Obama Housing Plan: Live Blogging Summary

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What the Media is Saying - Obama’s Plan to Fight Foreclosure

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Stimulus bill update - $8000 tax credit

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Hello Elite Real Estate Professionals,

As promised I want to continue to provide you with Real Estate industry updates and information that will be helpful to you and your clients.

The following is a great warning with property tax links that can be shared with all Real Estate Professionals and their clients.

I want to be a source of industry related information you can count on as well as your Fidelity National Home Warranty and Disclosure Source representative.

Please continue to ask for a Fidelity National Home Warranty and Disclosure Source NHD report for all of your transactions.

 

Yvonne Nelson 

Fidelity National National Home Warranty &

Disclosure Source 

800-308-1424 ext 3518        

www.homewarranty.com

www.disclosuresource.com

 

             

 

*****************************************

 

Property Tax Reduction Scams Spreading, California Warns
Scam targets homeowners with declining property values
February 13, 2009
       
California Attorney General Edmund G. Brown Jr. is warning consumers about a “blatant and costly scam” targeting homeowners with declining property values.

“This blatant and costly scam holds out hope to homeowners that their property taxes will be reduced if they pay hundreds of dollars to a middleman to have their property re-evaluated,” Brown said. “In point of fact, homeowners can seek relief directly from their county assessor free of charge. Homeowners should be on high alert.”

Companies are sending deceptive mailers to homeowners offering help in reducing property tax assessments, if the homeowner pays the company hundreds of dollars in fees.

The companies use official-sounding names such as “Tax Adjusters,” “Tax Readjustment” or “Tax Review” to make victims believe the company is a government agency.

Property tax reassessment is a free service provided by county tax assessors. If homeowners believe their property value has declined and they are paying too much in property taxes, the local tax assessor will review the property value for free for a possible downward assessment.

To avoid becoming a victim, homeowners should:

• Never pay money for something they did not ask for.

• Avoid a middleman; they should contact their local tax assessor’s office for property value reassessment.

Mortgage-modification pitches may carry big risk - Sacramento Business, Housing Market News | Sacramento Bee

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This week’s Mortgage Update contains information about mortgage modifications, foreclosure sales and evictions, and credit maitenance.

Mortgage modification fails to slow state, Inland foreclosures
The number of California households receiving notices of default — the first step in the foreclosure process — rose 122 percent between November 2008 and December 2008, following a three-month decline, according to RealtyTrac.

Some real estate analysts believe a California law that required mortgage lenders to provide customers with 30 days notice, before filing a default, only postponed the foreclosure, but did not resolve the challenges associated with loan defaults.

Freddie foreclosures, eviction plans continue during moratorium
Fannie Mae and Freddie Mac have agreed to suspend foreclosure sales and evictions through the end of January 2009; however, Freddie Mac, unlike Fannie Mae, is continuing the foreclosure process and filing the necessary paperwork.  According to Freddie Mac, even though the process is continuing, the actual sales and evictions have stopped.

Clean up your credit
With financial institutions, auto dealers, and credit card companies more cautious about lending than in previous years, consumers are advised to closely monitor their credit history and FICO score to ensure they receive the best interest rates possible.

MAKING SENSE OF THE STORY FOR CONSUMERS

·      Consumers considering the purchase of a home should first get their credit and finances in order.  Reducing spending, limiting credit card balances to no more than 25 percent of the available balance, and monitoring credit reports are highly recommended by most financial experts.  Even borrowers with less than ideal credit scores and credit histories still may qualify for a home loan.  Some lenders will be more forgiving if the borrower has started meeting monthly debt obligations in the last six to 12 months.  Consumers can view their credit reports from Experian, Equifax, and TransUnion by visiting www.annualcreditreport.com.  The free credit reports will provide a borrower’s credit history, but not the credit score.  The credit score can be purchased for approximately $10 from the credit reporting bureaus.

·      Borrowers who already have received their free annual credit report can purchase a copy from www.myfico.com.  The cost is approximately $16 for the score from one credit bureau, or $50 for all three.

·      Good credit doesn’t mean simply paying bills on time; it also can mean job stability.  Most lenders require borrowers to have worked for the same employer for at least one year, possibly longer before they will approve the home loan application.  For self-employed individuals, most lenders will want at least two years of tax returns before approving a conventional loan.

·      Many large financial institutions have been forced to write off high levels of credit card debt. As a result, borrowers are being required to have higher FICO scores than previously required.  A year ago, a FICO score of 720 was considered excellent.  By today’s standards, a credit score of 740 or higher likely will mean the borrower is approved, but not necessarily at the best interest rate possible, according to an executive with LowCards.com.

·      Inaccuracies on a credit report can be disputed with each credit reporting agency.  Typically, the process takes 30 to 45 days for the bureau to investigate the dispute.  Although this process can be time-consuming, it is well worth the time and effort.  Incorrect notations, such as an account that has gone to collection or a home in foreclosure, could cost the borrower 100 points or more on their credit score.

·      Credit advisors recommend that borrowers pay their accounts in full each month, if possible.  If that is not feasible, then borrowers should pay at least the minimum amount owed, and ensure the payments are made on time.  Late payments will likely lower a credit score and could automatically result in a higher interest rate.

Q. If I bought a home and used the $7,500 home buyer tax credit, can I retroactively receive $15,000 credit if it becomes law?

A. No.

Q. Are there any income restrictions on the tax credit?

A. The Senate version currently has no income limits. The current $7,500 tax credit phases out on buyers with incomes exceeding $75,000 for individuals and $150,000 for married couples.

Q. When will the new tax credit go into effect?

A. The Senate version would take effect when the bill is signed by the president into law, and it would last for one year.

Q. Can I take the tax credit this year?

A. Yes. The Senate proposal would allow buyers — even those who purchase in 2009 — to claim the credit on their 2008 taxes.

Q. The proposed tax credit is nonrefundable. What does that mean?

A. You can only receive the credit to the extent that you owe federal income taxes. The Senate proposal would give home buyers two years to claim the credit, so buyers could claim a $7,500 credit in 2009 and a $7,500 credit in 2010. A family of four that makes less than $82,000, for example, could have a tax liability of less than $7,500 and they would not receive the full value of the credit.

Q. Are there any repayment requirements on the tax credit?

A. No. The Senate proposal does not require the credit to be paid back. The House proposal eliminates a 15-year repayment provision on the existing $7,500 tax credit.

Q. If I am eligible for the current $7,500 credit, am I also eligible for the $15,000 credit?

A. While the $15,000 credit has fewer restrictions than the existing credit, there is one big difference: because the credit is nonrefundable, if you have a low federal income tax liability, you could end up receiving more money with the current credit than the larger, proposed credit.

Q. Are there any increased down payment requirements on the proposed tax credit?

A. No. A separate measure has been introduced in the House that would expand the tax credit to $15,000 but would require a 5% down payment on mortgages. The Federal Housing Administration currently requires a minimum 3.5% down payment.

Q. Can I use the tax credit to buy a second home?

A. No.

Q. How long do I have to live in my home after I purchase it with the tax credit?

A. The Senate version requires buyers to pay back the credit if they sell the house less than two years after they buy it.

Keeping you updated on the market!

For the week of February 9, 2009

Welcome to the Market Matters Advisory, your weekly guide to responding to the market.

Real Estate Market Update:

Housing Stimulus is the Key to Unlocking America’s Economy

The new stimulus bill working its way through Congress has a couple provisions that will be directly pertinent to Real Estate. Besides restoring the jumbo/conforming loan limit to $729,750 in high cost areas, there is now a Republican amendment that would temporarily offer homebuyers a tax credit worth $15,000 or 10% of a home’s purchase price, whichever is less.

This will have the option to utilize all in one year or spread out over two years. The credit does not have to be paid back, unlike the current $7,500 tax credit. It would be available to all purchases of any home from date of enactment for one full year - no longer just a first time homebuyer credit, and borrowers would be able to claim the credit against the 2008 tax return.

Other items: buyers must occupy the home for two years as their principle residence, it includes a two year recapture provision (if they leave the home in two years they lost the credit), and purchases of homes by investors are ineligible.

This is not finalized yet, so stay tuned for updates.

· Home buyers purchasing fixer-uppers, or homeowners looking to update their house with new tile, fresh paint, or modern lighting fixtures may be able to save money by performing some of the work themselves. Some community colleges and most big-box home improvement stores offer do-it-yourself classes to help homeowners save money and improve the look of their homes. Interested participants should check with their local education centers and home improvement stores to verify the types of classes offered and associated prices.

· When selling a home, first impressions are extremely important. Neglecting to maintain a lawn by letting it turn brown or become overgrown may discourage a buyer. To prevent this, homeowners should cut back or remove trees and bushes that are overgrown, especially if they are hazardous. Weeding and laying fresh bark in planter beds also can contribute to a favorable first impression.

Snag a great deal on a short sale
As more homeowners find themselves underwater — owing more on their mortgage than their home is currently worth — and unable to make the monthly mortgage payments, many are turning to short sales, which allows a homeowner to sell their home for less than owed on the mortgage. With the lender’s approval, home buyers can purchase properties in desirable neighborhoods and at favorable prices.

MAKING SENSE OF THE STORY FOR CONSUMERS

· According to real estate Web site Zillow.com, 14 percent of homeowners nationwide are currently underwater. In some areas, especially those hardest-hit by foreclosures thathave experienced the greatest price declines, more than 50 percent of homeowners would owe more than their home is worth if they sold today.

· Unlike foreclosed properties, which may be run-down and vacant for many months, short-sell properties are likely to be better maintained as many owners may still live in the home.

· In a short sale, the homeowner must receive approval from the lender before the sale of the property can proceed. With many lenders overwhelmed by short-sale transactions, it can take between two and six months to execute.

· Working with a REALTOR® who has experience with short sales can help both sellers and home buyers during the transaction. A seasoned REALTOR® will be able to serve as the mediator between the seller and the lender and lead to a successful transaction, while a buyer’s agent can help with offers, counter offers, home inspections, closing, and more.

· It is important to remember that although the seller may be anxious about selling the property and willing to accept any offer, it is ultimately up to the lender to determine if, and at what price, the property can be sold. Therefore, home buyers should work closely with their REALTOR® to submit a realistic offer.

· According to REALTOR® Loni Parmelly, author of Success in Short Sales, buyers should ask the lender to pay for all closing costs as part of the contract. The contract also should specify that the buyer will not conduct an appraisal or inspection of the property until the offer is approved. This added guarantee can protect home buyers from spending money on a home they may not purchase.

Home price plunge helping buyers
Lower home prices, coupled with low interest rates are making this an ideal time for many to purchase a home. According to the Standard & Poor’s/Case-Shiller Index, home prices in 20 metropolitan areas were down 18.2 percent in November compared with the same month a year ago. Phoenix , with a 33 percent drop, posted the steepest decline, followed by Las Vegas at 32 percent.

MAKING SENSE OF THE STORY FOR CONSUMERS

· With homes in the 20-city index losing nearly a quarter of their value since their peak in July 2006, more renters can now afford to buy a home for the first time in many years. According to the NATIONAL ASSOCIATION OF REALTORS® (NAR), the median home price nationwide in December was down 15 percent to $175,400. With current interest rates at or near historic lows, borrowers with a 10 percent down payment could save $254 per month on a median-priced home compared with a year ago.

· The percentage of households that could afford to buy an entry-level home in California stood at 53 percent in the third quarter of 2008, compared with 24 percent for the same period a year ago, according to the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.). The minimum household income needed to purchase an entry-level home at $287,760 in California in the third quarter of 2008 was $56,100, based on an adjustable interest rate of 5.91 percent and assuming a 10 percent down payment. The monthly payment including taxes and insurance was $1,870 for the third quarter of 2008.

Mortgage News:

Fed adopts program to stem foreclosures
The Federal Reserve recently announced it will seek to renegotiate mortgages it owns that might otherwise enter foreclosure, according to Federal Reserve Chairman Ben S. Bernanke. Under the program, the Fed could reduce what a homeowner owes on a mortgage; lower the interest rate; lengthen the term of a loan; or take other steps to prevent a loan from defaulting.

The Federal Reserve’s program will focus on reducing the amount of principal owed by those at risk of foreclosure, especially those with loan balances exceeding 125 percent of the estimated value of their property.

Subject: Obama’s stimulus plan regarding foreclosures

ESTABLISH A $10 BILLION FUND TO HELP FAMILIES AVOID FORECLOSURE

In addition to taking important steps to prevent mortgage fraud from occurring in the future and to prevent credit cards from turning into the next subprime housing crisis, Barack Obama has called for establishing short and long-term programs to help responsible homeowners facing foreclosure. Obama’s plan will help people stay in their homes and renegotiate with their lenders. It will not help speculators, people buying vacation homes or people that falsely represented their incomes. It is meant to help responsible homeowners through this difficult period. Given the downturn in the economy, Obama is calling for immediate creation of his Foreclosure Prevention Fund that will dramatically increase emergency pre-foreclosure counseling, and will work through the Federal Housing Administration, Fannie Mae and Freddie Mac to allow families facing foreclosure to responsibly refinance their mortgages or sell their homes. By helping families avoid losing their homes and preventing a further decline in property values, this measure will help lessen the impact of a national foreclosure crisis on state, local and family budgets. Obama was one of the first to speak out about the risks of fraudulent and deceptive lending practices. He will build off of that experience and his work with community based organizations to bring American homeowners and housing markets effective relief when he is president.

My comments:
Lately, investors have snapped up discounted distressed properties (Short Sales & REO/Foreclosure Sales). We saw pending home sales increase to 6.3% nationwide in December. January also experienced increased activity in the short sale & foreclosure market. If Obama’s plan carries out in the near future, the possibility of far less foreclosures exists.. thus pricing may go up sooner.