An article by Kenneth R. Harney from the Washington Report wrote the article below about the $8,000 Tax Credit - This is good news for first time homebuyers that are looking for ways to come up with their down payment, but when will it really happen?
By Kenneth R. Harney
Home builders and Realtors cheered in Washington last week when HUD Secretary Shaun Donovan announced that FHA will allow lenders and government agencies to “monetize” the $8,000 federal homebuyer tax credit, providing purchasers with downpayment cash upfront, available at closing, rather than waiting for the IRS to mail them a tax credit check.
Speaking at the mid-year conference of the National Association of Realtors, Donovan said HUD supports “bridge loan” programs designed to help first-time buyers come up with needed cash.
Under the bridge loan concept, an FHA-approved private lender, a state or local housing agency, or an FHA-approved nonprofit organization could advance as much as $8,000 for downpayment and closing costs -- in anticipation of receipt of the $8,000 credit months or weeks down the road.
Sanctioning bridge loans could improve the effectiveness of the federal credit program significantly, said Joe Robson, president of the National Association of Home Builders.
Bill Riley, incoming president of the Washington State Realtors Association, estimates that half of all would-be first-time buyers lack the downpayment resources needed to complete a purchase, and therefore aren't making use of the credit.
Donovan said technical instructions to lenders for the bridge loan program would be provided by FHA shortly.
In the meantime, 10 state housing finance agencies already run credit monetization programs on their own. They include the states of Missouri, Colorado, Delaware, New Jersey, Tennessee, Idaho, Ohio, Pennsylvania, New Mexico and Washington.
Most of the programs provide second liens with no interest charges for a period of months, with the expectation they'll be paid off immediately after the homebuyers receive their IRS credit checks.
In some cases the liens turn into second mortgages with 10 year terms and floating interest rates if the buyers choose not to repay the advance with the tax credit check.
In the wake of Donovan's announcement, major mortgage lenders are likely to gear up their own programs, bringing bridge loans for first time buyers to all 50 states, not just the ten that pioneered the idea.
However, anyone who wants to take advantage of all this needs to move fast. Under the federal tax credit rules set by Congress, purchasers must close no later than November 30 to be eligible. They must not have owned a principal residence at any time during the three years preceding their purchase. Buyers can claim the 2009 credit against their 2008 federal tax returns - they just need to file an amendment - or can wait and file next April.
For a detailed Q&A on the credit program, go to www.federalhousingtaxcredit.com.
Published: May 18, 2009
Mistake # 1: Buying real estate unprepared because you lack the right knowledge
Mistake # 1: Buying real estate unprepared because you lack the right knowledge
Though we encourage you to seek professional guidance throughout the real estate purchasing process, we’ll also tell you not to depend solely on these professionals. They’re human, and humans make mistakes! By all means, establish a good relationship with a professional, but do your own research too, so you understand what he or she is recommending. You can start by reading this reference guide and noting the real estate mistakes we’ve covered. You might also follow up with a seminar to further educate or refresh your memory on the buying process. It’s not every day you purchase real estate!
Throughout the Make No Mistakes About...Buying Real Estate reference guide you’ll find descriptions and explanations about the mistakes other buyers have made. You’ll also find the tools and checklists to help you Make No Mistakes™ About…Buying Real Estate, even when you work with professionals. We provide this information because it’s our goal to level the playing field between the haves and the have not’s – the people with real estate knowledge and those who have little or none. Here are just a few examples of what you’ll gain from this reference guide:
· Examine your present and future financial goals to ensure you don’t buy too much house even when a loan officer says you can afford more
· Determine which mortgage loan is best for you when you’re presented with more than one option
· Choose the best property based on your budget, “must haves” and desires in a home
· Learn the specific contractual language you should have in your earnest money contract (which isn’t included in the standard contracts)
· Know which elements will help you negotiate the best deal
· Read and understand the HUD-1 (Settlement Statement), which itemizes the financial details at closing
· Know what to do after you close in order to best protect your investment
In reality, YOU are the only one who can truly look out for your best interest. And when the transaction is complete, you are the one who is ultimately responsible for the property and for paying the mortgage loan! Go to www.MakeNoMistakes.com for more info or follow us on http://twitter.com/MakeNoMistakes.
Though we encourage you to seek professional guidance throughout the real estate purchasing process, we’ll also tell you not to depend solely on these professionals. They’re human, and humans make mistakes! By all means, establish a good relationship with a professional, but do your own research too, so you understand what he or she is recommending. You can start by reading this reference guide and noting the real estate mistakes we’ve covered. You might also follow up with a seminar to further educate or refresh your memory on the buying process. It’s not every day you purchase real estate!
Throughout the Make No Mistakes About...Buying Real Estate reference guide you’ll find descriptions and explanations about the mistakes other buyers have made. You’ll also find the tools and checklists to help you Make No Mistakes™ About…Buying Real Estate, even when you work with professionals. We provide this information because it’s our goal to level the playing field between the haves and the have not’s – the people with real estate knowledge and those who have little or none. Here are just a few examples of what you’ll gain from this reference guide:
· Examine your present and future financial goals to ensure you don’t buy too much house even when a loan officer says you can afford more
· Determine which mortgage loan is best for you when you’re presented with more than one option
· Choose the best property based on your budget, “must haves” and desires in a home
· Learn the specific contractual language you should have in your earnest money contract (which isn’t included in the standard contracts)
· Know which elements will help you negotiate the best deal
· Read and understand the HUD-1 (Settlement Statement), which itemizes the financial details at closing
· Know what to do after you close in order to best protect your investment
In reality, YOU are the only one who can truly look out for your best interest. And when the transaction is complete, you are the one who is ultimately responsible for the property and for paying the mortgage loan! Go to www.MakeNoMistakes.com for more info or follow us on http://twitter.com/MakeNoMistakes.
VA Requirements on Foreclosed Property
More protection for vetern's and the VA. A new rulings on how VA purchasers and sellers must now address home needed repairs has been announced. This a plus for homebuyers on thoses properties that are marketed AS-IS. However, a seller (Bank) could always consider another buyers offer. Read the circular below:
CIRC. 26-09-05: VA APPRAISAL REQUIREMENTS ON FORECLOSED PROPERTIES (03/31/09)
1.
Purpose. This circular reaffirms Department of Veterans Affairs (VA) policy that all properties, including foreclosed properties, must meet minimum property requirements (MPRs) prior to VA Loan Guaranty.
2.
Details. Since there has been an increased interest in the purchase of foreclosed properties, VA believes it is important to reaffirm its policies regarding MPRs. As outlined in the VA Lender’s Handbook (VA Pamphlet 26-7) Chapter 12, VA requires that all properties, including foreclosed properties, be in a condition that meets our MPRs or that there is a reasonable likelihood the property can be repaired to meet the MPRs prior to loan closing. In those cases where repairs are required, the VA appraiser must list on the appraisal report any repairs necessary to meet MPRs and provide an estimate of the fair market value for the property, as if repairs had been completed. The seller is expected to pay for these required repairs since they are included in the estimate of value. It is not allowable to escrow funds from the veteran purchaser for use in making the required repairs. Additionally, to protect both the veteran’s and VA’s interests, lenders selling a “Real Estate Owned” property may not process this case under our Lender Appraisal Processing Program; these cases must be ordered as an “IND” appraisal.
3.
Rescission: This circular is rescinded January 1, 2012.
By Direction of the Under Secretary for Benefits
CIRC. 26-09-05: VA APPRAISAL REQUIREMENTS ON FORECLOSED PROPERTIES (03/31/09)
1.
Purpose. This circular reaffirms Department of Veterans Affairs (VA) policy that all properties, including foreclosed properties, must meet minimum property requirements (MPRs) prior to VA Loan Guaranty.
2.
Details. Since there has been an increased interest in the purchase of foreclosed properties, VA believes it is important to reaffirm its policies regarding MPRs. As outlined in the VA Lender’s Handbook (VA Pamphlet 26-7) Chapter 12, VA requires that all properties, including foreclosed properties, be in a condition that meets our MPRs or that there is a reasonable likelihood the property can be repaired to meet the MPRs prior to loan closing. In those cases where repairs are required, the VA appraiser must list on the appraisal report any repairs necessary to meet MPRs and provide an estimate of the fair market value for the property, as if repairs had been completed. The seller is expected to pay for these required repairs since they are included in the estimate of value. It is not allowable to escrow funds from the veteran purchaser for use in making the required repairs. Additionally, to protect both the veteran’s and VA’s interests, lenders selling a “Real Estate Owned” property may not process this case under our Lender Appraisal Processing Program; these cases must be ordered as an “IND” appraisal.
3.
Rescission: This circular is rescinded January 1, 2012.
By Direction of the Under Secretary for Benefits
VA Taking Steps to Reduce Mortgage Fraud
In order to reduce mortgage fraud the VA is implementing certain guidelines. Someone up there is doing there homwork. :-)
The Secretary of Benefits department has released CIRC. 26-09-03: AGREEMENT OF SALE / SALES CONTRACT TO BE PROVIDED TO THE FEE APPRAISER (03/27/09)
1.
Purpose. The purpose of this circular is to announce the Department of Veterans Affairs (VA) requirement that a copy of the agreement of sale or sales contract be provided to the fee appraiser by the requester of the VA appraisal immediately upon assignment.
2.
Background. When the value opinion to be developed is market value, Uniform Standards of Professional Appraisal Practice requires an appraiser to analyze all agreements of sale, options, or listings of the subject property, current as of the effective date of the appraisal, if such information is available to the appraiser in the normal course of business.
3.
Details. VA believes that the fee appraiser must have access to such information to ensure that the estimate of value represents a proper value, which includes consideration of financing data, sales concessions, or property conditions typically contained in the agreement of sale. Furthermore, for VA loan origination purposes, VA expects that the agreement of sale is available, or would be available, to the requester of a VA appraisal.
4.
Actions. Effective immediately, the requester of a VA appraisal must provide a copy of the agreement of sale and all addenda to the appraiser immediately upon assignment, but not later than 1 business day after the date of assignment. If the agreement of sale is amended during the process, the requester must provide the updated contract to the appraiser. The assigned VA appraiser will analyze the agreement of sale and consider that analysis in establishing the fair market value of the property and any affect on VA minimum property requirement repairs. Should the requester fail to provide the agreement of sale to the appraiser, the appraiser will, upon notice to the requester, hold the assignment and notify VA of the delay.
5.
Rescission: This circular is rescinded January 1, 2012.
The Secretary of Benefits department has released CIRC. 26-09-03: AGREEMENT OF SALE / SALES CONTRACT TO BE PROVIDED TO THE FEE APPRAISER (03/27/09)
1.
Purpose. The purpose of this circular is to announce the Department of Veterans Affairs (VA) requirement that a copy of the agreement of sale or sales contract be provided to the fee appraiser by the requester of the VA appraisal immediately upon assignment.
2.
Background. When the value opinion to be developed is market value, Uniform Standards of Professional Appraisal Practice requires an appraiser to analyze all agreements of sale, options, or listings of the subject property, current as of the effective date of the appraisal, if such information is available to the appraiser in the normal course of business.
3.
Details. VA believes that the fee appraiser must have access to such information to ensure that the estimate of value represents a proper value, which includes consideration of financing data, sales concessions, or property conditions typically contained in the agreement of sale. Furthermore, for VA loan origination purposes, VA expects that the agreement of sale is available, or would be available, to the requester of a VA appraisal.
4.
Actions. Effective immediately, the requester of a VA appraisal must provide a copy of the agreement of sale and all addenda to the appraiser immediately upon assignment, but not later than 1 business day after the date of assignment. If the agreement of sale is amended during the process, the requester must provide the updated contract to the appraiser. The assigned VA appraiser will analyze the agreement of sale and consider that analysis in establishing the fair market value of the property and any affect on VA minimum property requirement repairs. Should the requester fail to provide the agreement of sale to the appraiser, the appraiser will, upon notice to the requester, hold the assignment and notify VA of the delay.
5.
Rescission: This circular is rescinded January 1, 2012.
How Do You Stop Giving Your Money Away?
So how do you stop from giving all that money away? Protect your credit scores, since it plays a major role in our society and how creditors view you when you want to borrow money or purchase items on credit. In fact, today, insurance companies and even employers look at your credit reports to see how you spend money, to determine your credit worthiness and to verify your employment. There are even creditors who use scoring models based on where you spend your money as a way to determine their risk. For example, in a recent article written by Money magazine, credit card holders who frequent certain types of establishments pose a higher risk. To our surprise, some of these were marriage counselors, nightclubs, massage parlors, billiard halls and bars.
Highlights of Obama’s Making Homes Affordable
The Obama administration launched what it calls the "Making Home Affordable" initiative today: a $75 billion loan modification program, which runs through 2012.
Here are the highlights:
- Mortgages for single-family properties that are worth more than $729,750 are excluded.
- Interest rates can be lowered to as low as 2 percent and then if necessary; the term of the loan can be extended to a maximum of 40 years.
- The home must be a primary residence (verified with tax return, credit report, and other documentation such as a utility bill). The home may not be investor-owned.
- The home may not be vacant or condemned.
- Borrowers must provide their most recent tax return and two pay stubs, as well as an "affidavit of financial hardship" to qualify. You need not wait to become delinquent with your payments -- a plan can be put in place as soon as you think you may have trouble making your mortgage payment.
- Borrowers in bankruptcy are not automatically eliminated from consideration for a modification.
- Borrowers in active litigation regarding the mortgage loan can qualify for a modification without waiving their legal rights.
- Borrowers are only allowed to have their loans modified once, and the program only applies for loans made on Jan. 1, 2009 or earlier.
- Eligibility is restricted to loans originated on or before Jan. 1, 2009.
- Incentives are provided to extinguish second liens on loans modified under the program.
- Homeowners are eligible for up to $1,000 of principal reduction payments each year for up to five years. Monthly payments can come down to as low as 31 percent of the borrower's gross (pre-tax) income.
- Separately, up to 5 million borrowers who have mortgages held by government controlled mortgage finance giants Fannie Mae and Freddie Mac should be eligible to refinance through June 2010.
Borrowers can find out if their loan is owned by Fannie Mae in one of two ways:
- Call your current mortgage lender or servicer. The phone number should be on your monthly mortgage statement or monthly coupon book. --
- Contact Fannie Mae. Call 1-800-7FANNIE (8 a.m. - 8 p.m. ET) or visit http://www.fanniemae.com/homeaffordable.
Fannie Mae also intends to make an online tool available later this month so borrowers can look up their loan and determine if it is owned by the company.
The Mortgage Reform and Anti-Predatory Lending Legislation
The Mortgage Reform and Anti-Predatory Lending Legislation as it’s currently written is designed to:
· Stop predatory lending by calling for all mortgage originators, brokers and bank loan officers to be licensed and registered.
· Ensure that mortgage originators act in the borrower’s best interest. Mortgage originators must present borrowers with loan products that match borrowers’ qualifications.
· Require subprime lenders to take into account the fully-indexed rate and fully-amortized payment on adjustable rate loans before they give the loan to the borrower. This simply means the lender must show the borrower can pay the mortgage payment after it has fully adjusted to its highest rate. This is what happened to many people who ended up in foreclosure: they didn’t understand that their mortgage payment would keep going up, and soon they couldn’t afford it.
· Require the lender to include taxes and insurance payments while calculating whether or not a borrower can afford a house. Lenders must include them with the principle and interest calculations, so borrowers can see what their actual monthly payments will be.
Require a borrower to participate in pre-loan counseling if the borrower will receive a high-cost loan .A “high-cost loan” refers to a mortgage with very high points and fees.
Many people are opposed to the bill because they believe it will end the practice of brokering mortgage loans. By eliminating the yield spread premiums (i.e., commissions) the broker income will be affected, which means there will be fewer and fewer mortgage loan brokers. In turn, consumers will have fewer options to obtain financing.
· Stop predatory lending by calling for all mortgage originators, brokers and bank loan officers to be licensed and registered.
· Ensure that mortgage originators act in the borrower’s best interest. Mortgage originators must present borrowers with loan products that match borrowers’ qualifications.
· Require subprime lenders to take into account the fully-indexed rate and fully-amortized payment on adjustable rate loans before they give the loan to the borrower. This simply means the lender must show the borrower can pay the mortgage payment after it has fully adjusted to its highest rate. This is what happened to many people who ended up in foreclosure: they didn’t understand that their mortgage payment would keep going up, and soon they couldn’t afford it.
· Require the lender to include taxes and insurance payments while calculating whether or not a borrower can afford a house. Lenders must include them with the principle and interest calculations, so borrowers can see what their actual monthly payments will be.
Require a borrower to participate in pre-loan counseling if the borrower will receive a high-cost loan .A “high-cost loan” refers to a mortgage with very high points and fees.
Many people are opposed to the bill because they believe it will end the practice of brokering mortgage loans. By eliminating the yield spread premiums (i.e., commissions) the broker income will be affected, which means there will be fewer and fewer mortgage loan brokers. In turn, consumers will have fewer options to obtain financing.
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