Kevin Breeland

I hope when I am in my mid to late 70's I have such good friends as my dad and Uncle have:

Front Left - My Dad Allan Breeland, Jr

Back Left - Family friend Frank Kosse

Front Right - My Uncle Lewis Breeland

Back Right - Family Friend Aubrey

I am sorry if I have posted this before but an ActiveRain friend Mark Brian was talking about the lost of his best friend's father and that got me to think about my dad and Uncle Lewis. I wanted to share this with you.

IT'S BACK....believe it or not ML-09-15 with attachments are back. Called Using First-Time Homebuyer Tax Credits so here are the guidelines:

The first thing to keep in mind is you must follow IRS guidance to see if you are even eligible for this tax credit. that website is http://www.irs.gov/newroom/article/0,,id=204671,00.html?portal7. Leave it to the IRS to have such a difficult link. Second piece, Pursuant to 31 U.S.C. 3727 and 26 U.S.C. 6402, a refund of the first-time homebuyer credit will be made by the IRS only to the taxpayer, not to a third party. Short version, any refund issued cannot be assigned by a taxpayer to a third party.

So, what are some of the rules this time around? Here are the bullet points right from the Mortgagee Letter HUD issued:

• The tax credit advance, when combined with the FHA-insured first mortgage MAY NOT RESULT in CASH BACK to the BORROWER
• The second lien may not exceed the total amount needed for the down payment, closing cost, and prepaid expenses...meaning if the total is $5000 and they qualify for $8000 the second lien can only be for the $5000..if confused reread the first bullet point.
• Secondary financing may be "soft" (silent) or require a monthly repayment.
• If payments are required, they must be included within the QUALIFYING RATIOS and, when combined with the first mortgage, CANNOT EXCEED THE BORROWER'S REASONABLE ABILITY TO PAY.
• Payments must be deferred at least 36 months to NOT BE INCLUDED IN THE QUALIFY RATIOS.
• If the tax credit advance loan has a short term for repayment, it must also provide that if the borrower fails to repay by the DESIGNED DEADLINE, PRINCIPAL AND INTEREST PAYMENTS BEGIN AUTOMATICALLY OR THE LOAN CONVERTS TO A "SOFT" SECOND (there is that word again "soft")
• The secondary financing may not require a baloon payment before ten years.

WHAT??? Wait, there's more bullet points titled Purchase of Tax Credit: FHA-approved mortgagees and FHA-approved nonprofit organizations as well as Federal, State, and Local governmental agencies and instrumentalities thereof may purchase the tax credit anticipated by the homebuyer.

• The proceeds of the sale of the tax credit MAY NOT EXCEED THE ANTICIPATED TAX CREDIT DUE THE HOMEBUYER based on the COMPUTATIONS OF FORM IRS 5405;
• The borrower must submit a signed certification that the tax credit is not subject to offset due to other indebtedness. Translation, the borrower cannot pay off other debt in the loan and can not have IRS obligations due.
• A Copy of the borrower's tax refund and/or the Form 5405 must be collected and retained
• Fees...remember this one...now there is a limit...cannot exceed 2.5% of the anticipated credit.
• The homeowner's downpayment required for eligibility for FHA insurance may not consist of any funds (including funds derived from a sale of the homebuyer tax credit) provided by the mortgagee, the seller, or any other person or entity that financially benefits from the transaction (or by any third party or entity that is reimbursed, directly or indirectly, by the financially benefiting person or entity). Accordingly the proceeds of the sale of the tax credit to FHA-approved mortgagees, the seller, or any person or entity that financially benefits from the transaction (or by any third party or entity that is reimbursed, directly or indirectly, by the financially benefiting person or entity), may not be used to meet the 3.5% minimum downpayment, but may be used as additional downpayment, buying down the interest rate, or other closing costs. What this tells me if the lender or anyone with a financial interest in this transaction does a purchase of the tax credit then the borrower still has to come up with the 3.5% downpayment requirement from their own allowable sources.

Show Me The Money!!! Once again HUD has managed to say you could do something while at the same time making it so difficult that it is going to be a miracle to figure out how to do this. This much I know REALTORS....don't get out there too far with this....right now there is not one investor who has said they will buy these loans and while I commend HUD for putting limits on FEES and CHARGES it is once again short on detail....like how does anyone actually get paid back?

HAVE A GREAT DAY!!!

Kevin M. Breeland

General Manager

Residential Mortgage of South Carolina, LLC

427 Johnnie Dodds Rd.

Mount Pleasant, SC 29464

breelandk@residentialmtg.com

www.residentialscdailyrates.com

Competitive by nature...the Best by choice!

What happened today with rates and what to expect? That is the question many will be asking and I will try an attempt to give some insights. The selling started last Thursday when Bill Gross from PIMCO questioned the AAA credit rating of the US. That is was bad but then Credit Suisse said that the Fed may be slowing down their MBS purchase program. Not good, then we had better than expected Consumer Confidence yesterday and a slightly better Existing Home Sales Report today. It doesn't stop there, these factors along with the notion that inflation could be a problem if the economy turns north, sent investors to an extreme selling panic. Since the high of Thursday ($100.41) to today's low ($96.78), the 4% MBS has lost 363bp closing down a whopping 206bp ending at $96.84. When a dramatic move to either side occurs, it should bounce back somewhat to the other side. But when will it bounce back, that is what everyone wants to know. The answer....not sure but this much I do know. The Treasury has committed to $1.25 Trillion in MBS (Mortgage Backed Securities) purchase. So far the Treasury has purchase somewhere in the neighborhood, according to the data I found, over $575 billion. The pressure seems to be coming for many different sources and it may take a few weeks for this to sort out. Where is the pressure, Oil for one. Oil is now up to $63/barrel. This is pushing prices at the pump to over $2.40 a gallon. What is the biggest threat to bonds, inflation. While the government will give us numbers minus food and energy, the bond market pays attention to the whole number. Another threat, money supply or as it has been pointed out the OVER money supply. The Government has been printing money as if they are at the copier for a Monday Morning meeting and someone forgot the copies for the meeting. While we need a healthy market, we are getting close if not already over the top, on having printed too much money. Another threat, well as dumb as this sounds the belief the economy is recovering. While it is important to see signs of improvement lets remember we are a long way form seeing the end of this. Example, homes are still delinquent at record numbers, at some point and time lenders will start foreclosing again, and the Government refinance programs will not provide enough incentives to save all the people who are trying. Lenders have servicing agreements with time frames that have to be met and the foreclosures are not done....yet. It is possible we can still see prices declining even further before the bottom is hit. Are we close to the bottom, I think so but remember this will not be resolved in weeks, think months and maybe years before all pieces of the economy will recover. Some other signs of a deepen recession, look at unemployment. In South Carolina this number is now 11.5% and nationally the number is 8.6% with many experts believing this number could hit 9.5%..some even think higher. Oil prices will stagger a recovery the closer to $3.00 a gallon we get, slow growth because people who do have jobs will be spending more money just getting to work, will have less money because food cost more, therefore increasing inflation fears as prices rise and the circle continues. Now I am not trying to say the end is near in either direction, just keeping the focus where it should be...today. Everyday is and will continue to be in uncharted waters. Lets not get too far ahead of ourselves. One other note...today Senator John McCain on twitter sent a tweet that the US Government (and us the taxpayer) would end up through the bankruptcy of GM with 70% ownership and another $50 billion on the hook. So, I responded to Senator McCain asking if all American would get employee pricing on all GM makes and models and he never answered. If you are going to tweet, you should answer when asked a question. Sorry for the lack of pictures the excess of words. Kevin M. Breeland General Manager Residential Mortgage of South Carolina, LLC 427 Johnnie Dodds Mount Pleasant, SC 29464 breelandk@residentialmortgagesc.com www.residentialscdailyrates.com

Monetize, I am not embarrassed to say that two days ago was the first time in my 52 years I ever saw this word. Since it was in a sentence I had a general idea what it meant, but honestly I wasn't sure. So, at 52, when you see a word you don't know what do you do??? Google it???? No....ol' school....I looked it up in the Fourth Edition The American Heritage College Dictionary I keep in my office.

So what is the definition of Monetize? I quote "mon e tize 1) To establish legal tender. 2) To coin (money) 3) To convert (government debt) from securities into currency that can be used to purchase goods and services." I think we have been doing a lot of #3 lately...but that is not what this is about...

So, we are going to "monetize" the $8000 tax credit but do we really know how that will be done. The answer, NO. While HUD issued "guidance" on this issue in Mortgagee Letter 09-15 in typical HUD fashion they issued no specifics...big shock there. Before you load up your cars with a bunch of First-Time Home Buyers my recommendation is this...WAIT!!!! STEP AWAY FROM THE TEMPTATION!!! The old argument is if I don't someone else will, well maybe but not with any success. Why, let me give you a few things to consider.

First, if a borrower only needs $5000 but qualifies for $8000 they can only use the "monetize" Tax Credit for $5000. The borrower CAN NOT....I REPEAT...CAN NOT receive CASH BACK!!! These second liens have to be counted in your borrowers debt ratios EVEN IF the payments are deferred. In the words of someone associated with FHA-approved nonprofits it appears the repayment works essentially on the honor system and appears to be TOO RISKY....however looking for more guidance to determine the level of potential risk. FHA approved mortgagees can do a "bridge loan" against the Tax Credit....did someone change the definition for a "secured loan"? Also, is the secondary market going to be willing to purchase these loans? It is not clear how you would "secure" these loans. Last but not least...FEES AND CHARGES. HUD ISSUED NO GUIDANCE. I CAN ASSURE YOU THERE WILL BE ABUSES AGAINST THE CONSUMER WITH NO GUIDANCE OR LIMITS IN THIS AREA. For now I would caution anyone moving down this path. It is one more example of the administration issuing policy with no idea of how to implement it. Stay Tuned for more!!!!!!! HAVE A GREAT DAY!!!!

Kevin M. Breeland

General Manager

Residential Mortgage of South Carolina, LLC

427 Johnnie Dodds Rd.

Mount Pleasant, SC 29464

breelandk@residentialmtg.com

www.residentialscdailyrates.com

Competitive by nature...the Best by choice!