Jan's Blog

The Obama administration is expanding the number of borrowers who can refinance home loans under its housing-rescue program, an acknowledgment that more needs to be done to help people who are upside down on their mortgages.

The administration said Wednesday that borrowers with mortgages worth up to 125% of their home's value will now be eligible to refinance under its program, up from a 105% limit.

To be eligible, borrowers must be current on their mortgages and have loans owned or backed by government-controlled mortgage companies Fannie Mae and Freddie Mac.

Secretary of Housing and Urban Development Shaun Donovan said the higher limits "will make a critical difference in our ability to help many more Americans...to stay in their homes."

Nearly 30% of homeowners with mortgages owe more than their homes are worth, according to Moody's Economy.com.

Wednesday's move is the latest indication that the refinance program, announced in March, has fallen short of expectations. In mid-June, the administration said 20,000 borrowers had refinanced under the program. The administration had previously said that the plan could help four million to five million borrowers who owed 80% to 105% of their home's value.

As recently as late April, Mr. Donovan had rejected the idea of expanding the program to borrowers who were more deeply underwater.

As many as three million borrowers could be eligible for the expanded program, according to Credit Suisse. But many of them have little incentive to refinance at current rates or couldn't qualify because of other limitations.

"It's a step in the right direction, but it's not going to have an overwhelming impact," said Credit Suisse mortgage strategist Mahesh Swaminathan.

The Mortgage Bankers Association said Wednesday that its refinance index dropped to the lowest level since November as rising rates put a damper on applications. Rates on 30-year fixed-rate loans currently average 5.49%, up from a recent low of 4.84% in April, according to HSH Associates in Pompton Plains, N.J.

To encourage borrowers to pay off their loans more quickly, Fannie and Freddie will reduce fees associated with refinancings for mortgages with terms of less than 30 years. Accelerating loan payments will allow borrowers who are underwater to build equity more quickly, the administration said.

Mortgage companies are still struggling to refinance borrowers who are eligible for the program, but have mortgage insurance. That part of the program has "taken longer to put in place" because the process is complex, said Freddie Mac Vice President Patricia McClung.

Some analysts and regulators who oversee Fannie and Freddie say expanding the program could decrease credit risks to the government-controlled mortgage companies because they already own or guarantee these mortgages; a refinancing to lower monthly payments could make those borrowers less likely to default.

Article courtesy of The Wall Street Journal, page A4

Tax Credit For Home Purchase Could Rise

According to a recently published USA Today® article, lawmakers and businesses are requesting an extension for first-time homebuyers.

The article states that first-time buyers make up 40% of home purchases, according to the National Association of REALTORS® (NAR), which is about 5 percentage points higher than the past historical average.

Bernard Baumohl, an economist at the Economic Outlook Group, says, "I'm fairly confident that (Congress) will extend the tax credit, because it is so important that housing come back."

There are several proposals in congress right now.

Some include:
  - A Senate bill to expand the tax credit to $15,000 for any home buyer regardless
    of income
  - A House bill to keep the $8,000 credit in place until June 2010 and expand it to all
    home buyers
  - Eliminating the income caps for singles earning more than $95,000 a year and
    couples who earn more than $170,000

Click Here for the article. 

Hello Bloggers,

As a full-time real estate broker, I am sure many of you wonder why I would include content on my blog highlighting reasons why some homeowners should consider NOT selling. Unfortunately, many homeowners owe more on their mortgages than their homes are worth. These "underwater" homeowners are finding that it is not economically feasible for them to sell their properties on a short sale and are deciding that staying put is the best option for their family. Here are 10 tips that may help you make the house you're in your dream home.

1. Show your true colors. "Paint is the cheapest and most powerful thing you can do to put your personal stamp on a home," says Barbara Corcoran, a New York City Realtor and NBC's "Today" show real estate expert. "Paint your home the colors you enjoy living with, the colors you feel happiest within."

2. Ditch some stuff. "You probably have more stuff than you need. Get rid of some of it," says James Gauer, author of "The New American Dream: Living Well in Small Homes."

3. Start simple. Find the simplest remodeling solution within your home's existing footprint before considering expanding its size, says Marc Vassallo, co-author of "Not So Big Remodeling: Tailoring Your Home for the Way You Really Live."

4. Dine in a booth. "I've yet to see a small living/dining room where a free-floating dining table and chairs really works," says Gauer. "A dining banquette against the wall looks and feels luxurious and comfortable while taking up considerably less space."

5. Check out books. "Put a wall of books in any room and it's cozy and inviting," says Corcoran.

6. Consolidate doorways. "Attempt to locate all the doorways to the kitchen on one side of the room and eliminate any that are not absolutely necessary," Vassallo says. "This leaves the rest of the kitchen for continuous countertop and appliance arrangement while limiting the flow of foot traffic through the work area."

7. Plan your furniture first. "Never buy furniture without first laying out a furniture plan," says Gauer. "Chances are, that sofa you're eyeing is too big and will just make your living room feel crowded."

8. Let there be light. "The right lighting can make a heck of an improvement," says Corcoran. "Throw in task lighting to make tasks easier, mood light to make a room sexier. And don't forget dimmers! I can't imagine lighting without them."

9. Add a column. "Create a more open floor plan by removing a wall and replacing it with a new support beam and columns," says Vassallo. "Columns allow for differentiation of places with minimal view obstruction."

10. Dare to be modest. "Modesty requires us to arrange our homes first and foremost to suit the real needs of our private lives with no thought to public display, to eschew the showy and unnecessary and embrace the appropriate and suitable," says Gauer.

Article written by J. MacDonald and courtesy of Bankrate.com.

First-time homeowners to get tax credits via FHA loans

HOLDEN LEWIS / bankrate.com

This year, some first-time home buyers will charge their down payments to the taxpayer.

Buyers will be allowed to use their first-time homeowner tax credits as down payments when they get FHA-insured loans, Secretary of Housing and Urban Development Shaun Donovan announced. The National Association of Realtors hailed the announcement, and asked taxpayers to subsidize all home purchases, and not just for first-time buyers.

The down payment initiative is built onto this year's first-time homebuyers' tax credit, in which qualified buyers can get an income tax credit of 10 percent of the home's price, or $8,000, whichever is less. The credit is half that for spouses filing separately, and the credit phases out for higher-income filers.

Under the plan announced by Donovan, buyers can get a piggyback mortgage or an unsecured bridge loan for the amount of the tax credit when they get a Federal Housing Administration-insured mortgage. The piggyback or bridge loan can take the place of a down payment. Typically, FHA-insured loans require a down payment of at least 3.5 percent.

Borrowers will be expected to pay off the piggyback or bridge loans when they claim the tax credit on their 2009 returns next year or their amended 2008 returns this year. To claim the tax credit, buyers have to buy by the end of 2009.

"We think the policy is a real win for everyone, ensuring that borrowers can tap into the numerous organizations that are already part of the FHA network," Donovan said. He cited a home builders' study that claimed that the tax credit will stimulate 101,000 sales to first-time buyers, and another 59,000 home sales to people who will be able to buy homes because first-time buyers bought their homes.

By using tax credits as down payments, buyers won't have to put some of their skin in the game by shelling out their saved-up cash to make down payments.

In response to the FHA's new down payment policy, the National Association of Realtors patted itself on the back.

"Last year, NAR asked Congress to pass housing stimulus legislation, which passed and is beginning to show results," said the Realtors' president, Charles McMillan.

Don't forget that Game 7 of the Finals is TONIGHT at 8pm. Check out the action on NBC and CBC.

Go Get that Cup!

Governor Signs Legislation to Help Homeowners Facing Foreclosure Stay in Their Homes

May 21, 2009

Homeowners, lenders will have extra time to work out new deal

LANSING - Governor Jennifer M. Granholm has signed legislation that helps protect homeowners from foreclosure by providing an extra 90 days for them to work with their lender on modifying their mortgage loan.
"We are committed to protecting Michigan families and helping them keep their homes," said Granholm, who called for similar legislation in her 2009 State of the State address. "This new law delivers on that commitment by providing homeowners extra time and assistance to save their home and preserve their American Dream."

The new law takes effect in 45 days and:

- freezes foreclosure proceedings for 90 days for homeowners who commit to work with their lender on modifying their mortgage loan;

- requires a lender to notify the homeowner in writing that the mortgage is in default and who to contact;

- stipulates that for help in modifying the mortgage loan, the homeowner must contact a housing counselor, available through the Michigan State Housing Development Authority.

Lenders must then attempt to work out a modification of the mortgage loan. This could be achieved through various means, such as lowering the interest rate or lengthening the life of the loan. If a homeowner and lender agree on the loan modification, foreclosure is avoided if the homeowner abides by the new agreement.

The signed bills are House Bill 4453 (Public Act 29 of 2009), sponsored by State Representative Shanelle Jackson (D-Detroit); House Bill 4454 (Public Act 30 of 2009), sponsored by State Representative Andy Coulouris (D-Saginaw), and House Bill 4455 (Public Act 31 of 2009), sponsored by State Representative Bert Johnson (D-Detroit).