Tag Archives: mortgage

Real Estate

Signs of Life in the Real Estate Market

signsoflife

I keep track of the number of pending real estate sales in Nevada County daily and have noticed a healthy increase in pending sales lately. Although many of the sales are short sales and foreclosures, other properties are moving as well. With real estate market values depressed to its present level, buyers are coming back to the market. This includes first time home buyers and investors sensing a buying opportunity of a life time.

According to Rismeida:

“A run of encouraging economic reports that have recently been released may mean the worst, panic-inducing stage of the economic downturn is over. Emphasis on the word may. “I think there are signs of economic life,” Mark Zandi, chief economist at Moody’s Economy.com in West Chester, PA, said. “The downturn is no longer intensifying, and the clearest evidence of this can be found in the retail sector as retail sales have turned since the beginning of the year,” Zandi said.

New-home sales in February jumped 4.7% to an annual pace of 337,000 from a record low in January. February marked the first increase in sales since the summer, and the report added to a string of “better-than-expected” housing data, according to Wachovia Bank economist Adam G. York.”

I believe foreclosures will continue into the next year, as the Alt-A loans come due for readjustment. Some figures indicate that there may be as much as $600 billion in foreclosures still to come from the Alt-A mortgage loans made in the 2006-2007 years. Alt-A loans were the love child of lending institutions and Wall Street when subprime loans were getting a bad name. The subprime loans were repackaged as Alt-A mortgage, bundled and sold to investors. A majority of these bundled loans are now toxic and due to fail.

Real Estate

Buy a New Home, Get Income Tax Credit From State of California

tax

In order to help the construction industry and sales of newly constructed homes in California, a $10,000 tax credit is now available for reducing California State income tax. The home, either attached or detached, must be a principal residence and have never been occupied. As of March 18, 2009, 1,189 applications have been received. This represents, if all the applications are approved, $11,599,825 in tax credits. There is $100,000,000 available, so if you are going to buy a brand new house that’s never been in lived in, hurry and get your application in. Once the $100,000,000 is claimed, there will be no further tax credits.

Here is part of the text from the Franchise Tax Board:
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“This tax credit is available for qualified buyers  who on or after March 1, 2009, and before March 1, 2010, purchase a qualified principal residence  that has never been occupied. The buyer must reside in the new home for a minimum of two years immediately following the purchase date.

California allocated $100,000,000 for this tax credit. Buyers must apply for credit allocation from us. Applications will be reviewed and credit allocations will be made on a first-come, first-served basis. Once $100,000,000 has been allocated, the tax credit will no longer be available. Please check this page for updates on the allocated and remaining credits available.

California allows qualified new home buyers a total tax credit amount equal to either five percent of the purchase price or $10,000, whichever is less. Taxpayers must apply the total tax credit in equal amounts over three successive taxable years (maximum of $3,333 per year) beginning with the taxable year (2009 or 2010) in which the new home is purchased.

Qualified Principal Residence/New Home:

A qualified principal residence means a single-family residence, whether detached or attached, that has never been occupied and is purchased to be the principal residence of the taxpayer for a minimum of two years and is eligible for the property tax homeowner’s exemption.

Types of residence: Any of the following can qualify if it is your principal residence and is subject to property tax, whether real or personal property: a single family residence, a condominium, a unit in a cooperative project, a houseboat, a manufactured home, or a mobile home.

Owner-built property: A home constructed by an owner -taxpayer is not eligible for the New Home Credit because the home has not been “purchased.”

To apply and for further information go to Franchise Tax Board”

Real Estate

Mortgage Rates Drops to Near-Record Lows

moneyhouse

Mortgage rates are dropping to near record lows – below 5%. This is in the wake of the Federal Reserve’s decision to buy up Treasury bonds and mortgage securities. Lower rates may help spur home sales, but analysts expect much of the action to come from homeowners seeking to refinance.

If you are in the category of refinancing, expect tighter rules and regulations, meaning you have to have a good credit score, equity in your home and there will be tighter debt to income ratio requirements. Keith Gumbinger of HSH Associates, a publisher of mortgage information, said good interest rates were available to all kinds of borrowers in all kinds of credit circumstances when the market was running flat out five years ago. That’s not the case today. “You must be a much better borrower than you had to be before,” he said. “For some borrowers, you might have to get used to hearing ‘no.’”

Be careful when you apply for your refinancing. I have a client who is in the process of refinancing her home. She applied at Countrywide and had me look at what they were going to charge her to refinance. They started out with 2 points or 2 percent of her loan to as part of the cost for refinancing. In addition, they had enough garbage fees that the total refinancing would have cost her $11,000 for a $417,000 loan. I had her shop at two other loan companies, and her costs dropped to about $6,000. Countrywide, when they were made aware of the pricing from the other two mortgage brokers, dropped their cost to refinance to match the other two brokers.

Home buyers and owners who want to refinance should be prepared for a longer process, and for different rates or costs, depending on their credit scores and loan-to-value ratios. Now, there might be three or four different levels for transactions that previously would have been priced equally.

By the way, after April 27, 2009 Countrywide will shed its name that it had since 1969 and will be morph into Bank of America Home Loans. Bank of American acquired Countrywide, once one of the biggest subprime lenders last year. More on Countrywide tomorrow

Real Estate

Cram Down On Your Primary Mortgage

The Federal Government is modifying the bankruptcy code to allow cram downs for primary home mortgages. After meeting with lawmakers, Citigroup has agreed to back legislation that would allow bankruptcy judges to alter the amount due on primary mortgage principals, so called cram-downs. (I guess if we want banks to change we have to cram it down their throats)

Quoting Buiness Week

“As it stands, Durbin’s Bill (SB 61) would essentially give judges the authority to rewrite the terms of a home mortgage — a so-called “cramdown,” something possible already for every other kind of debt, mortgages on vacation homes and any real-estate other than a primary residence. It would also extend Truth in Lending Act protections to bankruptcy court, meaning predatory loans — made in violation of TILA — would be wiped.”

If the bill passes, a home owner who is facing foreclosure would have the option of filing for bankruptcy and have the mortgage reduced to a level where future payments would be manageable. As we said, every other kind of mortgage can be reduced except for a person’s personal residence. Doesn’t make sense, but the banks have fought this change forever

This would help save millions of homes from foreclosure, which some people may not agree with, but somehow we have to stop the foreclosure rate. Until we do that, the economy is not going to come back and more unemployment will result.

Of course, the rest of the mortgage industry opposes this, since it feels that it would hurt their bottom line.