President Barack Obama signed homebuyer tax credit extension!

RISMEDIA, November 9, 2009—President Barack Obama has approved the first-time homebuyer tax credit extension which will extend the tax credit until April 30, 2010.

The extension is part of a $24 billion economic stimulus bill that will extend the $8,000 tax credit for homebuyers who are purchasing their first home from the current November 30 deadline and expands the program to offer a credit of $6,500 to homeowners who have lived in their current home for at least five years and are seeking to relocateRead more: http://rismedia.com/2009-11-08/obama-signs-homebuyer-tax-credit-extension/#ixzz0WUokStTl

Who is Eligible

First-time homebuyers, who are defined as buyers who have not owned a principal residence during the three-year period prior to the purchase, may be eligible for up to an $8,000 tax credit or 10% of the purchase price of the home

Existing homeowners, who have been residing in their principal residence for five consecutive years out of the last eight and are purchasing a home to be their principal residence, will be eligible for up to a $6,500 tax credit.

You must file taxes to be eligible to participate in this program

Income Limits

• Homebuyers who file as single or head-of-household taxpayers can claim the full credit ($8,000 for first-time buyers and $6,500 for repeat buyers) if their modified adjusted gross income (MAGI) is less than $125,000.


• For married couples filing a joint return, the combined income limit is $225,000.


• Single or head-of-household taxpayers who earn between $125,000 and $145,000, and married couples who earn between $225,000 and $245,000 are eligible to receive a partial credit.

Effective Dates

• The eligibility period for the tax credit is for homes purchased (closed) after Nov. 6, 2009, and before May 1, 2010.


• Also, home purchases subject to a binding sales contract (Purchase Agreement) signed by April 30, 2010, will qualify for the tax credit provided closing occurs prior to July 1, 2010.

Types of Homes that Qualify

• All homes with a purchase price of less than $800,000 will qualify This includes new construction or resale single family homes, townhomes, or condominiums.


• The home must be used as the purchaser's principal residence. Note that purchases of vacation homes and rental properties do NOT qualify

Tax Credit is Refundable

• You may take the credit on your 2009 or 2010 tax returns.


• If the amount of income taxes you owe is less than the credit amount you qualify for, the government will send you a check for the difference


• Be sure to check with your tax advisor!!

FAQ's from National Asso of Realtors
http://tinyurl.com/y9492n4

The U.S. House Passes Homebuyer Tax Credit Extension

Yes, they can! Republicans and Democrats can agree on something!

As reported by DSNews http://www.dsnews.com/articles/house-passes-homebuyer-tax-credit-extension-2009-11-05

The U.S. House of Representatives decided Thursday to extend and expand the federal homebuyer tax credit. The legislation passed with a vote of 403 to 12.

It cleared the Senate Wednesday, with unanimous approval. President Obama is expected to pen his name to the bill and make it official.

The $8,000 tax incentive for first-time homebuyers, which had an expiration date of November 30, will be extended through April 30 of next year.

The tax break has been expanded to include a new category of buyers – those who have lived in their current home for at least five years, but want to purchase a new home as their primary residence. The credit amount for these buyers will begin on December 1 and is $6,500.

The April 30 deadline is the date by which buyers must have signed a purchase contract, eliminating the mad frenzy to eek closing out by the sunset date. Another 60-day window beyond the end of April is allowed to complete the closing of the deal.

The U.S. Senate voted Wednesday to extend homebuyer tax credit (98 to 0)

I guess Republicans and Democrats can agree on something....

http://www.dsnews.com/articles/senate-approves-homebuyer-tax-credit-extension-with-unanimous-vote-2009-11-04

The U.S. Senate voted Wednesday to extend and expand the popular first-time homebuyer tax credit. The measure cleared the chamber with a vote of 98 to 0.

It now goes to the House of Representatives for approval. According to a statement from House Majority Leader Steny H. Hoyer (D-Maryland), it will be brought “to the House floor for a vote as early as tomorrow [Thursday].”

The bill is widely expected to pass the House as well, and then needs only President Obama’s signature.
The $8,000 tax break for first-time buyers, which was set to expire at the end of this month, would continue until April 30, by which buyers would have to have signed a contractual purchase agreement, but not closed on the sale. Another 60-day cushion beyond the end of April would be allowed to complete the closing.

The measure removes the first-time-only stipulation, though, opening the benefit up to existing homeowners who’ve lived in their current residence for at least five years but want to relocate to a new primary residence.
The incentive amount for those buyers is $6,500.

The income limits for both first-time buyers and existing homeowners would be $125,000 for individuals and $225,000 for couples – up significantly from the current first-time buyer thresholds of $75,000 per individual and $150,000 per couple.

The tax break would only be offered on homes priced at $800,000 or less, and beneficiaries who sell the home or stop using it as their primary residence within three years would be required to repay the credit.

The housing tax credit expansion was appended to a larger bill that also included an extension of unemployment insurance benefits and provisions that allow companies to apply net operating losses to previous years’ numbers in order to reduce their business tax.

Last night, the US Senate Clears Homebuyer Tax Credit Extension... to Pass This Week

Key points:

First-time buyers tax credit deadline would be extended through April 30th.

A new $6,500 maximum credit for “move-up" homeowners who have lived in their current residence for 5 of the last 8 years.

Enjoy all the details below!

As reported by UPI - 11/3/2009
http://www.upi.com/Real-Estate/2009/11/03/Senate-Clears-Homebuyer-Tax-Credit-Extension-to-Pass-This-Week/3701257254252/

After two weeks of delay, the Senate last night cleared the way to pass a seven month extension and expansion of the tax credit for homebuyers. By an 85 to 2 roll call vote, the Senate voted to cut off debate on a package of measures that includes the homebuyer credit, making it virtually certain that the legislation will reach President Obama for his signature this week.

The homebuyer tax credit, due to expire in 28 days, would be extended through April 30 of next year. First-time buyers who are in process of making a purchased would not need to worry about qualifying for the $8,000 credit if they close after the November 30 deadline.

For the first time, the legislation cleared last night makes move-up buyers as well as first-time buyers would be eligible for a credit. The $8,000 maximum first-timer credit will continue and will now available to couples with income up to $225,000, a nearly $55,000 increase above the level in existing law. A new $6,500 maximum credit would also be available to move-up homeowners who have lived in their current residence for five of the prior eight years.

The tax credit has fired the housing market, driving existing home sales to the highest level in over two years. The National Association Realtors reported sales jumped 9.4 percent to a seasonally adjusted annual rate of 5.57 million units in September and are 9.2 percent higher than the 5.10 million-unit pace in September 2008.

Only two Republicans voted against the credit. One of them, Senator Kit Bond (R-Mo.), said, “We’re kidding ourselves if we think we can prevent more fraud, more taxpayer losses,” “The most effective means of preventing fraud is simply to not extend the credit.”

The legislation included provisions added to address complaints of fraud. The Internal Revenue Service is given greater authority to oversee the process to root out fraud, and provisions are added in response to past abuses of false sales or underage buyers. An investigation by the Treasury Department’s Inspector General for Tax Administration found that more than 580 children, some as young as four years old, had received $627,000 in first-time homebuyer credits. The IRS has identified 167 suspected criminal schemes and opened nearly 107,000 examinations of potential civil violations of the first-time homebuyer tax credit.

A number of economists have voiced concern about the $16.7 billion.cost of the credit and the wisdom of spending up to $400,000 per homebuyer to stimulate real estate sales. The White House has been lukewarm at best. However, it is virtually certain that the President will sign the legislative package, which contains an expansion of unemployment benefits as well as the tax changes.

The legislation cleared last night also contains a provision supported by the National Association of Home Builders. It helps larger companies strapped for cash with net operating losses this year or in 2008.

Ordinarily these companies can carry back these losses for only two years to qualify for a tax refund. The provision would make this process extends the carry-back to five years for either 2008 or 2009. The tax break will now apply to losses in either 2008 or 2009, and the income cap will come off.

A similar provision, applying just to 2008, was included in the president’s economic recovery bill last winter but limited to smaller companies to keep down the cost to the Treasury.

Both tax breaks - the homebuyer credit and the change to net operating loss - will be offset by tax changes affecting foreign tax credits, chiefly important to large multinational corporations, according to the Senate Finance Committee.

Congressman Seeks to Raise FHA minimun Down Payments!!

I don't know about your business but in my Mortgage Practice 90+ percent of my clients are utilizing FHA financing. First Time Home Buyers especially, its at 98%. If congress passes this bill it would severely hurt the First Time Home Buyer market!!! See article below:

As reported by DSNews: http://www.dsnews.com/articles/congressman-seeks-to-raise-fha-down-payments-2009-10-02
A bill introduced in the House of Representatives Thursday aims to limit defaults on mortgages backed by the Federal Housing Administration by further tightening standards on borrowers.

The bill, sponsored and introduced by Rep. Scott Garrett (R.-New Jersey), would raise the minimum down payment on FHA loans to 5 percent of the principal, from its current minimum of 3.5 percent. The bill also would restrict borrowers from using FHA loan money to cover their closing costs.
Both moves are intended to stem defaults and foreclosures on FHA-guaranteed loans, which are guaranteed by federal funds if borrowers can’t pay. Since the beginning of the housing crisis, concern has grown among politicians and market analysts about the FHA’s ability to pay out on massive defaults.
That’s because FHA financing has exploded in popularity, especially among less-than-stellar borrowers, as credit markets tightened in the downturn and lenders cracked down on subprime and Alt-A loans. FHA loans accounted for less than 5 percent of all U.S. mortgages at the height of the boom in 2005 and 2006; by this year, more than 20 percent of all new loans were FHA guaranteed, according to FHA figures.
Worries about the guaranteed loans intensified in the past month after federal officials indicated that the FHA’s cash reserves would dip below their legally mandated level of 2 percent of FHA-backed loans. That’s chiefly a result of the accelerated pace of lending, but it also reflects a higher rate of problems with FHA borrowers. The rate of serious delinquencies on government-backed mortgages jumped to 7.5 percent in the second quarter of 2009, a 16 percent rise since the beginning of the year, according to statistics from the Office of the Comptroller of the Currency this week.
The FHA is fast becoming a substitute for “the riskier part of the mortgage market,” Fed Chairman Ben Bernanke told Congress at a hearing on Capitol Hill Thursday. “It’s the only source of mortgages where down payments can be less than basically 20%. And so it is providing mortgage access to a large number of people who could not otherwise buy homes.”
Yet despite FHA’s historical role as a safety valve for new buyers and credit rebuilders, Congress has recently wondered whether FHA’s easy lending is too risky, and whether it could end up costing taxpayers more in the long run. Last year, lawmakers approved a hike in the down-payment requirement to 3.5 percent from 3 percent, and closed a loophole that let sellers cover a purchaser’s down payment. Studies show that borrowers who put less money down are likelier to default in the life of a mortgage.
Republicans made that point in questioning Bernanke Thursday, but he underscored that a balance ultimately needed to be struck between lending risk and credit availability for deserving but needy borrowers.
“You could make the conditions tougher and tougher,” he said, but “that reduces the risk to the taxpayer, absolutely. And it reduces the number of people who can get mortgages.”
A full report on the FHA’s financial state is expected in the coming weeks. A spokesman for agency responded to the Republicans’ concerns and the new bill in a statement Thursday.
“As FHA is key to the housing recovery, we would urge Congress not to take precipitous action while we are awaiting the full details of the independent actuarial study,” it said.

Fed Report Shows One in Three Mortgage Applications Denied

DSNews.com Reporting...

Nearly a third of all borrowers who applied for a home loan last year – including new homebuyers and existing homeowners looking to refinance – were turned down, according to the Federal Reserve’s recently released annual report on home-lending activity.

The U.S. central bank found that denials were even higher for minorities. The rejection rate for all home loans was about 32 percent last year – about the same as in 2007 – but when looking at just black and Hispanic borrowers, the Fed said the denial rate was more than twice as high as the rate for white borrowers.
The Federal Reserve said the 2008 numbers reflect a turbulent year in the mortgage market following the housing bust, as related losses prompted a pullback by investors and threatened to push many of the nation’s financial institutions into the distressed column.
Overall, reported loan application and origination volumes fell sharply from 2007 to 2008 – down by a third – after already dropping considerably from 2006 to 2007. Mortgage activity in 2008 was half the level reached in 2006, the Fed’s data shows.
As DSNews.com has previously reported, the Federal Housing Administration (FHA) has picked up the slack as private lending has slowed. The Federal Reserve’s report puts the FHA-share of mortgage activity at 21 percent of all loans made in 2008 – up from less than 5 percent as recently as 2006.
The FHA backed more than half of the loans issued to black borrowers in 2008, and 45 percent of those made to Hispanics – a finding that many consumer advocacy and fair lending groups find disconcerting.
The Federal Reserve said in its report that high-priced subprime loans – which reflect mortgages with rates at least 3 percentage points above the rate for prime loans – for the most part, disappeared from the market in 2008. Last year, about 17 percent of blacks and 15 percent of Hispanics received these so-called high-priced mortgages, compared with 7 percent of whites.
According to the Associated Press, the mortgage industry maintains that lenders are not discriminating by race, but are instead making adjustments based on borrowers’ risk profile – such as their credit score and the size of their down payments. The disproportionate numbers may also reflect larger ratios of minority borrowers who took out subprime loans during the housing boom and found themselves unable to refinance when property values crashed.
“You still have a certain degree of risk-based pricing in the market,” Jay Brinkmann, chief economist for the Mortgage Bankers Association, told the AP.
The Fed also reported that mortgages termed “piggyback,” in which borrowers use a second lien in place of a downpayment, have essentially died out. Only 98,000 of such loans were made last year, down from 1.3 million in 2006

Why Rural housing???? 100% Financing baby!!!

1. 100% financing of the sales price!!!!
2. Actually, if the house appraises for more you can use the appraised value as the base loan!!! Yes, that is correct!!! That means we can roll some closing costs into the loan!
3. If repairs are needed this loan can roll the repairs into the loan!!!!

Does your listing qualify for Rural Housing? Is your client looking in Rural Housing areas? You would be surprised at what's classified as Rural.

Use this property eligibility link to see:http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

There are many other restrictions on this Rural Housing program please give me a call to explore the possibilities, 804-615-7773, kjacocks@union-mtg.com

Mortgage Disclosure Improvement Act - (HERA)

Here they go again.. our government try to "help".

Here are more regulations from the government!!! As you know, I’m committed to keeping my business partners informed about changes occurring within the mortgage industry.

The Housing and Economic Recovery Act of 2008 (HERA) was developed to protect the mortgage consumer when purchasing a home. The Act contains provisions that revise the Truth in Lending Act under rules known as the Mortgage Disclosure Improvement Act (MDIA). These rules apply to all loan applications received on or after July 30, 2009. (Yes there are 31 days in July but we are talking about the government.)

This applies to primary and second homes only!

Initial Truth in Lending (TIL) Disclosure
The initial TIL disclosure has been amended to require specific language to notify the consumer that they are not required to complete the loan agreement merely because they have received the disclosure or signed a loan application.

Waiting Periods - changed and defined
For all timing requirements set forth below, “business days” are Monday through Saturday and exclude all legal federal holidays (Bank Holidays).

The revised rules implement waiting periods for the collection of fees and loan closings:

• Creditors, mortgage brokers and any other person are prohibited from imposing any fee, other than a reasonable credit report fee, until the consumer has received my bank’s initial disclosures.
• The loan cannot close (document signing) until 7 business days after the initial TIL disclosure has been mailed.
• The loan cannot close until 3 business days after a re-disclosure TIL is received (if applicable).
• If the disclosures are delivered via regular mail, the disclosures are considered received by the borrower three 3 business days after they are mailed. If e-mailed, FedEx, etc. the regular mail time frame disclosures apply!
  

Annual Percentage Rate Changes (APR) If the APR increased or decrease by more than 0.125% from the previously disclosed APR, a re-disclosure TIL must be provided to the consumer. The loan cannot close (document signing) until 3 business days after the re-disclosure TIL is received by the borrower.

Okay, what do we do? It’s simple – we can no longer do extremely quick loan closings. (Thanks to Government Regulations -HERA) This means (you) must write contracts with longer closing dates and Mortgage Professionals must write tight loan applications and GFE’s. A longer Purchase and Sale contract means 35-40 day closings.

We will need a pre-HUD from your Closing Attorney or Settlement Company soon as possible, that’s accurate!! If they add junk fees (electronic download fee, cover letter fee, etc.), or higher Attorney Fees, that can push the APR over the top and we will have to delay closing.

Talk to your lender to discuss the file to see what hurdles he/she envisions, and worse case scenario, you close an extra 10 days late. However, it is important that your lender writes an air tight loan application and accurate GFE to avoid the re-disclosure delay of 3 days (or more) due to a .125% increase in APR.

On a personal note… I reviewed my last 18 loans and only one would have had to be re-disclosed under the new law. :)

I am happy to answer any questions you may have regarding these new guidelines. So please, do not hesitate to call me directly at 804-615-7773 - Kyle