Don't Forget ! PMI is Deductable

Don't Forget: PMI is Deductible

As April 15 tax day approaches, here is a reminder for home buyers with mortgage insurance.Home owners with adjusted gross incomes of $100,000 or less can deduct the full cost of their government or private mortgage insurance premiums on their 2007 federal returns.Families with incomes between $100,000 and $109,000 are eligible for a reduced deduction.This is a new tax break that Congress has approved through 2010. "On average, this year's tax break could be worth $350 per taxpayer — an annual deduction that qualified home owners can take each year through 2010," says Kevin Schneider, president of the Mortgage Insurance Companies of America (MICA).

Daily Real Estate News March 26, 2008

More Consumers Ponder Home PurchaseThe number of consumers who say they plan to buy a home in the next six months rose slightly this month to 3.3 percent from 2.9 percent, despite an overall drop in consumer confidence. According to a survey by the Conference Board, a private research group, consumer confidence fell 11.9 points to 64.5, marking a downturn in sentiment to levels usually seen only during recessions. Consumer expectations about the future plunged to their lowest point since 1973, when a recession was followed by painful inflation.Consumers expect inflation to reach 6.1 percent in the next year, the highest rate since the aftermath of Hurricane Katrina in 2005, when gasoline prices surged. "We've been seeing a gradual trend upward since the end of last year, and it's following in line with oil, gas and food prices," said Lynn Franco, who oversees the Conference Board survey. Source: The Wall Street Journal, Sudeep Reddy (03/26/2008)Browse all of today's news

Daily Real Estate News March 25, 2008
More Banks Consider Short SalesAfter about a year of dealing slowly and reluctantly with short sale offers, many banks are reconsidering, looking for solutions that will allow them to recoup debt in foreclosure situations.Observers say that if the trend continues, it will reduce or eliminate the need for taxpayer bailouts.The National Short Sale Center, which helps short buyers negotiate with banks, says three-quarters of its short offers are approved now, up from maybe half six months ago. "Before, people on the phone at banks didn't even have the authority to negotiate. Now they're calling us with numbers," says Pam B. Canada of nonprofit NeighborWorks in Sacramento, Calif.To be sure, many agents and counselors think banks still have their heads in the sand. "They're out to get the last dime, even when people don't have a dime," says real estate practitioner Heidi Mueller in San Francisco as she heads to an auction sale on the courthouse steps.

Daily Real Estate News March 24, 2008
Existing-Home Sales Rise in FebruarySales of existing homes increased in February and remain within a fairly stable range, according to the NATIONAL ASSOCIATION OF REALTORS®. Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 2.9 percent to a seasonally adjusted annual rate of 5.03 million units in February from a pace of 4.89 million in January, but remain 23.8 percent below the 6.60 million-unit level in February 2007. The sales pace has been in a fairly narrow range since last September.Lawrence Yun, NAR chief economist, said the gain is encouraging. “We’re not expecting a notable gain in existing-home sales until the second half of this year, but the improvement is another sign that the market is stabilizing,” he said. “Buyers taking advantage of higher loan limits for both FHA and conventional mortgages will unleash some pent-up demand. As inventories are drawn down, prices in many markets should go positive later this year.”The national median existing-home price for all housing types was $195,900 in February, down 8.2 percent from a year earlier when the median was $213,500. Because the slowdown in sales from a year ago is greater in high-cost areas, there is a downward pull to the national median with relatively fewer sales in higher priced markets.

Gettin Creative !

Home Sellers Resort to Weird Deals Frustrated home sellers are trying an array of techniques to sell their slow-moving homes.In Colorado, J.J. Rodgers has launched an essay contest. So far, she has received more than 500 essays – accompanied by a $100 entry fee – explaining why the writer should win her four-bedroom home. Rodgers hopes to get a total of 2,000 entries or $200,000 in fees.Bob and Ricki Husick sold their suburban Pittsburgh home by offering to give back the buyer's purchase price upon their death. The Husicks also offered to throw in the couple’s retirement home in Arizona if the buyers would agree to care for the Husicks in their old age.Daniel Lasnick, a real-estate attorney in Stamford, Conn., recommends discussing deals involving quirky incentives with a real-estate lawyer. Depending on the incentive, a side agreement may be needed. Some people think the weird incentives are unlikely to have much impact. "People are offering all kinds of goofy things to get their houses sold," says Allen Butler, a practitioner in Surprise, Ariz. "But what gets a house sold really is going to be based on price and price alone."

The FBI is currently investigating 17 firms involved in the mortgage lending industry, bureau officials told Reuters News in an exclusive interview. The bureau had previously acknowledged it was investigating 16 firms. Officials say the criminal probe could take years to complete. The FBI has assigned 100 agents to investigate corporate fraud aspects of the housing crisis, including subprime lending and insider trading. Another 150 are looking at related securities fraud, and 153 are looking at loan originations, says Neil Power, economic crimes unit chief of the FBI’s financial crimes section.The majority of cases are in New York and California, Powers says.The opportunities for fraud existed all along the chain from mortgage origination to the investors in mortgage-backed securities. But the problems begin in loan applications that required minimal or no documentation, the officials said."That's the start of the fraud right there," said Mike Cuff, a supervisory special agent in the economic crimes unit.Source: Reuters News, Randall Mikkelsen (03/18/2008)

Daily Real Estate News March 17, 2008
Fed Slashes RatesIn an effort to boost market liquidity, the Federal Reserve lowered the discount rate to 3.25 percent from 3.5 percent and launched a new lending program through which money will be moved from securities dealers to the securitization markets. The effort — the latest attempt to stabilize prices of bonds backed by residential loans as delinquencies continue to escalate and home prices tumble — will provide financing for JPMorgan Chase & Co.'s acquisition of Bear Stearns Cos. for approximately $270 million, or about $2 per share. Meanwhile, the central bank could reduce the interest rate affecting consumers and businesses to 2 percent at its March 18 meeting, marking a decline of a full percentage point.

Did someone say no money needed? Yes, no money from the buyer.

There are several non-profit programs out there that allow for some type of assistance to the buyer. Nehemiah is one of the largest non-profit organizations that allows the seller to give money for the down payment and closing costs.
This program is approved by FHA which is part of HUD. Nehemiah can basically get a consumer into their dream home with no money out of pocket. FHA states that you must have 3% of your own money into the deal. And FHA typically asks for 2.25% as your down payment, which is included in the 3% total. This means that you would need to pay an additional 3/4%. But FHA also allows you to receive a 100% gift that can be used for both your down payment and closing costs. This gift can come from either a family member and or a non-profit organization. Call me for more details about this !!!!! Jeff Stake, realtor, 233.2689

Tough Market

Tough Markets Bring Fraud to Surface Mortgage

Loan origination may have fallen to its lowest level since 2002, but mortgage fraud was on the rise in 2007, according to the Tenth Periodic Mortgage Fraud Case Report, prepared by the Mortgage Asset Research Institute. Speaking at a MBA fraud conference in Chicago yesterday, Merle D. Sharick, vice president of sales for MARI, stated that Suspicious Activity Reports received by the Federal Bureau of Investigation and the Financial Crimes Enforcement Network from federally regulated banks jumped 139 percent between 2006 and 2007. The jump in fraud will spell record losses for lenders, easily topping $1 billion, says the report. As it was in 2006, the most common types of mortgage fraud were misstatement about employment and income. However, borrowers’ failure to disclose debts, liens, and judgments grew by 50 percent in the last year. Several factors contributed to the rise, says Sharick, including reduced loan volume that prompted lenders to more carefully scrutinize loans, falling home values, and an oversupply of properties, especially in markets such as Florida and Nevada where a significantly number of recent home purchasers were made by investors. (View a report and state breakdown of mortgage fraud by the Mortgage Asset Research Institute.)In efforts to staunch the fraud flood, the Mortgage Bankers are developing a national mortgage fraud database so its members can share information on mortgage scams. The association also plans to develop a national database of property values. — By Mariwyn Evans for REALTOR® magazine online

Many Borrowers Ignore Help ?

Daily Real Estate News March 11, 2008

Many Borrowers Ignore Help Offers

The Hope Now Alliance, a coalition of 28 lenders and loan servicers supported by the Bush administration, has mailed more than 1 million letters since December to borrowers with subprime adjustable-rate mortgages, offering a solution. The response rate has been less than 20 percent.Why have borrowers been so reluctant to step forward?"Their collections departments have beat (delinquent home owners) over the head for months. It's no wonder borrowers won't answer the phone," says Todd Buckner, CEO of National Housing Solutions, a for-profit mediator between borrowers and lenders.Finding a solution also isn’t as easy as some politicians and lenders make it sound. For instance, the FHA has created FHASecure to help subprime borrowers refinance out of risky ARMs. Since the program was announced in fall, the FHA has received about 277,000 applications and approved fewer than half of them.And there are borrowers who aren’t willing to bend. Lender Martin Goodman, president of Residential Capital, says, “There's a sense of entitlement (among home owners) that is just unbelievable."

Now is a Great Time to Buy !

Daily Real Estate News March 11, 2008 Why Now is a Smart Time to Buy

Now is a great time to buy a home, say the financial gurus at the Wall Street Journal.The Journal calls it a buyers market and offers these suggestions for first-timers getting their feet wet. While their advice is solid, it’s not revolutionary, but some potential customers might find it reassuring.Remember this is a place to live not a stock market investment, they say. Lenders want buyers to spend no more than 28 percent of their gross monthly income on mortgage payments, real estate taxes, and home insurance. Buyers shouldn’t count on stretching further because lenders won’t approve their loans.
Cash is king. Having enough money in the bank to pay closing costs that are typically an additional 2 percent to 3 percent of the price of the home is necessary.
Location. Location, location. As any good real estate professional knows, homes in good school districts where the crime is low are much more likely to hold or increase their value.
Compare. Besides just looking at the comps, buyers should examine what it would cost to rent a similar house in the same area and they might consider what it would cost to buy land and build a comparable home.
Think long haul. It will probably take at least six or seven years of living in the house to be able to sell and come out ahead.

Economic news drives mortgage rates down.....
This week's decline linked to turmoil in jobs, consumer confidenceBy Inman News, Thursday, March 6, 2008.

Mortgage rates fell sharply this week on softer economic news, Freddie Mac reported today.
The average rate on 30-year fixed-rate mortgages dropped 21 basis points from a week ago, dipping from 6.24 percent to 6.03 percent, and the average 15-year fixed mortgage tumbled from 5.72 percent to 5.47 percent.
Points, or fees that lenders charge for loan processing expressed as a percent of the loan, averaged 0.5 on the 30- and 15-year loans.
"Weak economic reports that indicated declines in the job market, slowing in manufacturing and low consumer confidence drove bond yields lower this week and mortgage rates followed," Frank Nothaft, Freddie Mac vice president and chief economist, said in a prepared statement. "Interest rates for 30-year fixed-rate mortgages are now at the same levels as they were two weeks ago, erasing last week's upward jump.
"Meanwhile, the housing market continues to take a toll on the rest of the economy. Residential fixed investment shaved 1.25 percentage points off economic growth in the fourth quarter of 2007. More recently, the median sales price of new homes fell 15.1 percent in January, representing the largest annual drop on record. Residential construction fell 19.7 percent over the 12 months ending January 2008, the largest decline since March 2007."
According to Freddie Mac, the average rate on five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) sank to 5.34 percent from 5.43 percent a week ago, and average rates on one-year Treasury-indexed ARMs slid from 5.11 percent to 4.94 percent. Points on the 5- and one-year loans averaged 0.5.

Daily Real Estate News March 7, 2008

Low-Cost Kitchen Updates.

Sellers whose kitchens are old and outdated, but who don’t want to spend money gutting and remodeling, should consider these tips from interior designers for updating inexpensively.
Buy new lighting. Replace fixed ceiling lights with modern movable track fixtures.
Replace the hardware. Handles on today’s cabinets are large and sleek instead of small and ornate. Also, brass is out. Replacing the outmoded ones can make the whole room look more modern.
Buy a new faucet. A stylish faucet can make a big difference.
Update the backsplash. Colorful mosaic tiles are better than plain boring tile.
Buy new seating. If sellers can’t afford that, then they can certainly reupholster or replace the cushions.
Clean up the clutter. Get rid of the canister set, the breadbox, and all the appliances on the counters. Leave only one bowl of fruit and a plant on the countertops.

Tax Benefits of Owning a HomeBefore a home owner curses the troubled housing market, he or she should take solace in the U.S. tax code, which makes buying a home a good deal for almost everyone.Here’s why:Mortgage interest deductions, including in some cases mortgage insurance premiums, reduce home owners’ tax liability by reducing income. The deduction includes interest paid on both a first and a second home. Interest on home equity loans is also deductible — whether the borrower uses the money to remodel the kitchen or to take a vacation to Disney World.Profits from selling a house are potentially a huge windfall. When a home owner sells a primary residence, any profit on the sale of the property is tax free up to $250,000 for single home owners and $500,000 for married home owners filing. Any profit above that is nearly always a long-term capital gain taxed at 15 percent — less if the seller’s tax rate is less than 20 percent.Home owners can itemize. That opens up opportunities to deduct a host of other items that wouldn’t be deductible if the taxpayer took the standard deduction.