Dean Tucker

Oct. 29 (Bloomberg) -- The Obama administration endorsed a plan to extend an $8,000 tax credit for first-time homebuyers, saying it is helping stabilize the housing market.

The tax break, enacted early this year as part of the economic stimulus, has "brought new families into the housing market and contributed to three consecutive months of rising home prices nationwide," Treasury Secretary Timothy Geithner said today in a statement.

Senate Democrats plan to extend and expand the credit, which expires at the end of next month, to include some people who already own residences. An agreement reached yesterday would let homeowners who buy a new home qualify for a $6,500 credit if they have lived in their prior residence for five years, according to Regan Lachapelle, an aide to Senate Majority Leader Harry Reid.

"The compromise we have now would expand the credit beyond first-time homebuyers," Lachapelle said. Lawmakers expect to consider the measure as part of a bill to extend unemployment benefits, she said. That measure has been held up by a disagreement with Republicans over other proposed amendments.

Lawmakers have said they want to keep home sales from slipping as the economy struggles to recover from the worst drop in home prices since the Great Depression. The plan would extend the homebuyers' credit to home purchases under contract by April 30, 2010, with borrowers allowed another 60 days to close the sale, according to a person familiar with the details of the agreement.

Up to $250,000

The credit would be available to individuals earning as much as $125,000, or $250,000 for couples, up from $75,000 for individuals and $150,000 for couples under the current law, Lachapelle said.

The amendment on the homebuyers' credit is being packaged with a separate proposal to extend and expand a tax break for companies with net operating losses.

Any legislation would have to be reconciled with a House unemployment measure approved last month that omits the homebuyer tax provisions and extends jobless benefits only in states with the highest unemployment rates.

House Speaker Nancy Pelosi, a California Democrat, is waiting to see the final Senate agreement before deciding whether to support it, said spokesman Nadeam Elshami.

More than 1.2 million borrowers through Oct. 9 have claimed almost $8.5 billion of the $13.6 billion set aside for "first- time" homebuyer tax credits this year, according to U.S. Treasury data.

Stabilizing Sales

Realtors and mortgage bankers said the credits, which are available for taxpayers who haven't owned a home in the past three years, have helped stabilize housing sales this year.

"Already we've seen the impact of this credit in jump- starting the housing sector," Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, said on the Senate floor. He said it would be a "great mistake" to allow the break to lapse. Dodd estimated that more than 70 percent of current homebuyers would be eligible for the break.

While the tax credit speeds demand for homes from next year to this year, it won't necessarily increase overall sales, said Scott Buchta, head of investment strategy at Guggenheim Securities LLC in Chicago.

"They do need to expand the credit to get more people involved, but at the end of the day you are paying people tax dollars to do what they probably would have done anyway," Buchta said. "If it is passed, home sales of lower-priced homes should continue to hold their ground. However, if it is not passed we will probably see home sales slow down as we wait for natural demand to build up again."

Significant Support

Reid, a Nevada Democrat, said on the Senate floor yesterday that there is significant support among both parties for the homebuyers' tax credit. He said the other amendments sought by Republicans are unrelated to the unemployment bill and are designed to embarrass his colleagues.

Republicans want to vote on amendments on immigration and to bar funding for the community activist group Acorn.

Senate Minority Leader Mitch McConnell, a Kentucky Republican, agreed that most lawmakers support the unemployment and homebuyer measures. "We're not that far away from an agreement," he said yesterday.

The $2.4 billion unemployment measure would extend jobless benefits by 14 weeks in all states and provide an additional six weeks of benefits in states with the highest unemployment rates.

About 1.9 million Americans will exhaust their unemployment benefits by the end of this year unless Congress acts, the Labor Department said.

To contact the reporters on this story: Dawn Kopecki in Washington at dkopecki@bloomberg.com Brian Faler in Washington at bfaler@bloomberg.net

Oct. 27 (Bloomberg) -- U.S. Senate leaders moved closer to an agreement on replacing an expiring $8,000 tax credit for first-time homebuyers with a smaller one that expands access to more borrowers, two people familiar with the matter said.

The deal would reduce the size of the tax credit to 10 percent of the sale's price, capped at $7,290, the people said. The credit would be available on home purchases that are under contract by April 30, and borrowers would have 60 days more to close the sale. The existing credit is due to end Nov. 30.

The new agreement, which is still being negotiated and may change, would expand the credit to so-called step-up borrowers who have lived in their current home for at least five years. The income eligibility for first-time homebuyers would remain the same at $75,000 for individuals and $150,000 for couples. The income criteria for step-up buyers would be $125,000 for individuals and $250,000 for couples.

The credit would be limited to homes costing $800,000 or less.

The legislation, also being considered by leaders in the House, may be attached to a bill extending unemployment benefits that may be debated as early as this week, according to Regan Lachapelle, an aide to Senate Majority Leader Harry Reid.

Lawmakers are hoping the credit will spur home sales as the economy struggles to recover from the worst drop in home prices since the Great Depression.

Senator Bill Nelson, a Florida Democrat, told reporters yesterday of the tax credit, "We should be able to extend that later this week." Nelson was traveling with President Barack Obama on Air Force One to a speech in Jacksonville, Florida.

To contact the reporters on this story: Dawn Kopecki in Washington at dkopecki@bloomberg.com

By Dean Tucker, Idaho Regional Manager, Waterstone Mortgage - Prime Equity Group

A new bill dubbed the "FHA Taxpayer Protection Act of 2009" (H.R. 3706) was introduced to Congress on October 1st 2009. The new proposed legislation would raise the current required 3.5% down payment on FHA loans - to 5%.

Federal Reserve Chairman Bernanke is posturing that he is in favor of the upped down payment requirement. The bill also prohibits the buyers closing costs to be financed into the FHA loan, again potentially raising the cash to close requirements for first time home buyers.

No reason for Realtors, sellers or buyers to panic yet, as this is a brand new bill only just introduced to congress. None-the-less an important topic, and a good one to keep an eye on.

FHA Loan in Boise Idaho

Waterstone Mortgage - Prime Equity Group

New Mortgage Laws: 7 Critical Things Idaho Realtors Need To Understand To Protect their Clients, their Business, and their Income.

By Dean Tucker, Idaho Regional Manager, Waterstone Mortgage

There are a number of new laws in place is to protect consumers who apply for a mortgage. One of the most important changes involves mortgage disclosures and new mandatory waiting periods which recently became federal law. By law, the consumer is now given "time" to review all disclosures. This is intended to provide an extra layer of protection for consumers by imposing a mandatory waiting period before a loan can close. Here is a summary of what you need to know:

The "Nuts And Bolts" Of How It Works:

•1. UPFRONT DISCLOSURES: Borrowers must wait at least 7 business days after the Truth-In-Lending disclosure is issued until they can close on their mortgage loan. Add 3 days if the disclosures are provided via mail.

•2. REVISED DISCLOSURES: If there are any changes to the terms of the transaction or the loan, new disclosures must be issued and the borrower must wait an additional 3 days until they can close on their mortgage loan. Add another 3 additional days if the new disclosures are provided via mail.

•3. BROKERED LOANS: If the loan officer works for the same company that will be funding the loan, borrowers do not need to be concerned about any additional waiting periods. If the loan officer is "brokering" the loan to another company, then additional waiting may occur. When a loan is being brokered, the date of disclosures is based on the date that the funding lender issues disclosures rather than when the originating loan officer issues them. Most banks and direct mortgage lenders fund the vast majority of the loans that they originate, and as such these additional waiting periods don't typically apply. In an effort to always provide out customers with the best possible mortgage options, even banks will occasionally "broker" certain niche loan programs. Examples of these programs include, but are not limited to, some "State Bond" loan programs for first time home buyers, reverse mortgages and construction loans.

•4. APPRAISAL DISCLOSURE: In addition to the mortgage disclosure requirements, the lender must also deliver a copy of the appraisal to the borrower at least 3 business days before closing. Add 3 days if the appraisal is provided via mail.

•5. ELECTRONIC DELIVERY CONSENT: Borrowers can consent to receiving documents via email and shave 3 days off the waiting period. Lenders will require a signed "Electronic Delivery Consent" form on file to deliver documents via email.

Top 7 Things You Need To Understand To Protect Your Clients And Yourself:

•1. CLOSING DATE: I know this is a tough one, but when negotiating the date of closing, make sure it's flexible and there are no penalties for not closing on the specified date. The waiting periods are "federal law" and preclude the terms in the written contact.

•2. DOWN PAYMENT: Last minute down payment changes will delay your closings.

•3. RATE LOCK: "Floating the interest rate" until the last minute could delay your closings. Encourage your clients to lock in at least 7 to 10 days before the projected close date. In addition, last minute changes could also trigger the need for lock extensions, which could increase the loan costs and trigger even more disclosure waiting periods.

•4. SHOPPING: Switching lenders at the last minute will delay closings. The disclosure process starts over again with another lender.

•5. WAIVERS: There are no waivers to the waiting period-unless it's a hardship with tens of thousands of dollars at stake because the law is written as such that a ‘waiver" will be virtually impossible to obtain.

•6. TRANSACTIONAL CHANGES: Notify your loan officer if anything...and I mean ANYTHING changes on the purchase agreement. This could require a re-disclosure and another waiting period, and as such could delay the closing. See examples below.

•7. THIRD PARTY FEES: Since the lender is responsible for estimating and disclosing third party fees (appraisal, credit report, closing escrow company), there may be last minute changes that are out of their control.

The bottom line: The days of negotiating the deal at the last minute ARE OVER-unless all parties involved (buyers, sellers, etc.) are prepared to delay the closing date.

CHANGES THAT MAY TRIGGER RE-DISCLOSURE REQUIREMENTS:

Transactional Changes - Examples:

Sales Price

Loan Amount

Down Payment

Closing Date

Seller paid closing costs (sales concessions)

Loan Program (Conventional, FHA, VA RD, IHFA)

Type of Property (Single Family, 2-4 Units, Condo, Manufactured homes, etc)

Type of Occupancy (primary residence, second home, investment property)

Lender Changes - Examples:

Interest Rate (floating rate vs. locked rate)

Origination Fee (finalized when you lock)

Discount Points (finalized when you lock)

Lender Fees (Processing, Underwriting, Doc Handling, Courier Fees, etc)

Third Party Changes - Examples:

Flood Certification Fees

Mortgage Insurance

Closing Agent's Misc Fees (Doc Retrieval Fees, Courier Fees, Mailing Fees, etc.

Escrow Company's settlement closing fee

(The above examples are not all inclusive of every item that might trigger re-disclosure requirements.)

As you can see we are living in a crazier mortgage world than ever before. The keys to success: work with a knowledgeable fulltime mortgage professional, start the loan process early, don't try to close a transaction faster than the new laws will allow (a reasonable amount of time is 30 days from date of fully excepted contract), and keep a consistent flow of communication throughout the process!

The owners of Prime Equity Mortgage of Boise Idaho were recent Honorees of the BBB Integrity Counts! award for Southwest Idaho. Fox 12's Tami Tremblay interviews Dean Tucker and Shanna Wrote-Tucker on their award winning business philosophy.

(Home Loan Boise)