Archive for the ‘News & Articles’ Category

Government OKs $600 Million in Housing Aid for 5 States

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The Obama administration plans to send $600 million to help unemployed homeowners avoid foreclosure in five states.

The Treasury Department said Wednesday that mortgage-assistance proposals submitted by North Carolina, Ohio, Oregon, Rhode Island, and South Carolina received approval. The states estimate their efforts could help up to 50,000 homeowners.

The administration is directing $2.1 billion from its existing $75 billion mortgage assistance program to a total of 10 states. Each state designed its own plan. Treasury approved money in June for Arizona, California, Florida, Michigan, and Nevada.

“These states have designed targeted programs with the potential to make a real difference in the lives of homeowners struggling to make their mortgage payments because of unemployment,” Herbert Allison, an assistant treasury secretary, said in a statement.

More aid to the unemployed is coming. The sweeping financial reform bill passed signed into law by President Barack Obama last month provides an additional $3 billion to help jobless homeowners pay their mortgages.

Of that money, $2 billion is coming from Treasury’s foreclosure-prevention effort. The rest is to be managed by the Department of Housing and Urban Development.

Source: Alan Zibel (HouseLogic.com)


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Mortgage Rates Drop to a New Low

mortgage rates drop

Mortgage rates fell for the second straight week to the lowest point in five decades.

But many people either don’t qualify for new mortgages or have already taken advantage of the low rates this year. As a result, the housing market and the broader economy may not benefit much from the lower rates.

The average rate on a 30-year fixed mortgage dropped to 4.57 percent this week, mortgage company Freddie Mac reported Thursday. That’s down from the previous record low of 4.58 percent set last week.It’s the lowest since Freddie Mac began tracking rates in 1971. The last time rates were lower was in the 1950s, when most long-term home loans lasted just 20 or 25 years.

Rates have fallen over the past two months. Investors, concerned with the European debt crisis, have poured money into the safety of Treasury bonds. Treasury yields have fallen and so have mortgage rates, which tend to track yields on long-term Treasurys.

Rates could go lower and still not budge the housing market, analysts say. That’s because a person without a job can’t afford a home and a person worried about losing their job is unlikely to purchase, too, said Greg McBride, senior financial analyst with Bankrate.com.

“And if an $8,000 tax credit didn’t get buyers to take the plunge, saving $50 a month on a mortgage payment probably won’t either,” he said.

To calculate the national average, Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day. Rates on 15-year fixed-rate mortgages increased to an average of 4.07 percent, up from 4.04 percent last week. That was the lowest on records dating to September 1991.

Rates on five-year adjustable-rate mortgages averaged 3.75 percent, down from 3.79 percent a week earlier. That was also the lowest on Freddie Mac’s records, which date back only to January 2005.

Average rates on one-year adjustable-rate mortgages fell to 3.75 percent from 3.80 percent.

The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount. The nationwide fee for all types of loans in Freddie Mac’s survey averaged 0.7 a point.

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Source: J.W. Elphinstone (Associated Press)


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Congress Extends Home Buyer Tax Credit Deadline

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Congress late Wednesday night extended the deadline by three months of a popular home-buyer tax credit that has helped fuel the real estate market in recent months.

The extension is only for those buyers who signed a purchase contract by April 30 and need extra time to close their deals. The deadline to close was Wednesday and the extension will push that deadline to Sept. 30. The incentive offers up to $8,000 for certain buyers.

Real estate brokerage offices and mortgage lenders have been backlogged with the number of people trying to close their deals by the Wednesday deadline, according to the National Assn. of Realtors, a group that lobbied heavily for the extension. The group estimated that the extra time would assist some 180,000 people nationally and 17,700 Californians who qualify for the credit but did not appear as if they would meet the Wednesday deadline to close their deals.

The federal tax credit was created in 2008 by the Bush administration as a $7,500 incentive for first-time purchasers, who were required to repay the money in a series of installments. Congress increased the amount to $8,000 in February 2009 when it passed the economic stimulus package and waived the repayment requirement. As an initial deadline for the credit loomed last November, Congress extended and expanded it to include as much as $6,500 for some current homeowners.

The Realtors group in Washington estimates that a total of 4.4 million people have received the credit since it was made nonrefundable last year. That includes 2.9 million first-time buyers and 1.5 million repeat buyers, the group said.

Source: Alejandro Lazo (Los Angeles Times)


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New Policy: Fannie Mae will Penalize Borrowers who Walk Away

fannie mae

Seven-Year Lockout Policy for Strategic Defaulter

Fannie Mae  announced today policy changes designed to encourage borrowers to work with their servicers and pursue alternatives to foreclosure. Defaulting borrowers who walk-away and had the capacity to pay or did not complete a workout alternative in good faith will be ineligible for a new Fannie Mae-backed mortgage loan for a period of seven years from the date of foreclosure. Borrowers who have extenuating circumstances may be eligible for new loan in a shorter timeframe.

Fannie Mae will also take legal action to recoup the outstanding mortgage debt from borrowers who strategically default on their loans in jurisdictions that allow for deficiency judgments. In an announcement next month, the company will be instructing its servicers to monitor delinquent loans facing foreclosure and put forth recommendations for cases that warrant the pursuit of deficiency judgments.

Troubled borrowers who work with their servicers, and provide information to help the servicer assess their situation, can be considered for foreclosure alternatives, such as a loan modification, a short sale, or a deed-in-lieu of foreclosure. A borrower with extenuating circumstances who works out one of these options with their servicer could be eligible for a new mortgage loan in three years and in as little as two years depending on the circumstances. These policy changes were announced in April, in Fannie Mae’s Selling Guide Announcement SEL-2010-05.

Source: Fannie Mae


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Home Buyers Tax Credit: Closing Date to be Extended

home buyers tax credit

People hoping to take advantage of the first-time home buyer tax credit would have an extra three months to close their home purchases and still qualify, under a measure introduced in the U.S. Senate Thursday.

To be eligible for the current tax credit, home buyers must have a valid contract by April 30, 2010 and close the transaction by June 30, 2010. The Senate measure would allow home buyers until the end of September to complete their transactions.

It remains to be seen, however, whether the amendment will go anywhere. It’s part of a controversial jobs and tax bill that may be radically changed before the Senate approves it. Lawmakers are not scheduled to vote on the bill until next week at the earliest.

Source:  Jessica Holzer of Dow Jones Newswires and Tami Luhby (CNNMoney.com)


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Second Credit Checks for Home Buyers: Effective Today (June 1, 2010)

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Starting June 1, Fannie Mae has a new rule going into effect which requires the lender to check for additional lines of credit, such as a new credit card or a car lease, that a borrower may have obtained that have not been reflected on the credit report over the course of the loan process. With stricter regulations mandating a further credit probe before borrowers close their mortgage, real estate experts are advising prospective home shoppers to keep their financial situation static until the deal is finalized.

In light of the new regulation, we talked to a pool of mortgage brokers, who shared tips on dodging mortgage closing debacles and streamlining the process.

Tip No. 1: Get the house before the car

Across the board, mortgage brokers say that opening new lines of credit is the easiest thing to trigger the lender’s attention, especially with the news of Fannie Mae’s mandate. For example, this means opening up a store card at Lowe’s to get a head start on buying some new appliances or paint or leasing a car to have something shiny to park in your new garage.

New credit obligations, such as as credit cards, increases a borrower’s debt-to-income ratio (the amount of debt including mortgages, car loans, student loans, credit cards versus overall income). Fannie Mae sets the maximum for the debt-to-income threshold at 45 percent of a borrower’s gross monthly income. Breaking this cap –even after pre-approval–would result in a defunct loan.

Tip No. 2: Don’t switch professions (or tax brackets)

Brokers say its not earth-shattering to change jobs in the same field, especially if you are making more money at the new place of employment, but it’s complicated when a professional is moving job classifications, for instance, from employed to self-employed, or from a salaried-position to a commission job. “Moving from an employee to a contract basis is a dagger,” says Stern, as two years of federal tax returns need to be included with a loan application. “[In this case], it could take three years to get approved for a mortgage.”

As another precaution given the nation’s high unemployment rate, Stewart says it’s becoming routine for lenders to get a verbal confirmation of a borrower’s employment status on the day of the closing.

Tip No. 3: Try not to move around big sums of money — even deposits

One broker says keeping your financial situation unchanged is not only refraining from withdrawing large sums of money, but also avoiding making big deposits of money in any of your bank accounts from pre-approval to day of closing. To qualify for a mortgage, one of the requirements is proof of all assets, including checking, savings, stocks or bonds, and if this is checked at any future point, the borrower may need to provide records of the fund’s origins.

“That’s what tight lending is these days — providing documentation,” says Jay Sondhi, a mortgage consultant in San Francisco. “What they are concerned about is that a large deposit may be borrowed money.”

Though more money in your bank account is not going to sabotage your qualifications for a loan, complying with documentation requirements and time delays may make a closing a mortgage a bigger hassle.

Tip No. 4: Monitor the balance of your credit cards

Though the credit score formula is deemed an enigma by many, the balance that’s riding on your credit cards plays
a big part in determining your credit score
. Higher scores result in borrowers being able to secure better interest rates.

With tight lending policies and stricter, more spelled-out regulations in the post-boom era, getting a mortgage has become increasingly confusing for the consumer. But keeping your finances transparent and steady will help simplify the process.

Source: Megan Mollman (AOL Real Estate)

Need to fix your Credit Score? More information here…

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Now is Still a Good Time to Buy?

happy homeowners

More than 80% of first-time home buyers and sellers feel the current housing market is more affordable today than this time last year, despite the fact that 40% of all respondents are more worried about the economy compared to this time last year, according to Century 21 Real Estate LLC’s First-Time Home Buyers and Sellers Survey.

While the attractive combination of home prices, mortgage rates and tax credits appeal to both buyers and sellers, market conditions continue to favor buyers. However, first-time home buyers anticipate home prices will soon begin to rise and in fact, about half of first-time buyers (48%) expect an increase by this time next year, thereby reestablishing the balance between buyers and sellers.


Home price effects on first-time buyers and sellers:

-More than 80% of buyers believe now is a good time to buy a home.

-First-time home buyers rated the three most influential factors in their decision to enter the market and buy a home as current housing prices (66%), followed closely by both the home buyer tax credit (63%) and low interest rates (60%).

-Finding a home within a buyer’s price range is extremely important (95%), as is a neighborhood’s safety (90%).

-The top two factors influencing the first-timers’ decision to sell their homes were personal/family reasons and current housing prices – both of which were cited as motivating factors by 48% of first-time sellers.

-Most likely due to their experience, approximately half of first-time sellers (54%) think home prices are more affordable now than compared to this time last year.

-In fact, the current home prices have influenced 50% of sellers to ‘move-up’ and 37% to change neighborhoods.

-Sellers are mainly concerned about losing money on the sale of their home and receiving offers near their asking price.

-Approximately half of all first-time home buyers (48%) and sellers (53%) anticipate housing prices will increase over the next year.

Source: RISMedia.com



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