Fannie & Freddie incentives for buyers & agents.

Fannie Offers Incentives for HomePath Properties
On April 11, 2011, Fannie Mae announced new buyer and selling agent incentives in connection with the sale of Fannie Mae-owned properties (HomePath properties).
A buyer of a HomePath property to be used as the buyer’s primary residence can receive up to 3.5% of the final sales price to be used toward closing costs.
A selling agent bonus is available in four states—California, Washington, Arizona, and Texas. In these four states, a bonus is being offered to selling agents who represent a buyer who will use the property as a primary residence. For properties in California and Washington, the selling agent bonus is $1,000. For properties in Arizona and Texas, the bonus is $500.
To qualify for either incentive, the buyer and, for properties in one of the four states, the selling agent must meet certain requirements, including the following. The buyer and selling agent incentive must be requested at the initial offer submission. The initial offer must be submitted on or after April 11, 2011, and the property sale must close on or before June 30, 2011. The buyer must use the property as a primary residence (auction, pool and investor sales are excluded). Check the HomePath website for more details. If you have questions, please CONTACT Jeff Lischer at 202-383-1117 or jlischer@realtors.org with any questions.

Realtors® Oppose High Down Payment Requirement for Qualified Residential Mortgage Exemption

Washington, March 29, 2011

High down payment requirements being proposed by federal regulatory agencies as part of the upcoming rulemaking under the Dodd-Frank Wall Street Reform and Consumer Protection Act will unnecessarily burden homebuyers and significantly impede the economic and housing recovery, according to the National Association of Realtors®.

Six agencies, including the Department of Housing and Urban Development, Federal Deposit Insurance Corp., Federal Housing Finance Agency, Federal Reserve, Office of the Comptroller of the Currency, and the U.S. Securities and Exchange Commission, are developing a proposed risk retention regulation under the Dodd-Frank Act that requires lenders that securitize mortgage loans to retain 5 percent of the credit risk unless the mortgage is a qualified residential mortgage (QRM); FHA and VA mortgages would also be exempted. The purpose is to create strong incentives for responsible lending and borrowing.

“As the leading advocate for home ownership NAR supports a reasonable and affordable cash investment requirement coupled with quality credit standards, strong documentation and sound underwriting,” said NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I. “A narrow definition of QRM, with an unnecessarily high down payment requirement, will increase the cost and reduce the availability of mortgage credit, significantly delaying a housing recovery.”

NAR believes that Congress intended to create a broad QRM exemption from the 5 percent risk retention requirement to include a wide variety of traditionally safe, well-underwritten products. Congress chose not to include a high down payment among the criteria it specified in the Dodd-Frank Act to guide the regulators in defining a QRM. Strong evidence shows that responsible lending standards and ensuring a borrower’s ability to repay have the greatest impact on reducing lender risk.

“We need to strike a balance between reducing investor risk and providing affordable mortgage credit. Better underwriting and credit quality standards have greatly reduced risk. Adding unnecessarily high minimum down payment requirements will only exclude hundreds of thousands of buyers from home ownership, despite their creditworthiness and proven ability to afford the monthly payment, because of the dramatic increase in the wealth required to purchase a home,” said Phipps.

The definition of QRM is important because it will determine the types of mortgages that will generally be available to borrowers in the future. Borrowers with less than 20 percent down could be forced to pay higher fees and interest rates, up to 3 percentage points more, for safe loans that otherwise do not meet too narrow QRM criteria.

NAR is concerned that a narrowly defined QRM will also require severe tightening of FHA eligibility requirements and higher FHA premiums to prevent huge increases in its already robust share of the market, adding additional roadblocks to sustainable home ownership.

“Saving the necessary down payment has always been the principal obstacle to buyers seeking to purchase their first home. Proposals requiring high down payments will only drive more borrowers to FHA, increase costs for borrowers by raising interest rates and fees, and effectively price many eligible borrowers out of the housing market,” said Phipps. “We strongly urge the regulators to consider the negative consequences of setting onerous limits on the availability of credit.”

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

Redevelopment Agencies are wrong places to cut

I’ve been writing about this since Gov. Brown stated his intent to do away with local redevelopment agencies and distribute the money from local agencies to hi8s statewide projects. Sure there are some cities around the state that either aren’t using the funds or are misusing the funds but many are not and they have done a world of good. Look at downtown Temecula. Look at the Gaslamp in San Diego. Without redevelopment, the Gaslamp would still be the slum it was not that long ago.

An article appeared in today’s Californian that adds the housing element to the mix. Redevlopment has provided over 91,000 affordable housing units since 1995. For every 100 units created, 125 local jobs are created and 32 permanent jobs. Some in Sacramento just don’t get it – they are actively trying to kill what’s left of the housing industry not understanding that housing speeds an economic recovery, housing is a jobs engine which our state desperately needs.

Click here to view the forum post: Wrong places to cut.

Keep Your Home California – Good News for some CA homeowners.

Keep Your Home California Program

The U.S. Treasury Department has approved CalHFA’s plan to use nearly $2 billion in federal funding to help California families struggling to pay their mortgages.

The Keep Your Home California programs are focused on assisting low and moderate income families stay in their homes, when possible, and leveraging additional contributions from mortgage servicers.

Primary objectives for the Keep Your Home California programs include:

  • Preserving homeownership for low and moderate income homeowners in California by reducing the number of delinquencies and preventing avoidable foreclosures
  • Assisting in the stabilization of California communities

Each of the Keep Your Home California programs is designed to address one or more aspects of the current housing crisis by doing the following:

  • Helping low and moderate income homeowners retain their homes if they either have suffered a financial hardship such as unemployment, have experienced a change in household circumstance such as death, illness or disability, or are subject to a recent or upcoming increase in their monthly mortgage payment and are at risk of default because of this economic hardship when coupled with a severe decline in their home’s value.
  • Creating a simple, effective way to get federal funds to assist low and moderate income homeowners who meet one or all of the objective criteria described above. Speed of delivery will be balanced with fulfillment of the specific program’s mission and purpose.
  • Creating programs that have an immediate, direct economic and social impact on low and moderate income homeowners and their neighborhoods.

News from FHA on flipping and condos

Good news if you have clients who are FHA borrowers.  The FHA has extended its temporary waiver of its “anti-flipping rule.”  The original waiver, which was passed as the direct result of C.A.R.’s leadership efforts, was set to expire at the end of last month, but now will be extended through the remainder of 2011.  The ruling allows investors who acquire foreclosed properties at below-market value to be exempted from waiting the customary 90 days before reselling them.  The 90-day waiting period originally was put in place to protect FHA borrowers against predatory practices of flipping where properties were quickly resold at inflated prices to unsuspecting borrowers.  First-time buyers have responded overwhelmingly to the opportunity to buy “move-in ready” renovated homes with low down payments, prompting the extension.

If you work with condominium buyers, you’ll want to know if the condominiums in your area are approved and eligible for an FHA loan.  C.A.R.’s subsidiary, REBS®, has introduced Clarus FHA Approval™ Eligibility Check, which offers a unique searchable database that will allow you to quickly determine FHA loan eligibility via a simple property address search.  Using this service, you and your FHA clients can avoid failed transactions and non-recoverable costs due to undetermined FHA loan eligibility status.  C.A.R. has negotiated special discounts for its members.

You’ll also want to let the condominium associations in your area know that HUD now requires that an entire condominium development be preapproved before an FHA loan may be granted.  FHA loans currently represent almost half of all new mortgages nationwide, and failure for a development to be preapproved to be eligible for FHA loans will almost certainly impact the marketability and value of the development.  Clarus FHA Approval™ also offers Approval Services to assist condominiums in seeking HUD approval.  Discounts are available to condominium associations referred by a C.A.R. member.  For more information about both Clarus FHA Approval™ services.

NAR Pres. Elect Moe Veissi Talks Turkey at CAR Mid-Winter

Take-aways from our recent California Association of Realtors Mid-winter meetings.

From NAR President-elect Moe Veissi –

Six of the past eight recessions have ended due to increasing strength in the housing market. The other two were due to wars. That seems like an easy choice. We need to get behind housing. This battle against housing is counterproductive and the attack on the mortgage interest deduction is an attack on one of the basic foundations of the American Dream.

Similarly we should seek to preserve the basics of the GSE’s.They can certainly be improved upon but their services are vital to home buyers. They provide a foundation and critical financial instruments that allow many people to buy homes that otherwise would not be able to. Keep in mind that during the height of the meltdown, Fannie and Freddie had take-back rates of about 3 1/2% while at the same time banks like B of A and Wells were taking back 15% to 18%.

You hear people today who don’t know the history, who don’t know any better – oh, Canada doesn’t have a 30 year fixed mortgage and their housing market is great. Oh, Europe doesn’t have a Fannie/Freddie and their market is great. The fact is, their markets don’t compare with ours. Never have. Nobody does it like us. These other countries are trying to figure out how to do it like we do and we’re trying to figure out how to kill our system and adopt the systems others are trying to get rid of. So why would we try to emulate markets with which we have nothing in common? Why would we destroy 100 years of success to become more like an inferior market? It just doesn’t make sense.

These are not short term problems we are dealing with and they will keep rearing their heads. We have saddled ourselves with tremendous debt so attacks on basic and short term sources of tax revenue will be ongoing. Don’t believe them when they tell you – oh, we aren’t going to take it all away. Just this little bit. Yeah, just that little bit this time. Then  a little more, then a little more, you know how that works.

Realtors just don’t realize the power we have in our communities and our country. But we’ve got to stand up and be counted if we want to be heard. We need to present Congress with 1/2 million Realtor calls on issues instead of 100,000. When we can consistently deliver 1/2 million member voices or more to our Congressional leaders, they will know we mean business.

New Appraisal Rules Frustrating Homebuyers

Read the full article here… Have Down Payment but Stuck In Appraisal Hell.

…Four months later, the Stiners and their buyer both gave up. Together, they were out $1,600 for seven appraisals. “As a result, we are now renting our home out, and renting the home we wanted to buy,” says Beth. “We were frustrated and we weren’t going to keep doling out cash for new appraisals. It felt like a game.”…

NAR message to Congress about MID

Facts:

  • Repealing the Mortgage Interest Deduction (MID) is a form of tax increase.

  • Families with children would bear more than half of the total increase.
  • IRS data show that taxpayers in the 35 – 45 age group take the largest MID on average compared to any other age group of taxpayers

  • First time home buyers would be hurt the most if the MID is curtailed.
  • Current data from the IRS show that 65% of the taxpayers who have claimed the MID made less than $100,000.

  • The housing market has not emerged from the crisis that began in 2007.
The 1.1 million members of the National Association of REALTORS® strongly oppose proposals to reduce the mortgage interest  deduction (MID). Hard-working American families’ budgets are already stressed. Reducing or eliminating the mortgage interest deduction would pull even more money directly out of their wallets. If this crucial deduction is eliminated or reduced, home values will further erode. That’s something America simply can’t afford in this unstable housing market.

Congress:

The Facts Speak for Themselves.

To learn more, logon to www.realtor.org

White House Housing Conference debates ‘value of homeownership’.

I suspect many of you have been following the blowback from the White House Conference on Housing held earlier this week. I haven’t had an opportunity to talk with former CAR President Vince Malta, who was NAR’s rep at the event, nor have I seen any quotes from him in the press. Most of the quotes seem to be from Mark Zandi and his comments about how ‘we can’t afford housing subsidies any longer’. Hmmmm, I don’t recall Zandi mentioning that the last time he addressed an NAR crowd. Could it be he modifies his comments and his beliefs depending on the audience? Pro-housing when you’re in front of Realtors but pro-tax when you’re invited to sit on an Obama panel? I guess that’s how you keep getting  invited back.

But as Dr. Alan Greenspan told us at the NAR conference a couple years back, you’ve got to pay attention to the ‘first rule of economists. For every economist there is an equal and opposite economist. Rule #2 – they’re both wrong’. Zandi’s just the one getting quoted today.

But the more serious underlying tone of the seminar is that for the first time in 70 years, housing is on the table – especially the heretofore sacrosanct mortgage interest deduction. Panelists questioned the ‘value of home ownership’ and floated the theory that the government ‘spent’ $230 Billion to promote home ownership last year, the biggest chunk – $80 Billion – on the mortgage interest deduction. And they’re just not sure what return that’s producing for the government.

Excuse me? They’re spending $80 Billion on the mortgage interest deduction? That’s a bald faced LIE! They don’t ‘spend’ a nickel on the MID. The fact is for them, it’s simply a missed opportunity to tax us on yet another area of our lives. And since when was the purpose of homeownership  to provide a revenue generating tool for the government?

Let’s take their argument one step further – is the $80 Billion they claim they’re spending on homeowners really going to make a dent in the national debt, which is approaching $10 Trillion dollars? Is it Mark? So it’s OK to continue to funds all the pork and earmarks, bridges to nowhere, the arts, auto bail-outs, bank bail-outs, welfare for illegals, a trillion dollar healthcare bill, Fannie & Freddie not to menton the lifetime benefits accorded those who serve in Congress. But that $80 Billion a year for MID is breaking us? Is that really the best you can come up with?

And remember, it’s not $80 Billion they’re spending – it’s $80 Billion of OUR OWN MONEY they’re letting us keep.

And why did they seem to focus on the $80 Billion in MID and ignore the remaining $150 Billion spent on housing stimulus last year including the first time homebuyer tax credit? Maybe it’s because the tax credit was backed by this administration so they didn’t want to bite the hand that invited them to the conference.

But probably it’s because of a theory floated by another administration sycophant claiming that studies show the MID primarily benefits the wealthy. People making less than $40,000/year only benefit $91 while those making $250,000 benefit $5,459. Look out people, here’s another salvo at those damn ‘wealthy’ people. We need to redistribute that wealth.  Somehow we need to level the playing field so that people who work hard and do well get dinged more, or maybe they need to subsidize bigger houses for the people making less so those people can get bigger tax write-offs. It’s a shame to waste $80 billion on homeowners when you so many more undeserving groups you could fritter it away on.

Regardless of his fallacious math, the bottom-line is he has just redefined ANYBODY who owns a home as wealthy because they are getting benefits from the federal government that non-homeowners aren’t. So if you’re one of the people only benefitting $91/year, don’t get too smug because according to these folks you’re wealthy too and you won’t escape the axe.

That’s just wrong. Never mind we’re not collecting welfare or food stamps or ADC  or all the other give-aways our government has devised. The paltry $80 Billion ‘spent’ on homeowners is simply not providing a big enough ‘return’ to the government, according to these flacks.

I’m sick of this. I’m sick of paying ever increasing taxes so the unmotivated and unproductive can maintain a lifestyle. I’m sick of this talk of re-distributing the wealth. I’m sick of the constant attacks by this administration on the hard-working, productive members of this country. I’m sick of attacks on real estate and private property rights and on people who have been fortunate or industrious enough to own a home or several homes or invest in real estate. Mostly I’m sick of sycophants who, when faced with a problem, point the finger at every aspect of our society except toward the one segment where the blame truly rests – our country has a huge freakin’ spending problem and we can no longer afford OUR GOVERNMENT.

Well, that’s just my opinion – I could be wrong.

FHA Announces Short Refinance Program for Non-FHA Borrowers

On August 6, 2010, the U.S. Department of Housing and Urban Development (HUD) announced details for its new refinancing program to assist homeowners who owe more on their non-FHA mortgages than their home is worth. HUD originally announced the program in March. Beginning September 7, 2010, the Federal Housing Administration (FHA) will offer qualified non-FHA borrowers the opportunity to refinance with a FHA-insured mortgage on their primary residence. Borrowers must be current on their existing mortgage, qualify under FHA underwriting requirements, and have a credit score of at least 500. The first lien holder must agree to write off at least 10% of the remaining amount owed under the mortgage bringing the combined loan-to-value ratio (LTV) of all mortgages to 115% or less. The LTV for the new FHA mortgage may not exceed 97.75%. The Treasury Department will provide incentives to second lien holders who agree to forgive all or part of their liens. Additional information and guidelines can be found on the HUD website.

HUD Press Release
HUD Mortgagee Letter 2010-23, FHA Refinance of Borrowers in Negative Equity Positions

Tax Credit Extended!

After a close brush with the deadline, Congress has passed an extension of the Homebuyer Tax Credit closing deadline, the Homebuyer Assistance and Improvement Act (H.R. 5623). The extension applies only to transactions that have ratified contracts in place as of April 30, 2010 that have not yet closed.  The legislation is designed to create a seamless extension the new closing deadline for eligible transactions is now September 30, 2010.  There is will be no gap between June 30 and the date the President signs the bill into law.

NAR worked closely with Congressional leaders on both sides of the aisle to enact this important legislation. Extending the Tax Credit Closing deadline will help provide additional stability to real estate markets across the nation.

For additional information on the extension visit www.realtor.org/government_affairs

Additionally, the United States Senate has passed the National Flood Insurance Program Extension Act of 2010 (H.R. 5569) an extension of the National Flood Insurance Program until September 30, 2010.  This will allow transactions to move forward.  The bill is retroactive and covers the lapse period from June 1, 2010 to the date of enactment of the extension.

For more information on the flood insurance program visit www.realtor.org/government_affairs

Nearly 18,000 Californians stand to lose their tax credit if extension not granted.

Washington, 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®.

“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 Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz.

“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 Golder. “It would be a tragedy for them not to be able to complete the purchase in time to claim the credit.”

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:

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.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

Homebuyer Tax Credit Update

The United States House of Representatives has just passed  HR 5623, the Homebuyer Assistance and Improvement Act of 2010, by a vote of 409-5.  This bill extends the deadline for closing tax credit eligible transactions from June 30 to September, 30, 2010.   The bill moves to the Senate where the outcome is much less certain.  NAR will continue to update you as the events move forward.

Tax Credit Extension Still Awaiting Approval. Don’t bet your buyer’s farm on it.

NAR is working very closely with key Members of Congress and the Senate, and Senior Congressional Staff on two issues of critical importance to the membership: an extension of the June 30, 2010 deadline for closing contracts eligible for the Homeowner Tax Credit, and  a reinstatement of the National Flood Insurance Program.

Here are the latest details on the Tax Credit Closing Deadline:

Our best advice to members with questions and concerns is to proceed as if the June 30, 2010 date is binding.

NAR is pursuing all possible options with senior congressional staff to determine what other legislation may be available for passing a June 30 extension.  Each of the possible options face difficult obstacles, but NAR’s efforts to clear the way are on going.

The Senate will NOT have any votes today (Friday, June 25) this will push the Tax Credit Extension deadline to the week of June 28, 2010.

Should Congress extend the date, information will be posted on www.realtor.org/government_affairs as soon as it happens.

The final outcome will be posted on www.realtor.org/government_affairs on July 1, 2010.

$700 Bailout for California Homeowners? Don’t hold your breath.

$700 Million OK’d for California Homeowners!

That’s  a headline that would reach and and grab you over your oatmeal, wouldn’t it? It certainly caught my attention yesterday. Here’s a new program (4 actually) designed to help homeowners avoid foreclosure  and the Department of Treasury has just approved $700 Million of those old leftover TARP funds just for us in California. The article went on to say it’s to help:

  • unemployed homeowners in danger of defaulting on their loans (lenders must match federal funds)
  • borrowers who are a little behind on their mortgage but could catch up with a little help (lenders must match)
  • reduction in principle for borrowers needing it to avoid foreclosure (lenders must match)
  • transition assistance for families who can’t afford to keep their home.

I guess if I had any faith in any program the government was trying to foist on us right now this sounds like it has possibilities. I mean, who knew there was still a spare $700 million in TARP funds laying around for just one state over a year into the program. That program, along with all the other great unveilings like HAFA, HARP, HAMP, etc, have been such resounding successes you’d have thought the money would already have been used up to stimulate the economy. At least the Administration will tell you that’s why our jobs & housing market are roaring along so robustly right now.

Of course I don’t have much faith in anything the government is doing right now and wish they’s simply get the hell out of the housing business. This is no different. CalHFA’s Keep You Home Program plans to use the money to develop those four programs, oh, out around November 1. When? People are hurting TODAY. The money is available TODAY. The programs may be available in 4 months?  Well, yeah. There’s that government sense of urgency thing.

And that’s assuming they can get the lenders to match up to $700 million in order for homeowners to qualify. You think lenders in California are gonna just pony up another $700 million? Wasn’t TARP supposed to go to lenders to begin with?

Oh well, don’t hold your breath. Even the CalHFA spokeshole cautioned people not to get their hopes up. “We recommend that if homeowners are currently having financial difficulties, they do not wait for these programs.” They should contact lenders and HUD counselors to see if they can make use of one of the other worthless programs being touted by the administration or get screwed over by a loan mod or short sale scam artist. He also had no additional advice for those that have already been hosed by lenders and counselors and need assistance before the programs might start. He encouraged people to visit their website http://keepyourhomecalifornia.com/. Here you can find out about how close you came to actually getting assistance including a great quote from our Governor about the new future program “The new funding announced today will play a vital role in aiding the state’s neediest homeowners. Blah, blah blah blah blah KawLeeForKneeya.”

Read beyond the headlines folks. There’s no free lunch, the check is in the mail and we’re from the government and we’re here to help you – provided you can hang on until November.


Close date extended for homebuyer tax credit.

The Senate has amended a bill to give homebuyers who were under contract on a home purchase by April 30 an additional three months to close the deal and claim the federal homebuyer tax credit.

Extending the deadline for closing from June 30 to Sept. 30 would allow lenders more time to clear a backlog of 180,000 homebuyers nationwide, said amendment sponsor Sen. Harry Reid, D-Nev.

The amendment to HR 4213, the “American Jobs and Closing Tax Loopholes Act of 2010” — which primarily extends unemployment insurance benefits — was approved in a 60-37 vote Wednesday. The vote was mostly along party lines, with only four Republicans in favor and one Democrat opposed.

The National Association of Realtors supports the amendment, saying Realtors have reported that as many as one-third of qualified applicants have been told by lenders that their loans will not close before June 30 because of the sheer volume of loan applications in the pipeline.

The amendment does not extend the deadline for homebuyers to qualify for the tax credit, NAR said in urging lawmakers to approve it, but simply extends the deadline for closing transactions already in contract.

“Since these applications were already in the pipeline and figured into the program’s cost, the extension of the closing deadline should not incur any further government costs,” NAR President Vicki Cox Golder said in a statement.

Treasury answers your HAFA questions

Treasury Answers Three HAFA Questions

On May 21, 2010, Fannie Mae, on behalf of the Treasury Department, answered three HAFA questions submitted by NAR on behalf of its members. HAFA is the Home Affordable Foreclosure Alternatives Program that provides uniform procedures, forms, and deadlines for short sales and deeds-in-lieu of foreclosure. The purpose of HAFA is to help homeowners avoid foreclosure even if they are unable to retain the home with a loan modification under the HAMP program. In brief, under the HAFA program:

(1) buyer agents are not permitted to rebate a portion of their commission to the buyer,

(2) sellers who are real estate agents must list their home for sale with another broker, not their own broker, and

(3) the incentive allowed for subordinate lien holders (6% of any one subordinate lien, up to a total of $6,000 for all subordinate liens) is a hard cap and may not be supplemented from any source.

HAFA Q&As
NAR’s Short Sale Web Page

At the NAR – Economic Update w/ Dr’s Yun & Zandi

This morning we heard from Dr Lawrence Yun (NAR Chief Economist) and Dr. Mark Zandi (Moody’s Economy.com) with their financial outlook for the rest of 2010 and beyond. I try never to miss this program as I always find the info interesting – if not always the most accurate.

Now I know there are some of you who are not enamored of Dr. Yun’s talks and consider him to be an NAR stooge – but the fact is he has recently been named by USA Today as one of the nations top 10 economic advisors and Dr. Zandi is one spot higher in that ranking than Yun – so say what you will, these guys have some credentials. I personally am glad to hear an econmist who understands real estate giving a Realtor perspective. Too many of them talk about housing but strictly from a philosophical point of view – they’re not surrounded by Realtors every day like Yun is.

An overview;

dr lawrence yunYun talked quite a bit about the first time homebuyer program and the success that it was. Ultimately 3.4 million buyers will benefit from that credit and just over 1 million of those would not have purchased at this time without the incentive. Given the multiplier effect of real estate purchases this program more than paid for itself in terms of economic benefit to the nation. It also had a significant impact on reducing inventory which in turn helped stabilize prices. Without that inventory drop prices may well have dropped another 8% before finding a bottom and that 8% would have translated to another $1 trillion drop in equity wealth for homeowners. Price stability also translates to fewer foreclosures going forward as the 3rd wave of foreclosures was largely driven by unemployment and negative equity. 

Dr. Yun does not believe there will be a double dip in housing prices but that distressed properties will continue to be with us for at least the next two years before we start getting anywhere close to a normal market. Several factors could impact that timing – including such international pressures as a default by Greece and other events but he doesn’t believe that will be allowed to happen. 

Yun also called out the next crisis, one that I have been talking about for awhile now.  That is a housing shortage which could lead to a quicker price recovery, if not another mini-spike. This is driven by the fact that demand is now keeping pace with supply in many markets yet new home builders are not working yet – which could lead to a shortage within two years and force upward price pressure in some areas – specifically ours herein Southern California. Florida is still toast, Arizona & Nevada are still hurting but many areas are climbing back out with some, like the San Diego market, showing double digit price appreciation. 

dr Mark ZandiDr. Zandi titled his address “The Housing Crisis is Over (Almost). He believes we will continue to see minor price slippage in some areas into 2012 until the job market picks up. While as many as 250,000 new jobs have been crated in the past 2 months, we have lost nearly 9 million. He believes we will average 150,000 – 250,000 new jobs per month this year and as many as 300,000 a month by next year. By next year at this time we should see job growth in every sector of the economy except state and local government. But even under is rosiest lens, he doesn’t see us approaching full employment (5.5%) until well into 2014. 

While some areas, like SoCal, have housing inventories of 2 months or less, much of the country is still struggling with 2 years of homes – although he agrees with Yun that that inventory will be disposed of and if an adequate supply of new homes doesn’t begin to appear soon it could precipitate another shortage. He also outlined the four stages of the housing crisis starting with flippers giving homes back to builders in 2006 – that was just a preview of things to come. Stage 2 was the infamous sub-prime melt-down that consumed us in 2007 and the freeze on jumbo loans which is still hurting the recovery of the upper end of the market. Stage 3 occurred in 2008-2009 driven by rising unemployment and falling home equity. We are currently tailing off that state and driving into Stage 4 which is marked by strategic defaults. There are 50 million home mortgages in this country of which nearly 1/3 or 15 million are under-water right now with negative equity. Of those, 4.5 million are either in foreclosure or are 90 days or more late on payments. That translates to more pain to come but it will be somewhat mitigated by an improving employment picture, continued low interest rates (no re-sets) and stabilizing or appreciating equity. 

Overall not a bad prognosis from these two. Not entirely rosy but I’ve certainly heard worse. 

Here’s the slides to Dr. Yun’s presentation:

4% Sales Tax on Homes? Another myth busted.

No 4.0% “Sales Tax” on Home Sales In Recently Enacted Health Reform Bill

Contrary to reports and newspaper articles circulating widely on the Internet, there is not a 4.0% “sales tax” or “transfer tax” on the sale of a home included in the recently signed health care reform bill. The analysis underlying these reports is incorrect and fails to take into account the interplay of the bill’s provisions with already existing real estate tax laws that remain unchanged.

What was included in the health bill is a provision that imposes a new 3.8% Medicare tax for some high income households that have “net investment income.” Any revenue collected by the tax is dedicated to the Medicare hospital insurance program. This new tax will only apply to households with Adjusted Gross Income (AGI) of more than $200,000 for individuals or more than $250,000 for married couples. Since capital gains are included in the definition of net investment income, an additional tax obligation might result from the sale of real property.

In the case of the sale of a principal residence, the existing $250,000/$500,000 exclusion from capital gains on the sale of a principal residence remains unchanged. Consequently, even when the AGI limits are met, the new tax would not be applied to all capital gains that result from the sale of a home. Rather, it would only apply to any home sale gain realized in excess of the $250K/$500K existing primary home exclusion that pushes the filer’s AGI over the $200K/$250K adjusted gross income limit.

The new Medicare tax will not take effect until January 1, 2013.

For more information on the new Medicare tax, please consult NAR’s Health Reform Q&A on this and other provisions of the new health reform law located at:

www.realtor.org/healthreform