Low Mortgage Rates to Hang Around Next Year

Mortgage rates are expected to remain very low at least through mid-2012, while housing activity improves slightly, according to Freddie Mac’s economic and housing outlook released Wednesday.
The outlook also projects fewer single-family home-loan originations but more multifamily lending in 2012. The rental market is likely to lead growth in the lending industry, though parts of the country will also benefit from increased activity in the single-family home market.

High unemployment and a glut of foreclosed properties have depressed the housing market in recent years, despite extremely low interest rates that have made borrowing more attractive.
“While the headwinds remain strong going into 2012, there are indications the economy and the housing market are gaining ground, albeit slowly,” said Frank Nothaft, Freddie Mac’s chief economist. “All told, next year will be another bumpy ride.”

Job growth must accelerate beyond the average monthly payroll gains of 130,000 seen this year through November for the unemployment to decrease significantly. Even then, the mortgage company predicted the unemployment rate will remain above 8% in 2012.
Freddie Mac predicts the U.S. economy will grow by about 2.5% next year.

Military Veterans earn one-year Federal Tax Credit Extension

Military personnel, members of the Foreign Service, and employees of the intelligence community have an extra year, through June 2011, to buy a principal residence in the U.S. and claim the federal tax credit. The deadline for entering a binding contract is April 30, 2011; the deadline to close a purchase is June 30, 2011. The extension applies to any individual (and, if married, the individual's spouse) who serves on qualified official extended duty service outside of the United States for at least 90 days during the period beginning after Dec. 31,2008, and ending before May 1, 2010. All other home buyers must be under contract by April 30, 2010 and close by June 30, 2010 to qualify for the federal tax credit.

Federal & State Combined Tax Credits$18,000 IN COMBINED HOMEBUYER TAX CREDITS FOR A LIMITED TIME Californians have a brief window of opportunity to r

$18,000 IN COMBINED HOME BUYER TAX CREDITS FOR A LIMITED TIME

Californians have a brief window of opportunity to receive up to $18,000 in combined federal and state home buyer tax credits. To take advantage of both tax credits, a first-time home buyer must enter into a purchase contract for a principal residence before May 1, 2010, and close escrow between May 1, 2010 and June 30, 2010, inclusive. Buyers who are not first-time home buyers may use the same time frames to receive up to $16,500 in combined tax credits if they are long-time residents of their existing homes as permitted under federal law, and they purchase properties that have never been previously occupied as provided under California law.

Under the federal law slated to soon expire, a first-time home buyer may receive up to $8,000 in tax credits, and a long-time resident may receive up to $6,500, for certain purchase contracts entered into by April 30, 2010 that close escrow by June 30, 2010. Additionally, under a newly enacted California law, a home buyer may receive up to $10,000 in tax credits as a first-time home buyer or buyer of a property that has never been occupied. The new California law applies to certain purchases that close escrow on or after May 1, 2010 (see Cal. Rev. & Tax Code section 17059.1(a)(4)). California law generally allows buyers of never-occupied properties to reserve their credits before closing escrow, but buyers seeking to combine the federal and state tax credits will not be able to satisfy the timing requirements for such reservations (see Cal. Rev. & Tax Code section 17059.1(c)(1)(A)). Other terms and restrictions apply to both tax credits.

Source California Association of Realtors

New rule affects homeowners in foreclosure avoidance program

The new procedure, to be adopted by servicer's by June 1, would require three documents upfront: a formal application including a description of the hardship created by the mortgage; proof of income, which would mean at least two pay stubs or the most recent profit and loss statement for self-employed borrowers; and a form authorizing the IRS to release tax data to the servicer.

If a borrower makes three payments at the modified rate, the modification will automatically be made permanent. The changes should help borrowers better understand the process and their chance of getting a loan modified.

Lenders are being encouraged to cut loan balances to avoid losing even more money on foreclosures. The government should use its control of Fannie Mae and Freddie Mac to start writing down the principle on mortgages owned or insured by them and also request, that the private sector do the same.

The program was designed to provide billions of dollars in subsidies to encourage lenders to forestall foreclosures by reducing mortgage payments to 31% of the borrowers household income.

To obtain the subsidies, servicer's must take a series of steps to reach an affordable payment: reduce the interest rate, extend the loans term to 40 years and suspend payments on part of the amount owed. A permanent reduction of the loan balance is optional.

If the loan owner comes out ahead with a modification, the servicer is required to make it. By documenting the borrowers financial situation before offering a trial modification, servicers can make this calculation upfront and inform borrowers whether they qualify

News Release by Fannie Mae

News Release, Fannie Mae

January 28, 2010

Fannie Mae Announces 3.5 % Seller Assistance on HomePath Properties

Incentive Part of Ongoing Effort to Stabilize Neighborhoods

WASHINGTON, DC - Fannie Mae (FNM/NYSE) announced today that people purchasing a Fannie Mae-owned HomePath property will receive up to 3.5 % of the final sales price to be used toward closing cost assistance or their choice of appliances. The offer is available to any owner-occupant who closes on the purchase of a property listed on HomePath.com before May 1, 2010

"Attracting qualified buyers to the market and reducing the inventory of vacant homes is critical to stabilizing neighborhoods and helping the market recover. Many families are taking advantage of the federal homebuyer tax credit to buy a new home so this is a great time for Fannie Mae to offer some additional help," said Terry Edwards, Executive Vice President of Credit Portfolio Management. "Homebuyers have the option to choose between financial assistance toward closing costs or new appliances for their home."

Properties eligible for this incentive are listed on HomePath.com and most listings include detailed property descriptions, photographs, community and school information and more. In addition, many Fannie Mae-owned properties are eligible for special HomePath Mortgage and HomePath Renovation Mortgage financing which offers homebuyers an opportunity to purchase with as little as 3% down.

Fannie Mae Resource Center
1-800-732-6643

FHA lifts 90-Day waiting period

Starting Feb. 1 housing regulators will suspend for one year a 90-Day waiting period on property resales that it says has put FHA borrowers at a disadvantage in bidding on foreclosed properties.

The waiting period on FHA financing of resales was implemented in 2003 to protect the Federal Housing Administration's mortgage insurance program from the impacts of home flipping.

The policy did not apply to properties repossessed by Fannie Mae, Freddie Mac, or state and federally chartered financial institutions. In 2008, FHA lifted the 90-Day waiting period on resales of all bank-owned (REO) properties.

Now, although many other conditions still apply, the waiting period is being lifted on all resales including properties purchased and rehabbed by private investors.

Research shows that acquiring, rehabilitating and reselling properties to prospective homeowners often takes less than 90 days, the Department of Housing and Urban Development (HUD) said in announcing the change.

Some sellers of foreclosed properties have been reluctant to enter into contracts from potential FHA buyers because of the cost of holding a property for 90 days, and the risks that a vacant property would be vandalized, HUD said.

Lifting the waiting period "will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities," HUD said.

Lenders must have supporting documentation or a second appraisal if the sales price of a property increases by more than 20% from the seller's acquisition cost, HUD said in publishing the waiver requirements. The waiver does not apply t the Home Equity Conversion Mortgage (HECM) for purchase program

Inman News, 1/19/10

Energy-Efficient Rebate, by CAR

Energy-Efficient Rebates

The government is expected to unveil a new program in the next couple of months that, if approved, may reimburse homeowners for up to half the cost of making their homes more efficient. Through the program, homeowners will receive the largest return from simple upgrades like caulking windows, adding insulation, and changing incandescent light bulbs to those that are more energy-efficient.

To determine which energy-efficiency upgrades are best for their house, homeowners should obtain a home energy audit. Homeowners are advised to hire a contractor licensed by the Building Performance Institute or the Residential Energy Services Network. These contractors have been trained to first test a home to determine the amount of energy it is losing, then make suggestions on renovations.