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)
Welcome to the DovCar Real Estate & Investments Blogspot! We would like to become your source for Metro Atlanta real estate; and use this Blog as an opportunity to pass along current information concerning the metro Atlanta real estate and foreclosure market. We also welcome your comments, questions and experiences as either sellers, buyers or real estate investors.
Friday, January 29, 2010
Home Prices Rise Unexpectedly in November
MIAMI - U.S. home prices rose for the sixth straight month in November, with 14 of 20 metro areas posting improvements from the month before.
The Standard & Poor's/Case-Shiller home price index released Tuesday inched up 0.2 percent to a seasonally adjusted reading of 145.49. The index was off 5.3 percent from November last year, nearly matching analyst's estimates that it would fall by 5.1 percent.
The index is now up 3.4 percent from its bottom in May, but still 30 percent below its peak in May 2006.
Phoenix and San Francisco posted the highest month-to-month gains on a seasonally adjusted basis, while New York and Chicago had the largest declines.
Recent price gains have been fueled by a federal tax credit for first-time homebuyers, who rushed to purchase homes ahead of a Nov. 30 deadline. Congress eventually extended the deadline into the spring, and expanded the program to include a tax credit for current homeowners.
While prices have risen steadily on a national basis, some economists predict they will dip again early this year because of high unemployment and foreclosures.
"Until we get job growth, we won't get complete healing of the housing market," said Jeff Humphreys, an economist with the University of Georgia.
Humphreys said data for December and January could show price declines due to a lull in buyer activity after the tax credit was extended.
Rising prices are important to the economic recovery because they make homeowners feel wealthier and lead them to spend more money.
They also help millions of homeowners who owe more to the banks than their houses are worth.
The Standard & Poor's/Case-Shiller home price index released Tuesday inched up 0.2 percent to a seasonally adjusted reading of 145.49. The index was off 5.3 percent from November last year, nearly matching analyst's estimates that it would fall by 5.1 percent.
The index is now up 3.4 percent from its bottom in May, but still 30 percent below its peak in May 2006.
Phoenix and San Francisco posted the highest month-to-month gains on a seasonally adjusted basis, while New York and Chicago had the largest declines.
Recent price gains have been fueled by a federal tax credit for first-time homebuyers, who rushed to purchase homes ahead of a Nov. 30 deadline. Congress eventually extended the deadline into the spring, and expanded the program to include a tax credit for current homeowners.
While prices have risen steadily on a national basis, some economists predict they will dip again early this year because of high unemployment and foreclosures.
"Until we get job growth, we won't get complete healing of the housing market," said Jeff Humphreys, an economist with the University of Georgia.
Humphreys said data for December and January could show price declines due to a lull in buyer activity after the tax credit was extended.
Rising prices are important to the economic recovery because they make homeowners feel wealthier and lead them to spend more money.
They also help millions of homeowners who owe more to the banks than their houses are worth.
Thursday, January 28, 2010
Banks/Mortgage Lenders Seek Payback from Walkaways
Increasingly aggressive mortgage lenders are seeking to collect deficiencies from former home owners who walked away from their properties or sold them in short sales.
Many states, including Florida, give mortgage holders as long as five years to seek a deficiency judgment. If granted, the bank gets up to 20 years to collect and the option to renew for another 20 years if the debt isn’t paid.
About one-third of U.S. states, including California and Arizona, prohibit collection efforts after foreclosure, but home owners usually waive that protection in a refinance.
Most states allow collection on unpaid home-equity loans.
Banks are most likely to try to collect from people who walk away from a property on which they are still making payments.
“The bank is going to pull your credit report, and if you’re current on your other bills they are going to come after you and potentially ruin you,” said Larry Tolchinsky, a Florida real estate attorney.
Source: Bloomberg, Kathleen M. Howley (01/28/2010)
Many states, including Florida, give mortgage holders as long as five years to seek a deficiency judgment. If granted, the bank gets up to 20 years to collect and the option to renew for another 20 years if the debt isn’t paid.
About one-third of U.S. states, including California and Arizona, prohibit collection efforts after foreclosure, but home owners usually waive that protection in a refinance.
Most states allow collection on unpaid home-equity loans.
Banks are most likely to try to collect from people who walk away from a property on which they are still making payments.
“The bank is going to pull your credit report, and if you’re current on your other bills they are going to come after you and potentially ruin you,” said Larry Tolchinsky, a Florida real estate attorney.
Source: Bloomberg, Kathleen M. Howley (01/28/2010)
Tuesday, January 26, 2010
Ten Inexpensive Ways to Wow Buyers
Now is the time for home owners contemplating a spring sale to spruce up their properties in anticipation of what Mike Larson of Weiss Research calls a potentially vibrant home-selling season. "If you have been beating your head against a wall, this is going to feel a lot better,” he jokes.
Here are 10 cheap ways to make a property more attractive to shoppers.
Improve first impressions. Touch up the paint on the front door and other areas that buyers see first.
Clean up the landscaping. Trim the hedges and trees and plant some annuals in the flowerbeds.
Paint the interior. A coat of light yellow or cream with contrasting white woodwork looks fresh and clean.
Refurbish the floors. Buff the hardwoods. Install new carpets – or at least get them professionally cleaned.
Take care of the big problems. If the house needs a roof or the front stoop is crumbling, get them fixed.
Buy warranties. Putting appliances under warranty gives homebuyers a secure feeling.
Improve energy efficiency. New windows or improved insulation tell a potential buyer the seller is on top of things plus they come with tax benefits.
Replace light fixtures. Updated fixtures, especially at the entrance way and in the foyer, create a good first impression.
Buy a stove. Home owners whose kitchen isn’t top of the line can jazz it up for a few hundred dollars by buying a new stove, which gives the room a fresh feel.
Tidy up the bathrooms. Get rid of mildew, replace caulking and replace stained sinks.
Source: U.S. News & World Report, Luke Mullins (01/21/2010)
Clean up the landscaping. Trim the hedges and trees and plant some annuals in the flowerbeds.
Paint the interior. A coat of light yellow or cream with contrasting white woodwork looks fresh and clean.
Refurbish the floors. Buff the hardwoods. Install new carpets – or at least get them professionally cleaned.
Take care of the big problems. If the house needs a roof or the front stoop is crumbling, get them fixed.
Buy warranties. Putting appliances under warranty gives homebuyers a secure feeling.
Improve energy efficiency. New windows or improved insulation tell a potential buyer the seller is on top of things plus they come with tax benefits.
Replace light fixtures. Updated fixtures, especially at the entrance way and in the foyer, create a good first impression.
Buy a stove. Home owners whose kitchen isn’t top of the line can jazz it up for a few hundred dollars by buying a new stove, which gives the room a fresh feel.
Tidy up the bathrooms. Get rid of mildew, replace caulking and replace stained sinks.
No Picket Fence on Some Men's Horizon
Even though the government and society applaud homeownership, a growing number of men are little interested in the institution for financial, practical, and emotional reasons.
Only 10 percent of single men buy houses. Some experts say this disparity is related to single males' interest in changing jobs and cities, as well as being more willing to share living space.
Possibly for some people, house buying evolved from living in a house to a speculative investment during the last decade, and with the collapse of the housing market, some people are looking at the true value of that investment to determine if owning a house is worth the expense.
Nathan Quevedo says his bout with homeownership has taught him that having the American dream does not necessarily mean owning a house. Homeownership ties buyers to a location, which makes it harder for people to accept new business ventures and job opportunities if they are in another location.
Moreover, repairs and damage can be costly. Ohio State University Economics Professor Donald Haurin says, "People who are particularly mobile should not be a homeowner because of the high transaction costs [of unloading a house.]"
Source: New York Times
Only 10 percent of single men buy houses. Some experts say this disparity is related to single males' interest in changing jobs and cities, as well as being more willing to share living space.
Possibly for some people, house buying evolved from living in a house to a speculative investment during the last decade, and with the collapse of the housing market, some people are looking at the true value of that investment to determine if owning a house is worth the expense.
Nathan Quevedo says his bout with homeownership has taught him that having the American dream does not necessarily mean owning a house. Homeownership ties buyers to a location, which makes it harder for people to accept new business ventures and job opportunities if they are in another location.
Moreover, repairs and damage can be costly. Ohio State University Economics Professor Donald Haurin says, "People who are particularly mobile should not be a homeowner because of the high transaction costs [of unloading a house.]"
Source: New York Times
Friday, January 22, 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)
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)
Harder to get an Uncle Sam mortgage
It's going to be harder to get a government-backed mortgage from now on.
Looking to shore up its weakening finances, the Federal Housing Administration is set to announce stricter standards on Wednesday.
The agency, which insured nearly a third of new mortgages in 2009, will increase the premium it charges for its mortgage insurance and require those with weaker credit scores to come up with larger downpayments.
The FHA will also reduce the amount of money a seller can provide a homebuyer for closing costs, as well as tighten its enforcement of lenders.
"Striking the right balance between managing the FHA's risk, continuing to provide access to underserved communities, and supporting the nation's economic recovery is critically important," FHA Commissioner David Stevens said in a statement. "Importantly, FHA will remain the largest source of home purchase financing for underserved communities."
FHA loans have skyrocketed in popularity during the mortgage crisis since the agency backstops banks if borrowers stop paying. But housing experts are growing increasingly concerned about the agency's ability to handle rising numbers of defaults. (Cash cushion shrivels for FHA.)
In November, the agency reported that its reserve fund has dropped to .53% of its insurance guarantees, well below the 2% ratio mandated by Congress and the 3% ratio it had last fall. The fund covers losses on the mortgages the agency insures.
Federal housing officials, who took several steps to shore up the agency's finances last year, promised to do more. The new announcement is the latest set of changes to FHA policies.
What the new rules mean
The agency will increase its up-front mortgage insurance premium to 2.25%, from 1.75%. It will also ask Congress for the right to hike its ongoing premium, currently between .5% and .55% monthly.
The FHA will also require borrowers to have at least a credit score of 580 to qualify for the agency's 3.5% downpayment program. Those with lower scores will have to pay at least 10%. However, this rule may have little practical effect since Stevens recently said the average borrower score is 693.
The new policy also will reduce the amount of money sellers can provide to homebuyers at closing to 3%, down from 6%, of the home's price. That change will bring the agency in line with industry standards and remove the incentive to inflate appraisals.
Finally, officials plan to clamp down on lenders offering FHA mortgages. It will more closely monitor their performance and compliance with agency rules, as well as seek legislative authority to require mortgage firms to assume liability for all loans they originate and underwrite.
One thing the agency did not do is to broadly increase the downpayment requirement. Many industry observers said such a step is necessary to reduce the risk the FHA faces.
Agency plays crucial role
As banks have clamped down on mortgage lending, the FHA program has emerged as one of the few ways people can buy a home.
Banks are more willing to make FHA loans because they come with a federal guarantee to cover losses if the borrower defaults. And borrowers can more easily qualify for FHA loans because they only need 3.5% down and can have lower credit scores.
As a result, demand for FHA loans has exploded. The agency guaranteed more than $360 billion in single-family mortgages in fiscal 2009, which ended Sept. 30, more than four times the volume in 2007.
The agency insured about 30% of home purchases and 20% of refinanced mortgages in 2009. Nearly 50% of first-time homebuyers go through the agency.
The agency, however, has also seen a spike in delinquencies amid the mortgage meltdown. Some 14.36% of FHA loans were past due in the third quarter, according to the Mortgage Bankers Association. This compares to 9.64% of all loans.
NEW YORK (CNNMoney.com)
Looking to shore up its weakening finances, the Federal Housing Administration is set to announce stricter standards on Wednesday.
The agency, which insured nearly a third of new mortgages in 2009, will increase the premium it charges for its mortgage insurance and require those with weaker credit scores to come up with larger downpayments.
The FHA will also reduce the amount of money a seller can provide a homebuyer for closing costs, as well as tighten its enforcement of lenders.
"Striking the right balance between managing the FHA's risk, continuing to provide access to underserved communities, and supporting the nation's economic recovery is critically important," FHA Commissioner David Stevens said in a statement. "Importantly, FHA will remain the largest source of home purchase financing for underserved communities."
FHA loans have skyrocketed in popularity during the mortgage crisis since the agency backstops banks if borrowers stop paying. But housing experts are growing increasingly concerned about the agency's ability to handle rising numbers of defaults. (Cash cushion shrivels for FHA.)
In November, the agency reported that its reserve fund has dropped to .53% of its insurance guarantees, well below the 2% ratio mandated by Congress and the 3% ratio it had last fall. The fund covers losses on the mortgages the agency insures.
Federal housing officials, who took several steps to shore up the agency's finances last year, promised to do more. The new announcement is the latest set of changes to FHA policies.
What the new rules mean
The agency will increase its up-front mortgage insurance premium to 2.25%, from 1.75%. It will also ask Congress for the right to hike its ongoing premium, currently between .5% and .55% monthly.
The FHA will also require borrowers to have at least a credit score of 580 to qualify for the agency's 3.5% downpayment program. Those with lower scores will have to pay at least 10%. However, this rule may have little practical effect since Stevens recently said the average borrower score is 693.
The new policy also will reduce the amount of money sellers can provide to homebuyers at closing to 3%, down from 6%, of the home's price. That change will bring the agency in line with industry standards and remove the incentive to inflate appraisals.
Finally, officials plan to clamp down on lenders offering FHA mortgages. It will more closely monitor their performance and compliance with agency rules, as well as seek legislative authority to require mortgage firms to assume liability for all loans they originate and underwrite.
One thing the agency did not do is to broadly increase the downpayment requirement. Many industry observers said such a step is necessary to reduce the risk the FHA faces.
Agency plays crucial role
As banks have clamped down on mortgage lending, the FHA program has emerged as one of the few ways people can buy a home.
Banks are more willing to make FHA loans because they come with a federal guarantee to cover losses if the borrower defaults. And borrowers can more easily qualify for FHA loans because they only need 3.5% down and can have lower credit scores.
As a result, demand for FHA loans has exploded. The agency guaranteed more than $360 billion in single-family mortgages in fiscal 2009, which ended Sept. 30, more than four times the volume in 2007.
The agency insured about 30% of home purchases and 20% of refinanced mortgages in 2009. Nearly 50% of first-time homebuyers go through the agency.
The agency, however, has also seen a spike in delinquencies amid the mortgage meltdown. Some 14.36% of FHA loans were past due in the third quarter, according to the Mortgage Bankers Association. This compares to 9.64% of all loans.
NEW YORK (CNNMoney.com)
Wednesday, January 20, 2010
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)
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)
Monday, January 18, 2010
FHA Property Flipping Waiver
Saturday, January 16th, 2010
Since the announcement around 5:00 p.m. EST on Friday, January 15, my phone has not stopped ringing. The consensus is that this FHA property flipping waiver is a huge boon. Lots of people are citing links to it but very few people have actually taken the time to read it, break it down, digest it and offer comments about where they think the business is going as a result of this recent property flipping waiver.
Allow me to share with you a few bullet points:
1. This waiver is very good news.
2. This waiver does NOT necessarily mean that you will be able to do back to back same day closes to an FHA end buyer.
Allow me to explain why. Upon closely reading this waiver, you will see that they require that the “seller holds title to the property” thus the investor seller must be the owner of record.
Considering the past policy interpretations of the FHA underwriters, I believe that this means that they may very well expect to see the investor/seller be the owner of record as of the date the contract to sell to the FHA insured buyer is executed. This means that you can close on Monday, go into contract on Tuesday, and hopefully close in 30 days. This is a vast improvement over 91-140 days.
The next salient point is that if you are selling it for 20% more than what you bought it for, you are going to face a higher level of scrutiny in the underwriting process. So, if you can buy a property for $300,000, resell it for less than $360,000 you are going to be fine – but still be prepared to have to come up with the $300,000 and hold the property for a period of time, if you choose to sell to an FHA end buyer.
Sophisticated title companies such as Old School Title and a few other ones that I work with may be able to expedite the process through unique and proprietary business practices that they use to work with FHA underwriters. If you are not working with a cutting edge and industry-leading title and escrow company, now is the time to get with one.
Going back to the actual three page flipping waiver, you will note that the rationale behind this waiver is the recognition that people can buy properties, substantially rehab them and improve the value of them in less than 90 days, so don’t be surprised to see certain FHA underwriters still looking for proof of what you have done to enhance the value. You may in some instances be able to rely on the Freddie Mac Attachment A argument from October 2009 regarding the difference in value is the market reaction to you paying off all of the liens and clearing up the title issues, thus increasing the value of the property. Or, you may have to show receipts for paint and carpet with accompanying before and after photographs.
By now, I hope you realize that I do not see this property flipping waiver as the sudden opening of the bank vault with no security guards anywhere in sight. Rather, I see it as a significant but limited move by our nation’s “housing authority” to try to address the illiquidity in the residential real estate market.
I want it to be very clear that everyone will still need their short term brokerage funding, particularly 30-60 day funding, maybe less, to capitalize on this policy change by the FHA. You will still have to buy and fund this deal and then go through the process of selling to the FHA end buyer. However, it’s a whole lot easier to find 30-60 day money than 90-120 day money.
To summarize the salient points of this waiver:
1. All transactions must be arm’s length.
2. Assignments of a contract for sale will trigger a red flag.
3. The seller holds title to the property.
4. Entities such as LLCs, corporations, and trust must be properly established and operating in accordance with applicable state and Federal law.
5. There is not a pattern of previous flipping activity for the subject property, so if the property has been wholesaled two or three times in the last 12 months I doubt you are going to get an FHA loan on this. If you bought it via a short sale from someone who was losing it in foreclosure, I think you will be in good shape.
6. The property must pass at a minimum the FHA inspection. The program does not apply to reverse mortgages.
7. Most importantly, items 6 and 7 in the waiver make it very clear that this elimination of the 90 day resale restriction clearly applies to private sales of property for resale, therefore the entire restriction set forth in 24 C.F.R. § 203.37a (b)(2) is waived for a one year period.
8. The title company that you use and the particular lender that your C buyer selects will become crucial as to whether you will only need 30 day money or whether you will need money for longer.
Since the announcement around 5:00 p.m. EST on Friday, January 15, my phone has not stopped ringing. The consensus is that this FHA property flipping waiver is a huge boon. Lots of people are citing links to it but very few people have actually taken the time to read it, break it down, digest it and offer comments about where they think the business is going as a result of this recent property flipping waiver.
Allow me to share with you a few bullet points:
1. This waiver is very good news.
2. This waiver does NOT necessarily mean that you will be able to do back to back same day closes to an FHA end buyer.
Allow me to explain why. Upon closely reading this waiver, you will see that they require that the “seller holds title to the property” thus the investor seller must be the owner of record.
Considering the past policy interpretations of the FHA underwriters, I believe that this means that they may very well expect to see the investor/seller be the owner of record as of the date the contract to sell to the FHA insured buyer is executed. This means that you can close on Monday, go into contract on Tuesday, and hopefully close in 30 days. This is a vast improvement over 91-140 days.
The next salient point is that if you are selling it for 20% more than what you bought it for, you are going to face a higher level of scrutiny in the underwriting process. So, if you can buy a property for $300,000, resell it for less than $360,000 you are going to be fine – but still be prepared to have to come up with the $300,000 and hold the property for a period of time, if you choose to sell to an FHA end buyer.
Sophisticated title companies such as Old School Title and a few other ones that I work with may be able to expedite the process through unique and proprietary business practices that they use to work with FHA underwriters. If you are not working with a cutting edge and industry-leading title and escrow company, now is the time to get with one.
Going back to the actual three page flipping waiver, you will note that the rationale behind this waiver is the recognition that people can buy properties, substantially rehab them and improve the value of them in less than 90 days, so don’t be surprised to see certain FHA underwriters still looking for proof of what you have done to enhance the value. You may in some instances be able to rely on the Freddie Mac Attachment A argument from October 2009 regarding the difference in value is the market reaction to you paying off all of the liens and clearing up the title issues, thus increasing the value of the property. Or, you may have to show receipts for paint and carpet with accompanying before and after photographs.
By now, I hope you realize that I do not see this property flipping waiver as the sudden opening of the bank vault with no security guards anywhere in sight. Rather, I see it as a significant but limited move by our nation’s “housing authority” to try to address the illiquidity in the residential real estate market.
I want it to be very clear that everyone will still need their short term brokerage funding, particularly 30-60 day funding, maybe less, to capitalize on this policy change by the FHA. You will still have to buy and fund this deal and then go through the process of selling to the FHA end buyer. However, it’s a whole lot easier to find 30-60 day money than 90-120 day money.
To summarize the salient points of this waiver:
1. All transactions must be arm’s length.
2. Assignments of a contract for sale will trigger a red flag.
3. The seller holds title to the property.
4. Entities such as LLCs, corporations, and trust must be properly established and operating in accordance with applicable state and Federal law.
5. There is not a pattern of previous flipping activity for the subject property, so if the property has been wholesaled two or three times in the last 12 months I doubt you are going to get an FHA loan on this. If you bought it via a short sale from someone who was losing it in foreclosure, I think you will be in good shape.
6. The property must pass at a minimum the FHA inspection. The program does not apply to reverse mortgages.
7. Most importantly, items 6 and 7 in the waiver make it very clear that this elimination of the 90 day resale restriction clearly applies to private sales of property for resale, therefore the entire restriction set forth in 24 C.F.R. § 203.37a (b)(2) is waived for a one year period.
8. The title company that you use and the particular lender that your C buyer selects will become crucial as to whether you will only need 30 day money or whether you will need money for longer.
Sunday, January 17, 2010
Downsizing your Home? The Tax Credit is For You Too!
January 17, 2010
The tax credit is not just for those buying a bigger home, it also works for those wishing to downsize. When the First Time Home Buyer Tax credit was extended and expanded late last year, most people thought the expansion was only for home owners who wanted to move up, those who wished to buy a bigger, more expensive home. In fact, the expansion simply includes those who have owned a primary residence and lived in it for at least five years consecutive years out of the last eight years. If current home owners want to downsize they can use the tax credit toward their new home, regardless of whether it costs less than the home that they are selling, regardless of whether it is smaller than the one that they are selling.
Everyone we talk to assumes the tax credit is only for purchasing bigger and better. Many people however, especially those whose children have grown and left the nest, want to downsize. After-all, who doesn’t want to make life simpler these days?
If you have been considering selling your home and moving into a smaller space, consider doing so before the tax credit expires. Place your new home under contract by April 30th and close by June 30th and you could have a few extra dollars in your pocket.
The tax credit is not just for those buying a bigger home, it also works for those wishing to downsize. When the First Time Home Buyer Tax credit was extended and expanded late last year, most people thought the expansion was only for home owners who wanted to move up, those who wished to buy a bigger, more expensive home. In fact, the expansion simply includes those who have owned a primary residence and lived in it for at least five years consecutive years out of the last eight years. If current home owners want to downsize they can use the tax credit toward their new home, regardless of whether it costs less than the home that they are selling, regardless of whether it is smaller than the one that they are selling.
Everyone we talk to assumes the tax credit is only for purchasing bigger and better. Many people however, especially those whose children have grown and left the nest, want to downsize. After-all, who doesn’t want to make life simpler these days?
If you have been considering selling your home and moving into a smaller space, consider doing so before the tax credit expires. Place your new home under contract by April 30th and close by June 30th and you could have a few extra dollars in your pocket.
Friday, January 15, 2010
Thursday, January 14, 2010
Record Number of Foreclosures in 2009
Total foreclosures in 2009 reached 2.8 million, a 21 percent increase over 2008 and a 120 percent rise compared to 2007, according to foreclosure sales Web site RealtyTrac in a year-end report released Wednesday.
RealtyTrac also reported that fourth quarter foreclosures decreased 7 percent from the third quarter, although they were up 18 percent compared to 2008. December 2009 foreclosures were up 14 percent over December 2008.
The 10 states with the highest foreclosure rates in 2009 were: Nevada, Arizona, Florida, California, Utah, Idaho, Georgia, Michigan, Illinois, and Colorado.
California, Florida, Arizona, Illinois account for 50 percent of the foreclosures. The other 10 states with the largest numbers of foreclosures are Michigan, Nevada, Georgia, Ohio, Texas, and New Jersey.
“A massive supply of delinquent loans continues to loom over the housing market, and many of those delinquencies will end up in the foreclosure process in 2010 and beyond as lenders gradually work their way through the backlog,” says RealtyTrac CEO James Saccacio.
Source: The Associated Press (01/14/2010)
RealtyTrac also reported that fourth quarter foreclosures decreased 7 percent from the third quarter, although they were up 18 percent compared to 2008. December 2009 foreclosures were up 14 percent over December 2008.
The 10 states with the highest foreclosure rates in 2009 were: Nevada, Arizona, Florida, California, Utah, Idaho, Georgia, Michigan, Illinois, and Colorado.
California, Florida, Arizona, Illinois account for 50 percent of the foreclosures. The other 10 states with the largest numbers of foreclosures are Michigan, Nevada, Georgia, Ohio, Texas, and New Jersey.
“A massive supply of delinquent loans continues to loom over the housing market, and many of those delinquencies will end up in the foreclosure process in 2010 and beyond as lenders gradually work their way through the backlog,” says RealtyTrac CEO James Saccacio.
Source: The Associated Press (01/14/2010)
Sunday, January 10, 2010
Last chance to refinance below 5%
January 10, 2010
NEW YORK (CNNMoney.com) -- If you want to refinance your mortgage into a loan with a sub-5% interest rate, better hurry. Your window of opportunity is closing fast.
Lenders are still advertising rock-bottom interest rates, but for most borrowers, rates are rapidly rising into the 5%-plus category.
During the week of Jan. 7, the average 30-year, fixed-rate loan closed at 5.09%, according to mortgage giant Freddie Mac. That is significantly higher than the 4.71% it averaged at the beginning of the month, and experts say rates will go higher yet.
"Interest rates are up and they're not going to go down below 5% again," said Mark Zandi, chief economist for Moody's Economy.com, not for a while at least.
While homebuyers are still excited about these low mortgage rates, people who already have a loan and want to lower their costs are scrambling to lock in.
Refinancers act when the difference between the rate they're currently paying and the new one is at least a point or two wide, otherwise the costs of going through the refinancing wipes out any savings. In fact as rates rose in December, refinancings plunged, down more than 30%, according to the Mortgage Bankers Association.
A big reason for the jump is that a government program that has kept rates very low is winding to a close. The Federal Reserve has been purchasing mortgage-backed securities since early 2009, scooping up as much as $1.25 trillion worth. That has dampened rate increases by providing a ready market for the securities.
But the Fed's program lapses on March 31, when it cedes the playing field to private investors, who will almost surely demand higher rates. The Fed has already been slowing its purchasing, and that has corresponded with the recent rate increases.
As Treasurys go . . .
Not just mortgage rates have turned north. Treasury yields have as well, another indication that mortgage rates are headed skyward.
The yield on the benchmark 10-year Treasury has grown steeply over the past few weeks. It stood at 3.2% at the beginning of December and has soared to 3.84% as of Tuesday, a 20% jump.
Mortgage interest does not track Treasury yields in lockstep, but the two tend to mirror each other's movements.
Mortgage securities rates are always higher than Treasury yields because investors demand a premium above practically risk-free Treasurys.
The difference between mortgage rates and Treasury yields is usually somewhere near 1.7 percentage points, according to Keith Gumbinger of HSH Associated, a publisher of mortgage information. The current spread of about 1.2 percentage points is quite narrow.
That's bound to change, according to David Crowe, chief economist for the National Association of Home Builders. He believes mortgage rates will go up to about 5.5% by late summer. But other factors could push them into a larger-than-expected jump.
Economy bouncing back
For example, as the economy improves (it's hoped), businesses will expand production, hire new workers and open new sales outlets. All that requires borrowing in capital markets and the demand for lending will expand interest rates of all kinds.
A recovering economy also boosts corporate profits, making stocks a better bet for investors.
"Stocks tend to do better when the economy improves," said Stuart Hoffman, chief economist for PNC Financial Services. "Mortgage rates will rise to attract investment."
Hoffman's forecast is for rates to stay quite constant the rest of the winter and then elevate gradually during the spring buying season, the busiest time of year for home sales. He said they should hit about 5.5% by the end of June.
After that, the increases will slow, according to Hoffman, but still approach 6% toward the end of the year. He believes they'll cap at around 5.75% and are not likely to fall back to the 5% level again.
NEW YORK (CNNMoney.com) -- If you want to refinance your mortgage into a loan with a sub-5% interest rate, better hurry. Your window of opportunity is closing fast.
Lenders are still advertising rock-bottom interest rates, but for most borrowers, rates are rapidly rising into the 5%-plus category.
During the week of Jan. 7, the average 30-year, fixed-rate loan closed at 5.09%, according to mortgage giant Freddie Mac. That is significantly higher than the 4.71% it averaged at the beginning of the month, and experts say rates will go higher yet.
"Interest rates are up and they're not going to go down below 5% again," said Mark Zandi, chief economist for Moody's Economy.com, not for a while at least.
While homebuyers are still excited about these low mortgage rates, people who already have a loan and want to lower their costs are scrambling to lock in.
Refinancers act when the difference between the rate they're currently paying and the new one is at least a point or two wide, otherwise the costs of going through the refinancing wipes out any savings. In fact as rates rose in December, refinancings plunged, down more than 30%, according to the Mortgage Bankers Association.
A big reason for the jump is that a government program that has kept rates very low is winding to a close. The Federal Reserve has been purchasing mortgage-backed securities since early 2009, scooping up as much as $1.25 trillion worth. That has dampened rate increases by providing a ready market for the securities.
But the Fed's program lapses on March 31, when it cedes the playing field to private investors, who will almost surely demand higher rates. The Fed has already been slowing its purchasing, and that has corresponded with the recent rate increases.
As Treasurys go . . .
Not just mortgage rates have turned north. Treasury yields have as well, another indication that mortgage rates are headed skyward.
The yield on the benchmark 10-year Treasury has grown steeply over the past few weeks. It stood at 3.2% at the beginning of December and has soared to 3.84% as of Tuesday, a 20% jump.
Mortgage interest does not track Treasury yields in lockstep, but the two tend to mirror each other's movements.
Mortgage securities rates are always higher than Treasury yields because investors demand a premium above practically risk-free Treasurys.
The difference between mortgage rates and Treasury yields is usually somewhere near 1.7 percentage points, according to Keith Gumbinger of HSH Associated, a publisher of mortgage information. The current spread of about 1.2 percentage points is quite narrow.
That's bound to change, according to David Crowe, chief economist for the National Association of Home Builders. He believes mortgage rates will go up to about 5.5% by late summer. But other factors could push them into a larger-than-expected jump.
Economy bouncing back
For example, as the economy improves (it's hoped), businesses will expand production, hire new workers and open new sales outlets. All that requires borrowing in capital markets and the demand for lending will expand interest rates of all kinds.
A recovering economy also boosts corporate profits, making stocks a better bet for investors.
"Stocks tend to do better when the economy improves," said Stuart Hoffman, chief economist for PNC Financial Services. "Mortgage rates will rise to attract investment."
Hoffman's forecast is for rates to stay quite constant the rest of the winter and then elevate gradually during the spring buying season, the busiest time of year for home sales. He said they should hit about 5.5% by the end of June.
After that, the increases will slow, according to Hoffman, but still approach 6% toward the end of the year. He believes they'll cap at around 5.75% and are not likely to fall back to the 5% level again.
Friday, January 8, 2010
Principal Cuts May Prevent Foreclosures
At least 7 million borrowers will lose their homes this year and next unless there is a broad increase in property values or lenders become much more willing to cut the principal on mortgage loans, an analyst with Amherst Securities Group told the U.S. House Financial Services Committee last month.
That testimony has motivated Federal Deposit Insurance Corp. Chair Sheila Blair to consider incentives for lenders to cut principal on $45 billion in mortgages her agency has acquired from seized banks.
“We’re looking now at whether we should provide some further loss-sharing for principal write downs,” says Bair. “Now you’re in a situation where even the good mortgages are going bad because people are losing their jobs.”
While principal reductions are rare, some banks are doing them. In the third quarter of 2009, about 21,000 home loans were modified by reducing the principal, according to Mortgage Metrics, a government publication.
Mark Zandi, the chief economist for Moody’s Economy.com, suggests that banks receive a federal match of $1 for every $2 in principal reductions they offer to home owners.
“You’re not going to wipe out all the borrowers’ negative equity,” he says. “This just gives them enough hope to get them committed again.”
Source: Bloomberg, John Gittelsohn and Prashant Gopal (01/07/2010)
That testimony has motivated Federal Deposit Insurance Corp. Chair Sheila Blair to consider incentives for lenders to cut principal on $45 billion in mortgages her agency has acquired from seized banks.
“We’re looking now at whether we should provide some further loss-sharing for principal write downs,” says Bair. “Now you’re in a situation where even the good mortgages are going bad because people are losing their jobs.”
While principal reductions are rare, some banks are doing them. In the third quarter of 2009, about 21,000 home loans were modified by reducing the principal, according to Mortgage Metrics, a government publication.
Mark Zandi, the chief economist for Moody’s Economy.com, suggests that banks receive a federal match of $1 for every $2 in principal reductions they offer to home owners.
“You’re not going to wipe out all the borrowers’ negative equity,” he says. “This just gives them enough hope to get them committed again.”
Source: Bloomberg, John Gittelsohn and Prashant Gopal (01/07/2010)
Monday, January 4, 2010
Foreclosures Weigh on Home Appraisals
Approximately 25 percent of real estate practitioners say low appraisals have broken up deals, according to the NATIONAL ASSOCIATION OF REALTORS®.
While foreclosed properties typically are not included in a comparable sales analysis, they account for about 40 percent of home sales -- more than 50 percent in some markets -- making it difficult for appraisers to value properties not in the foreclosure process.
Additionally, new industry rules that require mortgage lenders to order appraisals through in-house staff or appraisal management companies means more appraisers without knowledge of the local market are making valuations.
While Zillow.com says non-foreclosures are selling for upwards of 30 percent more than foreclosures, a study of 20 years of home sales in Massachusetts by Harvard University's Joint Center for Housing Studies indicates that dwellings closer than 100 yards to a foreclosure lose about 1 percent in value.
Source: USA Today (01/04/10)
While foreclosed properties typically are not included in a comparable sales analysis, they account for about 40 percent of home sales -- more than 50 percent in some markets -- making it difficult for appraisers to value properties not in the foreclosure process.
Additionally, new industry rules that require mortgage lenders to order appraisals through in-house staff or appraisal management companies means more appraisers without knowledge of the local market are making valuations.
While Zillow.com says non-foreclosures are selling for upwards of 30 percent more than foreclosures, a study of 20 years of home sales in Massachusetts by Harvard University's Joint Center for Housing Studies indicates that dwellings closer than 100 yards to a foreclosure lose about 1 percent in value.
Source: USA Today (01/04/10)
Saturday, January 2, 2010
Census: Americans Stayed Put in 2009
Fewer Americans moved in 2009 than any other year this decade, the U.S. Census Bureau reported this month.
Population also grew less this year than any other year since the turn of the 21st Century. It reached 307 million on July 1, up less than 1 percent from a year earlier, the bureau says. About 850,000 people immigrated from other countries, down 15 percent compared to 2006.
The losers in this trend included Florida, which lost 31,000 people to other states, a first for the Sunshine State, which used to be No. 1 in attracting new residents. "The middle of the decade's huge surge to the Sun Belt stopped on a dime," says demographer William Frey of the Brookings Institution.
Demographers say real estate is one of the big reasons people are staying put. "People are trapped," says Yi Zhao, senior forecasting coordinator for the Census Bureau in the State of Washington. "They can't sell their house or they have a hard time getting credit for a new one."
Source: USA Today
Population also grew less this year than any other year since the turn of the 21st Century. It reached 307 million on July 1, up less than 1 percent from a year earlier, the bureau says. About 850,000 people immigrated from other countries, down 15 percent compared to 2006.
The losers in this trend included Florida, which lost 31,000 people to other states, a first for the Sunshine State, which used to be No. 1 in attracting new residents. "The middle of the decade's huge surge to the Sun Belt stopped on a dime," says demographer William Frey of the Brookings Institution.
Demographers say real estate is one of the big reasons people are staying put. "People are trapped," says Yi Zhao, senior forecasting coordinator for the Census Bureau in the State of Washington. "They can't sell their house or they have a hard time getting credit for a new one."
Source: USA Today
Friday, January 1, 2010
5 Home Remodeling Trends for the New Year
Happy New Year!
Remodeling and decorating trends in 2010 are likely to reflect the fact that many home owners are settling in for the long haul.
Here are some ideas for updating homes and gardens from decorators and leading real estate practitioners:
Environmentally sensitive furniture. Natural fibers, sustainable woods, and recycled products are key to attracting environmentally concerned buyers.
Classic neutral colors. Deep gray browns and gray blues, muted beige, and chalky white will be particularly popular shades, Pittsburgh Paints predicts.
Backyard gardens. First Lady Michelle Obama led the way in 2009 when she installed one at the White House.
Backyard living. Wood-deck additions offer an 80.6 percent payback, according to the annual Cost vs. Value Report from Remodeling magazine and REALTOR® magazine. Simple fire pits and outdoor fireplaces also will be popular, trend-watchers say.
Made in America. As more people feel compelled to support local employment, U.S. manufactured products and antiques will become more popular, says Patricia Shackelford, author of design blog, Mrs. Blandings.
Source: Orlando Sentinel
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- PropBob
- Metro Atlanta, Georgia, United States
- Realtor and Real Estate Investor - Revitalizing metro Atlanta, One Property at a Time. www.dovcar.com