Vicki Porter

President Obama signed the bill to extend the home buying credit, which should continue to help our real estate market. First time home buyers can still get up to $8000 if they get a property under contract by next April 30th. The tax credit program now gives a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years. For more info about the law, and for answers to frequently asked questions, go to http://www.FederalHousingTaxCredit.com

The mortgage industry has received considerable blame for the current economic collapse. Lenders made loans to people who were not qualified, on properties with inflated values, and with terms that were arguably unconscionable. It added insult to injury when these subprime loans were packaged and sold as securities, and these mortgage backed securities were sold at inflated values. Many borrowers were unable to make their payments resulting in many foreclosures, with the properties foreclosed losing their own value and dragging down the value of nearby homes with them.

Until recently in Colorado, there were no prerequisites to being a mortgage broker. "A mortgage broker is an individual who negotiates, originates, or offers or attempts to negotiate or originate for a borrower, and for a commission or other thing of value, a loan to be consummated and funded by a mortgage lender."[i] Colorado required registration of mortgage brokers in 2007, and on January 1, 2008, the Mortgage Broker Licensing Act became effective in Colorado. Mortgage brokers now must complete courses and pass a state exam in order to be licensed. The exam includes two parts - a Federal, State and Consumer Protection Laws portion and a Mortgage Lending Basics and Ethics portion. Each mortgage broker also must post a $25,000 surety bond, carry errors and omission insurance, and submit fingerprints for a criminal background check.

The Colorado Division of Real Estate is responsible for enforcement of the new Mortgage Broker Licensing Act. "Mortgage brokers doing business in the State of Colorado will be held to the highest ethical standards the law allows,.." said Erin Toll, Director of the Colorado Division of Real Estate. Of the 9323 mortgage brokers who had registered with the state by December 31, 2008, fewer than 3000 completed all of the requirements for licensure at the end of last year. The Colorado Division of Real Estate passed an emergency rule to allow extensions for individuals who were unable to complete the course and examination requirements before the end of the year, and the Division received hundreds of applications for extensions.

The stricter requirements for licensure of mortgage brokers may result in many leaving the industry. It may surprise some to hear that the higher standards is what attracted me to the field. In getting my mortgage broker license, I decided to bring my honest, professional work ethic to an industry that needs more trustworthy people. I am the owner and managing broker of Porter House Realty, an independent real estate company in Denver. What sets me apart from most other real estate brokers is the fact that I was an attorney in Denver prior to being a real estate broker. I was motivated to get my mortgage broker license because of the course and testing requirements.

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[i] Colorado Real Estate Commission definition.

[ii] Taken from Rebchook on Real Estate in the Rocky Mountain News on 3/31/2008

The monthly Standard & Poors /Case-Shiller Home Price Indices said average prices of existing homes in Denver fell 4 percent between December 2007 and December 2008, less than any of the other 19 cities in the report. The average decline among the 20 cities was 18.5 percent, S&P said.

All 20 metro areas are reporting negative monthly and annual rates of change in average home prices. Denver is reporting a relative improvement in year-over-year returns, in terms of lesser rates of decline than last month's values.

http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_Release_022445.pdf

The American Recovery and Reinvestment Act of 2009 (the “Stimulus Bill”) that President Obama signed into law yesterday in Denver, Colorado authorizes a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009.

• The tax credit is for first-time home buyers only.

• The tax credit does not have to be repaid.

• The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.

• The credit is available for homes purchased on or after January 1, 2009 and before December 1, 2009.

• Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.

The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.

If you want to take advantage of this credit, please contact me. Vicki@PorterHouseRealty.com

If you have any more questions, see http://www.federalhousingtaxcredit.com/2009/faq.php#2

Why should the government want to save the failing institutions and buy the bad loans, rather than just pump money into the economy Take the same $700 Billion, and make the government an investor. The money can be used for government loans for mortgages or business loans at a set interest rate (which the government can set and adjust when the market changes) with realistic qualification requirements. The lenders qualify the borrowers and make the loans. The lenders get the funds at a fixed amount lower than the actual loans. For example:

Wells Fargo creates a mortgage to a qualified borrower at 6%. Wells Fargo gets the funds from the government and agrees to pay the government back the loan plus 1%. As long as the borrower satisfies the qualification requirements that are set, the government assures the loan (i.e., Wells Fargo has no risk and can make 5% on the loan). This is a super deal for lenders, so they will go through the red tape to get the loans. Money will quickly get into the market, which will allow real estate values to stabilize and increase - making the existing bad loans less bad. This is also not a bailout, so Main Street would support it.

This would mean that companies will continue to fail and homes will get foreclosed, but it addresses the challenges in the economy today and works toward a remedy for the future. Plus it is not creating additional deficit for the government.

Let me know what you think.

Vicki Porter

Porter House Realty

Denver, Colorado