June 2010


 

 
Banks: We’re Hiring
Banks are staffing up on loan originators to handle the predicted increase in mortgage lending over the next two years.
Read more >
10 Most Recession-Proof U.S. Cities
See which cities the Brookings Institute’s Metropolitan Policy Program highlighted for keeping their labor and housing markets stable.
Read more >
Analysts Question Fannie Mae Plan
A plan announced by Fannie Mae to sue delinquent owners who have the ability to pay is being questioned by industry experts.
Read more >
Factory-Built Homes Gaining Acceptance
Lower prices, less production waste, and speedy construction are some of the reasons buyers are choosing factory-built over built-on-site homes.
Read more >
Florida Gives Condo Associations More Clout
If owners fail to pay their dues, condo associations in Florida will be able to collect from renters.
Read more >
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June 28, 2010  

Up to 180,000 home buyers will lose their tax credit through no fault of their own if Congress fails to pass an extension to the home buyer tax credit by June 30 when the closing deadline expires.

Included in that number are thousands of home buyers in every state of the union, from 390 in Wyoming to 17,700 in California, according to estimates by the National Association of REALTORS®.Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz.NAR issued the following state-by-state estimate of the number of home sales that would be delayed beyond the June 30 deadline; numbers are rounded to the nearest 10:

“We are strongly urging the Senate and the House to act quickly to pass this legislation and ease the minds and pocketbooks of these home buyers,” said NAR President

. “It would be a tragedy for them not to be able to complete the purchase in time to claim the credit.”Golder“These are not buyers who just entered into the market. These are buyers who previously met all the qualifications for the tax credit, but find themselves at the mercy of a workflow jam with lenders or other delays such as lapses in the National Flood Insurance Program, Rural Housing Service, and new home construction, and might not be able to complete the purchase of their homes by the current deadline,” said

Alabama, 2,590; Alaska, 830; Arizona, 5,440; Arkansas, 2,090; California, 17,700; Colorado, 3,390; Connecticut, 1,770; Delaware, 400; District of Columbia, 300; Florida, 14,830; Georgia, 6,270; Hawaii, 710; Idaho, 1,270; Illinois, 7,030; Indiana, 3,560; Iowa, 2, 030; Kansas, 1,840; Kentucky, 2,540; Louisiana,1,800; Maine, 840; Maryland, 2,630; Massachusetts, 3,930; Michigan, 6,470; Minnesota, 3,760; Mississippi, 1,530; Missouri, 3,600; Montana, 760; Nebraska, 1,110; Nevada, 3,800; New Hampshire, 690; New Jersey, 4,300; New Mexico, 1,160; New York, 9,190; North Carolina, 4,890; North Dakota, 460; Ohio, 8,510; Oklahoma, 2,760; Oregon, 2,090; Pennsylvania, 5,830; Rhode Island, 500; South Carolina, 2,460; South Dakota, 500; Tennessee, 3,910; Texas, 15,340; Utah, 1,130; Vermont, 400; Virginia, 3,890; Washington, 3,190; West Virginia, 940; Wisconsin, 2,690; and Wyoming, 390.

Source: NAR

HUD Issues Guidance on Home Warranty Contracts and RESPA
The General Counsel’s office at HUD issued guidance on the appropriate circumstances under which brokers and agents can be compensated on a per transaction basis for selling home warranties. NAR and industry partners have been working for more than two years to get HUD to accept legitimacy of these of these arrangements after an earlier intepretive letter raised great concerns for real estate professionals and their partners in the home warranty industry.

While HUD has accepted that agents and brokers can be paid on a per transaction basis and that review of transactions should be done on a case by case basis, concerns remain. HUD is accepting comments for 30 days and are due by July 26, 2010. NAR and its industry partners will be submitting comments and seeking additional clarifications.

HUD Guidance >
Electronic Comment Submissions >

Contacts: Kenneth Trepeta, 202-383-1294

Contacts: Marcia Salkin, 202-383-1092

Contacts: Scott Rinn, 202-383-7508

Conventional Residential Lending Report

 
Freddie Mac Revises HAMP Backup Modification Requirements
On June 18, 2010, Freddie Mac announced that it has revised certain eligibility, solicitation and reporting requirements for its HAMP Backup Modifications program.

The Freddie Mac HAMP Backup Modification option applies to all active stated income HAMP Trial Period Plans with an effective date on or before May 1, 2010 (previously April 1, 2010), and that have been deemed ineligible for a permanent HAMP Modification.

Under the revised Freddie Mac guidelines, if a borrower has made three HAMP Trial Period payments by June 18, 2010 and meets the Freddie Mac Backup Modification eligibility requirements, servicers must cancel the HAMP Trial Period Plan and evaluate the borrower for a Freddie Mac Backup Modification. Freddie Mac is requiring servicers to send an eligible borrower a Freddie Mac Backup Modification offer no later than 30 calendar days from the date of this notice, Bulletin 2010-14.

For further details, please review the Freddie Mac Bulletin (link below).

Freddie Mac Bulletin 2010-14 >
Template for report >

Contacts: Jeff Lischer, 202-383-1117

Contacts: Tony Hutchinson, 202-383-1120

 
Financial Regulatory Reform Nearing Completion
In the very early hours of Friday, June 25th, the House and Senate conference on Wall Street reform completed their work and voted to finalize H.R. 4173, the “Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.” It is expected that the House will vote to accept the revised version of the proposed legislation on Tuesday, June 29th, with the Senate following suit on the following Wednesday or Thursday. As initially proposed, President Obama could have the most sweeping financial regulatory reform bill since the Great Depression on his desk for signature prior to Independence Day.

Attached below is a link to the House Financial Services Committee page containing all of the actions taken on each section of the legislation.

HFSC: Dodd-Frank Wall Street Reform and Consumer Protection Act Conference >

Contacts: Tony Hutchinson, 202-383-1120

Contacts: Jeff Lischer, 202-383-1117

Environment Report

 
EPA Delays Lead Paint Certification Rule
On June 18, the Environmental Protection Agency (EPA) announced that it will provide renovation firms and contractors additional time to obtain the requisite training and certifications to comply with the new Lead Renovation, Repair and Painting (RRP) Rule. Until October 1, the EPA will not fine workers for lacking certification if they have applied to enroll or are enrolled in a class by September 30 and complete the training by December 31. This is largely a response to the Senate voting, May 27, to delay those certification requirements with an NAR-supported amendment to a supplemental spending bill (H.R. 4899). While delaying enforcement of the same requirements, the Agency wrote that it will continue to enforce the rule’s other requirements pertaining to lead-safe work practices.

Read the EPA Memorandum >

Contacts: Russell Riggs, 202-383-1259

Contacts: Austin Perez, 202-383-1046

Contacts: Helen Devlin, 202-383-7559

 
Flood Insurance Update
With progress on the larger bill (H.R. 4213) that includes a year-long extension of the National Flood Insurance Program (NFIP) stalled, attention has turned to efforts to moving an NFIP-only bill through Congress.

On June 23, the House unanimously passed by voice vote separate legislation that would extend only the NFIP until September 30, 2010 (H.R. 5569). NAR has been urging Congress not to wait for agreement on H.R. 4213 and pass the NFIP extension separately. Now that the House has acted, our focus has turned to the Senate where NAR is urging quick passage of the House bill.

As of Friday June 25, the Senate had not acted. NAR has written multiple letters including a joint industry letter and followed up directly with key members of the Senate to take up and immediately pass H.R. 5569. NAR has also issued an all-member Call for Action to keep up the pressure on the Senate. We would encourage you to write your members of Congress; just click on the link below to “Take Action Now!”

Since June 1 the NFIP has not had statutory authority to issue new or renewal flood insurance policies, which are required for mortgages in the 100-year floodplain. The various lending authorities (FEMA, Fannie, Freddie, etc.) have issued guidance describing the documentation they will accept as proof of flood insurance purchase while the NFIP is shutdown.

Visit the Flood Insurance Update page listed below to download the authorities’ guidance documents for lenders during the NFIP lapse.

Flood Insurance Update >
Take Action Now! >
Visit NAR’s Homepage on Natural Disaster/Flood Insurance >

Contacts: Austin Perez, 202-383-1046

Contacts: Russell Riggs, 202-383-1259

Contacts: Helen Devlin, 202-383-7559

Federal Tax Report

 
June 30 Closing Date Remains Unchanged
The Senate has adopted Senator Harry Reid’s (D-NV) amendment to the pending jobs and extenders legislation (HR 4213) that would extend the closing date for the homebuyer tax credit from June 30, 2010 to September 30, 2010. The amendment would apply only to purchasers who have satisfied the April 30 binding contract rule for the $8000 and $6500 tax credits. The amendment creates no new eligibility for the credit. The provision is now part of HR 4213, the pending Jobs/Loophole Closer bill. Passage of HR 4213 requires 60 votes. Three efforts to achieve the 60 votes have failed.

Even if the bill can secure the necessary 60 votes, several more votes will be required in the Senate. The bill then returns to the House. There is no guarantee that the House would adopt the Senate amendment.

The extension could be offered to another bill that includes tax provisions. The Senate will be considering a small business bill that includes tax provisions during the week of June 28. NAR continues to aggressively push House and Senate leadership to extend the date.

The Home Buyer Tax Credit >

Contacts: Linda Goold, 202-383-1083

Contacts: Samuel Whitfield, 202-383-1131

    June 25, 2010  

  

Welcome To The Weekly Update And More  
Rarely do we pick on or attack our competitors, however in our quest for the honest and ethical treatment of borrowers we have to expose or explain a shady deal when we see it. You may have heard the Chase ad about their mortgage with a 1% annual rebate (up to $500 max). We had a customer referred to us by one of our Realtors. The borrower started their refi at Chase and was locked into a 30 year fixed at 5.25%, loan amount $300,000 with 0 points. Our rate to them for the same terms was 4.75%. Let’s do some mortgage math (our favorite thing we love to do), the payment on a $300,000 loan for 30 years at 5.25% is $1656.61 (Chase’s deal). Applying Chase’s rebate $1,656.61 X 12=$19,879.32 per year, the rebate is 1%, easy math, just move the decimal place to the left 2 places, equals a rebate of $198.79. Therefore $19,879.32 – $198.79 = $19,680.53 gets us to the net payment. The payment on our option $300,000 loan 4.75% rate 30 year (both loans are 0 points), is $1,564.94 X 12 = $18,779.28. Getting to the finish line is easy, $19,680.53 – $18,779.28 = $901.25 savings with our deal. To steal a line out of Chase’s play book “Chase what matters” even if you have to run away from Chase. We think Mr. Shakespeare said it best, “All that glitters is not gold.” We will always tell you, with an apples to apples comparison, if someone’s offer is better than ours. We have done that and will continue to do that, that’s how we roll.   

It Must be Some Where?
  
We all know it’s true, but we need to see it in black and white. We are talking about the assumption of FHA mortgages. A very astute Realtor asked, “Where in the note does it say that FHA loans are assumable?” Well that sent us packing, we asked for a copy of the note and it did not mention anything about assumption. A call to our Government lending guru confirmed what we already knew, what we were looking for was not in the note. The light bulb flashed on for our guru and the assumption notice is part of the application for an FHA loan, DUH! We have explained that notice to every FHA borrower and did not realize that is it, there is no more than the “Assumption of HUD/FHA-Insured Mortgages Release of Personal Liability”. If you would like your very own copy, drop us a line and we will send you one; it’s only a one pager.  
“Exploit the Difference”  
Exploit is a word that doesn’t conjure up positive images. There is probably some textbook on selling that has a “Top Ten” list of words you should never use in selling and exploit is number 3. However we are going to tell you how to exploit a difference between Fannie Mae and Freddie Mac. Freddie Mac will combine ratios with a non occupant co-borrower, Fannie Mae won’t do this. We can even do this on Freddie Mac agency jumbo loans. Therefore, if a borrower has 20% down and is tight on ratios, we can add a non-occupant co-borrower and qualify. Better option than FHA if you have the down payment. Maybe we should create a tag line this “Exploit the difference” we like it better than “Chase what matters.” What do you think?  
Listening to a panel discussion this week one of the panelist had a novel idea that I thought we would try. They said, “Ask for the business.” OK we will give it a shot, we want your business! Next week we will not publish this newsletter in light of the holiday; Happy 4th.     

Sincerely,  

   

 The Meredith Mortgage Team, CMPS® 

Certified mortgage planning specialist  

“We Will Always Have Your Best    

  Interest In Mind”      

    

Erin & Kathleen  

The Bay Area’s Premier   

Mortgage Banker and Broker   

   

(925)983-3048 office  

(925)226-3215 efax  

(925)918-0585 mobile  

meredithteam@cmgmortgage.com  

emeredith@cmgmortgage.com  

   

Apply For Mortgage Financing with The Meredith Team, Click Below:    

http://www.cmgmortgage.com/LO/meredithteam/GetStartedApply.shtml  

The Home Ownership Accelerator  is helping people   

pay of their mortgage in record speed…click here  

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Despite efforts by the IRS to combat scams, thousands of individuals — including nearly 1,300 prison inmates — have defrauded the government of millions of dollars in home buyer credits, Treasury’s inspector general reported Wednesday.

The home buyer credit provided a federal tax credit of up to $8,000 for first-time home buyers for tax year 2008, the subject of the report. The credit, created to revive the housing market, was later extended to repeat home buyers. The latest credit expired with sale contracts signed as of April 30.  

  

In response to earlier reports of widespread fraud, the IRS tightened reporting requirements for taxpayers who claimed the credit. But additional controls are needed, the inspector general said. Among the report’s findings:  

•1,295 prisoners, including 241 serving life sentences, received $9.1 million in credits, even though they were incarcerated at the time they reported that they purchased their home. These prisoners didn’t file joint returns, so their claims could not have been the result of purchases made with or by their spouses, the report said.  

•2,555 taxpayers received $17.6 million in credits for homes purchased before the dates allowed by law.  

•10,282 taxpayers received credits for homes that were also used by other taxpayers to claim the credit. In one case, 67 taxpayers used the same home to claim the credit.  

“This is very troubling,” J. Russell George, the Treasury Inspector General for Tax Administration, said. “Congress created and modified the home buyer credit to stimulate the economy and help taxpayers achieve the American dream, not to line the pockets of wrongdoers.”  

Taxpayers who fraudulently claim the home buyer credit face civil penalties along with criminal prosecution, the IRS said. In October, a Florida tax preparer was sentenced to 30 months in prison for falsely claiming the credit on clients’ tax returns.  

The IRS is moving quickly to block fraudulent claims and recapture credits paid to prisoners, IRS spokesman Frank Keith said. He added that it’s not always easy for the IRS to identify a tax return filed by a prison inmate. Some prisoners use the address of a family member or a post office box, he said.  

And some prisoners have a legitimate reason to file a tax return, Keith added. For example, they may be owed refunds from income earned before they were incarcerated. The IRS is working with state and local governments to obtain information about taxpayers who are incarcerated, Keith said.  

In a statement, Assistant Treasury Secretary Michael Mundaca said the fraudulent claims identified by the inspector general represented less than one-half of 1% of the credits paid out under the program. “As with all new and expanded programs, we are constantly working to improve implementation, and the IRS has already begun to take additional steps to prevent fraud in this program.”  

 

NAR Hails House Vote on Flood Bill Extension

A bill to extend the authority for the National Flood Insurance Program, strongly supported by the NATIONAL ASSOCIATION OF REALTORS®, was passed by the House today. The bill would extend the program to September 30, 2010.

“We greatly appreciate that the members of House were sensitive to the plight of thousands of home buyers whose loans were being held up since this program expired earlier this year. The passage of H.R. 5569 is a first step toward helping home buyers to the closing table. We strongly urge the Senate to speed passage of this important bill,” said NAR President Vicki Cox Golder, owner of Vicki L. Cox Real Estate in Tucson, Ariz.

Lenders have refused to close loans on properties that required flood insurance, since the insurance program expired May 31. The bill would make flood insurance coverage retroactive and would include all approved applications since that date. The bill now goes to the Senate for consideration.

Source: NAR

Fannie Mae Cracking Down on Strategic Defaults

Fannie Mae announced plans Wednesday to get tough with strategic defaults.

Fannie said that borrowers who default when they are able to pay won’t be able to get another Fannie Mae mortgage for seven years. The current wait is five years. While that might sound like an empty threat, in an environment where Fannie Mae and Freddie Mac are providing most home financing, it may have some teeth.

Fannie also threatened to sue home owners who walk away from their mortgages in states where such deficiency judgments are legal.

The announcement attracted some criticism because of Fannie Mae’s refusal so far to allow hard-pressed borrowers to negotiate a lowering of their principal amount, which is something lenders are now agreeing to after prodding by the federal government. Critics contend the company should try principal write-downs before it penalizes borrowers for choosing to walk away.

Source: CNNMoney.com, Tami Luhby (06/23/2010)

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