Foreclosure Freeze through the Holidays

Fannie Mae and Freddie Mac are freezing all foreclosure evictions on the mortgage loans they own or back from Dec. 20 through Jan. 3.

"If the property is occupied, our foreclosure attorneys will suspend the eviction to provide a greater measure of certainty to families during the holidays," says Anthony Renzi, executive vice president of single family portfolio management at Freddie Mac.

Most of the large banks, including Bank of America, J.P. Morgan Chase, and Wells Fargo, already observe a moratorium through the New Year, unless the foreclosure involves an investor who chooses not to observe the holiday policy.

Source: CNNMoney, Les Christie (12/03/2010)

5 Steps to Remodeling Done Right

Here are five steps to developing a great relationship with a remodeling contractor.

1. Let the contractor know if you are ready to remodel or just kicking the tires. Gary Palmer, a Charlotte, N.C.-based general contractor, says seeking multiple bids is fine, but don’t waste his or her time by letting the bidding process drag on for weeks.

2. Do your homework. Before seeking bids, develop two files. One should include information, including photos, of what you like. The other should include a list of what you don’t like.

3. Listen to the experts. A good contractor can tell you whether the project is feasible and what the pay off will be.

4. Communicate your budget. Let the contractor know up front how much money you intend to spend.

5. Be realistic and patient. Every remodeling project is messy and all of them are going to be frustrating somewhere along the way.

Source: Charlotte Observer, Barbara S. Russell (10/23/2010)

Four Tips for Setting the right price

It’s a difficult disconnect that makes selling properties a challenge. Successfully marketing a home requires that the price be set carefully -- or it will languish on the market. Among the considerations:

* How many homes are for sale in the neighborhood? The more homes on the market, the more important it is to list at the lower end of the scale. "I want buyers to ask why is this house priced so competitively," said NAR President-elect Ron Phipps of Phipps Realty in Warwick, R.I. "I want the answer to be an offer."

* Take short sales and foreclosures into consideration when pricing. If the competing properties are in lousy condition, they are less of an issue, but if they are well taken care of, yet priced 25 percent below market, they can be a serious factor.

* Negotiate decisively. "Buyers are not interested in back-and-forth negotiations these days," Phipps said. "They are less emotional and more disciplined. They will walk away."

* Cut the price when you have to. If no one shows up for an open house, if no one calls and if there are no offers, then the price is too high. That means it's time to make a meaningful price cut.


Source: The Washington Post, Associated Press (09/18/2010)

10 Reasons to Buy a Home

Time magazine is being overly pessimistic in its recent cover piece that called into question the benefits of homeownership. In fact, now is a great time to buy. And, what's more, tomorrow will be a great time to own, because the fundamental strength of homeownership hasn't changed.

Why is now a great time to buy? Here are 10 reasons:

1. You can get a good deal. Prices are down 30 percent on average. They're at a level that makes sense for people's income.
2. Mortgages are cheap. At 4.3 percent on average for a 30-year fixed-rate mortgage, your costs to own are down by a fifth from two years ago.
3. You can save on taxes. When you add up the deductions for mortgage interest and others, the cost of owning can drop below renting for a comparable place.
4. It'll be yours. The one benefit to owning that never changes is that you can paint your walls orange if you want (generally speaking; there might be some community restrictions). How many landlords will let you do that?
5. You can get a better home. In some markets, it's simply the case that the nicest places are for-sale homes and condos.
6. It offers some inflation protection. Historically, appreciation over time outpaces inflation.
7. It's risk capital. If the economy picks up, you stand to benefit from that, even if you're goal is just to have a nice place to live.
8. It's forced savings. A part of your payment each month goes to equity.
9. There is a lot to choose from. There are some 4 million homes available today, about a year's supply. Now's the time to find something you like and get it.
10. Sooner or later the market will clear. The U.S. is expected to grow by another 100 million people in 40 years. They have to live somewhere. Demand will eventually outpace supply.

Source: Wall Street Journal, Brett Arends (9/16/10)

Investment Property: Four Considerations

Real estate entrepreneur Ryan Moeller offers these four tips for anyone considering a consumer real estate investment:

1. Don’t count on appreciation. Appreciation is a bonus.

2. Watch the loan-to-value ratio. Ideally, the total cost of the purchase, fees, and repairs should be no more than 70 percent of the appraised value of property in good condition.

3. Maximize annual return. Aim for properties that can be rented for at least 1.5 percent to 3 percent of the purchase price. For example, plan to pay no more than $50,000 for a property that can be rented for $750 per month.

4. Have an exit strategy. Seek properties that are attractive enough to have value no matter what happens to the market – as rentals, for sale to other investors, or for sale to somebody who plans to live there via conventional financing or lease purchase.

Source: BiggerPockets.com, Ryan Moeller (09/01/2010)

Five Reasons Homeownership Trumps Renting

The seemingly endless run of bad housing news is discouraging some potential home buyers from considering a purchase. But the truth is that the advantages of homeownership have very little to do with investment gains. The best things about owning a home have a lot more to do with personal comfort and satisfaction.

Here are five of them:

· Be your own landlord. The bank can only kick you out if you don’t pay; a landlord can be much less dependable – deciding to sell the property or choosing to live there themselves.

· Paying the principal is forced savings. Yes, it’s possible that home prices will fall further. It is also possible that your 401(k) will lose value. But over the long haul, both are likely to enjoy modest gains in value.

· Fixed-rate mortgages never rise – and eventually you pay them off. With mortgage rates at record lows, people who buy now are locking in real bargains.

· Good schools. Family-sized rentals are harder to come by in areas with excellent public schools.

· Spacious properties in pleasant neighborhoods. Sizable homes in attractive communities are almost always owned – not rented.

Source: The New York Times, Ron Lieber (08/27/2010)

20-Year Mortgages Cut Interest Significantly

Buyers with the ability to stretch a little might consider a 20-year fixed-rate mortgage instead of the traditional 30-year, suggests CBS Money Matters’ financial adviser Ray Martin.

Martin points out that a $200,000 mortgage with a 30-year term and an interest rate of 4.75 would have a monthly payment of $1,043 and the total interest over the life of the loan would be $175,600.

The same mortgage with a 20-year term at 4.5 percent would have a monthly payment of $1,265 with total interest over the life of the mortgage of $103,670.

Young home buyers planning to have children will have their 20-year mortgage paid off by the time their kids enter college, a big financial advantage, Martin points out.

Source: CBS, Ray Martin (08/04/2010)

Five Surprising Reasons to Buy a Home Now

ForSaleByOwner.com offers five good reasons why now is a great time to buy a house:

1. Low mortgage rates serve as an equity shock absorber. When buyers borrow at today's record-low rates, they start building equity as soon as they close. That means they can absorb a few ups and downs as the still-recovering housing market gains traction.

2. Houses are in move-in condition. Home owners have continued to spend on maintenance and repair, according to the Harvard Joint Center on Housing. As these houses enter the market, they are in marked contrast to tattered foreclosures.

3. Terrific houses are coming on the market. Foreclosures are finally starting to clear the system, and they are being replaced by some very attractive properties.

4. Appraisal regulations are finally aligned with market realities. Fannie Mae has adjusted its appraisal guidelines, giving appraisers more flexibility to set values that reflect the current market.

5. Plenty of programs. Many programs that encourage middle-class families to buy homes continue to exist, despite market downturns. Buyers who qualify can get a big boost by combining one of these programs with today's low mortgage rates.


Source: ForSaleByOwner.com (07/29/2010)

Renting Unsold Property May Be a Good Move

Home owners who can’t or don’t want to sell their homes in today’s market but must move should consider renting out the property.

Current rents may not be high enough to cover carrying charges, including mortgage, taxes, and insurance. Nevertheless, renting out the property may still make sense if property values rise in the next few years.

Offering a 12-month lease that converts to month-to-month is a good idea, if the owners are considering selling eventually. Include language in the lease that allows a real estate professional to show the home to potential buyers with 24 hours’ notice to tenants.

Source: Money Magazine, Amanda Gengler (07/28/2010)

Seller Financing Can Have Tax Advantages

Offering to hold either a second mortgage or a primary mortgage in either a residential or a commercial sale can be a good deal for the seller.

The primary advantage is deferral of taxes due. Sellers are normally taxed as the principal is received, spreading the tax bill over several years, explains Richard Schank, a financial planner with PTS Brokerage in Mt. Laurel, N.J.

Other advantages can include:

· Support for a higher-than-average price.
· An interest rate that provides a relatively high return on investment.

The safest arrangement includes obtaining a deed in lieu of foreclosure from the buyer, which allows the seller to take back the property if the note isn’t paid in a timely fashion.

Source: Investor’s Business Daily, Jeff Schnepper (07/15/2010)

What to Look for in an Outdoor Kitchen

Outdoor kitchens continue to be one of the hottest trends in home décor, but not all of them are created equal.

Here are some things to consider when evaluating the safety and durability of this attractive yet vulnerable feature:

• Is there adequate ventilation? Extensive outdoor cooking spaces should be carefully designed to keep smoke and odors away from dining spaces.
• Was the installation done by licensed and insured installers? If something does goes wrong — even years later — these professionals will stand behind their work.
• Are the cabinets, countertops, and appliances really weather proof and likely to hold up?

Source: The Plain Dealer (Cleveland, Ohio), Roxanne Washington (07/01/2010)

100 Dollars Can Go a Long Way for a Great Looking Yard

Got a hundred bucks and a free weekend? Then you've got what it takes to invest in some yard care improvements.

"Some of the best upgrades to your yard can be done with a few dollars and a few hours," says Trey Rogers, Ph.D., the Briggs & Stratton Yard Doctor. "When budgets are tight, get creative and do it yourself."

For those who'd like one-on-one advice from Rogers, enter the Yard Smarts Boot Camp. Attendees will learn how to easily take care of their yard, tour amazing green spaces and win a new lawn mower and more. Visit www.yardsmarts.com to enter.

What can you do for $100 right now?

-- Mow the right way. Don't scalp your lawn. Instead, let it grow a little longer, which is healthy for the lawn. When you mow, cut only one-third the length of the grass blade. Cost: About $3.00 for a month of mowing.

-- Apply bark mulch. Few things dress up a yard more than mulch around flowerbeds and trees. Cost: About $3.00 per bag.

-- Fertilize naturally. When you mow, leave a light layer of grass clippings on the lawn as a natural fertilizer. Cost: $0.

-- Maintain your mower. Once a year, change the oil, replace the spark plug and change the filter. Tune-up kits are available and make it easy. Cost: $10-14 for a walk-behind mower.

-- Let nature water your lawn. If water is costly where you live, let nature handle irrigation. If too little rain falls, your lawn may go dormant, but unless you are in a drought situation, it will green up again when the rain falls. Cost: $0.

With the rest of your $100 bill, splurge on some annual flowers to dress up your front doorway, patio or deck.

Source: RISMEDIA, June 29, 2010

Renting Can Be a Good Option for Sellers

Home owners who have been trying to sell their properties for a year or more might consider lease or a rent-to-own option.

A lease option agreement gives the tenant the option to buy at a predetermined price for a rent that is slightly higher than market. In a lease purchase, a buyer commits to buying the property. In exchange, the seller credits a percentage of each payment toward the purchase price.

Either arrangement is likely to attract serious renters who would like to buy the property if they can. In exchange, they’ll take good care of it.

Negotiating these agreements can be tricky, and the owner should always get help from a real estate attorney.

Source: The Wall Street Journal, June Fletcher (06/16/2010)

Mortgage Rates Hit an All-Time Low

Average interest on a 30-year fixed mortgage fell to an all-time low of 4.69 percent this week, down from 4.75 percent a week ago, reports Freddie Mac.

Although rates have held below 5 percent since early May, Michael Fratantoni of the Mortgage Bankers Association notes that demand for purchase loans has fallen in six of the past seven weeks and now is at a 13-year low. Consumers have grown used to low rates, he explains, adding that they balk at buying because they are more concerned about stagnant wages and high unemployment.

Source: Washington Post, Dina ElBoghdady (06/25/10)

Effort to Extend Tax Credit Closing Deadline Gains

The U.S. Senate voted Wednesday to extend the home buyer tax credit closing deadline to Sept. 30, giving an estimated 180,000 buyers who met the contract deadline of April 30 extra time to close the transaction. The extension was added to a bill to pay for jobless benefits, which still must pass.

The NATIONAL ASSOCIATION OF REALTORS® estimates that one-third of qualified applicants have been notified that they will be unable to close by the deadline. The Mortgage Bankers Association says delays are caused largely by the volume of transactions.

The overall bill, once it passes the Senate, must be approved by the House.

Source: Associated Press, Andrew Taylor (06/16/2010)

After foreclosure: How long until you can buy again?

Financing a home after foreclosure is possible for most homeowners. Those who default on their mortgages due to economic hardships, such as job loss, may receive approval for another mortgage in as little as two years, while it may take more than seven years for strategic defaulters to be approved.

• Lenders utilize several methods in determining whether to grant mortgages, including the amount of money borrowers have saved; employment histories; and payment history.

• According to the chief economist with the Mortgage Bankers Association, lenders may be more willing to finance a mortgage for a borrower who defaulted on their mortgage as a result of factors beyond their control.

• Some homeowners who strategically default—intentionally not meet their mortgage obligations although they have the financial means to do so—assume they can raise their FICO scores by paying their others bills on time. However, most future loan underwriters will scrutinize their records very closely, and if they determine the borrower strategically defaulted on their previous mortgage, the repaired credit score will not overshadow the walkaway.

• Although not impossible for strategic defaulters to finance another home purchase, it likely will be more difficult. Lenders may ask for down payments of 30 percent or more to provide sufficient collateral to enable the bank to recoup most of its money in a foreclosure. These borrowers also may be charged higher interest rates, even above the levels other borrowers with similar credit scores would receive.

For more information, see article

(Source: CAR & CNNMoney.com, 06/04/2010)

How to Help a Family Member Buy a Home

Helping someone close to you buy a low-cost property – $50,000 or less – is a fairly straight-forward transaction, although it may require specific legal advice, says Charles Carter, an attorney and a consultant at Haint Blue Realty in Mount Pleasant, S.C.

Carter suggests that buying a property outright, using the gift exclusion ($13,000 for singles; $26,000 for married couples) to pay for a down payment and closing costs and then giving the recipient a 30-year mortgage on the remaining amount at 5 percent interest is a good way to go.

There won’t be any gift taxes. And the mortgage holder may later cancel the mortgage and gift what remains on the loan as another annual gift-tax exclusion.

Source: McClatchy-Tribune News Service, Charles Carter (06/03/2010)

Fannie Tightens Interest-Only Requirements

Fannie Mae announced Friday that it plans to require borrowers using interest-only mortgages to put down 30 percent of the sale price.

Fannie Mae also said it will only buy adjustable-rate mortgages underwritten to require that borrowers could afford the loans even if interest rates reset to the higher of either:

1. The loan’s initial interest rate plus two percentage points.
2. The cap, the maximum the interest rate can rise.

"Our goal is to make sure consumers can sustain their mortgages and remain in their homes over the long-term, while helping our lender partners offer a range of mortgage products for qualified borrowers," says Marianne Sullivan, senior vice president of Single Family Credit Policy and Risk Management at Fannie Mae, in a prepared release.

Source: CNN Money.com, Les Christie (04/30/2010)

Service Members Get Extra Year for Tax Credit

Members of the U.S. military, foreign service and intelligence communities have another year to purchase a home and claim the home buyer tax credit.

Any service member who is or has been on extended duty for 90 days or more between Jan. 1, 2009 to April 30, 2010, has until April 30, 2011, to sign a sales contract and until June 30, 2011, to close on the property. Both the $8,000 first-time and the $6,500 repeat home buyer tax credits are included in the extension.

The rule that requires buyers to repay the credit if they move out of their home within three years has also been waived for qualified service members if they receive government orders to move.

Source: The National Association of Home Builders (04/26/2010)

How Delinquencies Impair Your Credit Score

Fair Isaac, which developed FICO scores, used a comparison between two people to explain how mortgage delinquencies affect credit scores.

Fair Isaac derived these numbers from a theoretical calculation based on hypothetical borrowers – one with an initial score of 680 and one with an initial score of 780. FICO scores range from 300 to 850.

The hypothetical person behind the 680 score had six credit accounts, while the person with the 780 score had 10. The consumer with the 780 score had no missed payments other than the mortgage; the 680 example had two late payments before they failed to pay the mortgage.

After a mortgage delinquency, the two scores would look like this:

• After 30-day delinquency, 680 score drops to 620 to 640; 780 score declines to 670 to 690.

• After 90-day delinquency, 680 score falls to 595 to 610; 780 score goes to 645 to 665.

• After foreclosure, short sale, or deed-in-lieu, 680 goes to 575 to 595 and 780 drops to 620 to 640.

• After bankruptcy, 680 drops to 530 to 550; 780 declines to 540 to 560.

Source: CNN, Les Christie (04/22/2010)

Five Costly Mistakes First-time Buyers Make

Buying a first home can be a daunting experience. Here are five common and costly mistakes that novice home buyers make:

1. Ignoring the costs of having a low credit score. Lower-score borrowers pay thousands of dollars in increased interest rates over the life of the loan.

2. Muddying the waters by shopping for other things before closing. Lenders continue to check credit scores right up until the time of closing. Too much shopping could cause the lender to take back the loan.

3. Scrimping on an inspection. Being surprised by the need for expensive repairs can be financially devastating.

4. Buying without contingencies. Buyers should give themselves an out if the inspection turns up problems or the bank raises the interest rates.

5. No money for insurance. Insurance can be surprisingly pricey. Buyers who don’t budget for it can face a nasty surprise.

Source: CNNMoney.com, Les Christie (04/19/2010)

Classic Williamsburg Colonial in Lafayette

New California Tax Credit May Go Fast...

The $100 million allocated for California's first-time homebuyer tax credits may be depleted in about 10 to 20 days or sooner, according to C.A.R.'s Economics team. California's Franchise Tax Board (FTB) plans to begin accepting applications on May 1, 2010 for tax credits up to $10,000 for first-time homebuyers and for homes that have never been previously occupied. However, the total tax credit allocation for all taxpayers is $100 million for first-time homebuyers and $100 million for new homes, both on a first-come, first-served basis.

C.A.R.'s forecast of 10 to 20 days to deplete the $100 million allocation for first-time home buyers is based on estimated May sales figures and other parameters. It does not take into account the possibility that buyers scheduled to close escrow in April may delay closing until May to take advantage of the tax credit. If a shift in closings from April to May occurs, the first-time homebuyer tax credits may be depleted even more quickly than indicated above.
Applications for the California tax credit must be faxed to the FTB after escrow closes. The FTB will update its website when the 2010 application form and other information become available.

REALTORS® are reminded not to give their clients any tax or legal advice, such as the availability of funds under the California tax credit program. Agents should encourage their clients to seek specific advice from an accountant, attorney, or other professional as they deem appropriate.

For more information, please refer to C.A.R.'s Homebuyer Tax Credit Chart 2010.

Source: CAR Realegal (04/15/10)

No More State Tax on Forgiving Debt

Distressed homeowners no longer have to pay California state income tax on debt forgiven in a short sale, foreclosure, or loan modification. Enacted into law yesterday, Senate Bill 401 generally aligns California's tax treatment of mortgage debt relief income with federal law. For debt forgiven on a loan secured by a "qualified principal residence," borrowers will now be exempt from both federal and state income tax consequences. The existing federal exemption is for indebtedness up to $2 million, whereas the new California exemption is for indebtedness up to $800,000 and forgiven debt up to $500,000.

"Qualified principal residence" indebtedness is defined as debt incurred in acquiring, constructing, or substantially improving a principal residence. It includes both first and second trust deeds. It also includes a refinance loan to the extent the funds were used to payoff a previous loan that would have qualified.

The tax breaks apply to debts discharged from 2009 through 2012. Californians who have already filed their 2009 tax returns may claim the exemption by filing a Form 540X amendment.

Taxpayers who do not qualify for the above exemptions (e.g., second home or rental property) may nevertheless be exempt under other provisions. Most notably, taxpayers who are bankrupt are exempt from debt relief income tax. Also, taxpayers who are insolvent are exempt from debt relief income tax to the extent their current liabilities exceed current assets.

For more information about mortgage forgiveness tax consequences, go to California Franchise Tax Board's Mortgage Forgiveness Debt Relief Extended webpage and the Internal Revenue Service's Mortgage Forgiveness Debt Relief Act and Debt Cancellation webpage. The full text of Senate Bill 401 is available at www.leginfo.ca.gov.

5 Signs a Home has Potential

The best deals on homes these days are often on properties that aren’t perfect.

Home shoppers looking for a great deal should keep these factors in mind when they are looking for a place with potential:

· Location, location, location. It’s still true that you get a better deal when you buy the worst house in a great neighborhood than you do when you buy a fancy house in a not-so terrific neighborhood.

· Less than 50 years old. Properties older than a half decade are likely to have more fundamental problems — like aging wiring, inadequate plumbing and sagging foundations.

· Livable floor plan. Buyers should select a home with a basic design they can live with. Once they start moving walls, they’re into big money.

· Light. Houses with the most potential have plenty of natural light.

· Good storage. Adding storage isn’t cheap, so it’s smart to choose a property that already has it.

Source: MSN.com, Marilyn Lewis (04/12/2010)

$18,000 in Combined Homebuyer Tax Credits for a Limited Time

Californians have a brief window of opportunity to receive up to $18,000 in combined federal and state homebuyer tax credits. To take advantage of both tax credits, a first-time homebuyer must enter into a purchase contract for a principal residence before May 1, 2010, and close escrow between May 1, 2010 and June 30, 2010, inclusive. Buyers who are not first-time homebuyers may use the same timeframes to receive up to $16,500 in combined tax credits if they are long-time residents of their existing homes as permitted under federal law, and they purchase properties that have never been previously occupied as provided under California law.

Under the federal law slated to soon expire, a first-time homebuyer may receive up to $8,000 in tax credits, and a long-time resident may receive up to $6,500, for certain purchase contracts entered into by April 30, 2010 that close escrow by June 30, 2010. Additionally, under a newly enacted California law, a homebuyer may receive up to $10,000 in tax credits as a first-time homebuyer or buyer of a property that has never been occupied. The new California law applies to certain purchases that close escrow on or after May 1, 2010 (see Cal. Rev. & Tax Code section 17059.1(a)(4)). California law generally allows buyers of never-occupied properties to reserve their credits before closing escrow, but buyers seeking to combine the federal and state tax credits will not be able to satisfy the timing requirements for such reservations (see Cal. Rev. & Tax Code section 17059.1(c)(1)(A)). Other terms and restrictions apply to both tax credits.

For more information, visit Tax Credit

Source: California Association of Realtors (03/31/10)

FHA Loan requirements are about to change...

The FHA's move to raise upfront mortgage insurance premiums takes effect next week, soon to be followed by a reduction in allowable seller concessions toward a borrower's closing costs.

Speaking to a Housing Financial Services subcommittee earlier in March, MBA President John Courson expressed concern that "this could be another policy change that would have an adverse effect on the population that traditionally has sought FHA's assistance to purchase a home." He added that the cut in seller concessions would largely affect low-to-moderate, first-time, and minority home buyers.

Source: Memphis Daily News, Eric Smith (03/30/10)

Understanding New Appraisal Processing

Consumers are often baffled by the home appraisal process. They may feel their home is worth a certain dollar amount, and therefore, the appraised value doesn't make sense to them. It is important to know that appraisal guidelines are dictated by the lenders. In many states, the lenders must disclose the purpose of the appraisal, as each situation carries its own set of rules.

In essence, lender guidelines force appraisers to put a fair market value on a home based upon comparable sales in the area where the home is located, as the home must be bracketed according to size and value. For example, there is no set amount associated with a great view, pool, spa, bathroom upgrades, etc. If a homeowner installs a custom pool that cost them $30,000, and the local marketplace supports the value of a pool at $15,000, that item will be bracketed as [$15,000] on the appraisal.

Upgrades can usually be expressed at full value in newer homes since they required investing additional money onto the cost of building the home. On the other hand, the amount invested in upgrading or remodeling an older home is rarely reflected in full in the final appraisal. The reason is the home had value in its original condition, and again, the value of the upgrades must be supported by comparable examples within the same marketplace.

These comparisons must be drawn from current market activity within the last six months. Some lenders may want to look at both closed and pending sales to see if there is any room for negotiation. This is a safeguard to prevent appraisers from over-valuing the home in question. It is further stated in the guidelines that appraisers can only place a value on homes that have closed escrow. However, when property values rapidly increase within a marketplace, appraisers are generally permitted to make concessions and put more weight on the evidence provided by comparisons to pending sales and listings. This allows for a "real time" appraisal.

Although there is no formal standard to speak of, most lenders give the appraiser a 5% margin of error. If the file is reviewed and the appraiser is off by 8%, there is a good chance the value will be cut by the full 8%. It is in the best interest of both the appraiser and the homeowner not to push the value up higher than the market will support, otherwise the property evaluation may be exposed to a strict appraisal review.

If you have any questions, feel free to contact myself or the provider of this article: Steve Snyder of RPM Mortgage, Inc. (925) 552-3572. ssnyder@rpm-mtg.com

Govenor signs New Tax Credit Bill

Governor Schwarzenegger today signed AB 183 providing $200 million for home buyer tax credits. The bill allocates $100 million for qualified first-time home buyers who purchase existing homes and $100 million for purchasers of new, or previously unoccupied, homes.

Eligible taxpayers who close escrow on qualified principal residences between May 1, 2010 and December, 31, 2010, or who close escrow on a qualified principal residence on and after December 31, 2010 and before August 1, 2011, pursuant to an enforceable contract executed on or before December 31, 2010, will be able to take the allowed tax credit.

This credit is equal to the lesser of 5 percent of the purchase price or $10,000, taken in equal installments over three consecutive years. Under the bill, purchasers will be required to live in the home as their principal residence for at least two years or forfeit the credit (i.e. repay it to the state). Buyers also must be at least 18 years old and be unrelated to the seller. First-time buyers are defined as those who have not owned a home in the past three years.

To learn more about the California Home Buyer Tax Credit,
Click Here

HOAs seek association fees from banks

Condominium and home owners associations desperate for money are experimenting with a tactic called “reverse foreclosure” to force banks to pay association fees.

The process works like this: When a borrower stops paying the mortgage, banks often delay taking the property into foreclosure. When banks delay, neither the former home owner nor the bank is paying association fees.

To remedy this, the association files its own foreclosure notice, taking over the title. The association can’t sell the property because of the bank’s lien on it. So the association goes to court, renounces the property and asks the judge to give the title back to the bank.

When the judge does so, the bank has to pay the fees. Experts say this technique is becoming very popular in parts of the country where there are a lot of foreclosed condos.

Source: Miami Herald, Rachael Lee Coleman (03/07/2010)

HARP Receives a One-Year Extension

The Home Affordable Refinance Program (HARP), which was supposed to expire June 10, will be extended for another year, the Federal Housing Finance Agency said in a statement.

Since HARP began last April, it has refinanced 190,180 mortgages. It is administered by Fannie Mae and Freddie Mac and aimed at borrowers with little or no equity in their homes.

This program is a sister to Home Affordable Modification Program (HAMP), which was severely criticized by Congress last week for failing to help enough struggling home owners.

Source: Reuters News, Corbett B. Daley (03/01/2010)

IRS Clarifies What's Needed to Claim Tax Credit

The Internal Revenue Service has clarified which documentation taxpayers need to submit to claim the first-time and move-up homebuyer tax credit.

While the IRS is still requiring the filing of Form 5405, it is not demanding that all parties’ signatures be on the HUD-1 settlement document in areas where requiring both the buyer and the seller to sign the document isn’t common.

The IRS clarification says: "In areas where signatures are not required on the settlement document, the IRS has clarified that it will accept a settlement statement if it is completed and valid according to local law. … The IRS encourages those buyers to sign the settlement statement prior to attaching it to the tax return.”

For repeat buyers, the IRS is seeking documentation that home buyers have lived in the previous property for a consecutive five of the past eight years. Proof can include property tax records, home owner insurance records, or mortgage interest statements.

Source: Washington Post (02/20/2010)

San Francisco condo resales stay steady

San Francisco's median resale condominium prices from November through January stayed steady from the same period a year ago, leading some analysts and real estate agents to conclude that values have settled into a range where they are likely to remain for some time.

According to city data analyzed by the Polaris Group, a San Francisco real estate firm that crunches housing numbers, the median price for a resale condo in the city - as opposed to a newly built unit - was $638,000 in the threemonth period ending Jan. 31.

That figure was essentially the same as the three-month period ending in January 2009 and was the first time since September 2008 that the median price has not experienced a year-over-year decline.

Analysts believe that housing prices across the Bay Area generally have begun to stabilize, but could be derailed by several factors, including a new wave of foreclosures, mortgage interest rate hikes and the Federal Reserve ending a program to buy mortgage-backed securities.

Chris Foley, a principal at Polaris, said that another big price dip is not likely to happen in San Francisco, given the city's relative shortage of existing housing inventory and a dearth of new construction coming onto the market. Prices currently are about where they were in 2004, he noted.

"Barring a cataclysmic event, either financial or natural, like an earthquake, we believe we are at the bottom and won't see great price appreciation for a while," said Foley. "There's no inventory overhang and there won't be any new construction for a while."

Foley said condo resales are a credible market indicator because they represent the biggest percentage of sales. Owners also generally are not under as much pressure to sell units as quickly as developers of new buildings, who are attempting to pay off construction loans, he said.

Foley said he believes that the market stabilization resulted from sellers becoming more realistic about prices the market would bear and buyers taking advantage of low interest rates and a lull in prices.

Some San Francisco real estate brokers say the market feels much improved from a year ago. They are seeing building owners return units to the market as condos that had been built in the past couple of years, but which had been rented out as apartments because sales were weak.

"The stock market crash in 2008 really changed things for a while and the beginning of last year was slow, but buyers are coming out again," said Realtor Eileen Bermingham.

Figures from another real estate research firm, DataQuick Information Systems, shows that resale condo prices are indeed back in the 2004 range. That year, the median price was $610,000. One year later, the median had jumped to $714,500.

A noticeable change in values started in 2004, when after three straight years in the $500,000 bracket, prices climbed another $100,000. The market hit its peak in May 2007, at $826,000.

Condo resales have seen less fluctuation than new units - particularly the ones at luxury downtown locales. Those buildings, many of them high-rises, started coming on the scene nearly a decade ago and sold briskly into 2008.

The 60-story Millennium Tower at 301 Mission St., for example, started selling units in November 2007 for an average of $2.5 million. By February of 2009, the Millennium had slashed prices by as much as 15 percent.

Waning interest in expensive new properties, in conjunction with banks reluctant to approve construction loans, has brought residential building in San Francisco to a near standstill.

As a result, it's likely that future construction will lag well behind an improved economy and job growth.

Source: SFGate.com; by: Robert Selna

Are interest rates about to rise?

Federal Reserve Bank of New York President William Dudley says the central bank will scale back its purchases of mortgage-backed securities late next month. While interest rates likely will climb when the program ceases, the extent of the rise remains to be seen.

Dudley says the Fed will act if rates spike too much. Still, analysts worry that the end of the MBA purchase program and expiration of the home-buyer tax credit, along with higher premiums and tighter underwriting of FHA mortgages, will work together to stifle home sales and price stabilization in the coming months.

Source: Inman News (02/08/10)

Fannie to Offer Closing Cost Aid on Foreclosures

Fannie Mae, the largest provider of residential home funding in the United States, announced Friday that it would pay the closing costs on purchases of foreclosed homes in its inventory.

The government-controlled company said buyers of qualified properties will get up to 3.5 percent in closing costs, or an equivalent amount for the purchase of new appliances.

The goal of Fannie is to clear out the nearly 50,000 properties it has in inventory— listed on HomePath.com, the Web site created by Fannie Mae last year to sell the growing number of foreclosed homes.

"Attracting qualified buyers to the market and reducing inventory of vacant homes is critical to stabilizing neighborhoods and helping the market recover," said Terry Edwards, executive vice president for credit portfolio management, in a statement.

Source: Reuters News, Al Yoon (01/28//2010)

6 Surprising Facts About the Buyer Tax Credit

The homebuyer tax credit is not as simple or straightforward as you might think.

Here are some nuances that will affect homebuyers who plan to use it.

* To qualify for the move-up tax credit, a home owner must have occupied the same principal residence for five of the last eight years consecutively.

* Buyers can elect to claim the credit on either their 2009 or their 2010 tax return, whichever is best for them.

* Buyers who claim the credit in 2009 can’t file electronically because the Internal Revenue Service hasn’t put the required forms on line. The wait for a refund is three or four months.

* The home can be a mobile home or travel trailer that is fixed to land owned or leased by the home owner. A mobile home or travel trailer that is actually mobile doesn’t qualify.

* The home can’t be purchased from a close relative, including a parent, spouse, child, grandparent or grandchild.

* A buyer who earns no taxable income or doesn’t owe any federal income tax can qualify for the tax credit and file a tax return just to claim it.


Source: Bankrate.com, Marcie Geffner (01/21/2010)

FHA Flipper Rules Waived - Starting February 1st

An excerpt from a HUD Release January 15, 2010 #10-011:

On 2/1/2010 there will be a one-year waiver of the regulation that prohibits insuring a mortgage on a home that has been owned for less than 90 days. There are some restrictions such as no reverse mortgages, must be arms-length and there are specific conditions if the sales price is 20% more than the purchase price.

Why this new rule? HUD says, “In today’s market, FHA research finds that acquiring, rehabilitating and the reselling these properties to prospective homeowners often takes less than 90 days. Prohibiting the use of FHA mortgage insurance for a subsequent resale within 90 days of acquisition adversely impacts that willingness of sellers to allow contracts from potential FHA buyers because they must consider holding costs and the risk of vandalism associated with allowing a property to sit vacant over a 90-day period of time.”

The policy change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.

For more information HUD No. 10-011.

Source: Duane Gomer (www.duanegomer.com)

FHA To Toughen Down Payment Rules

The Federal Housing Administration will raise the minimum down payment for its least credit-worthy borrowers, agency announced Tuesday.

Borrowers with credit-rating scores below 580 will be required to put down at least 10 percent. Those with a credit score above 580 will be able to continue to put down only 3.5 percent. The changes are intended to shore up the agency's finances.

The FHA also will increase its upfront mortgage insurance premium from 1.75 percent to 2.25 percent. The agency is expected to seek congressional approval to raise annual mortgage insurance premiums, paid by borrowers over the life of the loan, above the current 0.55 percent maximum. The amount it will seek has yet been announced.


Source: Reuters News, Corbett B. Daly (01/19/2010)

Another Tax Credit Extension in the works?!?

During his State of the State address, Governor Schwarzenegger today announced his 2010 proposals for California. Included in the proposals is a recommendation to set aside $200 million for a new round of $10,000 state tax credit by including both new and existing homes. Last year's tax credit only applied to new homes.

The tax credit could be combined with the recently extended and expanded federal tax credit for home buyers. The current first time home buyer tax credit is set to expire this March.

For more info, go to:
http://gov.ca.gov/press-release/14124/

20 positive tips for the New Year

I realize that this blog is mostly about real estate and local happenings, but I received an email from Jon Gordon today and couldn't help but pass it on. As many of us are thinking of New Year's resolutions, these 20 tips are always worth considering...

1. Stay Positive. You can listen to the cynics and doubters and believe that success is impossible or you can know that with faith and an optimistic attitude all things are possible.

2. When you wake up in the morning complete the following statement: My purpose is ____________________.

3. Take a morning walk of gratitude. It will create a fertile mind ready for success.

4. Instead of being disappointed about where you are, think optimistically about where you are going.

5. Eat breakfast like a king, lunch like a prince and dinner like a college kid with a maxed out charge card.

6. Transform adversity into success by deciding that change is not your enemy but your friend. In the challenge discover the opportunity.

7. Make a difference in the lives of others.

8. Believe that everything happens for a reason and expect good things to come out of challenging experiences.

9. Don't waste your precious energy on gossip, energy vampires, issues of the past, negative thoughts or things you cannot control. Instead invest your energy in the positive present moment.

10. Mentor someone and be mentored by someone.

11. Live with the 3 E's: Energy, Enthusiasm, Empathy.

12. Remember there's no substitute for hard work.

13. Zoom Focus: Each day when you wake up in the morning ask: "What are the three most important things I need to do today that will help me create the success I desire?" Then tune out all the distraction and focus on these actions.

14. Instead of complaining, focus on solutions. It's the key to innovation.

15. Read more books than you did in 2009.

16. Learn from mistakes and let them teach you to make positive changes.

17. Focus on "Get to" vs "Have to." Each day focus on what you get to do, not what you have to do. Life is a gift, not an obligation.

18. Each night before you go to bed, complete the following statements:

I am thankful for ____________.
Today I accomplished __________.

19. Smile and laugh more. They are natural anti-depressants.

20. Enjoy the ride. You only have one ride through life, so make the most of it and enjoy it.