Real Estate Information Archive

From HUD today:

Federal, State Partners Announce Multi Agency Crackdown Targeting Foreclosure Rescue Scams, & Loan Modification Fraud:

As homeowners & communities throughout the country continue to face devastating consequences from the deep contraction in the economy & the housing market, the Obama Administration announced on 04/06/09 a new coordinated effort across federal & state government and the private sector to target mortgage loan modification fraud & foreclosure rescue scams that threaten to hurt American homeowners & prevent them from getting the help they need during these challenging times… Read the entire press release, at: http://www.hud.gov/news/release.cfm?content=pr09-033.cfm & Visit: http://www.makinghomeaffordable.gov/ , Download the new brochure at: http://www.hud.gov/offices/hsg/sfh/mha.pdf

As always, let me know if you have any questions or need any assistance. I'm here to help!!

Here’s some helpful info on the tax credit options, straight from the IRS: 

On Wednesday the Federal Reserve concluded their two day meeting.  From their announcement (see below) it appears that they have agreed to increase the purchasing of Agency MBS (FNMA/FHLMC/GNMA) by an additional $750 billion for a total of $1.250 trillion.  This should ensure that the Fed will be supplying a stable source of funds for the government and conforming loan markets for at least the next 9 – 18 months.  As we have seen since December, the Fed seems to have patterned it’s buying of mortgages to keep rates in the high 4% to low 5% range.  It appears that we should have rates at these levels for some time.

Additionally, the Fed has indicated that they will expand the Term Asset-Backed Securities Loan Facility (“TALF”).  Previously the Fed has indicated that the TALF could expand to include purchasing private MBS (Jumbos) and with today’s announcement it appears that is likely to be the case.  While we don’t see Jumbos rates dropping on the magnitude of what we saw with conforming, this is welcome news.

All positive developments!  I will forward additional information as it is available.  

Yesterdays blog included the IRS form 5405 regarding the First-Time Homebuyer Credit. Today I discovered an easy to read Q & A report that describes the process in much better detail. Click on this link to get the answers to your remaining questions.

As always, please don't hesitate to contact me if you or anyone you know is looking to Buy or Sell real estate in the Central Oregon area. I'm here to help.

Hello

The Internal Revenue Service now has available IRS Form 5405 which explains how the recently passed First Time Home Buyer Tax Credit actually works. You can access this information here.

I hope the information helps explain this new program in more detail. Business is definetly picking up as we get closer to Spring. If you have any questions or need any immediate assistance, please don't hesitate to contact me.

Here is an article from the Washington Post printed this morning 2/20/09 about the mortgage rescue plan President Obama signed yesterday. I'll continue to keep you updated as more information is available.

Mortgage Rescue Eligibility Still Being Finalized

By Renae Merle
Washington Post Staff Writer
Friday, February 20, 2009; D01

A day after President Obama unveiled his $75 billion foreclosure prevention program, administration officials yesterday said they were still determining which homeowners should qualify.

The administration is developing a standard for lenders to use in evaluating applicants that seeks to exclude homeowners who are not in real need or are too far behind in their payments to be saved. Officials have set some conditions for eligibility, including requiring that borrowers' mortgage payments consume more than 38 percent of their income and that the property be a primary residence.

Government officials are working to finalize details before a self-imposed March 4 deadline when the program will go into effect and lenders are likely to be flooded with calls.

The program is aimed at stemming the tide of foreclosures as predictions mount that another wave of risky loans could begin defaulting later this year as a deepening recession makes it more difficult for borrowers to afford their homes.

The administration's effort includes several elements, including a refinancing initiative for borrowers with little equity in their home. A separate loan modification program gives lenders incentive payments to keep borrowers in their homes rather than foreclose on the properties.

A chief goal of the loan modification program is to address complaints of consumer advocates that borrowers are often turned away by lenders when they seek help before becoming delinquent on loans. The plan includes extra incentive payments for lenders that reach "at-risk" homeowners and modify their loans before they become delinquent.

"But what counts as an at-risk homeowner?," said Edward R. Morrison, a professor at Columbia Law School. He said policymakers should avoid setting a standard that encourages lenders and mortgage servicers to rework sustainable loans just to get payments from the government.

Administration officials involved in developing the program said they are basing their effort on a model developed by the Federal Deposit Insurance Corp. The formula to determine at-risk borrowers likely will weigh a homeowner's debt level and payment track record, officials said. But in setting eligibility standards, they are also trying to determine what documentation borrowers should provide to prove they could lose their job or face a reduction in income, they said.

Another key question facing the administration is how to calculate when foreclosure would be a better deal for lenders than keeping borrowers in their home, even with incentives. The administration will attempt to generalize the FDIC formula, known as the net present value test, and apply it to the entire mortgage industry, according to officials familiar with the effort.

"If a borrower has no means of repayment, even if you restructure the loan, then foreclosure may be the only option," said DianeCasey-Landry, chief operating officer of the American Bankers Association. "We're very interested in how they're going to develop it." The administration is canvassing the financial services industry and consumer advocates for input on this and other issues. "They want them as soon as possible, so we're scrambling," said Paul M. Leonard, vice president of government affairs at the Financial Services Roundtable's housing policy council.

Obama has pledged to spend $75 billion on loan modifications. About $50 billion would come from federal bailout funds approved by Congress to shore up the financial system, with mortgage financing firms Fannie Mae and Freddie Macand the Department of Housing and Urban Development also contributing, administration officials said. The HUD money will be used to help fund nonprofit housing groups, the officials said. The money from the Fannie Mae and Freddie Mac will be used pay incentive fees and rate subsidies to mortgage servicers that modify mortgages that the financing agencies own or guarantee.

Even as the administration finalizes details of the mortgage modification program, officials are getting pressure from some groups to include protection for lenders and mortgage servicers that rework a loan and worry they could face a lawsuit from investors.

The Mortgage Bankers Association is also trying to persuade the administration to expand the refinancing portion of the plan. Under that program, the administration will loosen lending standards at Fannie Mae and Freddie Mac to allow millions of homeowners to qualify for refinanced loans as long as their mortgages do not exceed 105 percent of the current value of their property. But with housing prices in a free fall in parts of the country, including Florida, California and Arizona, that will not be enough for many homeowners.

"We think that 105 percent [loan-to-value ratio] should be revisited," said Steve O'Connor, senior vice president for government affairs at the mortgage bankers' group.

I'll continue to keep you updated as additional news is available. Please contact me if you have any questions.

Greetings,

Today President Obama announced The Homeowner Affordability and Stability Plan (HASP), the administration’s plan to help homeowners. Highlights include: 

• Low cost refinancing options for homeowners currently with high LTV’s.
• Homeowner Stability Initiative to provide loan modifications to lower payments to more sustainable levels.
• Establish clear and consistent guidelines for loan modifications.
• Strengthening confidence in FNMA/FHLMC by increasing funding and expanding the size of their portfolios.

Given the high profile the media is giving this you will probably get some questions.  It is important to stress that although announced today it will take some time for the appropriate agencies to formulate their policies surrounding this plan. 

Overall this is a positive for the housing market and the economy in general.  Next up will be the Treasury Department’s expansion of TALP (son of TARP) to include the purchase of non-agency MBS’s.  This should provide relief to the jumbo market similar to what Treasury buying did to conforming rates in late 2008.

Now, about the new tax credit and how it affects mortgage revenue bond financed lending (Oregon Bond): 

Last year, Congress provided taxpayers with a refundable tax credit that was equivalent to an interest-free loan equal to 10 percent of the purchase of a home (up to $7,500) for first-time home buyers. The provision applies to homes purchased on or after April 9, 2008 and before July 1, 2009. Taxpayers receiving this tax credit are currently required to repay any amount received under this provision back to the government over 15 years in equal installments, or, if earlier, when the home is sold. The credit phases out for taxpayers with adjusted gross income in excess of $75,000 ($150,000 in the case of a joint return).

The new bill eliminates the repayment obligation for taxpayers that purchase homes after January 1, 2009, increases the maximum value of the credit to $8,000, and removes the prohibition on financing by mortgage revenue bonds, and extends the availability of the credit for homes purchased before December 1, 2009. The provision would retain the credit recapture if the house is sold within three years of purchase. Click here for the details.

This is a lot of information to digest. More information and more data will follow as it becomes available. Don't hesitate to call if you have any questions.

Hi, I hope this blog finds all of you enjoying a great start to 2009!

I thought I would pass on another article which seems to indicate we might come out of this housing slump in 2009.  If this is true, then we all know people will start buying homes and property all at the same time, which in turn will drive up prices. 

Trying to predict when the Real Estate market will turn around is virtually impossible to do. As I stated in my recent Market Trends Newsleter, we will all know when the market has bottomed out when it's going back up again.  Keeping this in mind, it seems to me the best time to Buy is while its still going down when there is no competition, rates are low (in the mid to upper 4's now!) and selllers are more willing to deal in most cases. Call or email me if you know anyone who is looking to Buy or Sell real estate anywhere in Central Oregon, I'd be happy to assist them.

If you click HERE you can view the article.

Thanks

Hello Everyone 

Announced yesterday, this action is likely going to drive mortgage rates down further. We can only hope though that the current lender regulations in place lighten up a bit along with the lower interest rates so more people can actually qualify for a loan, Buy a home, and get the housing market going again. Happy New Year to all!! Let me know if you have any questions or need my assistance.

Fed aims to Buy $500 Billion in MBS (Mortgage Backed Securities) by mid-year

Tuesday, December 30, 2008 3:53:48 PM (GMT-08:00)

Provided by: Reuters News

By Mark Felsenthal

WASHINGTON, Dec 30 (Reuters) - The U.S. Federal Reserve on Tuesday moved forward aggressively with an effort to drive down mortgage costs, setting a goal of buying $500 billion in mortgage-backed securities by mid-2009.

The central bank said it would start buying the securities in early January under a program announced last month. When it announced the program, mortgage rates dropped in anticipation of the purchases. Still, some analysts on Tuesday expressed surprise with how vigorously the Fed was pledging to act and the news propped up prices for MBS in very thin trade. "When they are buying along the lines of $80 billion to $100 billion a month, if they're going to do it in six months, they have to Buy everything they can get their hands on," said Kevin Cavin, a mortgage strategist at FTN Financial in Chicago. "It will push up prices and tighten spreads and push down primary mortgage rates," he said. The Fed selected investment managers BlackRock Inc, Goldman Sachs Asset Management, PIMCO, and Wellington Management Co to implement the program.

The mortgage-buying program is part of a sustained government effort to help the United States withstand a severe credit crunch and deep housing downturn that have tipped the economy into recession and damaged activity around the globe.

Earlier this month, the Fed cut benchmark U.S. interest rates close to zero and signaled that it was turning more heavily to unconventional measures to spur the economy.

On Tuesday, it said it would increase the money supply to make the MBS purchases, effectively easing monetary policy further. The program only covers securities issued by government-sponsored mortgage enterprises Fannie Mae and Freddie Mac and government loan financer Ginnie Mae.

When it announced the program on Nov. 25, the Fed also said it would Buy up to $100 billion in debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks, and after its meeting on interest rates on Dec. 15-16 it said it could press even more heavily into mortgage markets. "The goal of the program is to provide support to mortgage and housing markets and to foster improved conditions in the financial markets generally," the Fed said in a statement on Tuesday. The central bank said it would adjust the pace of its purchases based on changing market conditions and the impact of the program. The initiative is aimed at reducing the cost of credit and increasing its availability, which authorities hope will support housing markets and foster improved financial conditions generally. Investment managers are needed because of the size and complexity of the program, the Fed said.

Investor appetite for debt issued by Fannie Mae and Freddie Mac had dried up since the government seized control of both companies in September.

Greetings,

If you have clients that currently have an FHA loan and are likely to default or have defaulted on their loan and must Sell their home, you and they need to know about FHA’s PFS program. Here’s the HUD link to the full Mortgagee Letter, and excerpts are below.

http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/  

December 24, 2008                                                                Mortgagee Letter 2008-43

TO:                             ALL HUD-APPROVED MORTGAGEES 

ATTENTION:            Single Family Servicing Managers

SUBJECT:                             Pre-Foreclosure Sale (PFS) Program - Utilizing the PFS Loss Mitigation Option to Assist Families Facing Foreclosure

High foreclosure rates continue to have devastating effects on families and neighborhoods. The Federal Housing Administration (FHA) remains committed to taking actions to help families avoid foreclosure.  Since being introduced as a national program in 1994^[1], the PFS Program has helped thousands of mortgagors in default to avoid foreclosure and transition to more affordable housing. The PFS Program can help many families who today are facing foreclosure.  The PFS loss mitigation option allows a mortgagor in default to Sell his or her home and use the sale proceeds in satisfaction of the mortgage debt when the proceeds are less than the amount owed. 

This Mortgagee Letter (ML) serves to remind mortgagees of the relief that the PFS Program can bring to borrowers with FHA-insured mortgages. To facilitate greater use of this program, FHA has consolidated in this ML the requirements of the PFS Program that have been issued over the years, and has updated and clarified those requirements where needed, to better address the problems faced by mortgagors today and provide greater flexibility in considering a mortgagor’s candidacy for participation in this program.

Pre-Foreclosure Sale Introduction

The Pre-Foreclosure Sale (PFS) option allows mortgagors in default (resulting from an adverse and unavoidable financial situation) to Sell their home at FMV and use the sale proceeds to satisfy the mortgage debt even if the proceeds are less than the amount owed.  This option is appropriate for mortgagors whose financial situation requires that they Sell their home, but they are unable to do so without FHA relief because the gross recovery on the sale of their property (i.e., sales price minus sales expenses) is less than the amount owed on the mortgage.  HUD’s home retention alternatives such as Special Forbearance, Mortgage Modification, or Partial Claim must first be considered and determined unlikely to succeed due to the mortgagor’s financial situation.  Mortgagees must maintain supporting documentation to demonstrate that a comprehensive review of the mortgagor’s financial records was completed, and that the mortgagor did not have sufficient income to sustain the mortgage.  Under no circumstances shall the PFS option be made available to mortgagors who have abandoned their mortgage obligation despite their continued ability to pay. 

To participate in the program, mortgagors must be willing to make a commitment to actively market their property for a period of 3 months, during which time the mortgagee delays foreclosure action.  Mortgagors who successfully Sell to a third party within the required time may receive a cash consideration of up to $1,000.  Mortgagees also receive a $1,000 incentive for successfully avoiding the foreclosure and complying with all the requirements of this ML.  If the property does not sell, mortgagors are encouraged to use the deed-in-lieu of foreclosure (DIL) option, providing the title on the property is marketable.  By following procedures and time frames included in this ML, a mortgagee may submit a FHA insurance claim and be compensated for the difference between the sale proceeds and the amount owed on the mortgage (including accrued interest and reimbursable costs). 

A PFS sale must be an outright sale of the property.  If a foreclosure occurs after the mortgagor unsuccessfully participated in the PFS process in good faith, neither the mortgagee nor HUD will pursue the mortgagor for a deficiency judgment. 

If you have any questions, please give me a call today.