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RISMEDIA, January 23, 2010—By now it is well documented that today’s affordable housing prices, historically low interest rates and federal home buyer tax credit have combined to create one of the most attractive first-time buyer markets in recent memory. What many Americans might not realize is that a recent expansion of the buyer tax credit has created an equally desirable opportunity for existing homeowners.
This past November, Congress elected to expand the home buyer tax credit to repeat buyers after seeing the success the temporary financial incentive had on the housing market and overall economy. As a result, current homeowners who will have lived in their home for 5 consecutive years out of the last 8 may now be eligible to receive a $6,500 tax credit.
“The expanded tax credit offers a great financial opportunity for existing homeowners, particularly those looking to trade up,” said James M. Weichert, president and founder of Weichert, Realtors, one of the nation’s largest independent real estate companies. “Not only can you receive a large sum of money from the government, you’ll also likely purchase your next home for less money and at a lower interest rate than you could have in years past or years to come.”
To qualify for the tax credit, the repeat buyer must have signed a binding contract by April 30, 2010 and close on the home by June 30, 2010. Tax credit eligibility is subject to income limits, $125,000 for single buyers and $225,000 for couples. In addition, the sale price of the home being purchased can not exceed $800,000.
There is no requirement that existing homeowners must have sold their home to be eligible for the $6,500 tax credit. However, Weichert encourages existing homeowners who want to benefit from this incentive to move quickly, particularly those who prefer to first sell their current home before purchasing a new one.
“Typically, it takes three months or longer to sell a home. That’s why it is critical repeat buyers put their home on the market right away. Otherwise they might not leave themselves enough time to both secure a buyer for their current house and find a new home by the April 30 deadline,” added Weichert.
For more information, visit www.weichert.com.
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Mortgage rates improved last week after the Treasury Deparment completed debt auctions totaling $84 billion. On Friday, lenders improved rate sheets to their best levels all week (best in about a month really!). All US markets were closed yesterday in honor of Martin Luther King Jr. day. A few lenders issued rate sheets, they were unchanged from Friday.
We had no major economic data releases this morning; however, Citigroup announced third quarter results matching expectations of a 0.33 cent loss per share but missing on total revenue. In total, Citigroup lost $7.6 billion mainly due to a pre-tax charge of $8 billion which repaid TARP bailout funds. At 1pm today the National Association of Home Builders will release their Housing Market Index. This survey gives the market a view into the sentiment of home builders. If the housing market is to help add momentum the overall economic recovery, home builders will have to feeling positive enough to start building homes again.
Tomorrow data picks up with the weekly Mortgage Bankers Associations Application Index followed by Housing Starts which will give market participants a look into the strength of the housing sector. We also get a reading on inflation with the Producer Price index.
Thursday brings us the weekly jobless claims, leading indicators and Philadelphia Fed Survey. In addition to the data we also get another round of treasury auction terms from the U.S. Department of Treasury. They will announcethe size of next week’s offering of 2 year, 5 year and 7 year notes. The additional supply of debt may push benchmark Treasury yields higher to attract buyers which can cause mortgage rates to rise as well.
Friday we have no economic reports hitting the news wires. For more on the week ahead, check out the MND STORY.
Reports from fellow mortgage professionals indicate lender rate sheets to be unchanged this morning. The par 30 year conventional rate mortgage remains in the 4.875% to 5.125% range for well qualified consumers, a few lenders are still offering 4.75%, but not many. To secure a par interest rate you must have a FICO credit score of 740 or higher, a loan to value at 80% or less and pay all closing costs including an estimated one point loan origination/discount/broker fee. You may elect to pay less in closing costs but you will have to accept a higher interest rate. If you are looking to secure a 15 year term, you should expect a par rate in the 4.25% to 4.50% range with similar fees. Again, these are par mortgage rates, consumers will likely need to pay at least one point to get these rates.
Last week I advised that I am providing lock float guidance on a very short term basis. In the near term, as in this week, I expect to see only marginal mortgage rate improvements, nothing huge. I am thinking that locking before Thursday will likely be the best strategy (lock before the Treasury announces debt supply later this week).
I think I must repeat what I wrote on Friday afternoon:
While I am comfortable with a float recommendation into next week, I must share with you that we are very defensive of these mortgage rate improvements. We don't see gains being a long lasting trend. With that in mind, if you are closing in the next month, you should be looking to lock in soon. If you are a "fence sitter" or have an Interest Only ARM that is about to adjust, you should be considering a refinance before interest rates start rising. I hope its obvious how defensive we are...floating one day at a time.
I am in need of some participation from consumers that read my blog. Starting this year, there is a new good faith estimate that must be used. It is intended to more accurately present the closing costs of a loan to the consumer and prevent added fees once the good faith estimate has been provided.
Among the mortgage professionals I speak with on a daily basis, the new GFE hasn’t been met with much optimism. The consumers I have spoken with have found it to be very confusing. A one page document has now been expanded to three pages in an attempt to make it easier to understand. If you are a consumer that has received the new GFE from your mortgage professional, please provide us your feedback. Do you find it to be easier to understand? What do you like or dislike about it?
It may be easier to short sale your home if you have a Fannie Mae loan. Call me for more information.
RISMEDIA, January 11, 2010—In an effort to expedite REO sales, Fannie Mae has adopted a new policy. As part of this policy, Fannie Mae may accept offers to purchase homes it has repossessed without notifying loan servicers, and loan servicers may be required to reimburse Fannie Mae for a loss if it turns out the original mortgage on the home did not meet its eligibility or underwriting requirements..
Previously, if there was a question over whether a mortgage on a repossessed property met Fannie Mae’s requirements, servicers were given 15 days to turn over loan files for review. Rather than reimburse Fannie Mae for an incurred loss, loan servicers had the opportunity to try and find a better offer for the property or buy it themselves.
The rules have changed, though. In a recent announcement to loan servicers, Fannie Mae said it has implemented a change regarding assurance reviews. When the company is notified that a property has been acquired, it will begin the disposition process by obtaining opinions on the market value of a repossessed home and list it with a real estate broker.
“When Fannie Mae receives an offer to purchase a property that is also subject to an underwriting or servicing review, Fannie Mae may accept the purchase offer without first notifying the servicer, whether or not a final decision has been reached with respect to the review,” Fannie Mae said in its announcement. “If, after completion of the review, Fannie Mae determines that the mortgage loan did not meet its eligibility or underwriting requirements and Fannie Mae has incurred a loss by selling the property, the lender will be required to fully reimburse Fannie Mae for its loss.”
These changes come after recent reports from Fannie Mae showing an increase in the acquisition of foreclosed properties and an escalating rate of seriously delinquent single-family home loans.
According to its most recent quarterly report, Fannie Mae acquired 98,428 homes through foreclosure during the first nine months of last year and sold 89,691 REO properties during the same period. However, at the end of September 2009, Fannie Mae still had 72,275 REO properties on its books, marking a 7% increase year-over-year.
Furthermore, Fannie Mae’s monthly summary for November 2009 showed notable growth in seriously delinquent single-family home loans held or guaranteed by the company. Up from 1.89% in November 2008, loans three or more months behind in payments or in the foreclosure process soared to 4.98% in November 2009.
For more information, visit www.fanniemae.com.
RE/MAX Southern Realty 38 SW Miracle Strip Pkwy Suite 6 Fort Walton Beach, FL 32548Phone: (850) 259-1318 Cell: Fax: E-mail: Jennifer_Dodge@hotmail.com
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