Reno Sparks Real Estate Today

Home Affordable Modification Program (HAMP) rolls out new guidelines

The Treasury Department recently announced new guidelines that will require applicants to provide all paperwork before getting a trial modification.  The new policy should make it easier for homeowners to qualify for permanent assistance under President's Obama foreclosure prevention plan, even though it makes it harder for them to start the process.  Borrowers have been complaining that their loan servicers constantly ask for additional documents and lose their forms. Servicers, meanwhile, say that borrowers are not handing in all that's needed.  The new rules, which start June 1, will shift the paperwork burden from the back end to the front end of the process.  Distressed borrowers will have to fill out a three-page request form that asks them to explain their hardship and list their income and expenses.

They will also have to sign an IRS 4506-T form that allows servicers to pull their tax returns. Both forms are available on the Making Home Affordable program's Web site.  Applicants will also have to verify their income. For those earning a salary, two recent pay stubs will be sufficient. Other earnings, such as income from self-employment, benefits, or rental properties, must still be documented.  Servicers must acknowledge receipt within 10 business days and, if the file is complete, let the borrower know within 30 days if he or she is approved for the trial modification. If the documentation is incomplete, the servicer must tell the borrower what is outstanding.  Those who are approved for trial adjustments and make three timely payments will be automatically converted to long-term modifications.  Both servicers and housing experts applaud the move, saying that borrowers will now have a better sense of their chances for permanent help.  "It will not lead to more modifications, but it will lead to more certainty," said Howard Glaser, head of The Glaser Group, a financial services analytics firm.  

 For more information on the HAMP program visit. http://makinghomeaffordable.gov/

FHA Lifts Flipping Rule

This is good news for buyers, sellers, and investors in the Reno Sparks area.

The Federal Housing Administration is temporarily lifting an "anti-flipping" rule, allowing borrowers using government-insured loans to be more competitive in bidding on foreclosed properties recently purchased from banks and even the government.

The Department of Housing and Urban Development's anti-flipping policy prohibits FHA financing on purchase transactions where the seller has owned the property for only 90 days. HUD found this policy blocked potential FHA borrowers from taking advantage of quick resales of real estate owned. REO sellers, generally, are unwilling to go with FHA borrowers because of holding costs and vandalism risk during the 90-day holding period. FHA is lifting the 90-day rule for one year starting February 1. FHA borrowers have "often been shut out from buying affordable properties," said FHA commissioner David Stevens. "This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity." FHA has been burned by property flipping scandals before. This time around it insists that all sales must be arms-length transactions with no evidence of flipping in the previous 12 months. If the resale price is 20% higher than the REO sales price, the lender has to provide supporting documentation and a second appraisal in some cases.

It’s about time!  I applaud the FHA for finally using some common sense. This “anti-flipping” rule was having a negative effect on everyone in the market.  The majority of today’s buyers are using FHA loans to buy homes. Many investors are turning down FHA buyers due to the 90-day rule, or they have to extend the closing period to reach the 90 days, which raises holding costs. Eventually these costs get passed onto the buyer.  A 90-day holding period is doing nothing but extending the transaction.

I’ve long said, to get this market cleaned up we are going to need investors.  Banks are not in the real estate business; they are in the money business. They have already screwed up the money business; we need to keep them out of the real estate business.  Investors are the best group to buy up foreclosed properties, fix them up, and sell them or rent them.   Investors have the knowledge and local resources to get the job done quicker and more cost effectively than banks. 

HUD changes eligibility of buyers who previously had to short sale a home.

If you had to do a short sale on your home and are looking to buy a new one in the future, HUD has updated eligibility guidelines.  

Borrowers are eligible for a new FHA-insured mortgage if;
1. they were current on their mortgage and other installment debts at the time of short sale on their previously owned home, AND
2. the proceeds of the short sale serve as payment in full.

Borrowers are not eligible for 3 years following the date of the short sale if;
1. they were simply taking advantage of declining market conditions, AND
2. are looking to purchase, at a reduced price, a similar or superior property in same area.
3. if they were in default on their mortgage at the time of short sale.
Exceptions may be made to this rule if;
a. the default was due to circumstances beyond borrower's control (death of primary wage earner, long term uninsured illness, etc.), AND
b. review of credit report satisfactory credit prior to the circumstances that caused the default.
 
As always, guidelines will be made clearer as lenders introduce this announcement to their programs.  We will continue to keep you updated.

For official announcement from HUD click on link below.
http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/09-52ml.pdf
 

Obama's HAMP program a failure

An editorial in the Providence Journal succinctly outlines the reasons President Obama’s program to curb foreclosures appears to be failing.  The Home Affordable Modification Program (HAMP) offered incentives to mortgage companies to reduce payments for struggling homeowners, but as of September only about 1,700 homeowners had passed through all the necessary hoops to win a new permanent loan modification. In the meantime, foreclosures are on the upswing and well over a million mortgages were 60 days past due in October.

HAMP was not designed to deal with one of the biggest aspects of the foreclosure problem: falling home values that leave borrowers “under water,” owing more than their houses are worth. Primarily, HAMP is aimed at reducing interest payments but not principal. Not surprisingly, underwater borrowers are not rushing to sign up, and they're not finding much help when they do.  Participants in the program have to show their worthiness by completing a series of trial payments, and around 650,000 borrowers have done that. But many say they are subjected to disorganized claims for additional paperwork, and others fail to provide the necessary documents in the first place.  Last year, foreclosure sales topped 1 million. This year there were fewer, thanks to loan-modification efforts and moratoriums, but the danger of a stalled HAMP is that another new wave of foreclosure sales could swamp the market, sending home prices back down and threatening the economic recovery.

Home Buyer Tax Credit - Extended and Expanded

Late last week, the U.S. Senate unanimously passed an extension and expansion of the homebuyer tax credit. The House of Representatives approved the agreement reached in the Senate by a vote of 403-12.

You can check out more details here – Home Buyer Tax Credit           

Below is a summary of the new modifications in the extension and expa nsion of the tax credit:

1)  The $8,000 tax credit will be extended and available for first-time purchases before May 1, 2010.

 

2)  A new $6,500 tax credit will be available for repeat buyers who purchase between December 1, 2009, and May 1, 2010. To qualify for this provision, buyers must have used the home sold or being sold as a principal residence consecutively for 5 of the previous 8 years.

 

3)  Prospective purchasers with binding contracts in place as of April 30, 2010, will be allowed an additional 60 days to complete the transaction.

 

4)  Income limits are expanded to $125,000 on a single return and $225,000 on a joint return.

If you know anyone looking to buy their first home at a time when prices and interest rates are still down, or if you are thinking of buying another home and getting the new $6,500 credit please contact me today.

Here is another great article- 4 tips for the homebuyer tax credit.

Home Buyer Tax Credit Extended

Congress just passed an expanded version of the $8,000 first time home buyer tax credit that was set to expire on November 30. The new version of the tax credit has the potential to stimulate the housing more substantially that the previous initiative. Although the tax credit remains at $8,000 for home buyers that have not owned a primary residence in the last three years, it has been expanded to include a $6,500 tax credit for home buyers that have lived in their current primary residence for at least five consecutive years out of the past eight years. Under the old rules, move-up home buyers did not qualify. Consider these three examples:

Example 1:

Jane purchased a home in 2002, lived there for 5 years as her primary home, moved out in 2007, and turned that home into a rental property. If Jane decides to buy a new primary residence today, she would qualify for the $6,500 tax credit based on the fact that she lived in the same residence as her primary home for at least five consecutive years out of the past eight.

Example 2:

Harry purchased a home in 2004, and lived there for the past 5 years as his primary home. If Harry decides to buy a new primary residence today, he would qualify for the $6,500 tax credit based on the fact that he lived in the same residence as his primary home for at least five consecutive years out of the past eight.

Example 3:

Nicole purchased a home in 2006, and lived there for the past 3 years as her primary home. If Nicole decides to buy a new primary residence today, she would not qualify for the $6,500 tax credit based on the fact that she did not live in the same residence as her primary home for at least five consecutive years out of the past eight.  The tax credit applies to homes purchased for less than $800,000 before May 1, 2010.  If you sign a binding contract to purchase a home before May 1st

, you would need to close on the transaction before July 1, 2010. It works kind of like a gift certificate that can be redeemed for cash. You simply file a form with the IRS right after you buy your home, and the IRS will send you a check for the full amount of your credit. The income limitation for single tax payers went up from $75,000 under the old rules to $125,000 under the new rules. For married tax payers, the income limitation went up from $150,000 to $225,000. This means that more people will qualify for the credit – especially in parts of the country with higher costs of living. This should help stimulate parts of the housing market that may not have been impacted by the old version of the credit.

There are many creative ways of structuring your home purchase transaction in ways that maximize the benefits of the credit. Here are a few examples:

•

The credit applies to 1-4 unit homes as long as you live in one of the units as your primary residence – you could live in one unit and rent out the others

 

 

• If two unmarried individuals buy a home, and only one of the individuals qualifies for the credit based on their income or past home ownership status, the individual who qualifies for the credit can claim the full credit. (Note: In the case of married couples, both spouses must qualify for the credit.)

•

The credit applies even if you have co-signers on your mortgage loan

 

Jason Norris, MBA, CMPS, President MFG Mortgage Services, LLC 1.775.322.0496

Does size matter? Apparently not as much as is used to.

Th e trend is smaller and more efficient. Cars, trucks, computers, cell phones, and now it appears real estate has joined the party.                

New homes are shrinking for the first time in 15 years. According to the Census Bureau the average new home is 2,065 sq. ft., a 7% decline from a year ago.

The question is, is this a function of changing consumer interests or a result of the downturn in the economy?  I would say it is a little of both.

From a real estate perspective, builders have to adjust to the market and what is selling. Right now smaller entry level and investor friendly properties are selling. Tax credits and low interest rates have boosted this segment of the market. On the flip side, higher end home sales are really struggling.  “Jumbo” loans for higher end homes are more expensive and harder to get. The higher the prices get, the fewer people will be able to afford them.

From the consumer perspective, people are adjusting to the new realties of our economy. Let’s face it, gas prices are going back up. Most of the newer developments in town are in suburban areas. Spanish Springs, Cold Springs, Stead, Golden Valley, Somerset, Damonte Ranch, and south suburban areas. It becomes a trade off. Do I want to have a bigger house and drive further, or do I want a smaller house with less driving? 6-8 years ago this wasn’t even a consideration for most people. Gas was cheap and commutes were fast and easy. This is not the case anymore. Property taxes are on the rise, as well as energy cost to heat and cool your home. Bigger house equals more taxes, higher utility cost, higher maintenance costs, etc. Not to mention extra cleaning! Who wants that?

So will this trend continue? I say yes. People don’t want to be “married” to their house. They are cutting back on living expenses to free up cash for other things. Eating out, sporting events, college funds, and vacations.

 

What do you think?

Finding Foreclosure Deals in the Reno Sparks Area

If you are looking for “deals” on homes in the Reno Sparks area, foreclosures and short sales can be a great option. You can sign up for a free customized list of foreclosures in the Reno Sparks area here foreclosure deals list.  In addition to this list, you can also search directly on the top banks websites for bank owned properties. Below is a list with web addresses.

As always, if you have any questions about any of properties you find, we would be happy to assist you! Happy hunting. 

AHMSI
http://www.ahmhomes.com

Bank of America
http://bankofamerica.reo.com/search/propertysearch.aspx

BB&T
http://www.bbt.com/applications/specialassets/search.asp

Chase
http://mortgage.chase.com/pages/other/co_properties_landing.jsp

Citi
http://www.citimortgage.com/Mortgage/Oreo/SearchListing.do

Compass Bank
https://www.compassbank.com/appforms/properties/index.jsp

Countrywide (Now Bank of America owned)
http://www.countrywide.com/purchase/f_reo.asp

GMAC - Now CapMark
http://www.capmark.com/CAPMARK/mainpage.aspx?id=180&ts1_TSMenuTargetID=180&ts1_TSMenuTargetType=1&ts1_TSMenuID=0

HomePath by Fannie Mae
http://www.homepath.com/

HomeSteps by Freddie Mac
http://www.homesteps.com/hm01_1featuresearch.htm

HSBC
http://www.banking.us.hsbc.com/HICServlet?cmd_PropertySearchDefault=cmd_PropertySearchDefault

HUD - Housing and Urban Development Listings
http://www.hud.gov/homes/index.cfm

IndyMac
http://apps.indymacbank.com/individuals/realestate/Search.asp

M&T
http://services.mandtbank.com/personal/bank_owned_prop.cfm
Ocwen
www.ocwen.com/

Regions Bank
http://realestate.regions.com/servlet/Ore/ForeclosedPropertySearch.jsp

SunTrust
http://suntrust.res.net/

Wachovia
http://reo.wachovia.com/

Washington

Mutual
http://www.wamuproperties.com/

Uncle Sam to allow use of $8000 tax credit as down payment.

We're still gathering details on this announcement but below is a release out today. We should know more in the next week. But this is an exciting develpoment for Reno Sparks home buyers. 

FHA Preps Tax Credit for Down Payment Use

Home buyers qualifying for Federal Housing Administration-insured mortgages may soon use the new first-time home buyer $8,000 tax credit as a down payment, US Department of Housing and Urban Development secretary Shaun Donovan said today.

The process of applying the tax credit toward down payment, called ‘monetization’ in the industry, allows for FHA-qualified borrowers to use the tax credit to obtain a government-insured mortgage.

Donovan’s announcement came at a National Association of Realtors legislative summit this morning, although HUD’s details on the initiative aren’t scheduled for official release until next week. The initiative will allow FHA-approved lenders to monetize the tax credit through short-term bridge loans, letting borrowers access the funds at the closing table.

“We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a down payment,” Donovan said, according to NAR.

The tax credit arrived as part of the American Recovery and Reinvestment Act of 2009 for qualifying taxpayers that buy homes in 2009. The law states that qualifying home buyers may claim up to $8,000 — or $4,000 for married individuals filing separately — on either their 2008 or 2009 tax returns. Unlike the previous law — which required recipients of the tax credit to repay the funds over a number of years without interest — the new home buyer credit effective with the passage of the act does not have to be repaid.

Reno Sparks Home Buyer Class Wed. May 13th

Jason and I will be teaching a home buyer class for the Reno Sparks area Wed. May 13th at 6pm. The class will be in the learning center at Assist-2-Sell 1610 Meadow Wood Ln.

There is no cost to attend but please register. We are not going to be selling you books, videos, cds, or subscriptions. We are not going to make you sign any sort or agreement. This is a fun, low presure event designed to give you solid info and answers. Leave your wallet at home.  

Click the link below to save your spot.

Register Now

All materials are provided including complete manual, list of foreclosure properties, quick start check list, financing checklist, $8000 tax credit forms, and even a discount coupon from Lowes home improvement.