Good Day!!!
Below you will find.....
- First Time Home Buyer Tax credit
- Extension of Higher Loan Limits
- FHA Condo Changes
- Change to Debt to income ratio
- CAR helps buyers and Realtors stand out! - flyer attached
First Time Home Buyer Tax Credit - has NOT passed yet: Here is what we know:
- Has passed the Senate but has to go back to the House than to the President
- 10% of the purchase price to max of $8K for FTHB
- Extended to Apr 30 but COE has to be within 60 day after
- Move up buyers eligible; has to have lived in their house the last 5 of the 8 year; eligible for $6500 credit
- Capped at purchase price to $800K
- Income limits are expanded to $125,000 on a single return and $225,000 on a joint return. Current law $20,000 phase-out retained.
Extension of Higher Loan Limit
There is a bill that has passed House and Senate that is to extend unemployment benefits. Also tied to this is the extension of the High Loan Limit of $729,750. It is sitting on the President's desk waiting for signature....
FHA Condo Changes Dec 7th
There has been no full release of the new guidelines yet by FHA. We do know:
- Spot approvals will no longer be allowed
- Condos FHA approved prior to Nov 2008 will no longer be FHA approved
- Banks will be allowed to do the approval but there will be heavy fines ($1M or $500K I've heard both) if HUD finds the approval not to regulation/liking.
- The cost for an HOA will be $3 to $5K for the approval
- HUD will take 8 to 12 weeks to approve
- Only 30% of all condos in the complex can have FHA loans
CAR Help Buyers - Mortgage Protection Program - http://www.car.org/aboutus/hafmainpage/carhafmortgageprotection/
I made a call yesterday to find out that one of my clients a First Time Home Buyer a year ago was laid off 3 months ago. I gave him some advice but what could I say.
There is something that you can do for you current First Time Home Buyers. I've told you about this before but I think we all need a reminder......
C.A.R. Housing Affordability Financing Mortgage Protection Program
Qualified buyers who lose their job due to Layoff maybe eligible to receive $1500 per month for up to 6 months to help them making their mortgage payments
Change to Debt to Income Ratios
As I mentioned in a previous email; maximum debt to income ratio guidelines are changing.
Date has been moved to Dec 12th with the release of Fannie Mae's updated underwriting software (DU).
The max debt to income ratio of ALL LOANs will be 45% with exception to 50% with compensating factors; reserves at closing, high FICO (680 or higher), 10% or more down payment, no derogatory credit history, and others.
What is debt to income ratio: all expenses / total income
Example: Two Borrowers; Total expenses before purchase of new home of $1000
- Total income is $6000
- Borrower is purchasing a home for $200K with total house payment of $1800
(principal/interest/property taxes/insurance)
- Debt to income ratio ($1000+1800)/$6000 = 47%
Condos in Trouble
FHA has just issued new condo guidelines that will become effective on October 1, 2009. If you currently either have buyers interested in purchasing condos or clients looking to sell their condo you need to know the facts below:
LET CHERRY CREEK GET YOUR CONDO PROJECT APPROVED. We have one of the best and most experienced project approval experts in the U.S. on our Cherry Creek staff. This gives you a huge advantage over your REALTOR® competitors in the condo arena.
Highlights of the Day and other info:
- Bond Market Highlight
- FHA HVCC implemenatation
- Tax credit extended for Active Military
- Fannie and Freddie cutting debt to income allowances impacting government loans as well
- Buyers Choice Act
Bond Market Highlights:
Stocks closed last week at their highest level since October 2008. Mortgage Bonds, on the other hand, were unable to close above resistance and were ultimately pushed lower. As we head into this week, two important news items are worth repeating... and worth sharing with your database.
First - as we explained in last Friday's Market Update, the remainder of the Fed's purchase program equates to $12 Billion per week in purchases. However, since the Fed is reducing the frequency of purchases, it may elect to purchase $24 Billion every other week. This is significantly lower than we've seen up until now, which will probably lead to softer Bond prices and higher mortgage rates.
Second - don't forget Fed Chairman Bernanke's remarks last week about the Fed raising its Fed Funds Rate at some point down the road to protect against inflation. Even if inflation looks tame now, this is insight you and your referral partners can use to educate and better advise clients who are sitting on the sidelines waiting for better rates. After all, when you combine Bernanke's comments with the news about the Fed dialing back its purchases of MBS, it is highly unlikely that future rates will be lower or even equal to where they have been recently.
FHA HVCC implementation???
Yes, starting January 2010 FHA appraisals can no longer be ordered by anyone that will receive a commission or monetary compensation from the transaction. FHA also implemented in Oct that any appraisal done must also be licensed by the state.
REMEMBER!!! Cherry Creek Mortgage Company, Inc does not use AMC to ordered appraisals. Our appraisers are LOCAL and are VERY experienced! Are list of appraisers are those we have been working with for sometime and our system complies with all our investors and the HVCC.
House Passes Legislation Extending FTHB Tax Credit for Active Military
The House of Representatives voted unanimously Monday to extend the deadline for the home buyers tax credit for one group of Americans.
HR 3590 will allow eligible military personnel and foreign service and intelligence officers to apply for the $8,000 tax credit for one year beyond its current November 30 deadline. Those meeting the underlying requirements for the credit must also be serving overseas or have spent at least 90 days deployed outside of the country during the current calendar year. It is expected that about 350,000 military personnel and an unknown number of federal employees may be affected by the new law.
The bill, introduced by Representative Charles Rangel (D-NY) because it was thought that families serving overseas were being passed over for this one-time opportunity to purchase a home. It passed the Housed passed with 416 votes and 16 abstentions.
Fannie and Freddie Cutting DTI Allowances to 45%?!
What this means is that borrowers who could afford a $500k home today will have to settle for a $400k home in the future. Get those buyers moving!
The maximum allowable total expense ratio in DU will be revised to 45 percent, with flexibilities offered up to 50 percent for certain loan casefiles with strong compensating factors. If current debts exceed the maximum allowable total expense ratio, the loan casefile will receive an Ineligible recommendation. This will apply to government loans FHA/VA. Investors will take on this new guideline. As mentioned in a previous email Cherry Creek Mortgage Company, Inc as implemented this guideline for loans that fund after Nov 13th as to allow us time to sell those loans with DTI higher than this guideline to end investors. Thus new loans funded after Nov 13th will be under the new guidelines.
Governor signs AB957; Buyers Choice Act
Prohibits sellers of so-called REO properties - typically foreclosed properties owned by banks - from requiring the buyer to use a particular title company, escrow settlement or other real estate service provider. http://www.prnewswire.com/news-releases/buyers-choice-act-ab-957galgiani-signed-into-law-64103832.html
Bonds Market:
Condos in Trouble
FHA has just issued new condo guidelines that will become effective on October 1, 2009. If you currently either have buyers interested in purchasing condos or clients looking to sell their condo you need to know the facts below:
LET CHERRY CREEK GET YOUR CONDO PROJECT APPROVED. We have one of the best and most experienced project approval experts in the U.S. on our Cherry Creek staff. This gives you a huge advantage over your REALTOR® competitors in the condo arena.
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Key things that you need to be telling your clients this week
The market is volitale and could be getting more with the news of the tariff on China. Remember China is buying up a lot of our debt right now in the form of bonds in response they could dump a bunch of those bonds thus sending interest rates up in response. |
Last Week in Review
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"BEFORE ANYTHING ELSE...PREPARATION IS THE KEY TO SUCCESS." Alexander Graham Bell Rates for home loans remain low - but it won't last forever. The Fed continues on their purchasing plan of Mortgage Backed Securities, and the added demand has kept Bond prices high and home loan rates low. Last week, they purchased another $32.4B, bringing the total to $849B out of the $1.25T they committed to. While these Fed purchases have helped home loan rates stay near present low levels, remember that their buying program is set to be over near the end of the year. There is talk that the program will be extended - but there has also been talk that it will end early - so nothing is a guarantee, except for the fact that when the Fed purchasing program is over, home loan rates will assuredly rise. In addition, given the current expiration date of November 30, 2009 for the $8,000 First Time Homebuyer credit, it's important for homebuyers to get prepared, and take action. In fact, many homebuyers are doing just that already. The Mortgage Bankers Association reported that home loan applications surged in the latest week to their highest level since late May, as more buyers are seeing the great opportunity that exists right now. Let me know if I can answer any questions for you, or perhaps a friend, family member, neighbor or coworker that might be thinking about a home purchase. The combination of reduced home prices, motivated sellers, low home loan rates, and the potential of a juicy tax credit is too great an opportunity to miss. The Stock market is doing well - and as you can see in the chart below, the S&P 500 Index closed at its highest level of 2009 last Thursday. The S&P 500 is a basket of 500 Stocks that are considered to be widely held, and is considered by most market experts as one of the best benchmarks available to judge overall US Stock market performance. In other economic news, Consumer Sentiment came in stronger than expected and Initial Jobless Claims were also reported better than expected, but still at a high level. Continuing Claims, which represent the number of people still receiving unemployment benefits, dropped a bit, but this realistically may be due to benefits expiring rather than people finding new jobs. |
Forecast for the Week
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Be prepared for a jam-packed week of economic reports ahead! Tuesday brings both the Retail Sales Report, which is the most-timely indicator of broad consumer spending patterns, and the Producer Price Index (PPI), which provides information about inflation at the wholesale level. There will also be more inflation news coming on Wednesday with the Consumer Price Index (CPI). CPI is an important measurement of inflation (and deflation) because it measures the average prices paid by consumers for goods and services, and what the change is in those prices over time. And things won't slow down then...Thursday will bring a read on the housing market with the Housing Starts and Building Permits Report, followed by a read on manufacturing with the Philadelphia Fed Report, which is one of the most widely-watched manufacturing reports. Thursday will also bring another Initial Jobless Claims Report. This weekly report continues to be important to watch as the job market plays a key role in our economic recovery. Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. As you can see in the chart below, Bonds have been able to remain above a key technical support level, and I'll be watching closely to see if Bonds and rates continue to improve. |
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