http://www.marketwatch.com/news/story/Consumers-Get-Important-New-Credit/story.aspx?guid=%7B46CE1908-6639-4EE8-AB21-877184C1D438%7D
Tuesday, December 16, 2008
Feds Drop Rates
SAN FRANCISCO (MarketWatch) -- Long-dated Treasurys extended their gains Tuesday, further crushing yields to historic lows, after the Federal Reserve slashed its target rate to as low as zero and repeated its intent to lower borrowing costs by buying bonds.
http://http://www.marketwatch.com/news/story/treasury-yields-plunge-new-lows/story.aspx?guid=%7B2FB8B9AD-5E82-490D-95B9-153744E3FCBF%7D&dist=msr_1
http://http://www.marketwatch.com/news/story/treasury-yields-plunge-new-lows/story.aspx?guid=%7B2FB8B9AD-5E82-490D-95B9-153744E3FCBF%7D&dist=msr_1
Friday, December 5, 2008
As A Atlanta Braves Fan I'm Sorry To See Greg Go...
Greg Maddux to retire on Monday
David Zalubowski / Associated Press
Greg Maddux will announce his retirement on Monday at a news conference in Las Vegas, according to Scott Boras.
Greg Maddux, who won four Cy Young awards and 355 games, will announce his retirement on Monday.Maddux will make the official announcement at a news conference at baseball's winter meetings in his hometown of Las Vegas, according to a statement from his agent, Scott Boras.
Maddux, 42, closed out his career with the Dodgers. He did not start in the playoffs and made his final appearance in the National League championship series, mopping up for Chad Billingsley in the game in which the Philadelphia Phillies eliminated the Dodgers.Maddux said that day he was not offended to serve as a mop-up man."It was a privilege," he said. "I felt privileged to do it. I was glad I had a chance to pitch.
"It stinks that we lost. But there's a lot of good young players here, and they're only going to get better. I think this team has a chance to be good for a while."Maddux, a nine-time All-Star while pitching for the Atlanta Braves and Chicago Cubs, started his major-league career in 1986. His 355 victories rank eighth in major league history, one more than Roger Clemens, with Maddux earning his final win by holding the San Francisco Giants to one run over six innings on Sept. 27,The Dodgers acquired him from the San Diego Padres in August -- the second time in three years the Dodgers traded for him to fortify their rotation in a pennant stretch -- and he went 2-4 with a 5.09 earned-run average in seven starts.Every 300-game winner eligible for the Hall of Fame has been inducted, with Maddux, Clemens and Tom Glavine not yet eligible.Maddux also won his 18th Gold Glove this year.Shaikin is a Times staff writer.
David Zalubowski / Associated Press
Greg Maddux will announce his retirement on Monday at a news conference in Las Vegas, according to Scott Boras.
Greg Maddux, who won four Cy Young awards and 355 games, will announce his retirement on Monday.Maddux will make the official announcement at a news conference at baseball's winter meetings in his hometown of Las Vegas, according to a statement from his agent, Scott Boras.
Maddux, 42, closed out his career with the Dodgers. He did not start in the playoffs and made his final appearance in the National League championship series, mopping up for Chad Billingsley in the game in which the Philadelphia Phillies eliminated the Dodgers.Maddux said that day he was not offended to serve as a mop-up man."It was a privilege," he said. "I felt privileged to do it. I was glad I had a chance to pitch.
"It stinks that we lost. But there's a lot of good young players here, and they're only going to get better. I think this team has a chance to be good for a while."Maddux, a nine-time All-Star while pitching for the Atlanta Braves and Chicago Cubs, started his major-league career in 1986. His 355 victories rank eighth in major league history, one more than Roger Clemens, with Maddux earning his final win by holding the San Francisco Giants to one run over six innings on Sept. 27,The Dodgers acquired him from the San Diego Padres in August -- the second time in three years the Dodgers traded for him to fortify their rotation in a pennant stretch -- and he went 2-4 with a 5.09 earned-run average in seven starts.Every 300-game winner eligible for the Hall of Fame has been inducted, with Maddux, Clemens and Tom Glavine not yet eligible.Maddux also won his 18th Gold Glove this year.Shaikin is a Times staff writer.
Canned Juice: O.J. Simpson headed to prison for up to 21 years
The former football great was sentenced Friday to up to 21 years behind bars for a botched robbery in Las Vegas, ending his life as a free man 13 years after he was acquitted of murdering his ex-wife and her friend.
He must serve at least six years before being eligible for parole.
Before being sentenced an emotional Simpson apologized for his actions in a soft, hoarse voice and begged Clark County Judge Jackie Glass for leniency.
"I didn't want to steal from anyone," said Simpson, whose lawyers sought the minimum sentence of 6-to-17 years. "I'm sorry, sorry
http://www.nydailynews.com/news/us_world/2008/12/05/2008-12-05_canned_juice_oj_simpson_headed_to_prison.html
He must serve at least six years before being eligible for parole.
Before being sentenced an emotional Simpson apologized for his actions in a soft, hoarse voice and begged Clark County Judge Jackie Glass for leniency.
"I didn't want to steal from anyone," said Simpson, whose lawyers sought the minimum sentence of 6-to-17 years. "I'm sorry, sorry
http://www.nydailynews.com/news/us_world/2008/12/05/2008-12-05_canned_juice_oj_simpson_headed_to_prison.html
Thursday, December 4, 2008
Lower mortgage rates not the answer??
NEW YORK (CNNMoney.com) -- The government finally realizes that it has to address the problems in the housing market. Unfortunately, it seems officials are considering going at it the wrong way.
According to several reports, the Treasury Department is considering a plan to drive down mortgage rates as low as 4.5%. It would do this by purchasing mortgage-backed securities from the now essentially nationalized mortgage financing giants Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500).
Low rates, the thinking goes, would make mortgage payments more affordable and get home sales moving again.
The plan misses on a few fronts, however.
"The level of mortgage rates is not the main problem in the housing market," said Dean Maki, co-head of U.S. economics research with Barclays Capital.
http://money.cnn.com/2008/12/04/markets/thebuzz/?postversion=2008120418
According to several reports, the Treasury Department is considering a plan to drive down mortgage rates as low as 4.5%. It would do this by purchasing mortgage-backed securities from the now essentially nationalized mortgage financing giants Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500).
Low rates, the thinking goes, would make mortgage payments more affordable and get home sales moving again.
The plan misses on a few fronts, however.
"The level of mortgage rates is not the main problem in the housing market," said Dean Maki, co-head of U.S. economics research with Barclays Capital.
http://money.cnn.com/2008/12/04/markets/thebuzz/?postversion=2008120418
Wednesday, December 3, 2008
Home Shoppers Rush In As Mortgage Rates Fall
A editorial in todays USA Today references the mortgage rush that has occurred in the past week.
Telephones are ringing — and ringing — at mortgage brokers' offices around the country after this week's sharp drop in mortgage rates. Average rates on 30-year fixed-rate mortgages fell to 5.97%, down from 6.33% the week before, according to Bankrate.com. Some brokers report rates as low as 5.25%. Borrowers with a $200,000 loan, for example, would save about $63 a month if their interest rate dropped to 5.5% from 6%. Credit the Federal Reserve's announcement this week that it will buy $500 billion in mortgage-backed securities held by Fannie Mae and Freddie Mac, helping the two mortgage-finance giants increase the pool of money available to banks and other lenders to make new mortgages. "It is pretty remarkable stuff," says Bob Walters, the chief economist at Quicken Loans, where applications quadrupled Tuesday from Monday.
"Some people might be trying to hold out for even lower rates," he says, "but in 30 or 40 years, we haven't seen them go much beneath these levels. They could, but you're betting against history." Mortgage professionals used to 10 applications a day may have gotten 200 on Tuesday, says Brian Koss, a managing director of Mortgage Network in Danvers, Mass.
"This is really craziness," Koss says. "This news broke the logjam on interest rates that allowed rates to drop significantly." Koss recommends that borrowers who find an attractive rate move fast to lock it in. "If the number works, lock it, and lock it in for 60 days. Drop everything you are doing, get the mortgage professional all of the paperwork they need, so you don't run out of time," he says. Other mortgage professionals say they're seeing an uptick in applications, but the rates should remain low so people can apply when they're ready. "Any time you have action like that taking place in Washington," said Jim Sahnger, a mortgage broker with Palm Beach Financial Network, "it takes awhile to get to Main Street. As we're going into the holidays, people are more focused on buying turkeys than filling out a mortgage application."
But the customer surge comes to an industry decimated by business failures and job losses. There are fewer people to handle loans and less money to lend. Lending standards are higher, too. "It's like someone saying, 'Hey there is free food around the corner!' You don't realize it is free food for 50 — not 500," Koss says.
Telephones are ringing — and ringing — at mortgage brokers' offices around the country after this week's sharp drop in mortgage rates. Average rates on 30-year fixed-rate mortgages fell to 5.97%, down from 6.33% the week before, according to Bankrate.com. Some brokers report rates as low as 5.25%. Borrowers with a $200,000 loan, for example, would save about $63 a month if their interest rate dropped to 5.5% from 6%. Credit the Federal Reserve's announcement this week that it will buy $500 billion in mortgage-backed securities held by Fannie Mae and Freddie Mac, helping the two mortgage-finance giants increase the pool of money available to banks and other lenders to make new mortgages. "It is pretty remarkable stuff," says Bob Walters, the chief economist at Quicken Loans, where applications quadrupled Tuesday from Monday.
"Some people might be trying to hold out for even lower rates," he says, "but in 30 or 40 years, we haven't seen them go much beneath these levels. They could, but you're betting against history." Mortgage professionals used to 10 applications a day may have gotten 200 on Tuesday, says Brian Koss, a managing director of Mortgage Network in Danvers, Mass.
"This is really craziness," Koss says. "This news broke the logjam on interest rates that allowed rates to drop significantly." Koss recommends that borrowers who find an attractive rate move fast to lock it in. "If the number works, lock it, and lock it in for 60 days. Drop everything you are doing, get the mortgage professional all of the paperwork they need, so you don't run out of time," he says. Other mortgage professionals say they're seeing an uptick in applications, but the rates should remain low so people can apply when they're ready. "Any time you have action like that taking place in Washington," said Jim Sahnger, a mortgage broker with Palm Beach Financial Network, "it takes awhile to get to Main Street. As we're going into the holidays, people are more focused on buying turkeys than filling out a mortgage application."
But the customer surge comes to an industry decimated by business failures and job losses. There are fewer people to handle loans and less money to lend. Lending standards are higher, too. "It's like someone saying, 'Hey there is free food around the corner!' You don't realize it is free food for 50 — not 500," Koss says.
Tuesday, November 25, 2008
Rates Drop Lowest Since January 08'
Rates have plunged this morning in response to an announcement by the Federal Reserve that it is initiating programs to purchase mortgage-backed securities backed by government-sponsored enterprises and direct obligations of the GSEs.
The Fed said that it would purchase up to $500 billion of mortgage-backed securities beginning before year's end, and up to $100 billion of direct obligations of the GSEs beginning next week. The Fed said that the actions were taken "to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally. The Fed's $500 billion in MBS purchases will far exceed the roughly $50 billion of MBS the Treasury has thus far purchased through its MBS purchase program. The $100 billion of agency purchases represent about 5% of the debentures outstanding for Fannie, Freddie, and the Federal Home Loan Banks.
We don't know yet how it is that the Fed will finance its $600 billion of purchases. What we do know is that it can't do it with its current Treasury holdings, which total a comparatively smaller $489 billion, a level that has persisted for about 6 months. In other words, the Fed is unlikely to draw down its Treasuries much if at all in order to pay for its planned $600 billion of purchases. The Fed will instead expand its balance sheet and its actions will boost the amount of bank reserves, a powerful act that will ultimately fuel an expansion of bank credit. The downside to these actions is its potential impact on the value of the U.S. dollar, which could fall if investors believe the U.S. is creating excessive supplies of dollars.
Oddly, Treasury yields have fallen despite gains in equities and improvements in the credit markets. The Treasury rally is related to the rally in the mortgage market. When mortgage rates fall, mortgages are prepaid faster because an increasing number of people refinance their homes and there is usually some relative improvement in home purchase activity.
This means that holders of mortgage securities will be paid back faster, a situation that results in more cash in the hands of portfolio managers who would rather maintain a steady level of average maturities in their portfolios. To recalibrate their portfolios, portfolio managers purchase Treasuries to boost their average maturity levels.
CNBC http://www.cnbc.com/id/27908660
The Fed said that it would purchase up to $500 billion of mortgage-backed securities beginning before year's end, and up to $100 billion of direct obligations of the GSEs beginning next week. The Fed said that the actions were taken "to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally. The Fed's $500 billion in MBS purchases will far exceed the roughly $50 billion of MBS the Treasury has thus far purchased through its MBS purchase program. The $100 billion of agency purchases represent about 5% of the debentures outstanding for Fannie, Freddie, and the Federal Home Loan Banks.
We don't know yet how it is that the Fed will finance its $600 billion of purchases. What we do know is that it can't do it with its current Treasury holdings, which total a comparatively smaller $489 billion, a level that has persisted for about 6 months. In other words, the Fed is unlikely to draw down its Treasuries much if at all in order to pay for its planned $600 billion of purchases. The Fed will instead expand its balance sheet and its actions will boost the amount of bank reserves, a powerful act that will ultimately fuel an expansion of bank credit. The downside to these actions is its potential impact on the value of the U.S. dollar, which could fall if investors believe the U.S. is creating excessive supplies of dollars.
Oddly, Treasury yields have fallen despite gains in equities and improvements in the credit markets. The Treasury rally is related to the rally in the mortgage market. When mortgage rates fall, mortgages are prepaid faster because an increasing number of people refinance their homes and there is usually some relative improvement in home purchase activity.
This means that holders of mortgage securities will be paid back faster, a situation that results in more cash in the hands of portfolio managers who would rather maintain a steady level of average maturities in their portfolios. To recalibrate their portfolios, portfolio managers purchase Treasuries to boost their average maturity levels.
CNBC http://www.cnbc.com/id/27908660
Tuesday, November 11, 2008
Learn how The First Time Home Buyer Tax Credit works
Got an Hour…..Come join an expert
David B. Tuck
Licensed Tax Consultant
IRS Enrolled Agent
QuickBooks ProAdvisor
For an informative and free session highlighting:
· Who qualifies and what property is eligible?
· what are the income limits and purchase dates?
· how does it work ?
· What's the difference between a tax credit and zero down?
· What's the repayment amount
· Much more and room for questions!
Compliment Wine and Cheese provided
When: Tuesday November 18th 4:30pm
Where: The Park Towers 13115 NE Fourth St #123 Vancouver, WA 98664
Please RSVP by Friday November 14th
Call Will Amorin @ 360-931-0584
David B. Tuck
Licensed Tax Consultant
IRS Enrolled Agent
QuickBooks ProAdvisor
For an informative and free session highlighting:
· Who qualifies and what property is eligible?
· what are the income limits and purchase dates?
· how does it work ?
· What's the difference between a tax credit and zero down?
· What's the repayment amount
· Much more and room for questions!
Compliment Wine and Cheese provided
When: Tuesday November 18th 4:30pm
Where: The Park Towers 13115 NE Fourth St #123 Vancouver, WA 98664
Please RSVP by Friday November 14th
Call Will Amorin @ 360-931-0584
Monday, November 10, 2008
Loan Modifications
A Loan Modification is a permanent change in one or more of the terms of a mortgagor's loan, allows the loan to be reinstated, and results in a payment the mortgagor can afford.
Question 1: In utilizing the Loan Modification option to bring an asset current, can the mortgagee include all fees and corporate advances?
Answer: Mortgagee Letter 2008-21 states in part: Legal fees and related foreclosure costs for work actually completed and applicable to the current default episode may be capitalized into the modified principal balance.
Question 2: May a mortgagee perform an interior inspection of the property if they have concerns about property condition?
Answer: Yes, the mortgagee may conduct any review it deems necessary to verify that the property has no physical conditions which adversely impact the mortgagor's continued ability to support the modified mortgage payment.
Question 3: Can a mortgagee include late charges in the Loan Modification?
Answer: Mortgagee Letter 2008-21 states that accrued late charges should be waived by the mortgagee at the time of the Loan Modification.
Question 4: When utilizing a Loan Modification option, can a mortgagee capitalize an escrow advance for Homeowner's Association fees?
Answer: HUD Handbook 4330.1 REV-5, Paragraph 2-1, Section B, Escrow Obligations states: Mortgagees must also escrow funds for those items which, if not paid, would create liens on the property positioned ahead of the FHA-insured mortgage.
Question 5: Is there a new basis interest rate which mortgagees may assess when completing a Loan Modification?
Answer: Yes, Mortgagee Letter 2008-21 states that the new basis interest rate is 200 points above the monthly average yield on U.S. Treasury Securities, adjusted to a constant maturity of 10 years.
Question 6: Will HUD subordinate a Partial Claim, should a mortgagor subsequently default and qualify for a Loan Modification?
Answer: If a mortgagor subsequently defaults and qualifies for a Loan Modification, HUD will subordinate the Partial Claim.
Question 7: Are mortgagees required to perform an escrow analysis when completing a Loan Modification?
Answer: Yes, mortgagees are to perform a retroactive escrow analysis at the time the Loan Modification to ensure that the delinquent payments being capitalized reflect the actual escrow requirements required for those months capitalized.
Question 8: Is the mortgagor eligible for the upfront premium refund at payoff of a modified loan?
Answer: It depends upon when the closing date occurred. For assets closed:
After July 1, 1991 but before January 1, 2001, the 7-year unearned premium refund schedule shown in Mortgagee Letter 1994-1 remains in effect,
On or after January 1, 2001 that are subsequently refinanced, the 5-year refund schedule shown in the attachment of Mortgagee Letter 2000-46 applies, or
On or after December 8, 2004, refunds of upfront MIP are eliminated except, when the mortgagor refinances to another FHA insured mortgage. The refund schedule attached to Mortgagee Letter 2005-03 has been modified to a 3-year period.
Question 9: Can a mortgagee qualify an asset for the Loan Modification option when the mortgagor is unemployed, the spouse is employed, but the spouse name is not on the mortgage?
Answer: Based upon this scenario, the mortgagee should conduct a financial review of the household income and expenses to determine if surplus income is sufficient to meet the new modified mortgage payment, but insufficient to pay back the arrearage. Once this process has been completed the mortgagee should then consult with their legal counsel to determine if the asset is eligible for a Loan Modification since the spouse is not on the original mortgage.
This information was provide directly from HUD. For more information - please refer to the link provided.
http://www.hud.gov/offices/hsg/sfh/nsc/faqlm.cfm
Question 1: In utilizing the Loan Modification option to bring an asset current, can the mortgagee include all fees and corporate advances?
Answer: Mortgagee Letter 2008-21 states in part: Legal fees and related foreclosure costs for work actually completed and applicable to the current default episode may be capitalized into the modified principal balance.
Question 2: May a mortgagee perform an interior inspection of the property if they have concerns about property condition?
Answer: Yes, the mortgagee may conduct any review it deems necessary to verify that the property has no physical conditions which adversely impact the mortgagor's continued ability to support the modified mortgage payment.
Question 3: Can a mortgagee include late charges in the Loan Modification?
Answer: Mortgagee Letter 2008-21 states that accrued late charges should be waived by the mortgagee at the time of the Loan Modification.
Question 4: When utilizing a Loan Modification option, can a mortgagee capitalize an escrow advance for Homeowner's Association fees?
Answer: HUD Handbook 4330.1 REV-5, Paragraph 2-1, Section B, Escrow Obligations states: Mortgagees must also escrow funds for those items which, if not paid, would create liens on the property positioned ahead of the FHA-insured mortgage.
Question 5: Is there a new basis interest rate which mortgagees may assess when completing a Loan Modification?
Answer: Yes, Mortgagee Letter 2008-21 states that the new basis interest rate is 200 points above the monthly average yield on U.S. Treasury Securities, adjusted to a constant maturity of 10 years.
Question 6: Will HUD subordinate a Partial Claim, should a mortgagor subsequently default and qualify for a Loan Modification?
Answer: If a mortgagor subsequently defaults and qualifies for a Loan Modification, HUD will subordinate the Partial Claim.
Question 7: Are mortgagees required to perform an escrow analysis when completing a Loan Modification?
Answer: Yes, mortgagees are to perform a retroactive escrow analysis at the time the Loan Modification to ensure that the delinquent payments being capitalized reflect the actual escrow requirements required for those months capitalized.
Question 8: Is the mortgagor eligible for the upfront premium refund at payoff of a modified loan?
Answer: It depends upon when the closing date occurred. For assets closed:
After July 1, 1991 but before January 1, 2001, the 7-year unearned premium refund schedule shown in Mortgagee Letter 1994-1 remains in effect,
On or after January 1, 2001 that are subsequently refinanced, the 5-year refund schedule shown in the attachment of Mortgagee Letter 2000-46 applies, or
On or after December 8, 2004, refunds of upfront MIP are eliminated except, when the mortgagor refinances to another FHA insured mortgage. The refund schedule attached to Mortgagee Letter 2005-03 has been modified to a 3-year period.
Question 9: Can a mortgagee qualify an asset for the Loan Modification option when the mortgagor is unemployed, the spouse is employed, but the spouse name is not on the mortgage?
Answer: Based upon this scenario, the mortgagee should conduct a financial review of the household income and expenses to determine if surplus income is sufficient to meet the new modified mortgage payment, but insufficient to pay back the arrearage. Once this process has been completed the mortgagee should then consult with their legal counsel to determine if the asset is eligible for a Loan Modification since the spouse is not on the original mortgage.
This information was provide directly from HUD. For more information - please refer to the link provided.
http://www.hud.gov/offices/hsg/sfh/nsc/faqlm.cfm
Wednesday, November 5, 2008
An FHA Program Allows You To Buy A Foreclose Home That Has Damage And Come Out On Top
Did you know that you can know purchase a home that has been damaged and recieve up to $35,000 addtional for repairs!??
Through FHA - a program called 203K Rehab Loan will allow you to purchase a home that is in foreclosure and has been damaged, whether it's minor or serious. It will allow you to borrow up to $35,000 in additional funds to repair the damaged home. Here's how it works, directly from HUD.
Eligible Property
"The Federal Housing Administration (FHA), which is part of the Department of Housing and Urban Development (HUD), administers various single family mortgage insurance programs. These programs operate through FHA-approved lending institutions which submit applications to have the property appraised and have the buyer's credit approved. These lenders fund the mortgage loans which the Department insures. HUD does not make direct loans to help people buy homes.
The Section 203(k) program is the Department's primary program for the rehabilitation and repair of single family properties. As such, it is an important tool for community and neighborhood revitalization and for expanding homeownership opportunities. Since these are the primary goals of HUD, the Department believes that Section 203(k) is an important program and we intend to continue to strongly support the program and the lenders that participate in it.
Many lenders have successfully used the Section 203(k) program in partnership with state and local housing agencies and nonprofit organizations to rehabilitate properties. These lenders, along with state and local government agencies, have found ways to combine Section 203(k) with other financial resources, such as HUD's HOME, HOPE, and Community Development Block Grant Programs, to assist borrowers. Several state housing finance agencies have designed programs, specifically for use with Section 203(k) and some lenders have also used the expertise of local housing agencies and nonprofit organizations to help manage the rehabilitation processing.
The Department also believes that the Section 203(k) program is an excellent means for lenders to demonstrate their commitment to lending in lower income communities and to help meet their responsibilities under the Community Reinvestment Act (CRA). HUD is committed to increasing homeownership opportunities for families in these communities and Section 203(k) is an excellent product for use with CRA-type lending programs.
If you have questions about the 203(k) program or are interested in getting a 203(k) insured mortgage loan, we suggest that you get in touch with an FHA-approved lender in your area or the Homeownership Center in your area.Introduction
Section 10 1 (c) (1) of the Housing and Community Development Amendments of 1978 (Public Law 95557) amends Section 203(k) of the National Housing Act (NHA). The objective of the revision is to enable HUD to promote and facilitate the restoration and preservation of the Nation's existing housing stock. The provisions of Section 203(k) are located in Chapter II of Title 24 of the Code of Federal Regulations under Section 203.50 and Sections 203.440 through 203.494. Program instructions are in HUD Handbook 4240-4. HUD Handbooks may be ordered online from The HUD Compendium or from HUDCLIPS. 203(k) - How It Is Different
Most mortgage financing plans provide only permanent financing. That is, the lender will not usually close the loan and release the mortgage proceeds unless the condition and value of the property provide adequate loan security. When rehabilitation is involved, this means that a lender typically requires the improvements to be finished before a long-term mortgage is made.
When a homebuyer wants to purchase a house in need of repair or modernization, the homebuyer usually has to obtain financing first to purchase the dwelling; additional financing to do the rehabilitation construction; and a permanent mortgage when the work is completed to pay off the interim loans with a permanent mortgage. Often the interim financing (the acquisition and construction loans) involves relatively high interest rates and short amortization periods. The Section 203(k) program was designed to address this situation. The borrower can get just one mortgage loan, at a long-term fixed (or adjustable) rate, to finance both the acquisition and the rehabilitation of the property. To provide funds for the rehabilitation, the mortgage amount is based on the projected value of the property with the work completed, taking into account the cost of the work. To minimize the risk to the mortgage lender, the mortgage loan (the maximum allowable amount) is eligible for endorsement by HUD as soon as the mortgage proceeds are disbursed and a rehabilitation escrow account is established. At this point the lender has a fully-insured mortgage loan.Eligible Property
To be eligible, the property must be a one- to four-family dwelling that has been completed for at least one year. The number of units on the site must be acceptable according to the provisions of local zoning requirements. All newly constructed units must be attached to the existing dwelling. Cooperative units are not eligible.
Homes that have been demolished, or will be razed as part of the rehabilitation work, are eligible provided some of the existing foundation system remains in place.
In addition to typical home rehabilitation projects, this program can be used to convert a one-family dwelling to a two-, three-, or four-family dwelling. An existing multi-unit dwelling could be decreased to a one- to four-family unit.
An existing house (or modular unit) on another site can be moved onto the mortgaged property; however, release of loan proceeds for the existing structure on the non-mortgaged property is not allowed until the new foundation has been properly inspected and the dwelling has been properly placed and secured to the new foundation.
A 203(k) mortgage may be originated on a "mixed use" residential property provided: (1) The property has no greater than 25 percent (for a one story building); 33 percent (for a three story building); and 49 percent (for a two story building) of its floor area used for commercial (storefront) purposes; (2) the commercial use will not affect the health and safety of the occupants of the residential property; and (3) the rehabilitation funds will only be used for the residential functions of the dwelling and areas used to access the residential part of the property."
How the Program Can Be Used
"This program can be used to accomplish rehabilitation and/or improvement of an existing one-to-four unit dwelling in one of three ways:
To purchase a dwelling and the land on which the dwelling is located and rehabilitate it.
To purchase a dwelling on another site, move it onto a new foundation on the mortgaged property and rehabilitate it.
To refinance existing indebtedness and rehabilitate such a dwelling.
To purchase a dwelling and the land on which the dwelling is located and rehabilitate it, and to refinance existing indebtedness and rehabilitate such a dwelling, the mortgage must be a first lien on the property and the loan proceeds (other than rehabilitation funds) must be available before the rehabilitation begins.
To purchase a dwelling on another site, move it onto a new foundation and rehabilitate it, the mortgage must be a first lien on the property; however, loan proceeds for the moving of the house cannot be made available until the unit is attached to the new foundation."
For more information please feel free to contact me or refer to this site http://www.hud.gov/offices/hsg/sfh/203k/203kabou.cfm
Through FHA - a program called 203K Rehab Loan will allow you to purchase a home that is in foreclosure and has been damaged, whether it's minor or serious. It will allow you to borrow up to $35,000 in additional funds to repair the damaged home. Here's how it works, directly from HUD.
Eligible Property
"The Federal Housing Administration (FHA), which is part of the Department of Housing and Urban Development (HUD), administers various single family mortgage insurance programs. These programs operate through FHA-approved lending institutions which submit applications to have the property appraised and have the buyer's credit approved. These lenders fund the mortgage loans which the Department insures. HUD does not make direct loans to help people buy homes.
The Section 203(k) program is the Department's primary program for the rehabilitation and repair of single family properties. As such, it is an important tool for community and neighborhood revitalization and for expanding homeownership opportunities. Since these are the primary goals of HUD, the Department believes that Section 203(k) is an important program and we intend to continue to strongly support the program and the lenders that participate in it.
Many lenders have successfully used the Section 203(k) program in partnership with state and local housing agencies and nonprofit organizations to rehabilitate properties. These lenders, along with state and local government agencies, have found ways to combine Section 203(k) with other financial resources, such as HUD's HOME, HOPE, and Community Development Block Grant Programs, to assist borrowers. Several state housing finance agencies have designed programs, specifically for use with Section 203(k) and some lenders have also used the expertise of local housing agencies and nonprofit organizations to help manage the rehabilitation processing.
The Department also believes that the Section 203(k) program is an excellent means for lenders to demonstrate their commitment to lending in lower income communities and to help meet their responsibilities under the Community Reinvestment Act (CRA). HUD is committed to increasing homeownership opportunities for families in these communities and Section 203(k) is an excellent product for use with CRA-type lending programs.
If you have questions about the 203(k) program or are interested in getting a 203(k) insured mortgage loan, we suggest that you get in touch with an FHA-approved lender in your area or the Homeownership Center in your area.Introduction
Section 10 1 (c) (1) of the Housing and Community Development Amendments of 1978 (Public Law 95557) amends Section 203(k) of the National Housing Act (NHA). The objective of the revision is to enable HUD to promote and facilitate the restoration and preservation of the Nation's existing housing stock. The provisions of Section 203(k) are located in Chapter II of Title 24 of the Code of Federal Regulations under Section 203.50 and Sections 203.440 through 203.494. Program instructions are in HUD Handbook 4240-4. HUD Handbooks may be ordered online from The HUD Compendium or from HUDCLIPS. 203(k) - How It Is Different
Most mortgage financing plans provide only permanent financing. That is, the lender will not usually close the loan and release the mortgage proceeds unless the condition and value of the property provide adequate loan security. When rehabilitation is involved, this means that a lender typically requires the improvements to be finished before a long-term mortgage is made.
When a homebuyer wants to purchase a house in need of repair or modernization, the homebuyer usually has to obtain financing first to purchase the dwelling; additional financing to do the rehabilitation construction; and a permanent mortgage when the work is completed to pay off the interim loans with a permanent mortgage. Often the interim financing (the acquisition and construction loans) involves relatively high interest rates and short amortization periods. The Section 203(k) program was designed to address this situation. The borrower can get just one mortgage loan, at a long-term fixed (or adjustable) rate, to finance both the acquisition and the rehabilitation of the property. To provide funds for the rehabilitation, the mortgage amount is based on the projected value of the property with the work completed, taking into account the cost of the work. To minimize the risk to the mortgage lender, the mortgage loan (the maximum allowable amount) is eligible for endorsement by HUD as soon as the mortgage proceeds are disbursed and a rehabilitation escrow account is established. At this point the lender has a fully-insured mortgage loan.Eligible Property
To be eligible, the property must be a one- to four-family dwelling that has been completed for at least one year. The number of units on the site must be acceptable according to the provisions of local zoning requirements. All newly constructed units must be attached to the existing dwelling. Cooperative units are not eligible.
Homes that have been demolished, or will be razed as part of the rehabilitation work, are eligible provided some of the existing foundation system remains in place.
In addition to typical home rehabilitation projects, this program can be used to convert a one-family dwelling to a two-, three-, or four-family dwelling. An existing multi-unit dwelling could be decreased to a one- to four-family unit.
An existing house (or modular unit) on another site can be moved onto the mortgaged property; however, release of loan proceeds for the existing structure on the non-mortgaged property is not allowed until the new foundation has been properly inspected and the dwelling has been properly placed and secured to the new foundation.
A 203(k) mortgage may be originated on a "mixed use" residential property provided: (1) The property has no greater than 25 percent (for a one story building); 33 percent (for a three story building); and 49 percent (for a two story building) of its floor area used for commercial (storefront) purposes; (2) the commercial use will not affect the health and safety of the occupants of the residential property; and (3) the rehabilitation funds will only be used for the residential functions of the dwelling and areas used to access the residential part of the property."
How the Program Can Be Used
"This program can be used to accomplish rehabilitation and/or improvement of an existing one-to-four unit dwelling in one of three ways:
To purchase a dwelling and the land on which the dwelling is located and rehabilitate it.
To purchase a dwelling on another site, move it onto a new foundation on the mortgaged property and rehabilitate it.
To refinance existing indebtedness and rehabilitate such a dwelling.
To purchase a dwelling and the land on which the dwelling is located and rehabilitate it, and to refinance existing indebtedness and rehabilitate such a dwelling, the mortgage must be a first lien on the property and the loan proceeds (other than rehabilitation funds) must be available before the rehabilitation begins.
To purchase a dwelling on another site, move it onto a new foundation and rehabilitate it, the mortgage must be a first lien on the property; however, loan proceeds for the moving of the house cannot be made available until the unit is attached to the new foundation."
For more information please feel free to contact me or refer to this site http://www.hud.gov/offices/hsg/sfh/203k/203kabou.cfm
Tuesday, November 4, 2008
The Dollar Gains Against Euro After Obama's Victory
This evening history was made! Whether you voted Democrat or Republican history was made tonight in one of the most emotional events I've ever seen out of an inauguration of a new President. This much needed change has created a aura of joy and confidence back into America and it's a change that can already be seen all over the internet. Here we are, not even an hour after President Elect Obama has made his speech and we're already seeing a turn around in the Japans Nikkei market which is currently up 264 points. This is going to cause good things to happen tomorrow - expect a soar in stock prices a much stronger dollar (which just moments ago gained strength against the Euro!!) and lower interest rates!
I'd like to hear your feed back on the current President Elect Obama and how this will affect our future?
I'd like to hear your feed back on the current President Elect Obama and how this will affect our future?
Subscribe to:
Posts (Atom)
