Mortgage Weekly News

Market Commentary:
An interesting tidbit today.....it looks like the Fed is out talking up another Quantitative Easing (QE). One of the dovish members of the FOMC, William Dudley, was speaking this morning and actually mentioned a number for the easing - $500B over a six month period. Since this did not come from Bernanke, the market does not view it as "golden." However, in the past, the Fed has "leaked" what it is thinking to see what the market thinks of it. Only time will tell.

The Market will be focused next week on the Employment numbers at the end of the week.

Looking ahead:
Monday - Pending Home Sales
Tuesday - ISM Non-Manufacturing
Wednesday - ADP Employment Change
Thursday - Initial Jobless Claims / Continuing Claims
Friday - Unemployment Rate / Change in Payrolls

Industry Updates:
Flood Insurance - Yesterday The President signed a one year extension of the Flood Insurance Program.

USDA / GSE / FHA - The President also signed the Continuing Resolution yesterday that provides funding for the USDA Program until December 3rd and extends the temporary extension of the GSE and FHA Mortgage Limits until September 30, 2011. The new guaranty fee structure for USDA refinance transactions goes into effect today October 1st and is 2.25%. The USDA fee for purchase transactions remains 3.5%.

Austin - A GREAT place for Real Estate Investors!

Austin has been in the national news quite a bit recently. We now top Forbes list as the Best Housing Market for Investors. “Austin looks like a great buy right now with a projection population growth of 16% and three-year home price forecast of 5%.” To read the entire article - http://www.forbes.com/fdc/welcome_mjx.shtml

Here is another great article from Forbes.com talking about both residential and commercial Real Estate Investing. \http://blogs.forbes.com/francescalevy/2010/09/13/real-estate-investing-housing-reit-foreclosures-distresse/?partner=contextstory

If you have considered adding property to your portfolio, please contact me to discuss various options. I am here to help with any of your mortgage needs or questions.

Effects of Mortgagee Letter 2010-28

The recently released HUD Mortgagee Letter 2010-28 has generated not only quite a buzz in the industry, but also a good deal of confusion over the actual stipulations. Here is a basic recap of the Letter to help you navigate the change.

The Facts

The new law allows HUD to increase the amount of the annual Mortgage Insurance Premium (“MIP”) from 0.5 percent to 1.5 percent for loans at 95% or less LTV. The allowable premium changes from 0.55 percent to 1.55 percent for loans over 95% LTV.

However, HUD is not increasing premiums up to these allowed amounts at this time. Their letter states that, effective for all case numbers assigned on October 4 and later will be charged .85 percent or .90 percent, depending upon the LTV.

On the flip side, FHA will greatly lower the Upfront Mortgage Insurance Premium (“UFMIP”) on October 4 from 2.25 percent to 1.0 percent for purchase and refinance transactions.

Annual premiums for Home Equity Conversion Mortgages (“HECMs”) are increasing to 1.25 percent while the upfront premium is unchanged; cancellation policies for MIP are also unchanged.

What Does It All Mean?

The simple fact is that closing costs for FHA loans assigned on or after October 4 will be dramatically reduced by the new, lower UFMIP.

The upfront savings will be somewhat offset by the higher annual premium paid monthly. However, those borrowers who want to roll the UFMIP into their loan amount will enjoy having more equity in their homes now than if they had purchased prior to the change.

FHA loans are still a great deal, especially with the upcoming change to the UFMIP which should help to alleviate client resistance to FHA financing. If you or your buyers have any questions about FHA financing, please do not hesitate to ask me.

Can't decide if you are ready to buy OR if you should refinance?

Can't decide whether or not to buy? On the fence?
Read this article from Time magazine....it couldn't be more accurate! : http://www.time.com/time/magazine/article/0,9171,976602,00.html
The surprise? It was written 18 years ago! History often repeats itself. It is human nature to get stuck thinking what's happening now will never happen again, however it is important to remember that things go up and go down, we WILL get through this. The housing market will recover long term. The best investors buy during the most pessimistic times.

Can't decide whether or not to refinance?
Rates right now are the BEST they have ever been. It couldn't be a better time to buy or refinance. This current bond 'bubble' will burst, there is no doubt about it. If you are contemplating a refinance, now is the time to take action. You don't want to look back and wish you had. Instead, take action and take advantage of the best rates EVER available!
As always, please let me know if you have questions or if I may assist in any way.

ATTENTION REALTORS

It isn't new news to say that purchases have slowed down.

I would like to take this opportunity to partner with you NOW, to help build business in the months to come!

I would be happy to sit with you at any time to make outbound calls to anyone that is sitting on the fence. I can qualify your prospective clients and explain that affordability is great now and probably will never be better. I am also happy to track anyone that might not be ready today. I've always said "never say no, always say here's how". Every buyer deserves a loan, some just aren't ready yet. I'm here to help you get them ready.

I'm more than happy to be in your office, helping you find business solutions. Tough times require tough actions. As we all know, the next 6 months won't be easy. All indications are that sales are slowing, unemployment is not improving and though consumer confidence was up slightly today, it is still at very low levels.

Today I can be part of the solution; I plan to focus on the things that will build your business for the future. Today, as a team we can ensure that when the market does come roaring back, it will be YOU that the competition will be chasing.

Let me know how I can help!

Market Commentary

The unemployment numbers never cease to amaze. It is such a toss up between expectations and reality. Today's nonfarm payroll number was -54K when the consensus was -105K. And, if that was not enough, last month's number was revised to -54K from -131K. The employment rate went up by .1% this month to 9.6%. The private sector has had positive job growth every month this year. As a result, MBS prices are off this morning and the 30 year fixed FNMA required net yield (60 Day) is now at 3.85%Next week is very light on data. We will have the biweekly Treasury sales scattered throughout the week and the market holiday on Monday.

WE ARE ROLLING OUT A NEW MI PROGRAM!!!!!

SWBC Mortgage is proud to announce our new MI program that will offer our customers better MI pricing. Higher quality loans will now receive a price that reflects the reduced risk. The better the quality of the loan, the better the pricing. In addition to the opportunity for better pricing, we will also be able to obtain MI on some loans that may not have been eligible for coverage previously. Because each loan is priced according to the risk it presents, we will have expanded eligibility. As an example: the DTI can be exceeded by as much as 5 percentage points (max DTI of 50% on many loans) and the credit score can be as much as 10 points below the minimum required (650 on many loans) and still qualify for MI!

ActiveRain

You can find great local Austin, TX real estate information on Localism.com Emily Franke is a proud member of the ActiveRain Real Estate Network, a free online community to help real estate professionals grow their business.

USDA Update

The

USDA funding extension was passed in the appropriations supplemental bill earlier this week and is expected to go to the President for signature this week.

The bill permits USDA to charge 3.5% premium and .5 annual fee, however, USDA has indicated they will not implement an annual fee at this time.

While the President has not signed the bill yet, it is a virtual certainty that he will. In the meantime, Chase is purchasing USDA loans utilizing conditional commitments. Attached below is the most recent announcement from Chase with more information.

SWBC will begin allowing USDA loans to close effective Monday, August 2, 2010. The first payment dates for these loans must be no sooner than October 1, 2010.

Mortgage Rates: Are We Witnessing a Loan Pricing War?

Call me crazy but I think we've been witnessing a lender price war in the primary mortgage market.

Yesterday we talked about lenders "buying the market". (HERE is an explanation of "buying the market"). I originally described this behavior as "mixed", some lenders were better while others were worse, but then I looked back at my rate tracking spreadsheet and noticed a rotating pattern of aggressive pricing strategies. Of the majors, Wells and GMAC were buying the market last month, Chase and Bank of America had their moment in the sun, and right now I believe Citi might be trying to buy the market.

It's almost like they've been taking turns....

It makes sense though. Certain lenders have significantly longer loan processing turn times than others, some lenders are priced super aggressive while others seem content to linger toward the high side of the recent rates range. And yesterday we noticed mortgage loan pricing was insulated/less sensitive to the movements of MBS prices in the secondary market. The same thing happened today! MBS prices rallied and most lenders didn't reprice for the better, only a handful did. (Leaves room for improvement in the AM if related markets cooperate)

This means the "best executed" lock/float strategies have been a factor of identifying what lender is "buying the market" at the time of application or upon receipt of useful appraisal, as opposed to pacing the ups and downs of MBS prices and related markets. In general, direct lenders and mortgage brokers are nimble enough to access a wide range of investors at the same time. (Defend yourselves Retail!)

This might be over-analyzing the primary mortgage market for consumers, but I've been publishing screenshots of my rate tracking spreadsheet over on MBS Commentary. I think they might be better used on this channel.

What you see below is a day over day comparison of two separate mortgage rate metrics. For now I want to focus solely on the "Pricing Δ" column. This data shows the day over day change in the price mortgage investors are willing to pay to purchase your loan from a lender. Each note rate has a price. The pricing below assumes the borrower's rate quote is locked in for 30 days.

A RED number means they investor is willing to pay less for your loan. A BLACK number means investors are willing to pay more for your loan. These day over day price changes correspond to the discount points a consumer is charged. When pricing declines, lenders increase consumer borrowing costs. When pricing rallies, lenders reduce consumer borrowing costs (they're usually slower to give than to take though).

You'll notice that lenders reduced loan pricing today. Don't worry, 4.375% on a conventional 30 year fixed loan is still attainable, it's just going to cost you about 0.25% to 0.35% (of your loan amount) more (in discount points). The higher up your note rate is, the less sensitive your borrowing costs are to these day over day changes.

Although consumer borrowing costs (closing costs) might've moved marginally higher over the past week, lifetime low rates are still available.

The best advice I can offer consumers is: Make sure you ask your loan originator as many questions as it takes for you to totally understand the terms of your loan and rate lock. If your lender informs you that your rate will be higher because your credit score is below 720, ask why. Don't be shy to request a breakeven timeline on the discount and origination points you're being charged. Make sure you're not missing out on a cheap permanent buydown (ask your lender!).

And if you do lock your loan, don't abandon your loan officer if another lender comes along and offers to cut your application fees in half. I'm not saying you shouldn't shop your mortgage rate, just make sure you give first dibs to the originator whose been working hard for you. (They have to work hard in this environment)

by Adam Quinones at Mortgage Rate Watch

Can Mortgage Rates Go Any Lower?

Well, here we are on "hump day" and mortgage rates are still detached from the price fluctuations of the secondary mortgage market. Instead, the ups and downs of consumer borrowing costs continue to be driven primarily by the capacity constraints of major lenders, the market makers for mortgage rates.

One misconception is record low mortgage rates have drawn out a hoard of "fence sitting" borrowers who are bustling with excitement to refinance. Yes, media coverage of record low mortgage rates has attracted attention from some homeowners, but the crowds just don't compare to the mini-frenzy we witnessed in early 2009. This tells us the capacity constraints of major lenders are not totally due to an increase in loan applications.

With the larger lenders allocating newly hired labor to loan modification & loss mitigation departments, lending operations staff have been left to "fend for themselves". Support staff are expected to be multi-tasking, multi-talented, highly productive members of the team. Mistakes can be costly and often times even "kill" a deal. Anxiety is high. Stressing the situation further are recently implemented "quality control" standards. These risk management practices slow the origination process because they mandate an acute attention to detail. Plain and Simple: all i's must be dotted and all t's must be crossed. The entire origination process has slowed down a step or two. Consumers, this is why your loan officer may have recommended a 45 day lock period, they have learned to expect the unexpected.

I've been thinking a lot lately about the question: Can Mortgage Rates Go Any Lower???

I've approached the question from several angles. The "double-dip" great recession option is still on the table. That means we can't rule out the idea that benchmark Treasury yields might return to record lows and take mortgage rates along for the ride. That theory doesn't hold much water in my opinion though, this is largely due to technical considerations surrounding the securitization of mortgages. But there's a wild card we haven't talked about in while: If the economy does "double-dip", the Federal Reserve has made it clear they will "act accordingly" to prevent the spread of contagion. With the Fed essentially out of conventional policy bullets, the door is open for more quantitative easing, aka more MBS purchases.

If that scenario played out, the "best execution" 30 year fixed mortgage rate could move as low as 3.875%. The one hang up I have with this outlook is the fact that we already experienced an environment like this and mortgage rates failed to move lower than current levels. Remember last year when the Fed was buying MBS and benchmark Treasury yields were at record lows?

One reason why this time might be different: The competitive lending environment. A loan pricing war amongst the major lenders...

Let's say mortgage rates don't decline further and refinance demand eventually exhausts itself. If this were to happen and purchase activity didn't pick up enough to offset the production slowdown, lenders would be looking for ways to stimulate activity and the Fed would be looking for ways to redistribute wealth around the economy. A new wave of refinances would occur if mortgage rates fell to 4.00%. Two birds, one stone?

This seems like a logical option, unfortunately there is a major mismatch between the credit/collateral demanded by lenders and the credit/collateral supplied by borrowers. So unless we find a way to reduce the risks of origination, many borrowers will remain locked out of the refinance market, even if rates fall to 4.00%.

With that in mind, we have to start thinking about the idea of another attempt at HARP & DU REFI PLUS. Perhaps we might see the Fed launch some variation of a privately-funded, streamline refinance program that includes a de minimis government guarantee on the loan paper? Either way the government will still be involved in some capacity. One of the biggest reason mortgage rates have been so resilient lately is their implicit/explicit government guarantee. Mortgage-backed securities have benefited from their own "flight to safety", especially from overseas investors.

That's where we go full circle on my "rates going lower" theory. I suppose the first step of this scenario coming true is the "double-dip". Some folks say the deflationary spiral has already taken hold, others say we're dealing with a crisis of confidence and the underlying economy is actually building momentum. Working in the housing market I am exposed to excess amounts of negativity, but I also see evidence of a bottom. Either way, I know the Federal Reserve is standing "at the ready" if conditions take a turn for the worse.

The best 30 year fixed mortgage rates remain in the 4.375% to 4.625% range. The "best execution" rate for a well-qualified borrower is still 4.50%, for both conventional and FHA/VA. No borrower should be quoted a rate over 5.25%

by Adam Quinones at Mortgage Rate Watch

Geithner: U.S. Should Retain a Mortgage Backstop

Treasury Secretary Timothy Geithner said Sunday the government should retain "some type" of federal guarantee to ensure that Americans can easily finance home loans, in what could be the latest salvo between the Obama administration and Republicans over the future role of the public sector in the housing market.

The statement cuts to the heart of one of the most vexing policy questions in Washington: what to do with the costly government-run mortgage giants Fannie Mae and Freddie Mac.

Both companies were taken over by the U.S. in 2008 as they teetered towards collapse. So far, the Treasury has injected $145 billion in taxpayer aid to keep them afloat and that figure could climb in the coming months.

Republicans have said the firms and their distortive role in the housing market need to be addressed immediately. They say that their quasi-government nature allowed them to grow so large they helped fuel the financial crisis.

The Obama administration has said the firms should not return to their original state. But they haven't gone as far as some Republicans that have hinted at abolishing the functions the companies performed, such as offering mortgage guarantees.

Mr. Geithner promised the administration would "bring fundamental change" and said it wouldn't "preserve Fannie and Freddie in anything like their current form" during a Sunday appearance on NBC's "Meet the Press."

But, he added, "there's going to be a good case for taking a look at preserving or putting in place a carefully designed guarantee so, again, homeowners have the ability to borrow to finance a home even in a very difficult recession."

The stance illustrates the challenges facing lawmakers as they seek to remake the companies, which own or guarantee more than half of the nation's $10.2 trillion in mortgages.

For decades, a fuzzy, "implied" guarantee allowed the companies to borrow cheaply because investors assumed—correctly, it turned out—that the government would bail the firms out if they ever floundered. The arrangement allowed Washington to hide the expense of the generous subsidies that lowered borrowing costs for homeowners by making the 30-year fixed-rate mortgage widely available.

The administration has promised to sketch out more details by early next year. Last week, a 90-day public comment period established by the Treasury closed after drawing scores of responses from an array of market participants.

By NICK TIMIRAOS and DAMIAN PALETTA

Buyback Risk Locks Some Borrowers Out of Refi Market; Jawboning on Fannie and Freddie; Anecdotes from the Trenches;

One patient came in and said, "Doctor, I have a serious memory problem." The doctor asked, "When did it start?" The man replied, "When did what start?"

That line is short and to the point. Generally speaking, markets like news when it is short and to the point - borrowers are different than traders, who are different than investors, who are different than analysts, who are different than economists. So when the Fed Chairman uses the double adjective "unusually uncertain" to describe the economic outlook, one's opinion, and how one reacts to that quote from last week's testimony, will be different. There is no question that rates are great, and much better than many had forecast for this time of year. But if the Federal Reserve doesn't know what the US economy is going to do in the near (or far) future, what are small business owners, builders, etc., supposed to do?

One important factor which is influencing mortgage rates is that FNMA/FHLMC debt is attractive at present and is finding many buyers. This debt has higher yields than Treasuries and is de-facto backed by the Treasury department. With mortgages there will always be questions on duration mismatch and early pay-offs, but if both Freddie & Fannie pools and Treasury debt are guaranteed by the US government, why not obtain the higher yielding paper? On average the mortgages which comprise the debt are of substantially higher quality than those of, say, 2-7 years ago. These are fully documented, low debt ratio, high credit score, true A-paper loans. For the most part, we are past the worst in terms of real estate value erosion so there will be fewer "walk-aways" by folks who owe more than the property is worth. READ MORE ABOUT HIGH DEMAND FOR AGENCY MBS: http://www.mortgagenewsdaily.com/mortgage_rates/blog/164288.aspx and HOW IT HAS AFFECTED MORTGAGE RATES: http://www.mortgagenewsdaily.com/consumer_rates/164487.aspx

Not only are rates helping originators, but mortgage banker profit margins are currently very high. When rates dropped in April, instead of following the MBS prices tick-for-tick, many firms built in higher spreads both to build up their reserves and to limit volumes (have to watch that overhead!). All of this is easier to do now than in the past, given the lower competition. And as I have mentioned in the past, would you rather do 1 loan and earn a 2 point profit or 2 loans and earn a 1 point profit? Doing more loans for less margin, other things being equal, strains a firm's capital, warehouse lines, operations staff, exposure to buybacks, etc.

Although no move is expected until 2011, a story in the Wall Street Journal (http://online.wsj.com/ar)on Freddie's and Fannie's future stated that Treasury Secretary Geithner said the government should retain "some type" of federal guarantee to ensure that Americans can easily finance home loans.

Fannie and Freddie were taken over by the government in 2008, turning their implied government guarantee into an explicit guarantee and receiving almost $150 billion in aid. On "Meet the Press", Mr. Geithner promised the administration would "bring fundamental change" and said it wouldn't "preserve Fannie and Freddie in anything like their current form" but that "there's going to be a good case for taking a look at preserving or putting in place a carefully designed guarantee so, again, homeowners have the ability to borrow to finance a home even in a very difficult recession." Since F&F own or guarantee more than half of the nation's $10.2 trillion in mortgages it is not a "slam dunk" issue, and the Treasury received many responses during the 90 day public comment period (which ended last week).

An editorial was quick to point out that, in a twist of fate showing where things stand, Freddie and Fannie have become more central than ever to our mortgage business. The two companies have been nationalized. They underwrite the vast majority of all new home loans, and they own or guarantee about half of all the mortgages outstanding. Per the WSJ editorial, "There's simply no room in this story for two giant government-sponsored enterprises that distorted the housing and credit markets, took advantage of implicit government guarantees to operate at leverage ratios that would have made Lehman Brothers executives blush, and finally, and predictably, collapsed under the weight of that leverage and their bad bets on the housing market."

READ MORE ABOUT REFORMING THE HOUSING FINANCE SYSTEM: http://online.wsj.com/article/SB10001424052748703995104575389621503405044.html?mod=WSJ_topics_obama

There has been some press lately about a "national mortgage" since the government seems to be gathering things under their umbrella. A Barclays analyst wrote..

"A national 4% mortgage rate to all borrowers makes no sense at this stage. This strategy would require the government to subsidize this program and increase their already enormous balance sheet. What is far more likely is GSEs indemnifying the originators from early pay default risk for their existing g-fee loans. For each loan that gets put back to the originator, they lose 50 cents on a dollar. We believe this a large reason why originators have been focused on refinancing the most pristine borrowers (High FICO, Low LTV, and low DTI). In addition, anecdotally it appears that borrowers with very high DTI can't even get a mortgage. Bottom line, there is no reason why the GSEs can't provide amnesty for existing borrowers and at the same time insulate the originator from early default put back option. If the liability to the originator is removed, there is no reason why they can't refinance the $1.8 trillion of '04-'08 mortgages."

That being said, at this point many of these borrowers either no longer qualify under current guidelines, or their properties are underwater. Barclays estimates that even with rates in the mid-4% range (250 basis points below their mortgage rate) only 1 out of 10 borrowers in the 06/07 6.5s can refinance over the next year. "Absent of a policy change, this number is not going to change considerably even if mortgage rates continue to grind lower. Clearly these borrowers have combination of high LTV, high to infinite DTI , low FICO and low documentation.(higher LLPAs)

Why can't the government implement a strategy that all existing borrowers who have been current on their mortgages for the past 2-3 years be exempt of these requirement subject to ~ 50 bp higher g-fee? By waiving the LTV/DTI/FICO/Doc requirements in lieu of 2-3 years of being current on their payments, as a means to a streamline refinance program, the government will increase the agencies g-fees, lower the borrower's monthly payments, and provide incentive for remaining homeowners to stay current on their mortgage so that they can take advantage of a streamline refinance program in the future.

Comments from the originator trenches....

A processor wrote to me and said, "Scientists believe that to make a pound of honey, it takes 50,000 miles of bee flight. Now it seems that it takes that many steps in doing a mortgage, with the difference being that bees have had millions of years to adapt."

A loan officer wrote and said, "New legislation created to control compensation during the 'Golden Years' when the markets were not normal are forcing originators out of the business since the 'Golden Years' no longer exist. Current markets are still not normal and could be called the 'Suffering Years' as the business cycle continues to struggle to return to normal.Originators, real estate agents, appraisers, title attorneys, etc., have always had to endure good and bad business cycles, but the government adding all these 'fixes' for a market that no longer exists to one of the worst markets ever makes getting through it even more difficult while it reduces competition and increases costs to the consumer. Who wants a minimum wage employee to help you with the biggest purchase of your life?"

One loan agent said, "Underwriters have come up with some of the most insane conditions I've ever seen. Some are so ridiculous all you can do is laugh. I recently had a 58-yr old borrower, with credit scores above 800, who was purchasing a second home. The LTV was roughly 60% and the DTI ratio was 30%. The borrower, through our underwriter, was asked by a major lender to provide a letter of explanation of why he had 8 mortgages in his life time. And he provided it."
An error was made yesterday in the description of Freddie Mac's HARP product. It is not true that only the current servicer can originate a Freddie Mac HARP ("Relief Refinance Mortgages"). Any Freddie Mac Seller can originate and deliver Relief Refinance Mortgages to Freddie using "Open Access". Some investors, such as Wells Fargo, have overlays which restrict this product, whereas others such as Flagstar, Fifth Third, etc offer the "Open Access" programs where they will take any lenders' Freddie Mac deals. HERE:http://www.freddiemac.com/sell/factsheets/relief_refi_open_access.html is the official guidance from Freddie.

Some originators moved into offering mortgage relief services. Most are honest business people, but woe to those who aren't - and unfortunately these are the ones that garner the most publicity. Federal regulators (the FTC) have banned eight individuals and companies from selling mortgage-relief services, settling charges that they used false advertising to deceive homeowners facing foreclosure by paying $29 million in fees that they collected from clients. Some of the companies used names that deceived borrowers into believing the firms were participating in the Obama administration's $75 billion mortgage modification effort, known as "Making Home Affordable." Steven Oscherowitz (Federal Loan Modification Law Center), Loss Mitigation Services Inc., Direct Lender, Dean Shafer, Marion Anthony "Tony" Perry, Bernadette Perry, Salvatore and Nicholas Puglia (Hope Now Modifications and Hope Now Financial Services Corp.) were all either banned from the industry and/or required to pay large penalties.

Monday, once again, due to supply and demand issues, mortgage prices did well relative to Treasury prices. (Things started off quietly, but then traders reported that an "Asian buyer" of size emerged helping prices, and the $1.8 billion in origination sales were easily absorbed.) Even with the yield on the 10-yr Treasury moving above 3%, mortgage prices actually closed the day better by .125. A big surprise came from the report showing that U.S. single family home sales surged (up over 23%) in June coming off a record-low in May. At this sales pace, inventory is at 42 year low. The percentage increase last month was the largest since May 1980, and it partially unwound May's 37% drop. The median sale price for a new home fell 1.4 percent last month to $213,400, and over the last year prices are roughly unchanged. The New Home Sales number pushed rates higher. As mentioned, Monday the 10-yr closed at about 3%, with 30-yr mortgage prices better by about .125. Roughly $1.8 billion was sold, and, as usual, mostly 4 & 4.5% securities. Even though 3.5% securities are trading, and priced just below par, the liquidity is just not there yet for much hedging volume to show up.

A census worker was making his rounds in the hills of Arkansas when he knocked on a cabin door to collect some data.

A lady answered and after his introduction he asked, "How many people live at this residence?"

The lady answered, "Eight".

The census worker then asked the lady if she could give him some more details.

The lady responded "Well there is me, my husband and our six kids. We have two eight year old boys, two six year old girls, and two four year old boys."

The amazed census worker said, "Wow, you got twins each time!"

The lady responded, "Oh no honey, there was hundreds of times we got nothin' at all"

by Rob Chrisman

Housing Finance Reform Now in Focus for Obama Administration

Much to the surprise of many pundits, the recently signed Financial Reform Bill did not outline guidelines for regulators to begin crafting the future of Fannie Mae, Freddie Mac, and Ginnie Mae. Although this was viewed as an oversight by most, it was the right move because it will allow our political and financial leadership to focus on FIXING THE BROKEN HOUSING FINANCE SYSTEM

In April, Treasury outlined their "Housing Finance Reform" objectives. The administration's proposals will be designed to achieve four objectives.

• Mortgage credit should be available and distributed on an efficient basis to a wide range of borrowers.
• A well-functioning housing market should provide affordable housing options, both ownership and rental, for low and moderate-income households.
• Consumers should have access to mortgage products that are easily understood.
• The system should distribute the credit and interest rate risk in an efficient and transparent manner that minimizes risk to the broader economic system an does not generate excess volatility or instability.

At the same time, the Obama Administration released questions for public comment on the future of the housing finance system, (http://www.mortgagenewsdaily.com/04142010_obama_asks_industry_for_input.asp) including Fannie Mae and Freddie Mac, and the overall role of the federal government in housing policy.

1. How should federal housing finance objectives be prioritized in the context of the broader objectives of housing policy?
2. What role should the federal government play in supporting a stable, well-functioning housing finance system and what risks, if any, should the federal government bear in meeting its housing finance objectives?
3. Should the government approach differ across different segments of the market, and if so, how?
4. How should the current organization of the housing finance system be improved?
5. How should the housing finance system support sound market practices?
6. What is the best way for the housing finance system to help ensure consumers are protected from unfair, abusive or deceptive practices?
7. Do housing finance systems in other countries offer insights that can help inform US reform choices?

This was just posted on the White House blog:

http://www.whitehouse.gov/blog/2010/07/27/moving-forward-housing-finance-reform

Moving Forward on Housing Finance Reform
by Jeffrey A. Goldstein, Under Secretary for Domestic Finance at the U.S. Treasury Department

The housing industry is of vital importance to our country's future. It is a key sector of our economy, supporting millions of jobs in construction, manufacturing, real estate, finance, and other industries. Moreover, for many Americans, their home is their largest financial investment.

That is why the Obama Administration is strongly committed to responsibly reforming our nation's broken system of housing finance, including Fannie Mae and Freddie Mac. And that is why it is so important that we get the reforms right.

Work on this issue is well under way, as the Obama Administration continues to develop a comprehensive reform proposal for delivery to Congress by January 2011. Earlier this year, Secretaries Geithner and Donovan testified before Congress, outlining the principles that will guide the Administration's housing finance reform efforts. In April, the Treasury Department and the Department of Housing and Urban Development issued related questions for public comment, which have received over 300 responses from a broad cross-section of stakeholders. To read the responses, go HERE: http://www.regulations.gov/search/Regs/home.html#docketDetail?R=TREAS-DO-2010-0001 and HERE: http://www.regulations.gov/search/Regs/home.html#docketDetail?R=HUD-2010-0029

That commitment to public engagement will continue. Today, the Administration is announcing that it will hold on August 17 a Conference on the Future of Housing Finance at the U.S. Treasury Department in Washington, D.C. This event will bring together leading academic experts, consumer and community organizations, industry groups, market participants, and other stakeholders for an open discussion about housing finance reform.

As we continue moving forward, it is critical to maintain an open, productive public dialogue about how best to address a housing finance system that everyone – across both sides of the aisle – agrees is in clear need of reform. To help inform this debate, it is useful to offer some context about the Administration's efforts to date in this area and the current state of our nation's housing finance system.

Stabilizing the Housing Market

In September 2008, the Bush Administration put Fannie Mae and Freddie Mac into conservatorship and began injecting taxpayer funds into those firms in order to keep them afloat. When President Obama took office in January 2009, he inherited not only this conservatorship arrangement, but also a mortgage market and economy in free-fall.

From the beginning, the Obama Administration has made clear that the current structure of the government's role in the housing finance market is unsustainable and unacceptable. Fundamental reform was clearly needed. But abrupt change or an uncertain reform process in the midst of the financial crisis could have destabilized an already fragile housing industry and made it even more difficult for Americans to buy a home or refinance a mortgage. Continuing to provide financial support to Fannie Mae and Freddie Mac was the right decision then for the mortgage market and for our economic recovery – and it has played a critical role in stabilizing the housing industry during a period of crisis. Even today, private capital has not yet fully returned to this market. Fannie Mae, Freddie Mac, and other government entities guarantee more than 90 percent of newly originated mortgages. They are practically the only game in town.

Fannie and Freddie under Conservatorship

During their two years in conservatorship, Fannie Mae and Freddie Mac have been tightly supervised and regulated. Fannie and Freddie have made significant progress in improving the credit quality of their new obligations. Since 2008, FICO scores and loan-to-value ratios – both of which are key measures of how likely a borrower is to default – are meaningfully better on new mortgages. Fannie and Freddie have also increased their guarantee fees and risk-adjusted their pricing.

The losses that the federal government has had to backstop are virtually all attributable to bad loans that Fannie and Freddie took on between 2005 and 2007 – during the height of the housing bubble. Unfortunately, we still need to manage the continuing consequences of those poor credit choices.

Of course, none of these facts eliminate the need to take a hard and comprehensive look at long-term solutions for our nation's system of housing finance. But they do offer important context about the numbers behind the headlines on Fannie Mae and Freddie Mac.

Responsible Reform

The size, importance, and complexity of the housing finance market all compel us to craft its reform with great care:

• The U.S. mortgage market is the second largest securities market in the world, after U.S. Treasuries.
• Fannie Mae and Freddie Mac currently guarantee more than $5 trillion in mortgages and hold a total of $1.6 trillion in agency loans and other securities in their portfolios.
• Fannie Mae and Freddie Mac are only one part of a broader housing finance system that includes the Federal Housing Administration, Ginnie Mae, the FHLBanks, other government programs, and a significant private sector role in originating, funding, and servicing mortgage loans.
• For decades, Fannie Mae and Freddie Mac privatized their profits while ultimately putting taxpayers at risk for losses. This type of "heads private shareholders win, tails taxpayers lose" system of misaligned incentives makes no sense for the nation.

Housing finance reform needs to address these and other complex issues responsibly. That is why the Obama Administration is committed to an open and inclusive public dialogue about the future of U.S. housing finance. Given the importance of this task, we want to hear the best ideas from all sides of the debate. Working together with our colleagues in Congress, we believe that this is the right path forward to achieve responsible reform.

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Plain and Simple: the Administration is making it known that it's time to focus on fixing housing. I don't read their announcement as anything more than an FYI though. More "wait and see"...

In the meantime, we have discussed Housing Finance Reform in detail. Below is some background content for your educational enjoyment....

We must focus on three R's: Reform, Reorganize, and Reassure. READ MORE: http://www.mortgagenewsdaily.com/channels/voiceofhousing/135724.aspx

1. Reform: requires that action be taken to reform FHA and Ginnie Mae. (FULL STORY)
   
2. Reorganize: there is an important role for the GSEs in the US housing finance industry of the future - just not in their current form. Fannie Mae and Freddie Mac and merge them into a single organization that combines the best of each organization.
3. Reassure: the community of investors world-wide that the US housing finance industry has been reset on a solid foundation. This is accomplished only when all three legs of the stool are rebuilt and reset - because only then will the requisite level of investor confidence - and in turn private capital - return to the industry as a replacement for the trillions of dollars that are today coming from the US Treasury.

One of Washington’s most respected voices in housing policy says that the Congress should focus its reform on several things, including continued liquidity and stability for long-term, fixed-rate, sustainable mortgages and affordable rental homes. Here are five questions that must be answered about the reformed housing finance system. READ MORE: http://www.mortgagenewsdaily.com/channels/voiceofhousing/148518.aspx

1. Will it support the availability of long-term, fixed rate mortgages for consumers?
2. Will it offer access to capital by as wide a variety of institutions as possible, from small community banks and credit unions to large money center institutions?
3. Will it foster and spread innovation in mortgage products to insure that helpful and sound new products can be made available widely in the marketplace?
4. Will it fulfill a significant duty to serve under-served populations and communities?
5. Will it provide financing both for affordable single family homeownership and rental housing?

GSEs Able to Bypass Bureaucracy on Road to Resolution: While lawmakers will no doubt be able to legislate away some of the risk of the same crisis happening again in the future, we need to be prepared to deal with the next one when it does come. The intervention and ongoing recovery of the GSEs over the past year and a half may have taught us something. Maybe it’s the fact that a quasi-governmental organization is far less encumbered and therefore more effective, even in conservatorship, at crisis management and resolution than a federal agency? Fact is, Fannie Mae and Freddie Mac are not subject to and hamstrung by Federal Acquisition Regulations (FAR) and federal appropriations and budgeting.Ambiguous and urgent problems don’t wait for federal procurement practices that could take many months to approve a required service provider. READ MORE: http://www.mortgagenewsdaily.com/channels/voiceofhousing/148518.aspx

Housing’s image certainly is as battered as it’s ever been. Responsibility for this last recession is rightfully borne by a mortgage market on steroids that was too often lacking in common sense. Thankfully most of us have done our penance and confessed our sins over the past two years. It’s time to begin having the pride and courage to begin again reminding others of the fundamental value of housing to the economy and the democracy.

by Adam Quinones

Flood Insurance, Tax Deadline and USDA Update

Finally, we can resume closing loans with flood insurance!

It is indeed retroactive to June 1.

Tax deadline has been extended to September 30th and USDA unfortunately has not been.

The Congress has passed the following:
· Tax credit processing extension
The Congress has passed H.R. 5623, the Homebuyer Assistance and Improvement Act, which extends the tax credit closing deadline until September 30th. There will also be no gap between June 30th and the date the President signs the bill into law. The extension only applies to transactions in which the purchase contract was signed by April 30th.
· Flood insurance extension
The Senate has passed H.R. 5569 which extends the National Flood Insurance Program until September 30, 2010. The bill is retroactive from June 1, 2010 to the date the President also signs this bill.

USDA

There is still no decision on the USDA extension. Since the Senate adjoined until July 12th, the House must decide whether to accept the supplemental appropriations bill passed by the Senate or it will be necessary to delay final action on the USDA extension until after the July 4th recess.

Extension of Homebuyer Tax Credit Closing Deadline Has New Life

From Reuters:

The House just backed a measure to extend the closing deadline to Sept. 30 for buyers who met the April 30 deadline to have a signed contract. The current deadline requires those buyers to close the transaction by June 30 to receive the $8,000 tax credit for first-time homebuyers.

From House Rep. Frank Kravotil's site:
Today, the House of Representatives passed an extension of the $8,000 homebuyer tax credit for first time homebuyers. The extension was set to expire at the end of June. The extension, sponsored by Rep. Frank Kratovil and his colleagues Rep. Travis Childers (D-MS) and Kathy Dahlkemper (D-PA), will extend the credit until October 1, 2010.“The first time home buyer tax credit is working to revitalize the housing industry, a major indicator of the overall strength of the economy,” said Rep. Frank Kratovil. “However, more than 2,000 Marylanders who have already signed a contract to purchase a new home are having their closings delayed through no fault of their own. This common sense legislation will ensure that these individuals receive the tax credit that they rightfully deserve. Extending this tax credit will not only boost our economic recovery and support our housing market, but it is also the right thing to do.”The bill extends the credit for all homebuyers with a binding contract as of April 30, 2010 so that they are afforded more time to close the sale and still benefit from the credit.In late September Reps. Frank Kratovil (D-MD) and Travis Childers (D-MS) introduced a bill, The Tax Credit Extension for Homebuyers with a Loss Deduction Incentive Act (H.R. 3640), to extend the first time home buyer tax credit. A similar home buyer tax credit extension was eventually signed into law on November 6, 2009.

From the NAR:
Timely action is essential. Only one more day of eligibility remains for the credit. Despite the urgency, as many as 75,000 buyers and sellers still await bank approval of short sales or must cope with delays caused by third parties with responsibility for closing the transaction. Those selling properties damaged in natural disasters also are experiencing significant delays as they repair and restore homes that were under contract.
Extending the closing date from June 30 to September 30 is a pro-consumer relief provision that will also benefit many communities. It assures the fair treatment of purchasers who have followed the rules and done their part to assure that the sale goes through. Congress must assure that those who have met the eligibility requirements for the credit and done all within their power to satisfy the timing requirements will not have to forfeit the credit because of events and challenges outside their control.
The Senate must vote on the bill now. Senate Majority Leader Harry Reid should be on a mission to get this pushed through the process. If you're one of the folks who need this deadline extended...get on the horn with your Senator and make sure this bill gets passed ASAP. (ugh I hope there isn't any bacon attached!)

Tax Credit Deadline

Although the extension of the Tax Credit Bill was passed by the Senate, it was not passed by the house. Our sources in Washington do not believe it will pass before the 30th deadline. Be sure if your purchase involves the Credit, that they are underwritten and in closing so as not to risk delay. We do not want to cause you any problems by not having the loan closed and funded by June 30.

Homebuyer Tax Credit Deadline NOT Extended. But Senate Vote Adds Reid Amendment

News wires are buzzing with reports that the Senate just approved an extension of the homebuyer tax credit's June 30 closing deadline.

THESE HEADLINES ARE MISLEADING!!!

The June 30 closing deadline has not been extended...but it was accepted as an amendment to the Tax Extenders Bill. Under the amendment, borrowers who signed purchase contracts by April 30 would be given three extra months to close their loan and still qualify for the homebuyer tax credit. The new deadline would be September 30, 2010.

In a budget "point of order" vote taken this morning, the Senate actually voted against the bill that contains the homebuyer tax credit extension amendment. This forces the Senate Finance Committee, chaired by Senator Max Baucus, to rework the overall proposal before another vote is taken.

While this may be a cause of concern for borrowers who are awaiting a clear to close on their loan file, the "unanimous consent agreement" that set up the vote this morning says that any amendments accepted into the Senate Finance committee's version of the legislation would stand as long as the reworked bill is eventually approved by the Senate. Thus, the homebuyer tax credit closing deadline extension proposed by Senate Majority Leader Harry Reid would stand if the Senate agrees on the reworked version of the proposal. This only applies to the Senate. The House would still need to reconcile.

Below is the statement released by Max Baucus:

http://finance.senate.gov/newsroom/chairman/release/?id=cc18eb5c-03f5-4bea-9df7-c55e6ab15c2a
by Adam Quinones

4 Important Questions BEFORE selecting a lender and 5 Secrets after you do!

Before selecting a Lender
When selecting a lender, it is very important to first make sure you are working with an experienced, professional loan officer. The largest financial transaction of your life is far too important to place into the hands of someone who is not capable of advising you properly and troubleshooting the issues that may arise along the way. How can you tell?

Below are FOUR SIMPLE QUESTIONS YOUR LENDER ABSOLUTELY MUST BE ABLE TO ANSWER CORRECTLY. IF THEY DO NOT KNOW THE ANSWERS, RUN. DON'T WALK. RUN. TO A LENDER THAT DOES!

1) What are mortgage interest rates based on?
The only correct answer is Mortgage Backed Securities or Mortgage Bonds, NOT the 10-year Treasury Note. While the 10-year Treasury Note sometimes trends in the same direction as Mortgage Bonds, it is not unusual to see them move in completely opposite directions. DO NOT work with a lender who has their eyes on the wrong indicators.

2) What is the next Economic Report or event that could cause interest rate movement?
A professional lender will have this at their fingertips. For an up-to-date calendar of weekly economic reports and events that may cause rates to fluctuate, visit www.swbcmortgage.com/Franke and hit the green MMG Weekly banner - this is updated weekly and will keep you informed about what is happening in the market.

3) When Bernanke and the Fed "change rates", what does this mean, and what impact does this have on mortgage interest rates?
The answer may surprise you. When the Fed makes a move, they can change a rate called the "Fed Funds Rate" or "Discount Rate". These are both very short- term rates that impact credit cards, Home Equity credit lines, auto loans and the like. On the day of the Fed move, Mortgage rates most often will actually move in the opposite direction as the Fed change. This is due to the dynamics within the financial markets in response to inflation. For more information and explanation, just give us a call.

4) Do you have access to live, real time, mortgage bond quotes?
If a lender cannot explain how Mortgage Bonds and interest rates are moving in real time and warn you in advance of a costly intra-day price change, you are talking with someone who is still reading yesterday's newspaper, and probably not a professional with whom to entrust your home mortgage financing. Would you work with a stockbroker who is only able to grab yesterday's paper to tell you how a stock traded yesterday, but had no idea what the movement looks like at the present time and what market conditions could cause changes in the near future? NO WAY!

Be smart... Ask questions. Get answers! I cannot stress this enough. More than likely, this is one of the largest and most important financial transactions you will ever make, especially since your family has just grown. You might do this only four or five times in your entire life, however they do this every single day. It's your home and your future. It's their profession and if you are working with someone above and beyond, it is their passion. Make sure that your lender is ready to work for you and your best interest.

After selecting my lender, what is the next step?
Once you are satisfied that you are working with a top-quality professional mortgage advisor, here are four rules and secrets you must know to “shop” effectively.

First, IF IT SEEMS TOO GOOD TO BE TRUE, IT PROBABLY IS

But you didn’t really need us to tell you that did you? Mortgage money and interest rates all come from the same places, and if something sounds really unbelievable, better ask a few more questions and find the hook. Is there a prepayment penalty? If the rate seems incredible, are there extra fees? If the rate seems average, what are the fees? What is the length of the lock-in? If fees are discounted, is it built into a higher interest rate?

Second, YOU GET WHAT YOU PAY FOR

If you are looking for the cheapest deal out there, understand that you are placing a hugely important process into the hands of the lowest bidder. Best case; expect very little advice, experience and personal service. Worst case; expect that you may not close at all. All too often, you don’t know until it’s too late that cheapest isn’t BEST. Remember that if you’ve heard any horror stories from family members, friends or coworkers about missed closing dates, or big surprise changes at the last minute on interest rate or costs…these are often due to working with discount lenders who may have a serious lack of experience. Most importantly, remember that the wrong strategy can cost you thousands more in the long run. This is one of the largest financial transactions you will make in your lifetime.

Third, MAKE CORRECT COMPARISONS

When looking at estimates, don’t simply look at the bottom line. You absolutely must compare lender fees to lender fees, as these are the only ones that the lender controls. And make sure lender fees are not “hidden” down amongst the title or state fees. A lender is responsible for quoting other fees involved with a mortgage loan, but since they are third party fees – they are often under-quoted up front by a lender to make their bottom line appear lower, since they know that many consumers are not educated to NOT simply look at the bottom line! APR? Easily manipulated as well, and worthless as a tool of comparison.

Fourth, UNDERSTAND THAT INTEREST RATES AND CLOSING COSTS GO HAND IN HAND

This means that you can have any interest rate that you want – but you may pay more in costs if the rate is lower than the norm. On the other hand, you can pay discounted fees, reduced fees, or even no fees at all – but understand that this comes at the expense of a higher interest rate. Either of these balances might be right for you, or perhaps somewhere in between. It all depends on what your financial goals are. A professional lender will be able to offer the best advice and options in terms of the balance between interest rate and closing costs that correctly fits your personal goals.

Fifth, UNDERSTAND THAT INTEREST RATES CAN CHANGE DAILY, EVEN HOURLY

This means that if you are comparing lender rates and fees – this is a moving target on an hourly basis. For example, if you have two lenders that you just can’t decide between and want a quote from each – you must get this quote at the exact same time on the exact same day with the exact same terms or it will not be an accurate comparison. You also must know the length of the lock you are looking for, since longer rate locks have slightly higher rates.

I know this seems like alot of information; however I want you to be well informed as knowledge is power. The only bad question is the one not asked, so please always find out if you are unsure.
Again, my advice to you is to be smart. Ask questions. Get answers.

3 Things Lenders Don’t Want You to Know About Shopping for a Mortgage Online

Anyone who’s even remotely interested in shopping for a home loan has probably paid attention to the commercials on TV touting the ease of using any of a variety of Internet services to compare mortgage offers from the comfort of your home. You may even have tried a couple of them yourself, although you truly do need to watch out when trying to use the Internet to do the heavy lifting for you. Sometimes, these Internet services might work fairly well for certain people. However, the one-size-fits-all approach they offer is going to leave a lot of people with loans that aren’t the best for them, or even worse, they may be shut out of the process altogether.

The problem with these services is that they never really get to know anything about your financial situation other than your credit history and income level. Basically, what winds up happening is that you’re reduced to a number to them. If they don’t like whatever that number is, you’re out of luck.

Here are three things you should watch out for when shopping for home-finance products on the Internet – things most online mortgage sites hope you ignore:

- Do they take the time to find out about your unique situation, or are you just a cyber-borrower in their eyes? Most of these sites simply don’t have the manpower to individually work with every borrower. So a lot of times you wind up with a bad loan simply because there was no one to check if they could have found a better deal.
- What do they offer people in special financial circumstances – such as the self-employed or people with damaged credit? Most of these sites don’t even want to work with you unless you meet their stringent criteria.
- Do they provide advice to help when choosing between loan products? Most sites simply gather offers, throw them in your lap, and pressure you to choose between them. Unless you’re a pretty experienced mortgage pro, deciding on the best offer can be difficult, if not impossible.

So, what’s the solution? Use the Internet to educate yourself and then work with a real human being. You may not have thought about “old-fashioned” methods of finding the best deal, such as working with a mortgage banker. However, for anyone who values a real person sitting down with you and working through the process, there’s no better option. Give me a call or send an email, 512.809-7680 / efranke@swbc.com - I would be happy to discuss the options available to you!

The Truth About Mortgage Refinancing

It seems like everyone in Texas is jumping on the mortgage refinancing bandwagon. Maybe you're thinking about it yourself? After all, with rates as low as they are, the promise of lowering your monthly payments, sometimes significantly, is a great attraction for many homeowners.

Before you sign on the dotted line, there are a few things you should know about the way refinancing works so you don’t make a mistake that could wind up costing you big time.

With refinancing as popular as it is right now, Texas residents have to be even more careful about shopping for the best loan. Even the most attractive offer can wind up being a disaster once you realize how much the loan is really costing you.

Here are a few tips when considering refinancing:
- You should get a significantly lower rate for refinancing to make sense.
- Don't rush to refinance unless it's truly worth your while.
- If you're working with a mortgage banker rather than going it alone, you can be assured that they're bringing you the best offers out there. If you're going it alone, you'll have to do the legwork for yourself.
- Consolidating unsecured debt with a refinance loan can be a dangerous idea. You may not be in financial trouble now, but if in a few years things change, instead of simply missing a credit card payment or two, you'll now be in danger of losing your home as well.
- Your credit score counts... big time. If you've had credit problems in the past like a bankruptcy, it might make sense to wait a while for your credit score to recover before trying to refinance. Most lenders make it hard for people with less than perfect credit to get the best deals. However, again, if you choose to let an expert like a mortgage banker get involved in the process, they can often find loan options that most homeowners didn’t even know existed - which can save you thousands over the long haul.

I specialize in providing mortgage information to Texas residents that allows them to make informed decisions about their mortgage financing options and learn the insider secrets that can save them thousands of dollars over the life of their loan. I am available for interviews and welcome all of your mortgage related questions. Call 512.809.7680 or email efranke@swbc.com for a Free No-Obligation Consultation or you may visit my website at www.EmilyFranke.com

Attention shoppers, all home shoppers: please head to your nearest Realtors office to get in on the final days of the Homebuyer Tax Credit…

THERE ARE ONLY A FEW DAYS LEFT BEFORE THE HOMEBUYERS TAX CREDIT EXPIRES ON FRIDAY, APRIL 30!

Last November, the government expanded and extended the new Homebuyers Tax Credit. According to the program, first-time homebuyers are eligible for a tax credit of 10% of the purchase price of the home, with a maximum credit of $8,000. And current homeowners can receive up to $6,500.

Although military personnel may qualify for a special extension, the vast majority of homeowners must have contracts in effect no later than April 30, 2010 and must close no later than June 30, 2010 to qualify for the credit.

That means…buyers only have one week to get your paperwork going to qualify for this credit before it goes away!

Here is a brief overview of the Homebuyers Tax Credit – and its benefits.
Dollar-for-Dollar Benefit

The benefit of a tax credit is that it's a dollar-for-dollar benefit, rather than a "tax deduction" or reduction in tax liability that would only save you $1,000 to $1,500 when all was said and done.
So, if a first-time homebuyer who qualified for the entire benefit were to owe $8,000 in income taxes and would qualify for a tax credit of $8,000, she would owe nothing.

Event Better… It’s Refundable!

Remember, because it’s a tax credit, it’s refundable! That means a homebuyer can receive a check for the credit if he or she has little or no income tax liability.

For example, if a first-time homebuyer is eligible for a tax credit of $8,000 but is liable for $4,000 in income tax, she can still receive a check for the remaining $4,000!

What are the Income Caps?

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible.

Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

What’s the Maximum Purchase Price?

Qualifying buyers may purchase a property with a maximum sales price of $800,000.


Remember, the Homebuyer Tax Credit program includes a number of details and qualifications…and buyers should always check with a tax professional.

USDA Rural Housing update

House Committee to Mark Up Sec. 502 Guarantee Bill and Others
On Thursday, April 22, 2010 the House of Representatives' Financial Services Committee will consider several housing-related bills, including H.R. 5017, a bill introduced on April 14 that would make additional funding available for the Section 502 guaranteed mortgage loan program in Fiscal Year 2010. The mark-up will be broadcast live online via the Committee's website beginning at 10 a.m. Eastern time.
H.R. 5017, named The Rural Housing Preservation and Stabilization Act of 2010, would authorize up to $30 billion for the Section 502 guarantee program this year. (It has no provisions on rental housing preservation and is not related to H.R. 2876, The Rural Housing Preservation Act of 2009, which has been subsumed into H.R. 4868.) The program is expected to use the $12 billion previously authorized for this year by the end of April. The bill would raise the additional funds through lender fees when the guarantee is issued and then annually throughout the loan term.

Flood Insurance Program Reinstated

Congress has reinstated the NFIP program so your insurance agents can begin writing policies once again!

Texas Trade Up Appliance Rebate Program

If you are in the market for any new appliances this is a great opportunity to Trade and Save. Qualifying appliances include refridgerators, air conditioners, washers, dryers, dishwashers, hot water heaters, heat pumps and freezers.

The state of Texas received more than $23 million in federal stimulus funds from the U.S. Department of Energy to establish and administer an Energy Efficient Appliance Rebate Program — the first of its kind in Texas. The Texas Trade Up Appliance Rebate Program encourages consumers to replace old (but functional) appliances with new, energy efficient, ENERGY STAR® or CEE qualified models to stimulate the Texas economy and increasing energy conservation efforts in Texas.


http://www.texaspowerfulsmart.org/rebate/

The Texas Trade Up Appliance Rebate Program officially exhausted at about 2 p.m. yesterday, just six hours out of the gate.

Act Now! - Home Buyer Tax Credit ends soon...

Did you know that it is a great time to buy a home? Low interest rates and the federal tax credits* for certain first-time home buyers and move-up buyers combine to make home buying an exceptional value right now. But, time is running out, because the credits, which can be worth up to $8,000, are only available on sales contracts signed by April 30, for purchases that will close by June 30, 2010.

First-Time Home Buyer Tax Credit
First-time home buyers are eligible for a credit of as much as 10% of the purchase price, up to a maximum of $8,000. First time buyers are people, including both partners of a married couple, who have not owned a principal residence during the three years prior to purchase.

Long-Time Home Buyer Tax Credit
Taxpayers who have owned a principal home for a period of five consecutive years during the past eight can qualify for a tax credit of as much as 10% of the purchase price, up to a maximum of $6,500, on a new principal residence.The new home does not have to cost more than the current dwelling.

Property Flipping

Most investors are now requiring a Property Flipping Waiver to be signed at closing. Most allow the seller to own less than 90 days as long as the current sales price is greater than or equal to a 20% increase over the seller's acquisition cost.

W2 Transcripts

Just an FYI, many underwriters have started conditioning for W-2 transcripts just like if you were self employed and full returns are needed. This can impact closing time frames.

FHA Up Front MIP Fee Increases

UFMIP goes to 2.25% on case numbers ordered on or after April 5, 2010.

Notice of Funding - USDA Loans

Program funding for the Single Family Housing Guaranteed Loan Program will likely be exhausted by the end of April, 2010.

Once funding is exhausted, the Agency will not issue Conditional Commitments "subject to receipt of appropriated funds." This is because it is not certain when additional funding will be available.

Limited funding may become available for disaster areas declared in 2008, or in disaster areas declared for Hurricanes Katrina and Rita. Limited funding may also become available as prior Agency commitments are de-obligated, however, such funding will be very limited.

We apologize for any inconvenience this may cause you. Should you have any questions, you may contact the Single Family Housing Guaranteed Loan Division at (202)720-1452.

___________________________________________________________________

After having spoken with our investors Rural Housing Division, I wanted to provide a little more information and also specifically discuss the impact of this problem as it relates to new construction. Most of you who have been exposed to this loan product are probably used to these periodic announcements about program funding being exhausted. Generally speaking, in the past, we have been able to continue selling these loans even after funding was exhausted because they knew that additional funding had been approved and knew when it would be available. The situation this time is different because additional funding has not been approved and they do not know when it will be. While they do expect additional funding to eventually be approved, the timing is uncertain, so we cannot continue to sell the loans once funding runs out. Funds for the program are expected to last through the end of April or possibly early May.

IMPORTANT:
The critical element to ensuring that your loans have program funding is the USDA Conditional Commitment. When you obtain the conditional commitment from USDA, you effectively reserve the program funds for the related loan. If the program funds are exhausted prior to the time you obtain the conditional commitment for your loan, the transaction will not be able to proceed until such time as additional funding may be approved. As such, the best way we can manage this problem is to make sure to get the conditional commitment from USDA as soon as possible. Effective immediately, all USDA loans must be conditioned that approval is contingent upon our ability to obtain the USDA conditional commitment. It is imperative you are made aware that if program funding is exhausted prior to our receipt of the USDA conditional commitment, the related loans will not be closed or funded until such time as additional funding for the program is approved by Congress.

With respect to new construction, common practice seems to be to wait until completion of the home before submitting to USDA for the conditional commitment. However, USDA will issue the conditional commitment based upon an appraisal that is subject to completion per plans and specs, so it is imperative that your new construction loans obtain the conditional commitment before funding is exhausted.

In Detail: How to Claim the New Home Buyer Tax Credit on 2009 Tax Returns

Here are the details of how to file your First Time Home Buyer $8000 tax credit on your 2009 tax returns. If you know anyone looking to purchase a home let me know - this credit has been extended until April 30. This is too good to pass up!!!!

http://www.consumerismcommentary.com/2010/01/23/how-to-claim-the-new-home-buyer-tax-credit-on-2009-tax-returns/

FHA upfront MIP BULLETIN

All case numbers assigned after April 5, 2010 will be assessed a 2.25% MIP fee payable to FHA, up from the current premium of 1.75%