Senate Defeats Mortgage Cramdown Bill

The proposed law allowing bankruptcy judges to modify mortgages, known as the cramdown bill, was voted down Thursday by the U.S. Senate.

The financial industry opposed the bill, arguing that the change would drive up interest rates and make the market less stable. Some senators also were concerned that their constituents who pay their bills on time would resent this measure.

Minority Leader Mitch McConnell, who led the opposition, says the vote “ensures that homeowners who pay their bills and follow the rules won’t see an interest-rate hike at the whim of a bankruptcy judge.”

The reform was a key part of President Obama’s foreclosure prevention plan, leaving some to question ultimate likelihood of its success.

“It won’t render the loan modification program useless, but it removed an important ingredient that would have helped realign everybody’s interests,” says Barry Zigas, director of housing policy for the Consumer Federation of America.

Source: CNNMoney.com, Tami Lubby (04/30/2009)

Tags: cramdown bill, Finances, home financing, mortgage modifications, mortgages

Answers About The $8,000 First-Time Home Buyer Tax Credit

Q: Who is eligible to use the tax credit?

A: The $8,000 tax credit is available for first-time home buyers only. The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. All U.S. citizens who file taxes are eligible to participate in the program.

Q: Are there any payback provisions?

A: The tax credit is a true credit. It does not have to be repaid. The only repayment requirement is if the home owner sold the home within three years after the purchase.

Q: Are there income limits to qualify for the credit?

A: Home buyers who file as single or head-of-household taxpayers can claim the full $8,000 credit if their modified adjusted gross income (MAGI) is less than $75,000. For married couples filing a joint return, the income limit doubles to $150,000.

Single or head-of-household taxpayers who earn between $75,000 and $95,000 are eligible to receive a partial first-time home buyer tax credit. Married couples who earn between $150,000 and $170,000 are eligible to receive a partial first-time home buyer tax credit.

The credit is not available for single taxpayers whose MAGI is greater than $95,000 and married couples with a MAGI that exceeds $170,000.

Q: What are the effective dates for the tax credit?

A: First-time home buyers would receive an $8,000 tax credit for the purchase of any home on or after January 1, 2009 and before December 1, 2009. To qualify, you must actually close on the sale of the home during this period.

Q: Is the tax credit refundable?

A: Yes. A refundable credit means that if you pay less than $8,000 in federal income taxes, then the government will write you a check for the difference. For example, if you owe $5,000 in federal income taxes, you would pay nothing to the IRS and receive a $3,000 payment from the government.

If you are due to receive a $1,000 tax refund from the government, your refund would grow to $9,000 ($1,000 plus $8,000 from the home buyer tax credit).

Q: What years can buyers apply the tax credit to their tax returns?

A: Buyers can take the tax credit on their 2008 or 2009 income tax return.

Q: What types of homes qualify for the tax credit?

A: All homes, whether single-family, townhomes or condominium apartments will qualify, provided that the home will be used as a principal residence and the buyer has not owned a principal residence in the prior three years. This also includes newly-constructed homes.

Q: Where can I find more details on the tax credit?

A: NAHB has a consumer Web site that provides comprehensive information on the tax credit. The Web site is www.federalhousingtaxcredit.com

If you have any other questions or need further details, call us at either 609-417-1084 or 609-417-1086.

Linda & Terry Iwaniw
ReSales & Investment Realty, LLC
856-795-3111 x263
http://www.snewjerseyhomes.com
info@i-teamhomes.com

Tags: Buyer Information, Finances, first time home buyers, home buying, tax credit

They’re called USDA Rural Development 502 Loans

There is another news announcement that “Buyers Being Lured to 100% Loan Program” that was in the recent issues of The Wall Street Journal. The article states that more buyers in search of home loans are turning to an obscure program operated by the United States Department of Agriculture.

Well, we wrote about this program a few months back. The blog entry detailed this little know mortgage loan program.   The program allows no-money-down purchases. For those that qualify, a borrower can seek up to 102 percent, including a mortgage insurance policy.  To quality, buyers can’t have income that exceeds 115 percent of the median county income. Additionally, the loans are restricted to low-density areas (usually towns of no more than 25,000 residents). The loans are made by private lenders, which are then insured by the government.

For more information, contact your personal mortgage representative.  Or, if you don’t have one, we can highly recommend a few that we have done business with and have been completely satisfied with their service, as have our clients.  Just contact us by calling 609-417-1084. 

Find your next home at our new and updated web site.

Tags: buyers, Finances, financial, loans, mortgage loans, mortgages, no downpayment, no money down

First-Time Buyer Tax Credit

The $7,500 home ownership tax credit that the federal government created earlier this year as part of the Housing and Economic Recovery Act (H.R. 3221) is another tool at your disposal to encourage potential buyers to jump off the fence and get into the real estate market.

When you combine the tax credit with today’s low interest rates, wide selection of for-sale inventory, and affordable home prices, many of the pieces are in place for your customers to buy now. But tax credits can be confusing.

Here are 6 things you should know about the tax credit:

1. Buyers have until July 2009 to make a purchase that qualifies.
   The tax credit was passed in July of this year as part of the Housing and Economic Recovery Act (H.R. 3221). It’s worth up to $7,500 and can be taken in a single tax year. Authorization for the credit ends July 1, 2009, so if you wait to buy in the first half of 2009 you can take the credit on your 2009 tax return. You can take the credit on your 2008 tax return if you bought your house this year after April 9.
2. Buyers don’t really have to be “first-timers.”
   The tax credit is actually available to any individual or household that hasn’t owned a home for at least three years. And the NATIONAL ASSOCIATION OF REALTORS® has asked Congress to expand the credit to all buyers, not just those who haven’t owned a primary residence in recent years.
3. Even if buyers exceed the income limit, they can benefit from the credit.
   The actual credit amount is set as a percentage of the home purchase amount. That percentage amount is 10 percent, so your customers can get 10 percent of the home price credited against their tax liability, up to a maximum $7,500. Sounds like a great deal. But what if you make more money than the income limit of $75,000 for individuals and $150,000 for households? Good news: Individuals whose income exceeds the $75,000 limit but don’t make more than $95,000 can still take the credit but on a reduced basis. The same thing applies to households earning up to $170,000. By the way, any house is eligible as long as it’s a primary residence and is in the United States.
4. Think of it as an interest-free loan.
   The federal government requires the tax credit to be paid back in small, 6.67-percent increments over 15 years, although repayment will be no more than $500 yearly and payments will not start until 2011. For that reason, some analysts have likened the credit to a 15-year, interest-free loan to help make home buying affordable. NAR is pushing congress to remove the repayment provision, making this tax credit a true tax credit rather than an interest-free loan.
5. You don’t have to be authorized before making a home purchase.
   There is no pre-purchase authorization, application, or other approval process. Eligible buyers simply have to claim the credit on their IRS Form 1040 tax return and/or any form that the IRS might devise.
6. New-home construction qualifies.
   For a home that a buyer constructs, the purchase date is the first date the buyer occupies the home. However, any home that is not a primary residence, such as a vacation home or income property, does not qualify.

NAR Asking Congress to Expand Credit

As mentioned above, NAR has asked Congress to do away with the repayment provision of the first-time buyer tax credit and expand the credit to all home buyers, not just first-timers. The proposals were part of a four-point housing stimulus plan the association submitted in mid-October.

“Housing has always lifted the economy out of downturns, and it is imperative to get the housing market moving forward as quickly as possible,” said NAR President Richard F. Gaylord. “It is vital to the economy that Congress take specific actions to boost the confidence of potential homebuyers in the housing market and make it easier for qualified buyers to get safe and affordable mortgage loans.

Tags: buyers, Finances, first time buyers, first time home buyers, homes sales, tax credit

Hope for Homeowners Will Help Many Families, Say Realtors®

For Immediate Release:

WASHINGTON, October 01, 2008

The following is a statement by National Association of Realtors® President Richard F. Gaylord:

“The National Association of Realtors®, on behalf of its 1.2 million members, commends U.S. Department of Housing and Urban Development Secretary Steve Preston and the entire oversight board for quickly implementing the Hope for Homeowners Program. This program will permit families to refinance into safer, more affordable mortgages, in many cases helping those families avoid a devastating foreclosure. Hope for Homeowners will significantly contribute to stabilizing local home prices across the country. The program also protects the investment of the government and taxpayers by allowing them to share in the homeowner’s equity and appreciation.

Careful implementation of the program will ensure lender participation while protecting the FHA fund. We appreciate HUD for reaching out to government agencies, lenders, and other interested parties before implementing the program. Realtors® work to build communities, and by participating in this program, we can do our part to help many families to keep their piece of the American dream.”

Tags: Finances, financial, homeowners, HOPE for Homeowners, relief

Even In This Financial Climate: FHA Still Going Strong

Housing and Urban Development Secretary Steve Preston has a message for prospective home buyers -

You may have heard that the credit markets were “frozen,” but FHA has been open for business throughout the credit squeeze, and so are Fannie Mae and Freddie Mac. In fact, FHA’s volume has tripled and the agency is now insuring well over a hundred thousand new loans a month.

In an exclusive one-on-one interview with Realty Times, the country’s top housing official said that FHA, Fannie and Freddie (who have accounted for a combined 90 percent plus share of the whole U.S. mortgage market) have kept liquidity alive for home buyers and have virtually unlimited funds for new mortgages.

The fact of the matter is that there is no credit crisis for home buyers that have at least 3 percent to put down, have documentable employment, and at least a moderately good credit record. Business loans and various other types of credit may have been more difficult to obtain in recent weeks but, according to Preston, thanks to the government’s backing of the three biggest sources of mortgages tthe buyers and refinancers of homes have had no unusual problems.

HUD is playing a key role in the $700 billion financial system bailout plan now getting underway. Steve Preston is one of just five members of the Financial Stability Oversight Board that oversees the entire effort and HUD’s main task in the weeks ahead, he said, will be to either refinance or help work out thousands of delinquent subprime and underwater homes financed by private lenders during the boom years.

HUD’s new “Hope for Homeowners” program, which started October 1, will allow it to cut the principal debt, monthly payments and interest rates of delinquent loans through refinancings into fixed-rate FHA mortgages. During an interview, Steve Preston emphasized the importance of a new, $3.9 billion program that has received virtually no attention in the press. This program could have huge positive impacts on neighborhoods and communities struggling with large numbers of foreclosures.

Congress has authorized HUD to provide funds and other assistance to local governments in order to buy, resell, rent out, or fix up foreclosed houses that are bringing down local property values. Known as the Neighborhood Stabilization program, it offers not only roles for local governments to fight housing blight, but also provides opportunities for alert realty agents, rehab contractors, builders and investors to be involved — profitably — in the turnaround efforts.

If you’re interested, contact your local city or county housing and community development officials for more details. Even though HUD will be providing the funds, your local officials will be calling the shots and making the decisions.

So, with all of this said, why do mortgage rates seem kind of high?

One answer is that in order to fund the rescue and the new government guarantees, the Treasury Department must sell more new Treasury securities in order to raise more money. In order to attract buyers for these securities the Treasury has to offer higher interest rates to sell them.

Now, on top of that, mortgage related bonds always trade at a slightly higher yield due to the prepayment and delinquency risk. And lastly, the cost of financing mortgages has increased for Freddie Mac and Fannie Mae due to the plan for the FDIC to back the newly issued, unsecured debt of some banks. This obviously makes that debt more attractive for investors by having the government guarantee the bank debt and consequently creating more competition for Fannie Mae and Freddie Mac when they sell their own securities. So, in order to compete for those security buyers, these mortgage giants will have to raise their own yields on their securities, and to pay for that they’ll have to charge borrowers higher interest.

The Federal Housing Finance Agency (FHFA) expects to announce 2009 conforming loan limits for Fannie Mae and Freddie Mac by November 7. The limits define the maximum loan size of mortgages that can be purchased by these entities. To determine high-cost area limits under HERA for 2009, FHFA will use median home values estimated by the Federal Housing Administration (FHA) of the Department of Housing and Urban Development (HUD). The FHA median prices will be calculated in the coming weeks by FHA for the purpose of determining its 2009 loan limits.

Watch here for updates to this issue and others pertaining any changes.

Tags: buyers, Finances, financing, home financing, home mortgages, mortgages

Important News: Interest rates slashed to prevent global financial meltdown

The Federal Reserve along with the Bank of Canada, the Bank of England, the European Central Bank, and the Swiss National Bank slashed interest rates Wednesday to prevent the financial crisis from becoming a global economic meltdown.  The Fed reduced its key rate from 2 percent to 1.5 percent. In Europe, the Bank of England cut its rate by half a point to 4.5 percent and the European Central Bank sliced its rate by half a point to 3.75 percent. Treasury Secretary Henry Paulson said Wednesday that global financial markets remain severely strained, underscoring the need for quick action to implement the government’s $700 billion rescue program.  The cut in the Fed interest rate will help borrowers who have adjustable rate loans that are tied to the prime interest rate.  

Tags: Finances, financial markets, interest rates, meltdown, mortgages

A FLEX/FIXED® pricing special for allowable 30-year fixed-rate Government loans!!!

The FLEX/FIXED program is a temporary buy down that provides a qualified borrower with a lower start rate AND the security of a fixed-payment schedule. In the month of October applicants locking into a government loan (FHA or VA) will receive a FREE 1% buy down for the first year of the mortgage. 

For example, if the current rate is 6.25% they would pay based on a 5.25% rate for the first 12 payments.  Someone purchasing a $200,000.00 home, putting 3% down would save $123/month for the first year!! After the first year, the payment would be recalculated and locked at the 6.25%.

If you want to learn more, contact me.

Terry Iwaniw
REALTOR Associate
First Time Home Buyer Specialist
Foreclosure Prevention Consultant
RE/MAX Home Team
609-417-1086
http://www.terryi.com/
http://www.snewjerseyhomes.com/

Tags: buy down, buyers, Finances, financing, mortgage

The I-Team Attempts to Help Families in Pre-Foreclosure Crisis

Laurel Springs, New Jersey – September, 02 2008 – After speaking to numerous homeowners about their real estate experience with the so-called “experts” in short sales and pre-foreclosure home selling situations, Linda and Terry Iwaniw of RE/MAX Home Team have decided to expand their business into the pre-foreclosure market so that more home owners facing foreclosure have an opportunity to prevent their homes from being foreclosed on.

Linda and Terry Iwaniw can sympathize with those homeowners that are facing foreclosure because they have been where these homeowners currently are. Years ago, The Iwaniw’s were facing foreclosure due to a job loss and they seeked the advice of professionals for help. One of those professionals was a real estate agent. Unfortunately for the Iwaniw’s, the real estate agent was not putting their best interests ahead of his. Looking back to that time, the real estate agent that The Iwaniw’s attorney recommended did little more than trot his investor friends and broker friends through their house looking it over before the Sheriff sale to see if the house was worth their bid. In over six months the agent did not bring one legitimate buyer in to look at the house, just investors and other brokers “previewing” the property. He did nothing to help Linda & Terry. Linda and Terry have been very reluctant to service this market because of their own horrendous experience. However, after speaking with many former homeowners who lost their homes because the “experts” dropped the ball, they felt compelled to do what they can do to help others who find themselves in similar circumstances that they themselves experienced.

The fact of the matter is there are no “experts” when it comes to these pre-foreclosure situations unless you have experienced for yourself, first hand. Every circumstance is different; every bank or mortgage company has different requirements. With such a diversity of circumstances and companies it is impossible to be an “expert”. Another fact is most of these “experts” only able to close 1 in 10 short sale properties. That leaves 9 homeowners out in the cold. You can contact them at http://www.i-teamhomes.com/foreclosure.htm or call them directly at either 609-417-1084 (Linda) or 609-417-1086 (Terry).

Linda and Terry Iwaniw are REALTOR Associates with RE/MAX Home Team, and are known as The I-Team. They pride themselves on their focus on customer service and the fact that they treat their customers as real people not just a transaction; and unlike most real estate agents, they don’t treat the pre-foreclosure market as a gimmick to get more leads.  When you hire Linda and Terry you deal with them, directly. They do not pass you to some underling like so many others do. You can reach them at their web site at http://www.i-teamhomes.com/.

Tags: distress, Finances, Foreclosures, home sales, homeowners, mortgages

FHA – Risk Based Interest Rates

Since its inception in 1934, the FHA has been the answer to home ownership for millions of Americans who otherwise would never be able to own a home. The FHA was created as an answer to the Great Depression, where millionsof people lost every cent they owned and most banks went out of business.

The FHA allowed families to purchase homes with very little money and at market interest rates, even if they had a tainted credit history. The FHA was a godsend to what was left of the banking industry in 1934. Since every FHA loan was insured by Up-Front Mortgage Insurance Premiums (UFMIP) and MIP (mortgage insurance premiums) the banks had very little risk. Homeownership was now available to the masses, not just the privileged few. 

In its 74 year history, there have been many changes to the FHA, but the most sweeping change is about to take place in about a year. The FHA has always offered the same interest rate to all its borrowers, regardless of their down payment or credit rating. It did not matter whether you put down 3% or 20%, or your credit scores was 550 or 850, your interest rate was the same. That will not be the case in the very near future.

The FHA is about to implement ‘Risk Based Lending”, just like conventional banks.  Translated this means the lower your downpayment and the lower your credit score, the higher your interest rate.  This would have been implemented on October 1, 2008 but Congress placed a 1-year moratorium on this radical change to allow for the sale of the millions of foreclosed homes clogging up the banks balance sheets.

What does this mean for people who would need to take advantage of the low down payment/lower interest rates now offered by the FHA in order to buy a home? Very simply, if you wait to buy a home until 2009, may very well have to come up with more cash and suffer through higher interest rates and therefore, higher payments. Many people will be forced out of the market altogether, thereby taking homeownership out of the hands of thousands upon thousands of people.

Mr. & Mrs. Charles Humphreys, The First Home Financed
through the FHA

As a professional, my advice to anyone who thinks they will need to finance their home through FHA is to do it as soon as possible.  Once the FHA is allowed to change their guidelines to “Risk Based” financing, people who once relied on old guidelines to qualify for a low, fixed rate mortgage will be out of luck.

Linda Iwaniw
REALTOR Associate First Time Home Buyer Specialist
Fixer Upper Property Specialist
Foreclosure Prevention Consultant
RE/MAX Home Team
609-417-1084
http://www.sjerseyhomes.com/

Tags: fha mortgage, Finances, home mortgages, mortgage qualifications, mortgages