On Top of the Aloha Beat BLOG

New Update!- as of 3:30p EST Speaker Pelosi states the revisions are still being drafted and the House Vote has been postponed until tomorrow to allow for time to review the language. As of this moment there are still no new updates on the Library of Congress site. I will continue to check and likely post a new blog once the info is available. As of this time most press sources are reporting the tax credit has been reduced to $8000 max- FYI.

UPDATE! As of 9A EST, 02/12/09- We have all heard conflicting reports that the $15k tax credit provision has either been scaled back or removed completely! The Library of Congress link below still shows the bill including the tax credit but this is politics folks, things can and often do change at the last minute.

If you think it's the big deal everyone obviously thinks it is we should ALL be calling our US Representatives. You can get contact information for your Rep at the following website:

http://www.house.gov/

I strongly suggest you call the DC office and at least leave a message indicating your support for the tax credit. I have called my Rep and have a message into his staff to verify if the bill currently includes the tax credit or not. I'll be updating this post as the news becomes clear, and when I say clear it means I see it on government websites or I hear it from my Representative's staff.

A cursory review of the bill agreed upon by the House and the Senate today shows a number of changes to what both sides had originally wanted. On the plus side it looks like the final tab has been reduced a bit. On the downside it looks like housing didn't get the boost it certainly deserved. Here are the items that impact us the way I see them. Bear in mind the bill has not had its final vote but change at this point appears less likely. Also, the draft of the bill is undergoing constant update so some of it may not be reflected accurately.

•·         We got our 10% to $15,000 tax credit, and there doesn't appear to be a repayment provision! Kudos to NAR and the National Association of Homebuilders for getting that win! It does appear the credit can be claimed as a 2008 purchase and you "may" divide it up to receive half then and half next year. This will allow our buyers to amend their current 2008 taxes to reflect the purchase and receive the credit quickly. The purchase must be a principle residence but the credit is NOT limited to first time buyers. Should the buyer sell or fail to occupy the home as a "principle residence" within 24 months of purchase, the amount of tax credit received will be due on their next tax filing. There are a few exceptions to the recapture provision such as death and divorce (same thing isn't it-J). The new credit will last for 1 year after the date this bill becomes law. Do note the old system of $7500 that must be repaid goes away the day this new bill is enacted.

•·          USDA is getting over $10.4 billion for the guaranteed program alone. Although that may not be enough to fund the rest of the year it's a big jump from the approximately $7 billion that was used last year. This demonstrates the administration's commitment to the USDA Rural Development loan program.

•·         The Hope 4 Homeowners refinance program is being tweaked to allow for hardship in the case of "decrease in income". The private mortgage insurance factors are also being reduced to no more than 2% up front and 1% annual. There is also a provision to entice lenders that have these loans to refinance. They can receive $1000 or more for "performing services associated with refinancing" such mortgages.

•·         Mandatory mortgage loan modifications and a Foreclosure mitigation section that refer to the $50 billion the Treasury is allocating to mitigate foreclosures. Details were sketchy so look for more on this. Do note the lenders servicing these mortgages could receive payments not more than $2000/loan to modify them and seem to be granted the authority to do so if it seems reasonable that not modifying the loan will result in a bigger loss. I think this can be potentially huge if the private sector embraces it.

These are the salient points I could find for now but the bill is HUGE! If you want to try to pour through it you can access it here but you will be required to refresh your screen often as changes are coming in constantly. Many sections were stricken including provisions continuing the higher FHA loan limits and the reinstatement of seller funded down payment assistance wasn't there;  but again, the cost was reduced and that is always a good thing!

Gerry Suarez, Jr.

Your FHA Loan Pro!

Has Fannie Mae pulled their head out of their... sand box?

What if I told you Fannie Mae is offering special financing if you buy one of their bank owned homes?  Would you believe me?  Well you should because it is true!

Why does this benefit you?  Well frankly... the terms of their offered financing is pretty darn sweet!

The benefits of their HomePath program include:

• Low down payment and flexible mortgage terms (fixed-rate, adjustable-rate, or interest-only)
• You may qualify even if your credit is less than perfect
• Available to both owner occupiers and investors
• Down payment (at least 3 percent) can be funded by your own savings; a gift; a grant; or a loan from a nonprofit organization, state or local government, or employer
• No mortgage insurance
• No appraisal fees
• FREE home warranty is included with the purchase.

I recently wrote a blog about another local Sacramento Agency that is offering a similar incentive if you buy one of their bank owned homes.  Read the blog now >> 

BUT the catch is they only have 2 or so homes available in the Sacramento Area to purchase.

Here is the best part about this program... There are over 250 homes available in the Sacramento area right now that qualify for this program!

Here are some other homes available in the Sacramento Area:

Elk Grove... 46 homes available!
Citrus Heights... 21 homes available
Rancho Cordova... 16 homes available!
Fair Oaks... 4 homes available
Carnichael... 14 homes available!
and so on...

Here is some more specific information about their guidelines:

97% (3% down) for owner occupied financing with NO MORTGAGE INSURANCE!

Why is this such a big deal?
A typical FHA loan with an equivalent down payment (3.5% down) would require 1.75% of the loan amount to be paid upfront for a mortgage insurance premium. Then on top of your monthly payment (PITI), you would be charged .55% (of the loan amount) every year for ongoing mortgage insurance.

Let me break this down so I don't throw too much loan lingo your way.. Here is an example mortgage insurance fees for an FHA loan of $200,000...

$200,000 x 1.75 = $3500 You would be charged this amount at closing or you could roll this into a loan on a traditional FHA loan program for the upfront mortgage insurance premium.

$200,000 x .55 / 12 months = $91.67 This means $91.67 would be added to your payment every month for mortgage insurance.

With this special financing offered by Fannie Mae you could put .5% LESS down than a FHA loan and you do no pay ANY MORTGAGE INSURANCE!  This really is a sweet deal!

Do you feel like a little more sugar today? Wait until you see what they will do for an investor!

90% (10% down) for non owner occupied properties with NO MORTGAGE INSURANCE!
If you are looking for an investment home in Sacramento, you know that you will get a better return on your investment if you have less money in the deal.  Right now with typical financing (actually offered by Fannie Mae for non-Fannie Mae owned homes), you should expect to put down at least 25%.

 

Wow! So for example if you purchased a home for $150,000 (not owned by Fannie Mae), you would need to put down $37,500 plus closing costs.  If you buy a home owned by Fannie Mae, you only have to put $15,000 plus closing costs. If that does not help you"sharpen your pencil" I am not sure what will!  This is a really big deal!

They even offer a renovation program that allows you to finance light renovations upfront and add it to the loan amount.  So if you find a Sacramento Fannie Mae owned home that maybe has some vandalism issues (which many do), you can probably get a discount for the home and finance in the repairs that are needed to bring it back to livable condition!

It is so nice to be able to report some good news to folks.  It really has been a drag having to shovel through the bad news to try and find something good to report as far as guideline changes go!

Here is a link to search for homes in your area >>

We can offer this special loan program... so just give us a call and we can discuss this opportunity further!

Happy Hunting!

 

This blog by:

Team Newington
Sacramento Mortgage Planners
(916) 687-6868
www.SuperiorLoanTeam.com

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Fixing the housing problem in Las Vegas and elsewhere throughout the nation is high on the growing list of priorities for new President Barrack Obama.  Recent piecemeal attempts by banks and the government to modify loans or delay foreclosure for specific groups of homeowners have not uncovered a way that will work for everyone - or a way that will satisfy every interest in the loans.

Investment bankers Credit Suisse reports that since the housing bubble burst, over 3 million homes have been lost to foreclosure while another 8 to 10 million more are headed that way over the next four years.  One in ten homeowners are in foreclosure or more than 30 days late with a payment - the highest delinquency rate on record.

Loan modification plans offered by both the government and private lenders have approached the problem by lowering payments and stretching them out, often at a lower interest rate. The theory behind the plans is that they will cost the lender less than foreclosure and reselling the home.  Lenders have been resistant to lowering the principle. 

Modern mortgage financing practices complicate things these days, as mortgage loans are usually pooled and sold to investors.   Loan service companies, who have no connection to the homeowner, manage the mortgage payments to investors.  Multiple classes of investors often have different claims on the same mortgage - and conflicting interests.  Some investors benefit more from foreclosure than from keeping the loan performing, so the loan servicing firms make out better when loans are in foreclosure than when loans are modified.

From the borrowers' standpoint, loan modification plans currently on the table fall short of being helpful.  The loan modification process is lengthy.  Some borrowers, especially those who vastly overstated their income, those whose job status has changed, or investors, may not qualify for refinancing options.  Unless the principle is modified, the payments on the modified loans are still too high for many borrowers.  Many plans use 38% of monthly income, a figure that consumes too high a percentage of income for most borrowers.  Some homes were purchased at an inflated price and financed with teaser rates; a modification to even 38% would stretch out the term of the loan far beyond what the lender would want to offer.  Recent figures from that Comptroller of Currency affirm that loan modification as currently implemented are often not a long-term solution;  of loans modified in the first quarter of 2008, 37% were 60 days past due within six months.

With homes prices still declining in most areas, some borrowers are reluctant to refinance a home that is continuing to fall in value, they see little hope of ever having equity, and easily yield to foreclosure or shortsale.  Programs like Hope for Homeowners that encourage the lender to write down the loan value to 90% of a home's market value require the homeowners to share any future equity with the government.  Hope for Homeowners was funded to help 400,000 but only 350 loans have been processed due to lack of enthusiasm for the disincentives to lenders and borrowers alike

As noted by Evan Wagner, a spokesman for Indy Mac Bank, loan modification programs seek to make a home temporarily affordable to borrowers - not good investments.  Once arrears, interest, and fees are tacked on to the mortgage balance, the consumer often owes as much or more than before but has longer to pay.  It's a tough sell for banks when the loan is "underwater" and the customer will still end up owing much more than what the home is worth.

With 3.8 million more mortgages expected to be 60 to 90 days past due by the end of 2009, the need for an effective solution only increases.

To search for your new home in Las Vegas, including bank owned properties available at great prices, contact your Prudential Americana Group Realtor® Yonas Woldu at (702) 236-8997 or visit www.VegasRealProperty.com. The N&Y team, lead by partners Nebi Adhanom and Yonas Woldu, is always ready to serve you.

As part of the annual Swanepoel TRENDS Report that is published every year during the first week of February, the research team wraps their four month study of the real estate industry by announcing the top 10 Newsmakers, Events and Trendsetters for the year.

The second list to be released is the top 10 events that during 2008 had the largest impact and influence on the real estate brokerage industry. Events are defined as those occurrences that transpired during the previous calendar year (2008) that made headlines and captured the attention of the real estate industry.  The selection of these events was based upon their potential future impact on the industry rather than only their 2008 impact.

The Top 10 Events impacting Real Estate for 2008 are:

1.     The Bailout: September 17^th

Most notably the one single event of the year was the announcement of the "Silver Bullet" designed to save the country from the subprime collapse itself and the failure/buyout of major Wall Street firms and national banks.  Depending upon how effectively the Emergency Economic Stabilization Act's $700 billion is going to be allocated and managed it may prove to be the beginning of the turning point in the current economic recession.

2.     The Presidential Election

In one of the most competitive, contentious, divisive and yet historic political campaigns the country responded with the largest voter turnout in history to remove the incumbent president and elect an African American, Barak Obama as president.  The "I have a dream" has taken a huge step toward fulfillment.  However, the new administration will have little time to reflect on victory as it faces serious economic challenges and a trillion dollar plus debt that will take years to resolve.

3.     In Memory Of: Countrywide, IndyMac, WAMU, Wachovia And Others

Barely one year ago in 2007 these companies were not only household names but were considered financial giants.  In one short year they have become a factoid of history.  Some filed for bankruptcy while others were acquired by the likes of Bank of America, the federal government, J.P. Morgan Chase and Wells Fargo.  2008 reminded us that nothing lasts forever and everything is replaceable.  

4.     Facing Foreclosure Frenzy

As a direct fallout of the subprime collapse, the foreclosure rate in the U.S. hit staggering levels in 2008.  At the opening of the third quarter foreclosures were up 25% over the previous October with a reported one in every 452 of the country's homes in foreclosure.  RealtyTrac reported last October that there was a sharp decline in foreclosure filings but it still estimated that by the end of 2008 there would be more than one million REOs on the books.

5. Home Prices Spiral Downward

The recession devastated many real estate markets across the country with the worst-performing towns and cities in places like central California, Miami and Las Vegas posting declines of 40% in 2008. The stranglehold on financing continued to drive home prices in many other places back to 2000 - 2002 levels, with predictions of continued declines in 2009 as unemployment reaches record highs and the financial meltdown spills over to other industries.

6.     NAR - DOJ Settlement

Finally the long and protracted 2½ year legal battle between NAR and the Department of Justice (DOJ) was put to rest as Judge Kennelly issued his final judgment in November.  In the end, NAR's longstanding Internet Data Exchange (IDX) policy was validated as NAR was deemed to have not admitted any liability or wrongdoing and no payments were made in conjunction with the settlement.  In addition, NAR has been cleared to reinstate an updated version of its Virtual Office Website (VOW) and the MLS has been preserved and strengthened in the process.  Now it's back to business.

7.     Brokers Go Bust

Changing names, merging, consolidating, filing bankruptcy and closing branches was on the order of the day throughout 2008 as literally thousands of real estate brokerages companies went out of business during 2008. This included many independents as well as franchises from just about every major brand including Century 21, EXIT and RE/MAX. Also filling for bankruptcy is national franchise Help-U-Sell and Web 2.0 newcomers such as Igglo. 2009 may see even more brokers closing up shop than 2008.

8.     Keeping It Short

Founded in 2006, Twitter moved into the mainstream this year as the next evolution in the social networking and micro-blogging environment.  By using short text-based posts (affectionately named "tweets"), staying in touch has been given a whole new meaning.  

9.     ActiveRain Explodes Past 100,000 Members

As we discussed in last year's report (Trend #1 - Two Worlds; One Industry) ActiveRain has moved to the head of the social networking line in the real estate industry.  With as many as 35,000 users logged on at the same time, no one else has even come close to reaching that many Realtors^® at one time.  It goes without saying that ActiveRain has proven that social networking has made a home in real estate.

10. NAR Celebrates 100 Years

In May 1908, 120 men gathered in Chicago with the goal to "unite the real estate men of America." Today the National Association of REALTORS® (NAR) is America's largest trade association representing more than 1.2 million members. For 100 years, NAR and its members have established homeownership as a cornerstone of the American Dream and advocated private property rights as one of the fundamental principles that unite us as Americans. 2008 marked NAR's centennial birthday.

How many of these events impacted you or were/are you aware of?

Active Rain Praised at NAR for being One of Real Estate's Key Trends for Success!

That's right for those of you that did not make it to Orlando, or did not get to the Economic Issues and Residential Real Estate Business Trends Forum, you missed Active Rain praise!

Lawrence Yun, NAR's Chief Economist and one of USA Today's top market analysts and dynamic marketing strategist, Stefan Swanepoel gave a comprehensive forum about where the housing market went wrong and what we as REALTORS need to do to fix it.   And, Yes, Active Rain is a part of the solution to the Global Economic Crisis.  Well, AR may not be the only fix, but social networking sites for the Real Estate industry were a major part of Swanepoel's path to change the future of our industry.

 

I try to hear Lawrence Yun speak whenever I can.  He is direct and to the point and his predictions or subtle remarks have proved to be strong pearls of wisdom, that I love to soak-up with a sponge.  You can read or listen to Yun's economic theories and reports on www.REALTOR.org.

 

Swanepoel's approach to change beats anything that I have heard from a Political candidate in decades.  He has been a part of starting Real Estate Wiki, which I found through Active Rain and is a good source for definitions and explanations of the terms we hear and read about within the industry.

The most important thing that I have learned while on Active Rain and while I have been attending these Conferences is that Real Estate is THE leading economic and social indicator.  As REALTORS, not only do we hold our selves to a higher ethical standard, but we need to raise the bar to enter our profession.

As the preamble to the REALTOR Code implies, we have a greater duty to the national market security than we do to an individual sale.  This point has been forgotten and these two seasoned gentlemen reminded me of this fact again, today!  Not that they said this, but while hearing only 55% (if you were there you know) of the facts, their sentiments sparked this within my feeble mind.

Go forth and Socialize on Active Rain, and while you do so, you are helping  change the image of our industry and working to turn the economy around through positive interaction!  Come sing in the Rain with me!

 

Posted by proud Active Rainer Member- Jane Page Thompson, Aiken, SC

(Photos used in this post are from previous posts of mine and are from Stefan Swanepoel's website.  I have only written about my recollections of their speeches.)