Last Week in the News

The Commerce Department announced that gross domestic product — the total output of goods and services produced in the U.S. — increased at an annual rate of 3.5% in the third quarter of 2009. The rebound ended four consecutive quarters of contracting economic activity, the longest period of decline since quarterly records began in 1947.

The Conference Board reported that its consumer confidence index fell to 47.7 in October from a revised 53.4 in September. Economists had expected a reading of 53.5. The index was benchmarked at 100 in 1985, a year chosen because it was neither a peak nor a trough in consumer confidence.

The Standard & Poor’s/Case-Shiller 20-city housing price index rose 1% in August. It was the third consecutive monthly gain and follows a 1.2% increase in July.

Orders for durable goods — items expected to last three or more years — rose 1% in September after falling a revised 2.6% in August. Among the areas of strong growth were orders for heavy machinery, up 7.9%, the best showing since an 8.5% increase in March 2008.

The Commerce Department reported new home sales fell 3.6% in September to a seasonally adjusted annual rate of 402,000 from a downwardly revised rate of 417,000 in August. It was the first decline since March.

Initial claims for unemployment benefits rose by 1,000 to 530,000 in the week ending October 24. The figure was higher than the 525,000 that economists had forecast. The number of people continuing to claim jobless benefits in the week ending October 17 fell by 148,000 to 5.8 million.

Upcoming on the economic calendar are reports on construction spending and pending home sales on November 2, factory orders on November 3 and wholesale trade on November 6.

HomeLine

Moving Done Right

With more than 40 million Americans moving each year, the Department of Transportation (DOT), which oversees the moving industry, receives up to 4,000 complaints each year. Most of these complaints stem from damaged goods and overcharging. If you have clients planning a move, here are some important tips they should consider.

Qualify the mover. Ask to see the movers’ DOT registration. Most complaints involve “rogue movers,” which are companies that operate without the proper certifications. Check their reputability on Angie’s List (angieslist.com) and the Better Business Bureau (bbb.org). Avoid any mover that offers quotes over the phone or the Internet. Instead, get at least three written estimates from separate professional movers that require an in-home inspection before providing a quote. Be wary of any quote substantially lower than others you get. The tactic of low balling to get the job and then demanding additional charges to cover actual costs is all too common.

Know your estimate. Professional movers offer different kinds of estimates. They can include binding and, more often, non-binding estimates with a guaranteed not-to-exceed price. Discuss all options and identify in writing any exclusions to the guaranteed not-to-exceed price.

Get additional insurance. The default insurance that movers provide is called valuation coverage, which assumes liability for no more than 60 cents per pound per item. Meaning: The 32" Sony LCD HDTV that cost $497.99 will fetch $15 if found damaged upon delivery. Fortunately, movers offer additional insurance policies in which you can pay to cover depreciation value or even replacement cost. Regardless of the type of insurance, notify the mover in writing about any articles of high value.

Finally, do not sign a delivery receipt for your household goods if it contains any language about releasing the moving company from liability. By law, anyone moving has up to nine months to file a written claim. Strike out this kind of language or refuse delivery until a proper receipt is provided.

House Approves Loan Limit Extension; House, Senate Leaders Reach Agreement on Home Buyer Tax Credit

By: Sorohan, Mike

The House and Senate yesterday approved a continuing resolution that includes a provision that would extend current loan limits for FHA and the government-sponsored enterprises through next year.

Additionally, Senate leaders announced they have agreed to an extension of the $8,000 first-time home buyer tax credit through April 30. The popular credit, which has strong support from the Mortgage Bankers Association, is set to expire Nov. 30.

The CR, which keeps the federal government running through Dec. 18, passed the House on a 247-178. The Senate vote was 72-28.

MBA commended both chambers on their actions. "Given the lack of a private secondary mortgage market, FHA, Fannie Mae and Freddie Mac are pretty much the only game in town," said MBA Chairman Robert Story Jr., CMB. "Extending the current loan limits through 2010 will allow more loans to qualify for these important programs and will help keep mortgage credit more accessible and affordable for qualified borrowers."

The CR provision would keep in place current conforming loan limits of $625,000 ($729,750 in designated high-cost areas). Without approval from the Senate, those limits will expire on Dec. 31.

MBA and other industry trade groups sent a letter this week to leadership of the House and Senate urging Congress to pass legislation “as soon as possible” to extend current higher loan limits. The letter called the higher limits a “key component of the economic recovery efforts because they help make affordable loans available for a broader spectrum of consumers who want to purchase a home or refinance an existing mortgage.”

"As we try to maintain the momentum of the housing recovery, providing affordable financing for qualified borrowers is critical," Story said. "Extending the loan limits, along with other initiatives such as extending and expanding the homebuyer tax credit, will help restore stability to the housing and mortgage markets."

Meanwhile, members of the Senate said they substantially reached an agreement on extending the first-time home buyer tax credit, adding it to a bill that would extend expiring unemployment benefits.

The amendment would extend the existing $8,000 tax credit for first-time home buyers and offer a new $6,500 credit for existing homeowners who have lived in their current residence for a consecutive five-year period within the past eight years. Under the amendment, home buyers would be required to be under contract by April 30 and close before July 1.

MBA has supported extension and expansion of the tax credit, noting that the Internal Revenue Service recently reported that more than 1.4 million taxpayers have benefited from the tax credit, enacted by Congress as part of the Housing and Economic Recovery Act of 2008.

“MBA believes the first-time home buyer tax credit has had a stimulating impact on our economy, and MBA supports extending and expanding it so it can help more buyers and sellers,” MBA said in a recent Call to Action from its grassroots advocacy arm, the Mortgage Action Alliance. “Our fragile economy is just beginning to show signs of stabilizing. We should not jeopardize our recovery by letting this tax credit expire. The home buyer tax credit is helping hundreds of thousands of Americans realize the American dream, and it is creating thousands of jobs that rely on homeownership.”

House Approves Loan Limit Extension; House, Senate Leaders Reach Agreement on Home Buyer Tax Credit

By: Sorohan, Mike

The House and Senate yesterday approved a continuing resolution that includes a provision that would extend current loan limits for FHA and the government-sponsored enterprises through next year.

Additionally, Senate leaders announced they have agreed to an extension of the $8,000 first-time home buyer tax credit through April 30. The popular credit, which has strong support from the Mortgage Bankers Association, is set to expire Nov. 30.

The CR, which keeps the federal government running through Dec. 18, passed the House on a 247-178. The Senate vote was 72-28.

MBA commended both chambers on their actions. "Given the lack of a private secondary mortgage market, FHA, Fannie Mae and Freddie Mac are pretty much the only game in town," said MBA Chairman Robert Story Jr., CMB. "Extending the current loan limits through 2010 will allow more loans to qualify for these important programs and will help keep mortgage credit more accessible and affordable for qualified borrowers."

The CR provision would keep in place current conforming loan limits of $625,000 ($729,750 in designated high-cost areas). Without approval from the Senate, those limits will expire on Dec. 31.

MBA and other industry trade groups sent a letter this week to leadership of the House and Senate urging Congress to pass legislation “as soon as possible” to extend current higher loan limits. The letter called the higher limits a “key component of the economic recovery efforts because they help make affordable loans available for a broader spectrum of consumers who want to purchase a home or refinance an existing mortgage.”

"As we try to maintain the momentum of the housing recovery, providing affordable financing for qualified borrowers is critical," Story said. "Extending the loan limits, along with other initiatives such as extending and expanding the homebuyer tax credit, will help restore stability to the housing and mortgage markets."

Meanwhile, members of the Senate said they substantially reached an agreement on extending the first-time home buyer tax credit, adding it to a bill that would extend expiring unemployment benefits.

The amendment would extend the existing $8,000 tax credit for first-time home buyers and offer a new $6,500 credit for existing homeowners who have lived in their current residence for a consecutive five-year period within the past eight years. Under the amendment, home buyers would be required to be under contract by April 30 and close before July 1.

MBA has supported extension and expansion of the tax credit, noting that the Internal Revenue Service recently reported that more than 1.4 million taxpayers have benefited from the tax credit, enacted by Congress as part of the Housing and Economic Recovery Act of 2008.

“MBA believes the first-time home buyer tax credit has had a stimulating impact on our economy, and MBA supports extending and expanding it so it can help more buyers and sellers,” MBA said in a recent Call to Action from its grassroots advocacy arm, the Mortgage Action Alliance. “Our fragile economy is just beginning to show signs of stabilizing. We should not jeopardize our recovery by letting this tax credit expire. The home buyer tax credit is helping hundreds of thousands of Americans realize the American dream, and it is creating thousands of jobs that rely on homeownership.”

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.