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Archive for the 'Mortgage & finance' Category

Mortgage rates are lowest they’ve been in 38 years

Do you need another reason (besides the low prices and the big tax credit) to think about buying a new home? Okay, here it is: Mortgage rates came down again this week and are now at the lowest point IN THE PAST 38 YEARS!
Freddie Mac does a survey of mortgage rates every week, and this week’s survey shows that rates are at historic lows for 30-year fix rate mortgages.
The rates on 30-year (and 15-year) mortgages came down for the fifth week in a row, according to Freddie Mac. Rates on five-year adjustable rate mortgages came down to record levels a week earlier, and they stayed in that very low range during this most recent week.
Why the low rates? Well, demand for mortgages (and, of course, demand for housing) remains weak; also, foreclosures continue to be a factor.
The 30-year fixed-rate mortgage rate for the week was 4.71%, down from  4.78% during the previous week. A year ago, the average rate was 5.53%.

Tags: interest rates, pinellas

Looking to buy in Pinellas County? The tax credit is nearing an end

     What’s going to happen to the first time homebuyer tax credit?
     The tax credit, which was introduced back in February as part of the Obama Administration’s stimulus package, gives an income tax credit of up to $8,000 to all first time home buyers. The trouble is, the tax credit runs out at the end of November.
     The Congress is thinking about extending the credit, and some members would like to see it expanded to apply to all home buyers, not just first-timers. But other members say that making the credit last longer – and apply to more people – would be a budget-buster. They say any new tax credit version should be offset by tax increases, or at least some spending cuts.
     Some observers say they think there’s a pretty good chance that the tax credit will be extended, but they are not so optimistic that it will be enlarged to include new categories of home buyers. 
     Under the current rules, the tax credit applies to individuals making more than $75,000 per year, or couples making no more than a combined $150,000 per year. Some members of Congress say they would like to double those limits so more homebuyers would qualify. That’s a nice idea and would stimulate more home purchases, but it would cost an estimated $16.7 billion. 
     Meanwhile, I can tell you that buyers are increasing their home shopping activities, trying to get sales done before the current programs ends. I know that because I have been busy showing property.

New IRS form lets loan officers see your IRS income info — twice

     Are you going to be applying for a mortgage anytime soon?  Here’s something you need to know:
     Your loan officer may ask you to sign IRS Form 4506-T. If you do, you will authorize the loan officer to get IRS electronic transcripts of your federal income tax filings.
     This may not seem like anything terribly new — the IRS has been giving lenders tax-return info for years. In the past, however, that information wasn’t requested until settlement, and it usually was requested only in the case of people who were self-employed.
     What’s changed is that Fannie Mae is working harder to spot fraudulent claims of income, and to limit losses from bad loans. So… Fannie Mae now wants lenders to get two sets of electronic IRS transcripts for all borrowers, no matter what their sources of income are.
     One copy is pulled at the time of the application, while the other gets requested before the closing.
     All of this seems to be a response to the old “stated income” or “no-doc” loans, in which borrowers were asked to simply say what their incomes were without providing any evidence. Some people inflated their incomes, and a percentage of those loans went bad when the market deflated.
     Because of all that, Fannie Mae (and other lenders) are tightening up their requirements, and IRS Form  4506-T is one of the consequences. Lenders now want to verify those income claims — not once, but twice.
     Remember, you need to take this form seriously when the loan officer puts it in front of you. Make sure that the information you provide is accurate, and make sure the years you specify are the years you actually want the loan officer to see.
     You are going to see a request for a Form 4506-T request twice during the mortgage loan application process, so be ready for that, too.
     If you would like to see a copy of the form before the loan officer actually presents it to you, you can get one on the IRS Web site, which is http://www.irs.gov

Some new rules will change the mortgage process

 Getting ready to buy a new home? The federal government has come up with a new set of rules that may have an impact on your mortgage. The new rules, from the Federal Reserve, go into effect at the end of this month.
Here are the high points:
– Lenders must provide you a mortgage cost disclosure within three business days of the date you apply for the mortgage. If they don’t you can walk away from the deal.
– Lenders can’t collect fees until you get that aforementioned cost disclosure statement. The only exception is a reasonable fee for checking your credit. It has been fairly common for lenders to ask for money up-front to cover appraisals, credit checks and other fees. No more.
– Once the lender provides the mortgage cost disclosure, there must be a seven-day waiting period before the closing.
– The appraisal must be delivered by the lender to the borrower at least three business days before the loan closing. Borrowers have always had a right to see the appraisal, but they often didn’t know they had that right, and they often didn’t request it because they didn’t know they were entitled to it. Now, the closing can’t happen until you’ve received it.
– If the annual percentage rate of the loan goes up more than one-eighth of one percent between the time you get the early cost disclosure and the closing, the lender must re-disclose all the costs and provide an additional seven days for you to consider the deal.
It is all meant to make the mortgage transaction more transparent and give borrowers more confidence about the deal they are signing.

Home refinance program expanded

     We’ve written here in the past about tax credits and about government programs aimed at saving homes from foreclosure and making home payments more affordable. Now, it looks as though the Obama Administration wants to expand those programs to make them apply to more borrowers than before.
 

    Until now, those government programs have been available to people whose mortgage amounts are up to 105 percent of a home’s value. This week, the administration announced that it wants to raise that limit to 125 percent of value.
Here are some of the conditions that apply:

• The mortgages in question must be owned or backed by Fannie Mae or Freddie Mac.
• The applicants for new financing must be current on their mortgage payments.

     It is estimated that 30 percent of all mortgages are for amounts that exceed their homes’ values.
     The expansion of this federal home refinance program is an acknowledgement that the original program fell far short of expectations. When it was announced in March, the Obama Administration said it hoped that it would help 4-5 million homeowners who were upside-down on their mortgages. But in the middle of June, the administration admitted that only about 20,000 homeowners had applied to refinance their mortgages under the plan.
One problem has been rising interest rates. Current rates are around 5.5 percent, up from 4.84 percent in April. That rate increase has put a damper on refinances. The government hopes that the new expansion will encourage more homeowners to refinance their homes, and those refinances will make the homeowners less likely to default on their mortgages.
     Got a home in Palm Harbor, Dunedin, Clearwater, or anywhere else in Pinellas County with a mortgage bigger than the home’s value? This expanded program may be for you.

Tags: making home affordable, mortgages, pinellas county, refinance

Bills would extend tax credits beyond first time home buyers

The real estate market is getting a bit better, and much of the action is taking place among first-time home buyers.

And why not? There are some really great deals at the less-expensive end of the market; first-time buyers usually don’t have an existing home that they have to unload before buying a new one; and let’s not forget that very attractive $8,000 first time home buyer tax credit from the federal government.

“But wait!” you say.  “What about me?  I’m not a first time home buyer, but why shouldn’t I get that $8,000 tax credit, too?”

Well, maybe you’re right. At least that’s what two members of Congress from the Dallas area think.  They have introduced legislation that would make the $8,000 credit apply to everyone and all houses. Not only that, but they would extend the tax credit all the way into 2010. The current tax credit only applies to homes purchased by Nov. 30 of this year.

The legislation comes from Rep. Kenny Marchant, a Republican, and Rep. Eddie Bernice Johnson, a Democrat. They have filed separate bills to expand the reach and the time limit for the tax credits. Marchant’s bill also includes a $3,000 credit that could be used by people refinancing their existing loans.

You would think that home builder and realtor lobbying groups would be all for these new bills. But they are acting cautiously because they don’t want anything to undermine the current tax credit which expires at the end of November.

There is plenty of legislative business already on the House calendar, so don’t expect fast action on these bills.  But that may change later in 2009, after members return from their summer recess.

Tags: tax credits

Higher interest rates may slow housing market recovery

What’s the biggest (and latest) threat to a recovery in the housing market? Probably rising interest rates, which have jumped up noticeably in the past couple of weeks.

At midweek, the rate on a 30-year fixed-rate mortgage had climbed to 5.79 percent, up from just 5 percent two weeks ago. That may not seem like a huge increase, but experts are saying that the increase is already having a dampening effect on refinances. Some say that the increase from 5 percent to 5.79 percent may mean that refinance applications are likely to be cut in half.

The major culprit seems to be interest rates on Treasury notes. The Federal Reserve is trying to combat the increasing interest rates by buying up Treasury notes. So far, however, that strategy doesn’t seem to be having much of an affect.

A few weeks ago, interest rates had fallen below 5 percent, which was the lowest level in more than 50 years. Those very low rates, along with low purchase prices, seemed to be providing enough momentum to get the sluggish housing market moving again. But higher interest rates could let the air out of that momentum.

Tags: Palm harbor real estate, Pinellas County real estate, rising interest rates

More FBI agents will investigate mortgage fraud

Here’s something I hear all the time:

“Those lenders who made all those bad loans just to line their own pockets ought to be in jail.  Why haven’t those people been prosecuted for fraud?”

Well, thanks to the U.S. Congress, you may finally get your wish.

Congress has provided the funding to double the number of mortgage fraud task forces from 26 to 50 and perhaps more. The bill contains $75 million to hire almost 200 special agents as well as another 200 forensic analysts and support staffers.

The U.S. Attorney’s Office received another $90 million to pay for the prosecutions of those that the FBI arrests.

The bill contains new language that extends the law to cover mortgage lenders who are not directly regulated by the federal government. Those lenders were responsible for nearly half the residential mortgage market before the economy collapsed.

The bill is also designed to protect the economic stimulus package as well as the Troubled Asset Relief Program (TARP) from fraudulent schemes.

The funding provided by Congress also will fund a new 10-member Financial Crisis Inquiry Commission, which will examine the current economic crisis and provide Congress with advice as to how it may come up with additional reforms.

Tags: FBI, mortgage fraud

Are we bailing out the bad lenders?

Banks are getting billions of dollars from the federal government to prop them up following the melt-down of the U.S. housing industry. The melt-down was caused in large part by poor lending practices, especially among sub-prime lenders. And who owned those sub-prime lenders? The very banks that are now getting bail-out money.

That’s the finding of a new report released by the Center for Public Integrity. And a not-insignificant number of those loans financed homes right here in Pinellas County.

Many banks that have been hit the hardest by the economic melt-down have portrayed themselves as victims of the sub-prime lending industry — companies that were too easy about lending money to people with little cash, poor credit or low incomes. But the director of the Center for Public Integrity says the banks not only knew about those questionable practices, they owned the very lending companies that behaved so irresponsibly.

“The mega-banks that funded the sub-prime industry were not victims of an unforeseen  financial collapse, as they have sometimes portrayed themselves,” said Bill Buzenberg. ”These banks were deliberate enablers that bankrolled the type of lending that’s now threatening the financial system.”

The Center looked at 7.2 million sub-prime loans made between 2005 and 2007.  It said that banks based in the U.S. and Europe poured vast amounts of capital into the sub-prime industry in pursuit of big profits. And it says that at least 21 of the 25 biggest sub-prime lenders  received their financing from banks that are now getting bailout money from the U.S. government.

The Center for Public Integrity describes itself as a non-profit organization “dedicated to producing original, responsible investigative journalism on issues of public concern.”

Tags: Add new tag, home finance, pinellas county, sub-prime

Pinellas homeowners: New program makes refinancing possible

Would you like to refinance your home, but find that you can’t because the value of your property has declined? You may be able to refinance anyway under the federal government’s new Making Home Affordable program.

This is good for some homeowners in Pinellas County and in Tampa Bay, where foreclosures and declining values are among the highest in the nation.

Making Home Affordable has two parts – one allows for the modification of existing mortgages, while the other offers opportunities for home refinancing, if the home mortgage is owned or guaranteed by Freddie Mac or Fannie Mae.

Let’s look at the refinancing function of Making Home Affordable:

• To qualify, borrowers must occupy their homes. The home may have up to four units, but the owner has to occupy one of them.

• Interest rates under Making Home Affordable are “market rates,” but it is a little unclear what that means exactly.

• Loan balances may be as much as 105 percent of the current value of the home. Otherwise, borrowers have to comply with all the other usual underwriting demands, things like all payments must be current, income has to be high enough to cover the new payment amounts, and there can’t be more than a single late payment during previous 12 months. 

• Mortgage insurance on the old loan will carry over to the new loan – a little unusual, because generally mortgage insurance policies end when the loan is paid off; then a new policy gets issued for the new mortgage.

• It’s okay to have a second mortgage on the property as long as the second mortgage holder has agreed to remain in the second position lien-wise.

• Cash cannot be withdrawn during the transaction, but closing costs can be included in the mortgage amount.

To learn more, visit http://www.MakingHomeAffordable.gov

Tags: making home affordable, pinellas county, refinancing