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)

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.

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)

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)

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

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)

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)