|
|
Archive for October, 2009
Friday, October 30th, 2009
 The Senate announced a bi-partisan deal yesterday to extend the new homebuyer’s tax credit through April 2010. The deal will extend the $8,000 tax credit, which was set to expire in weeks, on homes with values up to $800,000. While the previous tax credit only applied to homebuyers with salaries of up to $75,000/year for individual and $150,000/couples, the deal raises the requirement, so that the tax credit will now apply to homebuyers with salaries of up to $125,000/year for individuals and $225,000 for couples. This will serve to make the vast majority of homebuyers available for the tax credit. In addition, a new $6,500 tax credit will be available to home owners wishing to move out of their current homes into more expensive ones.
The extension of the tax credit is expected to cost the government $10.2 billion, which will be offset by delaying a tax-break for U.S. based international corporations from 2010 to 2017.
The extension of the tax credit (as well as the new credit for current homeowners) is expected to help the housing market and real estate industry bounce back from the housing crisis. It is hoped that the tax credit, which has been successful in the past year, will help the market return to its former strength in 2010.
Tags: homebuyer, homebuyers, homeowner, homeowners, housing market, new homebuyer's tax credit, real estate, Senate, tax credit
Posted in Consumer News, Industry News | No Comments »
Friday, October 30th, 2009
 Yesterday, Congress passed the continuing resolution we discussed yesterday, extending the HECM loan limit through the 2010 fiscal year. The continuing resolution is now headed for the President’s signature, which it is expected to receive. The continuing resolution means that the reverse mortgage loan limit will remain at $625,500. The change reduces uncertainty about the future of the loan limits for HECM reverse mortgages. As mentioned yesterday, the continuing resolution also includes jumbo conforming loans and conforming loans, two kinds of forward mortgages.
Tags: conforming loans, Congress, hecm, jumbo conforming loans, loan limit, loan limits, Mortgage, mortgages, reverse mortgage, reverse mortgages
Posted in Consumer News, Industry News | No Comments »
Thursday, October 29th, 2009
 An appropriations bill has been proposed that will extend the FHA reverse mortgage limits until the end of 2010. The current limit of $625,500 is currently set to expire at the end of the year unless new appropriations are made. The appropriations bill still needs to pass the House of Representatives and the Senate. The extensions would also apply to Jumbo Conforming Loans and Conforming Loans, two kinds of forward or conventional mortgages.
Many in the industry appear to be hopeful that the bill will be passed before the limits expire. It is probably too early to become extremely concerned about the expiring limits, but with the bill needing to pass through both houses of Congress, it is something to keep an eye on.
Tags: appropriations bill, bill, conforming loans, Congress, House of Representatives, jumbo conforming loans, Mortgage, mortgages, reverse mortgage, reverse mortgages, Senate
Posted in Consumer News, Industry News | No Comments »
Wednesday, October 28th, 2009
 A day after positive news about existing home sales and housing prices, the data on new home sales sent a negative current through the economy. This morning it was reported that new home sales fell unexpectedly after 5 months of consecutive increases. Home sales fell from a seasonally-adjusted 417,000 new home sales in August to 402,000 in September, a decrease of 3.6%. But a survey of economists had predicted that the number of home sales would rise to 440,000 in September, leading to a prediction nearly 10% higher than the actual amount.
This is not the first time we have seen mixed housing data. While it is easy to speculate on the ups and downs of the market, only time can tell whether the bumps are telling of actual trends or merely slight deviations from the mean. This month, all the positive data about home prices and existing home sales, as well as climbing orders for long lasting goods, show that the industry may be beginning to recover, even if that recovery is a slow one with some set backs along the way.
Tags: economy, home prices, home sale, home sales, housing, housing starts, new housing starts, September
Posted in Consumer News, Industry News | No Comments »
Tuesday, October 27th, 2009
 In the Case-Schiller report data released this morning, US home prices continue to show improvement in August. The Standard & Poor’s/Case-Schiller index showed a seasonally-adjusted 1 percent improvement in August over the previous month. 16 of the 20 cities in the index saw their prices rise. Only four–Cleveland, Las Vegas, Charlotte, and Seattle–saw their home prices decline.
While the numbers are still down compared to last year, the continued upward trend is a nice change from last winter, when all cities saw their prices decline for several months on end. Many believe that the housing market is now turning around. However, the prices are down significantly. The average price today is equivalent to 2003 levels. In Detroit, they are at the same levels they were at in 1995. Compared to last August, prices are down 11.3 percent. As a result, many of the problems we have seen recently in regards to underwater homeowners and foreclosures seem likely to continue in the near future. As the New York Times said, in many places, it’s as if the housing boom never happened.
Tags: Case-, Case-Schiller, case-schiller index, cities, home prices, housing market, real estate, Standard & Poor's, The New York Times, US
Posted in Consumer News, Industry News | No Comments »
Monday, October 26th, 2009
This week’s reverse mortgage rates are below. These rates are effective for the week beginning October 27, 2009.
APR:
HECM LIBOR 225: 2.494
HECM LIBOR 250: 2.744
HECM LIBOR 275: 2.994
HECM LIBOR 300: 3.244
Expected Rates:
HECM LIBOR 225: 5.83
HECM LIBOR 250: 6.08
HECM LIBOR 275: 6.33
HECM LIBOR 300: 6.58
The HECM LIBOR APR remained almost unchanged for the fifth consecutive week. Meanwhile, the expected rates continued to rise, though they only rose by three hundredths of a point. One wonders when the APR will finally change, and, when it does, in which direction it will go.
Tags: 2009, APR, expected rate, hecm, hecm rates, interest rate, LIBOR, October, reverse mortgage, Reverse Mortgage Rate, reverse mortgage rates, reverse mortgages, This Week, weekly hecm rate, weekly hecm rates
Posted in Consumer News, Industry News | No Comments »
Monday, October 26th, 2009
 In the past, we have explained reverse mortgage terms. Today, we will explain some home mortgage terms:
Some Important Home Mortgage Terms Explained
Banks and other lenders offer mortgages to borrowers who want to buy homes and don’t have the required cash to make upfront payment for them. The lenders utilize the homes as collateral or security for their loans. If the borrower defaults on the contracted payments, then they can lose their homes to foreclosure. There are various forms of mortgage loans and various mortgage terms used in mortgage related discussions. You can also refer to a dictionary for home mortgage terms to have a better understanding. Following are some important mortgage terms that you would frequently come across in mortgage deals.
Adjustable Rate Mortgage
ARMs or adjustable rate mortgages usually have a fixed rate of interest at the beginning of the loan term and subsequently, they get reset to the market average. For instance, a 5/1 ARM would carry a fixed rate of interest for the initial five years and subsequently, it would get reset to the market rate every year. These loans are beneficial for those people who secure a mortgage when interest rates are escalating.
Fixed Rate Mortgage
Fixed rate mortgages come with a predetermined rate for the whole tenure of the loan. These loans are advantageous for locking in an affordable rate and for borrowers who need the security to understand that they would have a uniform monthly payment.
Annual Percentage Rate
APR or Annual Percentage Rate represents the real borrowing costs of a mortgage loan. Individuals with good credit scores typically qualify for lower APRs.
Down Payment
This is a portion of the home value that you have to pay at the beginning of the loan. A bigger down payment would lead to improved terms for the loan since it guarantees the lender that they would receive the payments.
Loan Term
The loan term is the length of time throughout which the loan has to be paid off. The higher the loan term, the less would be your monthly payments. However, if the tenure is extensive, then you would land up paying a huge amount of interest throughout the whole term of the loan.
Mortgage Points
Mortgage points or discount points are charges that you pay at the beginning of the loan. Every mortgage point is equal to 1% of the loan amount. Hence, if you are asked to pay 3 points on a $200,000 loan, you would pay $6,000. Lenders permit you to pay points or prepaid interest to lessen your interest rate.
Tags: homes, Mortgage, mortgage information, mortgage terms, mortgages, reverse mortgage
Posted in Consumer News | No Comments »
Friday, October 23rd, 2009
 The government’s $8,000 tax credit to new homebuyers has been under a lot of scrutiny in recent months. The tax credit was designed to help stimulate the housing market and lead to increased home ownership. To that end, it has been extremely successful. However, abuses within the system appear to have also been quite high. While the reverse mortgage industry found itself under scrutiny for what appear to be under about a dozen complaints, the federal government has started 167 criminal investigations and 107,000 civil investigations into possible fraud. Of the 1.4 million people who claimed the over 10 billion dollars in tax credits in 2008-2009, 60% had incomes under $50,000– leading to questions as to whether they could even afford a home.
The new homebuyer tax credit has certainly had many positive effects. Of the 1.4 million home sales, 350,000 to 400,000 were estimated to be a direct result of the credit’s availability. That accounts for 25-30% of the eligible home sales. In some areas, real estate agents have reported that up to 70% of their clients were considering buying a home as a direct result of the tax credit. With sales of existing homes at their highest level in two years, many are attributing the strong numbers to the tax credit, which expires November 30. Sales increased 9.4% in September according to the National Association of Realtors.
So which is it? It seems that the tax credit likely has had a positive effect on the market. However, the rock-bottom prices and increased inventory have also likely contributed to many first-time buyers choosing to enter the market. The increase in first-time homebuyers is a good sign for the real estate industry, but it is still a disconcerting one. If 60% of the 1.4 million people who claimed the tax credit from 2008-2009 had incomes of under $50,000, could they really afford to own a home? Will we see another foreclosure crisis within the mortgage industry down the line as these homebuyers are faced with rising rates or declining incomes? The answer to these questions remains to be seen.
While the pros of the tax credit may outweigh the cons, with the damage to the real estate industry wiping out the savings of many throughout the country, if the credit is extended, it should be done so with caution. While the image of every American owning a home is a promising one, the government has an obligation to ensure that those owning homes can actually afford to do so. Otherwise, history is at risk of repeating itself.
Sources: The New York Times: Home Tax Credit Audit Shows Abuses
The New York Times: Tax Credit Lifts Home Sales to Two-Year High
The Associated Press: Northeast Home Resales Post 11 Pct Annual Increase
Tags: first-time homebuyers tax credit, foreclosure, fraud, government, home sales, homebuyer, housing market, Mortgage, mortgages, new homebuyers, real estate, reverse mortgage, reverse mortgage industry, reverse mortgages, tax credit
Posted in Uncategorized | No Comments »
Friday, October 23rd, 2009
 HUD released the long awaited new RESPA FAQs this morning. The document contains many common questions and answers about complying with RESPA.
RESPA, the Real Estate Settlement Procedures Act first passed in 1974, is the source of many of the basic federal reverse mortgage required disclosures, including the HUD-1 statement and the Good Faith Estimate (GFE). Most of the questions in the RESPA FAQs released this morning address the HUD-1 and GFE. There is also a specific section on reverse mortgages.
RESPA Rule FAQs
Tags: FAQs, GFE, HUD, HUD-1, Real Estate Settlement Procedures Act, RESPA, reverse mortgage, reverse mortgages
Posted in Industry News | No Comments »
Thursday, October 22nd, 2009
 After already announcing a delay of the implementation of Mortgagee Letter 2009-19 to case numbers assigned on or after November 2, 2009, the Reverse Review reported today that HUD has delayed the implementation further. Guidance is expected from HUD in the next two weeks clarifying Mortgagee Letter 2009-19 and offering additional leniencies to address the difficult current market conditions. The changes will then go into effect on December 7, 2009.
For those who forgot, Mortgagee Letter 2009-19 changed the condominium approval process and condo unit eligibility for reverse mortgages. The Mortgagee Letter can be found at Mortgagee Letter 2009-19.
Tags: condo, condominium, HUD, mortgagee letter, reverse mortgage, reverse mortgages
Posted in Industry News | No Comments »
|
The Senate announced a bi-partisan deal yesterday to extend the new homebuyer’s tax credit through April 2010. The deal will extend the $8,000 tax credit, which was set to expire in weeks, on homes with values up to $800,000. While the previous tax credit only applied to homebuyers with salaries of up to $75,000/year for individual and $150,000/couples, the deal raises the requirement, so that the tax credit will now apply to homebuyers with salaries of up to $125,000/year for individuals and $225,000 for couples. This will serve to make the vast majority of homebuyers available for the tax credit. In addition, a new $6,500 tax credit will be available to home owners wishing to move out of their current homes into more expensive ones.
