Mortgage Interest Deduction Limits Not Included in Proposed Budget

Mortgage Interest Deduction Limits Not Included in Proposed Budget

The proposal in the Administration's FY 2010 budget to limit itemized deductions, including the mortgage interest deduction, for upper income taxpayers has found no champions in either the House or the Senate. The House and Senate Budget Committees have met to formulate a Budget Resolution to provide a guide for revenues and spending. NAR had been concerned that the Budget Resolution might include references to the Administration's proposal to use a portion of the mortgage interest deduction as a means of setting aside funds to "pay for" revisions to the health insurance and health care systems. In the end, neither the House nor the Senate included any reference to the proposal. The proposed Budget Resolutions did direct the tax-writing committees to set aside reserves for funding health care reform, but left the challenge of identifying the payment mechanism to the tax writers.

Visit www.realtor.org/2009housingtaxcredit

Existing-Home sales up in Feb. 09

Sales of existing homes rose 5.1 percent from January to February, to a seasonally adjusted annual rate of 4.72 million units, the National Association of Realtors reported today.

Distressed sales accounted for 40 to 45 percent of transactions, and total housing inventory grew 5.2 percent, to 3.8 million existing homes for sale.

At the current pace of sales, that's a 9.7-month supply of homes, unchanged from January but down from the record of 11.2 months seen in July. A six-month supply of housing is generally seen as a healthy balance between supply and demand.

The national median existing-home price for all housing types was $165,400 in February, down 15.5 percent from a year ago. The median home price was pushed down by sales of distressed homes, which are selling for 20 percent less than normal market price, said NAR Chief Economist Lawrence Yun.

The median condominium price was down 18.2 percent from a year ago, to $172,200, and sales of existing condos and co-ops were up 11.4 percent from January, to a seasonally adjusted rate of 490,000 units. Looking back a year, condo sales were down 13.1 percent.

The median existing single-family home price was down 15 percent from a year ago, to $164,600, and sales rose 4.4 percent from January to a seasonally adjusted annual rate of 4.23 million units. That's 3.6 percent below the pace of sales a year ago.

Regionally, California saw a strong gain in sales, with the median listing price on the rise for the first time in three years.

Existing-home sales in the West increased 2.6 percent from January to February, to an annual rate of 1.2 million, but were down 30.4 percent increase from a year ago. The West has also seen the greatest year-over-year price declines, with median price falling 30.3 percent from a year ago, to $204,600.

In the Northeast, sales were up 15.6 percent from January to an annual pace of 740,000, but are down 14.9 percent from a year ago. The median price in the Northeast was $251,200, down 4.8 percent from a year ago.

Existing-home sales in the Midwest increased 1 percent from January to an annual pace of 1.04 million, down 14 percent from a year ago. The median price in the Midwest was $131,000, down 7.8 percent from a year ago.

In the South, existing-home sales rose 6.1 percent from January to an annual pace of 1.74 million, but were down 11.2 percent from a year ago. The median price in the South was $146,700, down 10 percent from a year ago.

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FHA Mortgage Limits Website

FHA Mortgage Limits Website
If you’re a mortgage lender or REALTOR, homebuyer or homeowner in one of the Northwest’s high-cost housing markets, the recently-enacted stimulus package has something very important to you – higher FHA mortgage insurance limits. The higher limits give homebuyers a larger inventory of homes from which to choose and give more homeowners in a volatile market the chance to refinance into, says HUD Secretary Donovan, FHA’s “safe, affordable mortgage products.” This website page allows you to look up the FHA mortgage limits for your area or several areas, and then list them by state, county, or Metropolitan Statistical Area.

Homebuyer Credit Revised Form 5405

Homebuyer Credit Revised Form 5405
Following enactment of the American Recovery & Reinvestment Act, the Internal Revenue Service already has posted – at www.irs.gov - a revised Form 5405, First-Time Homebuyer Credit to incorporate Act’s provisions permitting qualifying taxpayers who buy a home this year before December 1 can claim up to $8,000, or $4,000 for married individuals filing separately, on either their 2008 or 2009 tax returns.

Commerce: New-home Sales See Rise in February

Commerce: New-home Sales See Rise in February

The U.S. Commerce Department reported that new-home sales rose 4.7 percent in February to a seasonally adjusted annual rate of 337,000, up from a revised January figure of 322,000.

The January rate was the worst since records were first kept in 1963, and yesterday’s report was actually better than most economists feared it would be

The report is "another faint but nonetheless encouraging sign that the economic slide may be moderating," wrote David Resler, chief U.S. economist at Nomura Securities.

At the current sales pace, the government estimated that it would take a year to exhaust the inventory of new homes on the market.

Source: The Associated Press, Alan Zibel (03/25/2009)

Home Prices Edged up in January

Home Prices Edged up in January
Home prices rose 1.7 percent in January, up for the first time in 10 months, according to the Federal Housing Finance Agency, which only reports prices for conforming properties with mortgages backed by Fannie Mae and Freddie Mac.

Many analysts were skeptical about the results because the report excludes expensive homes with subprime loans and jumbo mortgages.

The government did note that sales numbers in January were low and that could skew the results.

Meanwhile, the Commerce Department is expected to report today that new home sales fell in February to a seasonally adjusted annual rate of 300,000 units from 309,000 units in January. This is the lowest level since 1963.

Source: The Wall Street Journal, Kelly Evans and the Associated Press (03/25/2009)

'Psychological' Blueprint Helps House Hunters

This is a great piece that I wanted to share with you. I think we in SF got so wrapped up with Feng Shui, that we forgot to pay attention to the Psychological aspects of relating to a 'home'. ~ Suzanne

Environmental psychologist Toby Israel, author of a new book, Some Place Like Home: Using Design Psychology to Create Ideal Place, says people’s childhood homes have a profound effect on what kinds of homes they like best.

Before anyone buys, builds, rents or remodels, Israel believes they should consider what kinds of living spaces satisfy them, she says.

One exercise she recommends for anyone searching for a home is to draw a timeline of all the places they've lived for six months or more and circle those that they liked the best, then describe why. She calls the result a "design psychology blueprint" that can help a real estate professional identify what a client really wants.

Source: Star-Tribune, Jim Buchta (03/14/2009)

Read More

• How Design Psychology Can Help You Lure Buyers
• Color Psychology: Choosing the Perfect Shade

U.S. Expands Plan to Buy Banks Troubled Assets

The White House unveiled the details of a plan to buy up to $2 trillion in bad home loans and mortgage-backed securities from banks.

The U.S. government will match investments made by private investors and offer affordable, taxpayer-supported financing to encourage purchases of the troubled mortgage assets.

The Obama administration also plans to create public-private investment funds to buy mortgage-backed securities as well as expand the Term Asset-Backed Securities Loan Facility to include financing for purchases of existing distressed MBS, including those backed by commercial property loans.

Source: New York Times, Edmund, Andrews (03/24/09)

Major Banks Re-Enter Jumbo Arena -Great News for San Francisco!

Major Banks Re-Enter Jumbo Arena
Bank of America is among the major banks rolling out jumbo mortgage programs and holding the loans in their own portfolios.

It will offer loans from $730,000 to $1.5 million with 30-year fixed rates under 6 percent; but borrowers must make a 20-percent down payment, have good credit, provide proof of income, and hold six months' of principal, interest, property tax, and insurance payments in reserve.

Other banks offering jumbo loans include ING Group's ING Direct unit and Luxury Loans of San Diego.

Source: Chicago Daily Herald, Ken Harney (03/20/09)

Small Scale Investing Challenge

Investor Report: Small Scale Investing Challenge
by Kenneth R. Harney

Small-scale investors who own condo units are facing tougher financing challenges as the biggest players in the market are imposing new restrictions -- worse, it seems, every month.

Fannie Mae and private mortgage insurers don't say it this way officially, but their actions make it clear: They don't want to finance condos in large numbers any more, and they are making it increasingly difficult for developers, unit owners and potential investors.

That wouldn't be a big a deal if Fannie were not the number one traditional source of financing for condominium units. Freddie Mac, its smaller rival, has been far less active as a buyer or guarantor of condo loans.

Fannie's latest moves, which took effect March first, ban mortgages in new condo developments where fewer than 70 percent of the units have been pre-sold. The previous cutoff point was 51 percent.

Also Fannie no longer will finance units in projects where more than 15 percent of unit owners are behind on their payment of condo dues, or where more than 10 percent of the units are owned by a single investor, individual or company.

On top of that, Fannie now declines to finance units in buildings where more than 49 percent of all units are owned by investors. Forget most resort area rental condos. Forget condo hotels.

Private mortgage insurers have joined the condo-avoidance bandwagon by either refusing to insure low-downpayment loans in any of dozens of local markets deemed to be "declining," or by charging exorbitant premiums on units in healthier markets.

Even Freddie Mac may soon be following Fannie in restricting condos sharply. It recently raised the minimum downpayment on condo unit loans to 25 percent, and added a three quarter point penalty on top of its regular fees for condos. Fannie also hits all condos with a three quarter point add on.

Fannie Mae now reserves the right to REJECT financing on condo units in projects where -- in its sole opinion -- developers or sellers are offering "excessive" come-ons to buyers, either on below-market financing or other subsidies designed to get buyers to sign contracts.

Fannie says such concessions distort the true market values of the condo units in the entire project.

One glimmer of possibly good news here: Fannie Mae says it is willing to review individual loan on a case by case basis in situations where condo projects don't quite make the grade --- for example, there are more investor units in the building than normally permitted, but lenders will need to submit documentation that the overall project is healthy economically and presents minimal risk.

Feds launch 'Home Affordable' site

Borrowers can check eligibility for a loan mod, refi

By Inman News, Friday, March 20, 2009.

A new government Web site includes online tools that can help troubled borrowers determine whether they are eligible to participate in the "Making Home Affordable" loan modification and refinancing program.

The site, MakingHomeAffordable.gov, is intended to help communicate how the program works and who is eligible -- elements "critical to the program's success," Housing Secretary Shaun Donovan said in a press release.

The Making Home Affordable program includes $75 billion in incentives for loan servicers and borrowers intended to help up to 4 million homeowners negotiate loan modifications or short sales with their loan servicers. The refinance component of the program will rely on Fannie Mae and Freddie Mac to refinance up to 5 million loans they already own or guarantee (see story).

Fannie Mae and Freddie Mac have set up Web sites and toll-free hotlines to help borrowers determine whether their existing loan is owned or guaranteed by Fannie or Freddie.

The Fannie Mae form is at www.fanniemae.com/homeaffordable, and the company is accepting calls at (800) 732-6643. Freddie Mac's Web site for troubled borrowers is www.freddiemac.com/avoidforeclosure and calls are accepted at (800) 373-3343.

Borrowers can also apply for help from their mortgage servicer by submitting details about their financial situation using an online application form at HopeNow.com, the Web site operated by an alliance of mortgage servicers and nonprofit counselors, or by calling the HOPE NOW hotline, (888) 995-4673.

Fed Takes Center Stage This Week

The Federal Reserve holds its monthly meeting this week and will make its decision on interest rates Wednesday afternoon.

The Fed has already slashed the key rate to a record low, zero to 0.25 points.

One possibility that might help the economy include a decision by the Fed to buy long-term Treasury notes to further drive down mortgage rates. Another option is to increase the amount of debt issued or guaranteed by Fannie Mae and Freddie Mac. The risk to these action is the likelihood of stimulating the inflation.

During Sunday night’s interview on CBS’ 60 Minutes, Fed Chairman Ben Bernanke was optimistic that the end of the recession is in sight.

"We've seen some progress in the financial markets, absolutely," Bernanke said. "But until we get that stabilized and working normally, we're not going to see recovery.

"But we do have a plan. We're working on it," Bernanke said. "And, I do think that we will get it stabilized, and we'll see the recession coming to an end probably this year."

Source: The Associated Press, Jeannine Avera, Ieva Augustums (03/16/2009)

Obama- Loan Modification Plan

Is My Loan Eligible for Modification Under the Obama Plan?
by Ralph Roberts

The Treasury Department recently released a report, which include eligibility requirements to determine which homeowners qualify for relief under the plan. Following are the eligibility requirements as specified in the guidelines:

• Mortgage must have originated on or before January 1, 2009.
• Home must be an owner-occupied primary residence (verified with tax return, credit report, and other documentation such as a utility bill) – this program is not designed for investor-owned properties.
• Home must be a single family 1-4 unit property (including condominium, cooperative, and manufactured home affixed to a foundation and treated as real property under state law).
• Home may not be vacant or condemned.
• Borrowers in bankruptcy are not automatically excluded from consideration.
• Borrowers in active litigation regarding the mortgage loan can qualify for a modification without waiving their legal rights.
• First lien loans must have an unpaid principal balance (prior to capitalization of arrearages) equal to or less than:

  • 1 Unit: $729,750
  • 2 Units: $934,200
  • 3 Units: $1,129,250
  • 4 Units: $1,403,400

• Foreclosure actions are suspended during the trial period or while borrowers are considered for alternative foreclosure prevention options. If homeowners fail to qualify, foreclosure proceedings may resume.
• No minimum or maximum LTV ratio for eligibility purposes.
• Loans are eligible for only one loan modification under the program.
• Subordinate liens (such as second mortgages or home equity loans or lines of credit) are not included in the Front-End DTI calculation, but they are included in the Back-End DTI calculation.
• Servicers should follow any existing express contractual restrictions with respect to solicitation of borrowers for modifications.

Applicants will be accepted into the program until December 31, 2012 (the program expiration date), but incentive payments will continue up to five years after the date of entry into the Home Affordable

Modification Program. Monitoring will continue through the life of the program.

Keep in mind that these eligibility requirements are simply government guidelines. Avoid the temptation to qualify or disqualify yourself based solely on what the eligibility requirements indicate. Consult a loan modification specialist who works with lenders on a daily basis to review your situation and determine whether you are likely to qualify. Sometimes the only way to determine whether you qualify is to actually submit your loan modification application.

Survey: AMERICAN DREAM STILL ALIVE!

Survey: American Dream Still Alive
The American dream of homeownership is alive and well with both home owners and potential home owners undeterred by the current housing slowdown.

According to the latest American Dream Survey by Trulia.com, more than 75 percent of Americans surveyed consider owning a home a key part of achieving their personal American Dream.

Creating more jobs and increasing job security is the most important thing President Barack Obama can do to stabilize the housing market, says 53 percent of those surveyed.

Other notable findings:

• 7 percent believe it is important for Obama to keep interest rates low.
• 5 percent think it is important to offer other economic incentives to homeownership.
• 21 percent say it is wise to reduce foreclosures.
• 6 percent believe that there is nothing Obama can do to stabilize the housing market.

Overall, 29 percent of those surveyed believe the housing market will improve in the next year. Of the Republicans surveyed, only 10 percent see improvement in the next year, while 47 percent of Democrats believe in that timetable.

Harris Interactive surveyed more than 1,400 home owners and about 600 renters for the survey.

Source: Trulia.com (03/05/2009)

SF Condo Website

Being in the SF condo market, I am always looking for ways to keep my clients updated with what is happening. This webiste is a great tool. Check it out! Let me know what you think.

http://www.newcondosonline.com/california-condos/san-francisco-new-condos/