Market News in Real Estate
March 4, 2010
The Los Angeles Times Reports
Shopping for a loan? A good faith estimate will protect you.
Beginning Jan. 1, the Dept. of Housing and Urban Development (HUD) required lenders to issue Good Faith Estimates to protect consumers applying for mortgage loans. Some loan officers, however, sidestep the new requirement by giving their initial quotes on informal worksheets that carry no federal consumer protections. It is important that consumers understand the differences between the federally mandated good faith estimate form and a lender’s informal worksheet.
Keep this in mind. . .
- Last month, HUD told lenders and loan officers that under no circumstances can worksheet quotes be issued to a mortgage applicant in lieu of a good-faith-estimate form.Under the new law, once a mortgage applicant supplies the essential application information, including Social Security number, property address, and estimated value, among other data, lenders must issue a binding-cost good-faith estimate. Once this information is provided, lenders are required to issue the good faith estimate within three days of the application.
- Under the new law, once a mortgage applicant supplies the essential application information, including Social Security number, property address, and estimated value, among other data, lenders must issue a binding-cost good-faith estimate. Once this information is provided, lenders are required to issue the good faith estimate within three days of the application.
- Loan officers cannot refuse to provide a good faith estimate to an applicant who requests one, nor can they tell applicants that they must commit to moving forward with their mortgage company to obtain a mortgage prior to receiving a good faith estimate.
- Once an applicant has received a good faith estimate, they can take the form with them to comparison shop. The new form includes itemized boxes allowing mortgage applicants to compare quotes from up to four lenders, such as interest rates, loan fees, prepayment penalties, and total settlement expenses.
- The good faith estimate also ties upfront estimates to later charges at closing, and encourages borrowers to check line by line for any discrepancies. The form explains which fees come with zero tolerance for changes between upfront estimates and closing—generally the lender’s own fees and local transfer taxes—and which fees allow a 10 percent fluctuation for changes higher than the estimate, such as certain title and closing-related services.
- Some worksheets resemble good-faith estimates, but have titles such as “estimated settlement costs” at the top of the page. Others indicate on the bottom of the form that the worksheet is not a good faith estimate, so consumers should carefully review documents before making any decisions.
To read the full story, please click here
The Mercury News Reports
Refi program for underwater homeowners gets another year.
The government is giving homeowners another year to refinance their loans under a little-used program designed to help borrowers whose homes have plummeted in value.
To read the full story, please click here
Bloomberg News Reports
Home prices decline 1.2 percent, smallest drop in two years.
U.S. home prices fell 1.2 percent in the fourth quarter from a year earlier, the smallest loss in two years, as a federal tax credit for home buyers boosted demand.
To read the full story, please click here
The Wall Street Journal Reports
Bid to curb mortgage tax break falters.
The latest effort to scale back some tax deductions on mortgage interest, one of the nation’s most-enduring tax breaks, is finding little support in Congress.
To read the full story, please click here
The Los Angeles Times Reports
Many borrowers in default stay put as lenders delay evictions.
Despite being months behind, many strapped residents are hanging on to their homes, essentially living rent-free. Pressure on banks to modify loans and a glut of inventory are driving the trend.
To read the full story, please click here
The New York Times Reports
Another foreclosure alternative.
Homeowners on the verge of foreclosure will often seek a short sale as a graceful exit from an otherwise calamitous financial situation. Their homes are sold for less than the mortgage amount, and the remaining loan balance is usually forgiven by the lender.
To read the full story, please click here
The Washington Post Reports
Consumer optimism seen with January rise in spending.
Perhaps the lessons of the Great Recession are not so deep-seated after all. Consumers spent more and saved less in January, according to government data released Monday, a sign that Americans feel increasingly secure about their financial situation, economists said.
To read the full story, please click here
The Wall Street Journal Reports
Freddie Mac abandons ship on interest-only loans.
Freddie Mac said on Friday that it would stop buying and securitizing interest-only loans in September because those mortgages have performed so poorly.
To read the full story, please click here
The Mercury News Reports
Increasing numbers of Californians are suing lenders to avoid foreclosure.
In the last five years, the number of foreclosure lawsuits filed in federal courts in California has ballooned—like an exploding adjustable-rate mortgage—from only 29 statewide in 2005 to nearly 1,400 last year.
To read the full story, please click here
What you should know about the market. . .
- When house hunting, first-time buyers are advised to create long-term budgets to help estimate costs of homeownership. Items such as taxes, insurance, utilities, closing costs, appraisal fees, escrow fees, homeowner’s insurance fees, and moving costs should be included in the budget.
- A common mistake many home buyers make is being too close-minded while searching for a home. To avoid this, home buyers should sit down with their REALTOR® and create a needs/wants list. Thelist should include items that are must-haves or deal-breakers, as well as those that are not necessary, but would be nice to have in the home.
If you enjoyed this post, make sure you subscribe to my RSS feed!
Home Prices May Be Flat for Years
March 4, 2010
Housing prices are unlikely to fall much farther, but they aren’t going to rise either - at least for several years - predict analysts for Barclays Capital in its Residential Credit Strategy report.
Barclays blames government programs that have slowed foreclosures. “The overhang of distressed inventory is a huge negative technical. It suggests that any price rise will probably be met by increased distressed sales,” the report says.
The report also concludes that home prices are cheaper than rents and incomes suggest they should be, “but not extremely so.”
Source: Property Wire (03/03/2010)
If you enjoyed this post, make sure you subscribe to my RSS feed!
Market News in Real Estate
March 3, 2010
The Los Angeles Times
IRS issues new guidelines on obtaining home buyer tax credits
The Internal Revenue Service (IRS) recently issued new guidelines and clarified documentation that taxpayers must submit to successfully obtain the federal tax credit for home buyers.
Keep this in mind:
- The federal tax credit for home buyers was extended and expanded late last year. Qualified first-time buyers may be eligible to receive a tax credit of up to $8,000 on homes purchased before April 30, 2010. Repeat buyers may be eligible for a tax credit of up to $6,500. Visit http://www.irs.gov/newsroom/article/0,,id=187935,00.html for more information about the federal tax credit for home buyers, including eligibility requirements.
- To receive the tax credit, home buyers must comply with the IRS’s documentation requirements, including a fully executed IRS Form 5405. On the form, which is available on the IRS’s Web site, taxpayers provide information supporting their claim of eligibility, such as income and home purchase date.
- The IRS also requires home buyers to submit a copy of the closing or settlement statement that proves the transaction took place. The IRS previously said that the statement should show “all parties’ names and signatures, property address, sales price, and date of purchase.” However, since closing or settlement statements vary by state, and in some cases the form does not include both the seller’s and buyer’s signatures, the IRS has revised this requirement. As long as the closing or settlement statement conforms to prevailing local practices, the IRS will accept it.
- One stipulation for repeat buyers is they must provide documentation they lived in their former property for a consecutive five years out of the previous eight years. Accepted documentation may include property tax records, hazard insurance records, or copies of annual mortgage interest statements filed with their federal taxes.
To read the full story, please click here
CNN Money
Housing help for unemployed, underwater borrowers
Under pressure to do more for troubled homeowners, President Obama is expected to announce a $1.5 billion program to help borrowers in five states hit hardest by the housing crisis.
To read the full story, please click here
The Los Angeles Times
High-end home sellers lower their sights
The housing slump is finally bringing down prices in the luxury property market.
To read the full story, please click here
The San Francisco Chronicle
More using program to prevent foreclosure
The number of mortgages with permanently lowered monthly payments under the Obama administration’s foreclosure prevention program increased dramatically in January.
To read the full story, please click here
Bloomberg News
High-scoring borrowers pay cards ahead of mortgages
Consumers with high credit scores are more likely to default on mortgages than credit-card loans, said FICO, maker of the scoring formula most widely used by U.S. lenders.
To read the full story, please click here
The Los Angeles Times
Jumbo mortgage market is beginning to thaw
The mortgage meltdown sent interest rates soaring and availability shrinking, but rates are declining and lenders are more wiling to make loans that top the limits for Freddie Mac, Fannie Mae, and the FHA.
To read the full story, please click here
The Sacramento Bee
Struggling homeowners warned against phony foreclosure ‘audits’
State officials warned struggling homeowners Monday about a new variation on loan-modification scams: “forensic loan audits.”
To read the full story, please click here
What you should know about the market. . .
- When beginning the house hunt, some buyers go in blindly, not knowing how much house they can afford. Without this knowledge, buyers may find themselves viewing houses that aren’t within their budget. To prevent buyers from spending time viewing homes they may not be able to afford, real estate experts advise home buyers get pre-approved by lenders before house hunting. By providing copies of a recent credit report, W-2s, pay stubs, and bank and brokerage statements to a lender, buyers will have a better idea of the price range they can afford.
- Many financial and real estate advisors also recommend home buyers create long-term budgets to help create guidelines for affordable mortgage payments and long-term homeownership costs. Most experts advise clients to devote no more than 30 percent of their monthly household income toward housing costs, which should include mortgage principal, interest, taxes, and insurance. There are numerous worksheets available online to help consumers calculate how their income, debts, and expenses may affect the amount they can afford each month for the next 15 to 30 years.
If you enjoyed this post, make sure you subscribe to my RSS feed!
New Rules for FHA Borrowers
February 1, 2010
The Federal Housing Administration (FHA) recently outlined future changes to the FHA home loan program. The changes first were proposed last month by Secretary of Housing and Urban Development (HUD) Shaun Donovan.
Rising defaults on FHA loans have led to the FHA’s cash reserves falling below federally mandated levels. FHA officials hope that policy changes will ensure borrowers have a stronger equity position and are less likely to default.
Policy changes include:
- Raising the up-front mortgage insurance premium: The premium will rise to 2.25 percent from its current 1.75 percent. HUD is expected to release a Mortgagee Letter on Jan. 21 making the premium increase effective in the spring.
- Raising the minimum credit score requirements: New borrowers will be required to have a minimum FICO score of 580 to qualify for the FHA?s 3.5 percent down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10 percent. FHA expects this to take effect in early summer after it goes through the normal regulatory process.
- Reduce allowable seller concessions: The agency is lowering the maximum permissible level to 3 percent from its current 6 percent limit. FHA expects this to take effect in early summer after it goes through the normal regulatory process.
For more information to read these possible changes, click here
If you enjoyed this post, make sure you subscribe to my RSS feed!
Now is a Great Time to Buy
January 27, 2010
Those Who Wait Will Pay Thousands More This Spring…
Waiting a few extra days or weeks to purchase a home this spring could cost buyers thousands of extra dollars as the office of Housing and Urban Development (HUD) implements several changes for loans guaranteed by the Federal Housing Authority (FHA).
Coming just weeks before the April 30 deadline for the Home Buyer Tax Credit and just days after the March 31 expiration of the Federal Reserve Board’s mortgage backed securities purchase program (which has kept home loan rates artificially low for over a year), these FHA changes make it even more important to act now to save big.
Here are a few reasons why:
On April 5th, the cost of required up-front mortgage insurance for loans guaranteed by the FHA will increase from 1.75% to 2.25%. For a borrower purchasing a $200,000 home with a $7,000 down payment, the up-front mortgage insurance will increase by $965. Up-front mortgage insurance is typically financed in the final loan amount so the impact to a monthly payment will be minimal but overall, the increase is still borne by the borrower both upfront and monthly.
Later this spring, the amount of money that a seller can return to the buyer from their sale proceeds will be reduced from 6% to 3%. The reduction in these “seller concessions” can increase the amount of cash a buyer will be required to pay at closing by $6,000 for a home purchase of $200,000.
To discuss your financing options further, please contact Brad Wiese at Comstock Mortgage at 916.977.1248.
If you enjoyed this post, make sure you subscribe to my RSS feed!
