Tax Credit
Tax credit might be shot in the arm for first-time homebuyers
TALLAHASSEE, Fla. – April 7, 2009 – A coalition of powerful groups, including the Orlando-based Florida Association of Realtors, is lobbying the state to find a way to advance first-time homebuyers a new, $8,000 federal tax credit designed to spur home sales.
Many first-time buyers have the income and credit to qualify for a home loan but need help with the downpayment, said Cynthia Shelton, an Orlando Realtor and current president of the statewide trade group. Fronting the money for the new tax credit could draw more qualified buyers into the slumping home market sooner, she said.
A study by Miami-based economist Antonio Villamil concluded last week that “front loading” the tax credit, part of the federal government’s stimulus package, would give Florida’s economy a significant boost – equivalent to creating 33,206 jobs and generating $514 million in federal, state and local tax revenue.
“I was in Tallahassee last week and I met with some senators. We’re pressing like mad to get this through,” Shelton said.
But with state lawmakers rushing to complete their annual session by May 1, the chances of passing any such bill are remote, so other avenues are being explored, said Walt Dartland, executive director of the Consumer Federation of the Southeast.
“The Legislature may or may not play a part,” Dartland said Monday from Tallahassee. “It’s true, we are out of time” for passing a new law from scratch. Other options being researched that might not require legislation, he said, include leveraging some of the resources of the Florida Housing Finance Corp., which already has a down-payment assistance program. Qualifying homebuyers would sign over their tax credits to repay the fund.
In addition to the Realtors and the consumer federation, the alliance now urging the Legislature to consider the home-financing proposal includes the Florida Home Builders Association, Florida Bankers Association, Florida Credit Union League, Florida Manufactured Housing Association and Florida Association of Mortgage Brokers.
Supporters of what the consumer federation is calling the “Florida formula” said the state has a short time in which to act because the tax credit is for homes purchased by the end of November. A tax credit is a dollar-for-dollar reduction in federal taxes owed.
Steve Auger, executive director of the Florida Housing Finance Corp., said the agency has provided $66 million in downpayment assistance since 2007, but its ability to continue doing that is jeopardized by the possibility that lawmakers may commit all of the housing agency’s trust fund to the general fund this year because of a record budget shortfall.
“I would hope the legislators would think long and hard about that,” Auger said.
Dartland said that another idea being discussed would involve the state issuing short-term notes that could be sold to participating banks. Those notes could then be repaid with the homebuyers’ tax credits.
Copyright © 2009 The Orlando Sentinel, Fla., Jerry W. Jackson. Distributed by McClatchy-Tribune Information Services.
New Homes
Buying New Makes Sense
One quick glance at today’s headlines, and it’s no wonder that, as concerned consumers, we’re pinching pennies more than ever. In a recent survey conducted by HSBC Bank USA, 64 percent of us plan to cut unnecessary spending this year. And, in a similar survey by Discover Financial Services, about half of consumers plan to cut down on such non-essential spending as dinners out and movies – even remodeling.
Still, when it comes to buying a house – something that many consumers are doing because of the many good deals to be had in a slow market – most of us prefer new. Even better, buying a new home also makes good financial sense. New homes offer countless advantages for consumers when it comes to saving money. Perhaps the biggest plus is that, since they’re brand-new, the maintenance headaches that often accompany maintenance – as with older homes – simply don’t exist, and won’t for a while.
New homes also use the latest in whole-house systems, like heating and air conditioning, so they’re not likely to break down, saving consumers money. They’re also more energy-efficient, which is also good for saving lots of green. Speaking of green, with interest rates that aren’t too far away from historic lows (just over 6 percent for a 30-year fixed mortgage as of March 11), consumers can also save money on new home mortgages. And, since mortgage interest and real estate taxes are deductible, it’s another way to save money by buying a new home, especially when it comes to tax time.
There’s a saying that when you buy a pre-owned home, you’re buying someone else’s vision of a home, and that’s true. Even if that “vision” involved avocado green counters, white laminate floors in the kitchen and neon Hollywood-style lighting in the bathroom. Today’s homebuilders are offering the latest in popular choices at up-to-the-minute design centers that allow consumers to choose from hardwood flooring to cabinetry, fixtures to lighting – and everything in between.
With a new home, the sky’s the limit when it comes to design choices – and they’re all yours. New homebuyers end up with a house that’s perfectly suited for their needs. Buying new means also adding elements as your home is built – the kind of custom features that would cost far more if they were added after the fact. Consider the cost of such finished spaces as game rooms or media rooms, or such extras as fireplaces and built-in microwave ovens.
Any builder will tell you that it’s much less expensive to choose these kinds of options up-front. In the end, buying new just makes more sense: less worries about maintenance, lower interest rates on mortgages, and design choices that fit your lifestyle. And who doesn’t want that?
FHA Loans
Government considers propping up federal loan program
WASHINGTON – April 3, 2009 – The Obama administration soon may be forced to subsidize the government’s mortgage insurance program with taxpayer dollars as economic troubles cause defaults and foreclosures to surge.
No decision has been reached, officials said Thursday at a Senate subcommittee hearing focused on the fiscal health of the Federal Housing Administration. But if the agency’s losses grow too high, the FHA would be forced to raise money – either by increasing insurance premiums on new borrowers or seeking a subsidy from the federal budget.
President Barack Obama’s housing secretary, Shaun Donovan, told senators that officials are evaluating whether aid for FHA will be needed as part of the administration’s $3.6 trillion budget for next year.
However, Donovan said FHA is “unlikely to face the catastrophic losses borne in the subprime sector.” That’s partly because the agency has more conservative standards than the subprime lenders that fueled the housing boom. It also didn’t back loans for more expensive properties that have plummeted in value, particularly in places like California, he said.
As of February, 7.2 percent of loans backed by the FHA were either 90 days overdue or in foreclosure, up from 5.8 percent in August. “Based on the numbers we’re seeing, I think it’s going in the wrong direction,” said Kenneth M. Donohue, inspector general for the Department of Housing and Urban Development.
Lawmakers, meanwhile, are worried taxpayers will be stuck with the final bill.
Sen. Kit Bond, R-Mo., called the FHA a “powder keg” waiting to explode, and said Congress and the Obama administration shouldn’t place a greater financial burden on the already strapped agency. “The taxpayer credit card is maxed out,” Bond said.
“My constituents have been clear that they don’t want to wake up to learn that Congress has taken steps that leave the taxpayer holding the bag,” said Sen. Patty Murray, D-Wash. “That is exactly what could happen if the FHA is pushed to buy loans that could go bad soon or down the line.”
The FHA became the main source of home loans to borrowers with poor credit and low down payments after the subprime lending market’s collapse. It allows borrowers to take out home loans with down payments as low as 3.5 percent, compared with 20 percent for a typical loan that doesn’t require mortgage insurance.
FHA loans are made through by banks, insured by the government and sold as mortgage-backed securities by Ginnie Mae, the government’s mortgage finance agency. The FHA currently backs around a third of new home loans, up from about 3 percent in 2006.
To combat fears that shady mortgage lenders are feeding fraudulent loans into FHA, Donovan said the government has activated “SWAT teams” that will conduct unannounced inspections of lenders whose loans are showing unusually high default rates. The agency has the right to revoke lenders’ ability to do business with FHA.
Obama last month nominated real estate industry veteran David Stevens to head the FHA. Stevens is currently president and chief operating officer of Long and Foster Cos., a Chantilly, Va.-based real estate brokerage. The position requires Senate confirmation.
Meanwhile, a program launched by former President George W. Bush’s administration to assist troubled borrowers has been canceled. The “FHASecure” refinancing program announced with great fanfare in August 2007 produced disappointing results, aiding few delinquent borrowers, and was allowed to expire at the end of last year.
Copyright © 2009 The Associated Press, Alan Zibel (AP Real Estate Writer). All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Homebuyer Tax Credit
FAR supports push to advance homebuyer tax credit aid
ORLANDO, Fla. – April 3, 2009 – – Finding a way to turn a new $8,000 federal tax credit for first-time homebuyers into money that they can use right away for a downpayment would spark the recovery of Florida’s housing market and boost the state’s economy, says Cynthia Shelton, 2009 president of the Florida Association of Realtors® (FAR).
“A revitalized housing market and commercial real estate industry are crucial to Florida’s economic recovery,” Shelton says. “While the new tax credit provides a great incentive for first-time homebuyers to find the home of their dreams here in Florida, many qualified buyers may be unable to take advantage of it because they cannot come up with the necessary downpayment to purchase a home in the first place. We need to encourage Florida lawmakers to take action now – converting the tax credit into cash upfront could help thousands of first-time buyers overcome that financial barrier to homeownership, which generates an economic ripple that stimulates the state’s overall economy.”
With tighter credit restrictions these days, many banks are reluctant to lend money, notes John Sebree, vice president of public policy for FAR. Research indicates that 8,000 to 12,000 prospective first-time homebuyers in Florida could benefit if the federal tax-credit stimulus provision could be accessed on the front-end to help consumers with downpayment and closing costs.
“Finding a state solution to this problem is key,” Sebree said. “The money should only be available to people who are eligible for the new tax credit. The state would advance the cash to these buyers, who would then forward their tax credits back to the state. These families could get their $8,000 tax credit in a matter of months, so it basically would be a short-term loan. But we have to move quickly, since homebuyers have to complete their purchase by Nov. 30, 2009, to receive the tax credit.”
Gov. Charlie Crist is considering the proposal. A coalition of Florida consumers, Realtors, lenders and homebuilders are lobbying state legislators to come up with a “Florida Formula” to allow first-time homebuyers to use the federal tax credit upfront. Spearheaded by the Consumer Federation of the Southeast (CFSE), a nonprofit consumer advocacy group, the alliance includes the Florida Association of Realtors, the Florida Home Builders Association, the Florida Bankers Association, the Florida Credit Union League, the Florida Manufactured Housing Association, Florida Association of Mortgage Brokers, the Latin Builders Association, and the Builders Association of South Florida.
Short Sales
MANATEE COUNTY, Fla. – April 3, 2009 – Area real-estate professionals are hoping Fannie Mae continues a limited pilot program aimed at facilitating short sales, especially as local foreclosure filings continue to hit record highs.
Since its January launch, the program has prevented at least a handful of homes in 11 Florida counties – including Manatee and Sarasota – from falling into foreclosure by making it easier to sell them for less than their outstanding mortgages.
The project initially was scheduled to last three months, but officials with a regional listing service said Wednesday they’re hoping to persuade Fannie Mae to extend it.
“We’re very excited about the project, and we’d like to see it continue,” said John Weeden, marketing manager for the Mid-Florida Regional Multiple Listing Service, which is collaborating on the pilot program and is scheduled to update Fannie Mae on its progress next week.
About 300 Florida homes are in the program, which streamlines the short sale process by getting all necessary approvals and property research done beforehand. A short sale is one in which the lender – Fannie Mae for homes in the pilot program – agrees to accept less than what is owed on the home to avoid the costs of foreclosure.
Weeden said he did not know how many short sales have closed through the program, which applies only to homes with Fannie Mae mortgages.
Quicksilver Real Estate Group Inc., a Tampa firm with an office in Bradenton, has closed three and has two others pending, broker/owner Linn Wyllie said. Those sales have come together in a matter of weeks as opposed to the several months or longer that a typical short sale can take, he said.
“It’s huge for the industry,” Wyllie said of the pilot program’s time savings.
Fannie Mae, officially known as the Federal National Mortgage Association, also launched a similar program in the Phoenix area.
The program didn’t prevent lenders from maintaining their record pace of foreclosure filings in Manatee, however. Lenders filed 608 foreclosure suits in Manatee County Circuit Court in March, the highest monthly total ever, court records show.
There have been 1,653 foreclosure actions filed through the first three months of 2008, up 33 percent from the 1,241 filed during the same period a year earlier. At that pace, last year’s record of 5,592 foreclosure filings will be broken in September.
For the third straight month, more primary homes than seasonal, vacation and rental homes fell into foreclosure: 54 percent were homesteaded, while 46 percent were not. That’s largely the result of mounting job losses and indicates foreclosures likely will remain high as the county’s unemployment rate worsens, experts said.
Copyright © 2009 The Bradenton Herald, Fla., Duane Marsteller. Distributed by McClatchy-Tribune Information Services.
Good Time to Buy
Six reasons why it’s still a good time to buy
NEW YORK – March 31, 2009 – The housing market is looking healthier. Here are six reasons why now is the time to jump into the market.
1. Uncle Sam is willing to help. First-time buyers (defined as anyone who hasn’t owned a home in the last three years) are entitled to a maximum $8,000 tax credit; interest rates are at record lows; and the Federal Reserve is doing its best to make mortgage loans available.
2. People have to live somewhere. About 800,000 new households are formed each year in this country, ensuring that the housing market will tighten, even if the economy doesn’t soar.
3. Borrowers leverage their investment. If you put $10,000 into the stock market and it earns 10 percent, you’ve earned $1,000. If you put $10,000 down on a home and its values increases 10 percent, you’ve made $10,000.
4. When prices come back up, you’ll have instant equity. In parts of the country where foreclosures have driven down prices, better times will mean the price of the home you buy will rise rapidly.
5. Mortgage costs stay the same. If you get a fixed-rate mortgage, the monthly payment stays the same – while everything else, including rent, goes upward.
6. You own it. There is something comforting in the notion that your home is your own. You can paint it any color you want, let the dog run in the back yard and hang a swing for the kids in the front.
Want to learn more about the home buyer tax credit? You can sign up for NAR’s upcoming Webinar, “Build Your Business Using the Improved Home Buyer Tax Credit” set for April 28. For more information click here.
Source: The Wall Street Journal, June Fletcher (03/27/2009)
Foreclosures and Short Sales
There are many good deals I’m seeing in the South Tampa market today that are foreclosures and short sales. The short sales are a bit trickier to land, but I’ve experienced some recent success getting the lender to accept a low offer. I just had one approved that was listed at $165K and we offered $135K. The buyer thought I was crazy sending him that one because he was only approved at $135K. I told him that you never know what they will take until you submit an offer. To his delight, they accepted the $135K and he ended up getting the opportunity to own a much nicer home than he thought he would get. It even had a very nice pool. Foreclosures, REO’s (Real Estate Owned), and Bank Owned properties which are all the same thing, are a little easier to pick up. Typically, we are seeing a 48 hour turn around on a response from the bank to an offer. Unfortunately, you are up against cash buyers most of the time on the really good ones, but many will accept conventional financing and FHA. Most are in an unacceptable condition for FHA, but not the FHA rehab loan which is becoming more and more popular. I would be happy to go over any of the above information more in depth with you if you have interest in looking at your options.
Foreclosures
WASHINGTON (AP) – Feb. 12, 2009 – The number of Americans on the verge of losing their homes fell in January but was still up from the same month a year ago. The numbers would have been higher if not for efforts to stall the foreclosure process.
Nationwide, more than 274,000 homes received at least one foreclosure-related notice last month. That was down 10 percent from December, but still 18 percent higher than a year ago, according to RealtyTrac Inc., a foreclosure listing service based in Irvine, Calif. Ohio’s foreclosure rate put it in the top 10 states.
Contributing to the monthly drop was a decision by government-controlled mortgage finance companies Fannie Mae and Freddie Mac to suspend foreclosure sales during the winter holidays. Plus, Florida Gov. Charlie Crist brokered a deal in which lenders in that state agreed to a 45-day halt to new foreclosure petitions.
But those efforts may not have much of an impact in the long run.
“If you don’t do anything to get to the core problem, all you’re doing is extending the housing downturn,” said Rick Sharga, RealtyTrac’s vice president for marketing. “It’s only a good idea if there’s a corresponding program that dramatically restructures hundreds of thousands of loans.”
Meanwhile, a federal regulator on Wednesday urged more than 800 thrift institutions to suspend all foreclosures while President Barack Obama’s top economic officials develop plans to keep borrowers in their homes.
The Obama administration plans to spend $50 billion to combat foreclosures of owner-occupied, middle-class homes but is divulging few details. An announcement of the administration’s housing plans is expected in the coming weeks.
Testifying before House lawmakers on Wednesday, Treasury Secretary Timothy Geithner said the government would provide incentives to “try to induce economically sensible restructuring of mortgages,” but offered no specifics.
More than 2 million American homeowners faced foreclosure proceedings last year, and that number could soar as high as 10 million in the coming years, according to a report last month by Credit Suisse, depending on the severity of the recession.
The RealtyTrac report said nearly 67,000 properties were repossessed by lenders in January as the worst recession in decades, falling home values and stricter lending standards continue to sap the U.S. real estate market. That was up from more than 45,000 repossessed properties in January 2008, but down from 79,000 in December.
Geithner and Shaun Donovan, the new secretary of the Department of Housing and Urban Development, met with officials from housing and other nonprofit groups, top bank executives and industry lobbyists Wednesday to hear proposals for how the new programs to fight foreclosures should be structured.
After the meeting, John Taylor, chief executive of the National Community Reinvestment Coalition, a consumer group in Washington, said he was optimistic the new administration would agree to use government dollars to buy up mortgages and remove them from complex mortgage-linked securities and restructuring them at more affordable levels.
He said support from government and industry officials for that idea was a “giant step forward” compared with opposition to such an approach by the Bush administration.
The Obama administration is also expected to back a push in Congress – opposed by the mortgage industry – to let bankruptcy judges alter the terms of primary home loans. Earlier this week, Obama said it “makes no sense” that judges are not allowed to do so. The mortgage industry argues that this prohibition allows lenders to charge lower rates.
In the RealtyTrac report, Nevada, California, Arizona and Florida had the nation’s top foreclosure rates. In Nevada, one in every 76 homes received a foreclosure, while the number was one every 173 in California. At No. 5, Oregon, formerly a bastion of housing stability, made its first appearance close to the top of the list of foreclosure hot spots.
Rounding out the top 10 were Illinois, Michigan, Georgia, Idaho and Ohio. Ohio had one foreclosure notice for every 452 homes, but January filings were down slightly from December and down 12 percent from a year earlier. Among metro areas, Merced, Calif., was first, with one in every 59 housing units receiving a foreclosure filing. It was followed by Las Vegas and the Cape Coral-Fort Myers area in Florida.