First Time Homebuyer Tax Credit Extended Pending Obama’s Signature.

The First time Home Buyer Credit was extended through 2010. We are just waiting for the President to sign it. I still do not know how I feel about it as a whole but it is very good news for my clients!!!!

Thank you for visiting California Home Strategies…………… I am humbled by all the visitors each day. Your readership is very much appreciated and I am glad that you find value in the content.

Tax Credit not Extended Yet. Bill Has not been enacted!

All too often I see poor forms of marketing. That would be the spreading of  information that is only partially true. It may draw your attention and it may have a call to action to read it but it does not deliver the whole truth. Someone somewhere reports the rumor of what may be true and then virally this information runs amuck through the internet.

Most recently this has been the case with the Home-buyer tax Credit. The current deadline of November 30th, 2009 is awaiting an extension and revision anxiously. The revision appears to extend the credit to other buyers yet reduces the credit they would receive to $6500. This has not been enacted. As members of the National Association of Mortgage Brokers we received this directly from them:

October 30, 2009

The $8,000 first-time home-buyer tax credit is set to be extended until April 30, 2010. The Obama Administration has urged Congress to pass legislation to extend the program from its original December 1, 2009 deadline. In addition, legislation may provide a tax credit for some current homeowners. NAMB will continue to monitor legislation and will inform members when the extension is formally enacted.

The key words are formally enacted. Marketing should state the facts but always seems to focus on partial or half-truths. As a professional that has the privilege to assist home-buyers make their single largest financial decision I ask my readers and consumers to hold me accountable. It is easy to get caught up reporting something not finalized or only partially true to bring business. If you ever feel that I have done so call me out. I want to be accountable to my consumers. Transparency is the focus to my business. I wish you all the very best and when the tax credit becomes formally enacted you will be the first to hear about it.

Happy Halloween!

Tax Credit for Your Down-Payment!

HUD has released information on the ability for First Time Home-buyers to monetize the tax credit. I encourage all buyers that this is a good thing but also encourage you to read further. Below is a link to the information posted on HUD’s Site.  The News Release published on the Hud site gives insight on how this will be done.

“Housing Finance Agencies and certain non-profits will be able to use the tax credit for their down-payments via secondary financing provided by the HFA or non-profit.”

The way that I read this is that corporations like Nehemiah was in the past for seller funded down payment assistance will provide Bridge Financing via a second lien for the down-payment. Upon the filing of the tax return with the IRS your debt will be paid in full with your Credit. If it is not a Non-profit like Nehemiah it may be the Housing Finance Agencies.

I am left with the following questions:

1. How much will the fee be to set up the secondary financing through the non-profits?
2. Who will pay the fee?
3. How will wholesalers factor this into the underwriting decision?
4. What is the actual process from A-Z to make this as seamless for the borrower as we can?
5. “HFA and certain non-profits” lead me to the question, Which ones?

I have several other questions that I hope will be answered in the coming days. If I have questions I am most certain that you do as well. I will work diligently to get the answers for you so that I may make this very simple and easy to understand. Have a great weekend.

Foreclosure Fix: Obama’s plan released

The details of Obama’s Foreclosure relief program have been released. If you bought a home prior to January 1st, 2009 and you owe less than $729,500 on your Primary Residence you may be eligible for a Loan Modification.

Some of the Requirement of the plan include but are not limited to the following:

• Mortgage obtained prior to January 1st, 2009
• Mortgage amount less than $729,500
• Primary Residence Only
• Fully document your income by providing tax returns and pay stubs
• sign a statement of financial hardship
• go for counseling if their total household debt – including auto loans, credit cards and alimony – total more than 55% of their income

Modifications may be structured as follows:

• Servicers are asked to modify loans to meet a 38% total house payment and the government will subsidize servicers dollar for dollar to lower that ratio  to 31%. The interest rate can’t go below 2%.
• lender can extend the term of the loan up to 40 years or shift part of the principal to the loan at no interest. Servicers also have the option of reducing the loan’s balance.
• The new interest rate will remain in place for five years after which the interest rate will Increase 1% per year until it reaches the original rate or the prevailing rate at the time of modification whichever is lower.

Loan Modification plans focus on people who are behind in their mortgage payments or at risk of defaulting on their mortgage. The definition of “At Risk” is defined as those that are:

• suffering serious hardship
• declines in income
• increase in expenses
• facing an interest rate hike
• having high mortgage debt compared to income
• owing more than the house is worth
• demonstrating other reasons for being close to default ie: Extreme Hardship

Both borrowers, servicers and the investors will receive benefits for active participation in the program. Servicers are said to receive $1,000 dollars per modified loan and additional benefits annually for timely payments by the borrower. The timely payments are a result of previous failed efforts of loan modification that have resulted in over half of the modified loans slipping back into default within a year. Investor’s will receive one-time $1,500 incentive for modifying loans that are not yet delinquent and borrowers will receive $1,000 per year in Principal Reduction for timely payments, for up to five years.

There is also a provision for second mortgages to be eliminated but the details of that provision will depend on the cooperation of the second mortgage holders.

The modification program will be in effect until the end of 2012 and is said to help up to 9 million homeowners.

Contact your loan servicer to see how this plan will work for you. Many of the details of the program have been taken from multiple sources of media and listed here for your benefit. I do not have or know the extent of the help further than the explanation above. I stress that each situation will differ so the best source for you will be to contact your servicer for your situation.