REAL Trends Comment

Just as we feared the Feds are "talking" about another tax credit

What don't they get?  When they talk publicly about the possibility of a tax credit then certainly buyers will hold off to see what will happen.  Sales professionals will be caught in a no man's land with their customers - can't you see it, a buyer asking a sales professional, who has no way to know whether it will happen or not - giving advice as to whether to wait or not, then rates go up.  Or telling them it likely won't happen and then it does? 
 
If they are going to think out loud then about the only thing they should also do would be to make the tax credit effective the first day Donovan mentioned it.
 
We would all like to have the sales levels we had in the spring continue for the next few years.  This market stinks plain and simple.  But the more the Feds fool around with irresponsible out-loud thinking about further tax credits, the more we delay the day when we have a more normal predictable housing market.

Homeowners have no regrets

The Great Recession may have drained the equity from millions of homes, but when it comes to making what's often the greatest purchase of all, the vast majority of homeowners are resting easy. An overwhelming 90 percent of homeowners say they don't regret buying their current home, according to a new study by Bankrate, Inc.

That's even in the face of stagnant - or sliding - home prices they've suffered and rock-bottom mortgage rates they may have missed out on. Only 9 percent of respondents expressed second thoughts about taking the plunge. Why? Most often because they couldn't sell their home and move on, or because they were unable to afford the monthly mortgage payment.

Source: DeadlineNews Group, Crystal Chow

IRS paid $23.5 billion in homebuyer tax credits

The total bill for the homebuyer tax credit so far, as reported by the Internal Revenue Service, stands at $23.5 billion. About $16.2 billion of that is for the $8,000 (Recovery Act) and $6,500 (Assistance Act) grants shelled out to first and second-time homebuyers, respectively. The other $7.3 billion is for interest-free loans through the Housing Act provision. Americans who qualified for these loans will begin repaying them next tax season, which starts in January.

The numbers are based on IRS filings through July 3. The Government Accountability Office estimates that with all of the first-time homebuyer tax credits, the total revenue loss to the federal government will be about $22 billion.

California, being the most populous state with nearly 37 million residents, received the largest chunk of the money - $814 million, the GAO said in a letter to John Lewis (D-Ga.), chairman of the oversight subcommittee of the House Ways and Means Committee.

Florida came in second with $455.5 million in homebuyer tax credit dollars received so far. Georgia is third with $295.8 million, followed by New York with $276.9 million and Illinois with $268.7 million. On a per-resident basis, Nevada took the top spot, but the overall pay out is considerable less at $104 million.

Source: Housingwire.com, Jacob Gaffney, (09/03/2010)

Banks could tank new FHA Refinancing Program

A new FHA program launched allows homeowners who are underwater on their mortgages to refinance at today's record low rates, take at least 10 percent off their principal, and get a new FHA loan that will leave them with positive equity in their home.

FHA estimates some three to four million homeowners could take advantage of the program, called FHA Short Refinance, which would dramatically stabilize housing markets, reduce delinquencies and foreclosures, and make it possible for many "move up" owners to sell and buy a new home that better fits their needs.

However, lenders must voluntarily agree to write off 10 percent of the unpaid principal in order to bring a borrower's combined loan-to-value ratio to no greater than 115 percent.Real estate and mortgage professionals around the country fear that the principal reduction, which is also required in modifications under the Treasury's Housing Affordable Modification Program (HAMP), to be a potential roadblock.

In some markets, where prices are still far below the peak in 2006, homeowners who bought at that time today are far below the 97.5 percent loan to value ratio the new program requires.In addition to getting the lender to eat 10 percent or more of the principal, the program, also requires:

· The homeowner must qualify for the new loan under standard FHA underwriting requirements and have a credit score equal to or greater than 500.
· The homeowner must owe more on his/her mortgage than their home is worth.
· The homeowner must be current on his/her existing mortgage.
· The property must be the homeowner's primary residence.

Source: realestateeconomywatch.com, Steve Cook, (09/02/10)

Executive management appointments

Joe Carroll is now with Surety Financial as director of Strategic Business Alliances. Carroll was formerly with Bank of America/Countrywide and prior to that Metrocities. Surety is based in Sherman Oaks, CA.