Wednesday, August 5, 2009
As we continue to recover from these crazy times, the Feds are creating new legislation at an alarming rate. These new rules are rolling out a bit too quickly - and without a thorough analysis of the impact to the consumer.
Don't get me wrong - the goals are important, and the steps needed. We simply need to know how to manage in these new environments.
One immediate impact, probably 45 day purchase escrows. 60 days are even on the horizon.
These changes impact purchase loans AND re-finance loans.
The two most important changes were rolled out on May 1st and early in July.
The first is called the "HVCC" or Home Valuation Code of Conduct. It dictates how people in these industries work with Appraisers. In short, we can't talk to them!
The second is a change to the Truth-In-Lending laws. These laws force new disclosures to borrowers if there is a change of 1/8th of a point in APR. ...and a 3 day "hold" period for the analysis of that new disclosure.
What does this last item mean?
Let's say interest rates change between your lock and your close of escrow. NOTE THAT THEY ALWAYS WILL since rates are based on the daily US bond markets!! You could end up reviewing and reviewing changes and changes for days.
More review, more 3 day wait periods = longer escrows. Please plan accordingly!
Friday, July 24, 2009
Applications will be funded on a first-come first-serve basis.
The program was aimed at promoting sales of new homes.
Monday, June 15, 2009
This article from John Graham, the Neighborly Financial manager:
In light of the recent run-up in mortgage rates, one has to ask if the low rates are gone for good. After all it was hard to imagine rates being at 4.75% for a 30 year fixed loan. At this time, I think these rates are gone. Why? Well, everyone is now seeing the light at the end of the tunnel for the recession. Stocks are up over 25% from the March '09 lows, with confidence growing. People are selling bonds with relatively low yields - moving to higher yielding stocks. As people sell bonds, the interest rates move up.
Add to this all the federal spending that will be pushed into the economy in the coming months. Money that will generally not hit the economy till it's too late. Think of it as giving stimulants to a hyperactive person - not a good outcome....
This is the outcome everyone is worrying about now. How do we keep the economy from getting out of control on the other side - with runaway inflation the primary fear. The main weapon in controlling a runaway economy is interest rates on various financial instruments.
As people sell bonds, and the fed is deciding how high and how fast to raise rates, mortgage rates are the first to suffer. After all the fed had a program to buy mortgage backed securities, to artificially drive these down. Now in light of the changing economic times, they are backing away from this program in the first step to let rates rise.
So.... what does this mean to the average borrower? Get ready for higher rates. If you have not refinanced, and if it makes sense, do it now! Remember, any rate below 6% is still a good rate.
see us at http://www.neighborlyfinancial.com/
Tuesday, April 7, 2009
Energy Efficient Mortgage (EEM)
The FHA Energy Efficient Mortgage is focused on allowing current or potential homeowners 'go green' by investing in energy saving updates to their home. In a nutshell, EEM:
- May be used with other FHA Mortgages
- No special underwriting or appraisal requirements
- May finance 100% of the energy improvement
- Allows $4,000 or 5% of property value not to exceed $8,000
Similar to the FHA Section 203(k) rehabilitation program, the EEM Mortgage allows upgrades to the home to be rolled into the purchase of a new or existing home. The improvements can be included in the borrower's mortgage only if their total cost is less than the total dollar value that will be saved during their useful life.
The monthly savings on utility bills is considered when determining the amount of mortgage allowed.
Jeff, Neighborly Realty (http://www.englepropertiesonline.com/)
Monday, March 30, 2009
On the market today:
Today, Placer county has 1236 "active" (non-short sale) listings.
- 17% are Bank Owned (REO) properties
- 61% came on the market within the past 90 days
In addition, there are 830 Short Sale properties on the market
- 581 were listed in the past 90 days
- 104 or 13% were under $200,000
- 40% of the entire inventory are Short Sale properties
What's sold in the past 90 days?
- 739 Sales were completed in the past 90 days
- 360 were Bank Owned (REO) properties
- 86% of these sold within 90 days of being listed
379 were not Bank Owned (Active and Short Sales)
- 58% of these sold within 90 days of being listed
In addition there are 526 properties in Pending state (in escrow)
- 301 or 57% are not Bank Owned
- Distressed sales are still a big part of the market here, however there seems to be a shift towards more short sales.
- Buyers looking for 'bargain' prices should look beyond Bank Owned properties as regular active sales are often priced comparable to REO properties
- Short Sales should not be ignored in this market - have your Realtor do due diligence to find out the status of the seller's short sale
March Inventory Snapshot (Placer County):
Single Family under $500k average list price: $316,267 (Median $300,000)
Single Family Over $500k average list price: $1,018,544 (Median $770,000)
Condo/Townhome Under $300k average list price: $186,561 (Median $199,000)
(MLS - Metrolist Statistics)
Wednesday, March 25, 2009
This article just in from CAR (the California Association of Realtors).
If you've found yourself drowning in mortgage obligations and debt recently, you're not alone. Declining home values, overall economic malaises, job losses, and other forces are driving homeowners like you to consider options that just a few years ago were unthinkable.
While a new state law known as SB 1137 took effect in September 2008, effectively blocking lenders from initiating foreclosure proceedings until 30 days after contracting the borrower or making "due diligence" efforts to do so, many California homeowners are still in need of financial relief.
In response, the US Department of Housing and Urban Development has established a free hotline (877-HUD-1515), staffed with HUD-approved counselors to assist homeowners who are facing a reset on an adjustable mortgage, are three to six months from defaulting on their mortgage, or are experiencing health and/or employment issues.
Some homeowners are finding relief in an option known as a loan "recasting" which involves a modification to the mortgage and typically results in reduced mortgage payments, with payments recalculated with the same interest rate and a new maturity date.
- Pro: The upside to recasting is that you'll be working with your existing lender, which means no closing costs.
- Con: The challenge is that not all lenders are willing to negotiate such deals
Another option is a short sale, or the negotiation of a payoff amount lower than what was originally agreed upon with your lender.
- Pro: This option allows the homeowner to sell the property without suffering the stigma of foreclosure. In addition, H.R. 1424, the Emergency Economic Stabilization Act of 2008, extended the federal income tax exemption for mortgage debt forgiveness on home loans under the Mortgage Forgiveness Debt Relief Act of 2007 until Dec. 31, 2012.
- Con: California does not grant this exemption any longer. Short sales of primary residence - sold after Jan 1, 2009 - can trigger taxes (depending on your income) associated with debt forgiveness, which is considered taxable income
Foreclosure is the final option and occurs when a homeowner loses the rights to his or her property, thus allowing the bank to sell the property to satisfy the debt.
Cons: This route will negatively impact your credit rating- and ability to buy or even rent another home - and wipe out any equity that you had in the home. Finally, it can also result in a tax obligation on the debt forgiveness. To learn more able the tax consequences of a short sale versus a foreclosure, visit the IRS' Web site (www.irs.gov). Before executing any of these options, consult with a certified public accountant or tax attorney.
By Bridget McCrea
Home Edition/News From your Realtor
California Real Estate Magazine:March 2009
Mortgage Workout Programs for Homeowners. To learn which lenders are recasting or offering workout arrangements visit: www.car.org/economics/
Avoiding Foreclosure in California: www.hud.gov/local/ca/homeownership/foreclosure.cfm
Consumer Home Mortgage Information: www.yourhome.ca.gov/mortgage-help.shtml
CALL US if you need to talk. We’re here to present options.
Jeff - Engle Properties / Neighborly Realty
Tuesday, March 24, 2009
WASHINGTON - As part of the Treasury Department's consumer outreach effort and with the April 15 individual tax filing deadline approaching, the Internal Revenue Service today began a concerted effort to educate taxpayers about additional options at their disposal to claim the new $8,000 first-time homebuyer credit for 2009 home purchases. For people who recently purchased a home or are considering buying in the next few months, there are several different ways that they can get this tax credit even if they've already filed their tax return.
The Treasury Department encourages taxpayers to explore these options to maximize their credit and get their money back as fast as possible.
"The new credit can get money in the pockets of first-time homebuyers quickly," said IRS Commissioner Doug Shulman. "For people who recently purchased a home or are considering buying in the next few months, there are several different ways that they can get this tax credit even if they've already filed their tax return."
First-time homebuyers represent a significant portion of existing single-family home sales. The expansion in the first-time homebuyer credit will make it easier for first-time homebuyers to enter the housing market this year.
Under the American Recovery and Reinvestment Act of 2009, qualifying taxpayers who purchase a home before Dec. 1 receive up to $8,000, or $4,000 for married individuals filing separately. People can claim the credit either on their 2008 tax returns due April 15 or on their 2009 tax returns next year.
The filing options to consider are:
· File an extension - Taxpayers who haven't yet filed their 2008 returns but are buying a home soon can request a six-month extension to October 15. This step would be faster than waiting until next year to claim it on the 2009 tax return. Even with an extension, taxpayers could still file electronically, receiving their refund in as few as 10 days with direct deposit.
· File now, amend later - Taxpayers due a sizable refund for their 2008 tax return but who also are considering buying a house in the next few months can file their return now and claim the credit later. Taxpayers would file their 2008 tax forms as usual, then follow up with an amended return later this year to claim the homebuyer credit.
· Amend the 2008 tax return - Taxpayers buying a home in the near future who have already filed their 2008 tax return can consider filing an amended tax return. The amended tax return will allow them to claim the homebuyer credit on the 2008 return without waiting until next year to claim it on the 2009 return.
· Claim the credit in 2009 rather than 2008 - For some taxpayers, it may make more financial sense to wait and claim the homebuyer credit next year when they file the 2009 tax return rather than claiming it now on the 2008 tax return. This could benefit taxpayers who might qualify for a higher credit on the 2009 tax return. This could include people who have less income in 2009 than 2008 because of factors such as a job loss or drop in investment income.
The IRS reminds taxpayers the amount of the credit begins to phase out for taxpayers whose modified adjusted gross income is more than $75,000, or $150,000 for joint filers. Taxpayers can claim 10 percent of the purchase price up to $8,000, or $4,000 for married individuals filing separately.
IRS.gov provides more information, including guidance for people who bought their first homes in 2008. To learn more about the overall implementation of the Recovery Act, visit www.Recovery.gov.