Are There Any Foreclosure Deals Left?

For the eighth straight consecutive month, national foreclosure activity in the U.S. was dominated by a small set of states.
As reported by RealtyTrac.com, more than half of October's foreclosure-related activity came from just 4 states:
1. California
2. Florida
3. Illinois
4. Michigan
The remaining Top 10 states in terms of total foreclosure activity included Arizona, Georgia, Texas, Ohio, New Jersey, and Maryland.
Foreclosures are up 19 percent from last October, but a deeper look at the RealtyTrac report revealed two positive developments for the housing market.
1. Foreclosure activity is down 3 percent from last month
2. Foreclosures per Household decreased in 9 of the 10 most heavily concentrated states
Furthermore, Nevada's foreclosure pace is down 4% from last year. This is a big deal because Nevada has long led the nation in foreclosure-related activity. Until last month, Nevada's year-to-year foreclosure rate hadn't fallen in more than 4 years.

According to an industry trade group, distressed homes account for nearly one-third of home resale activity. Distressed homes range from foreclosures, foreclosure auctions and short sales, etc. We're seeing numerous short sale listings go to closing within 2-5 months now, and for great prices - call me anytime for more info. And if you know someone else who's upside down in the mortgage and needs help...tell them not to wait for their bank to decide their fate - Take Back Control! Call 703-400-6757 today.

Thanks to Ken Byrne, Vice President for Residential Lending of First Savings Mortgage Corp (703-883-9582 ) for some of the content in this posting.

First Time Home Buyers Could Have Until April 2010 to Buy!

Last night, the Senate unanimously approved an extension of the current $8,000 first time homebuyer tax credit. The House is expected to approve the measure in the next few days and then on to the White House for signature sometime next week. The current proposal would give qualifying homebuyers until April 30th to sign a purchase contract and an additional 60 days to close. In addition, homebuyers who previously owned a home for at least five consecutive years in the previous eight years would be eligible for a $6,500 tax credit for new home purchases. The income limits would expand to $125,000 for individuals and to $225,000 for married couples. Updates will be forthcoming as the bill moves forward.

FIRST TIME HOME BUYER TAX CREDIT EXTENSION APPROVED BY TUESDAY?

Senate Majority Leader Harry Reid said that the first time home buyer tax credit could be approved as early as Tuesday, November 3rd. There is a vote scheduled for late on November 2nd. “The House said that they would accept that and that could be done as early as November 3rd,” said Senator Reid. The delays in approving the bill has been due to the Republican demands for votes on amendments including the expiration of TARP funds by the end of 2010.
The November 2nd vote would allow Democrats to ignore the amendments if the bill is approved. Democrats have a plan to extend the first time home buyer tax credit until April 30th. The revised plan will also allow higher income home buyers to qualify for the tax credit. There is also an addition to the bill that home buyers who lived in their prior homes for at least five years could receive a credit of $6500. The increases of income for the tax credit are up to $125,000 for an individual and $225,000 for a couple from $75,000 and $150,000, respectively.

In addition, the House Appropriations Committee has approved an extension of the $729,750 loan limits for Fannie Mae, Freddie Mac and the Federal Housing Administration through September 2010. The committee also increased the lending and guarantee authority of FHA and Ginnie Mae, as requested by the Obama Administration. The Department of Housing and Urban Development appropriations bill authorizes FHA to insure $400 billion in single-family loans during fiscal year 2010, up from $315 billion in the current 2009 fiscal year, which ends Sept. 30. The FY 2010 appropriations bill allows Ginnie Mae to guarantee up to $500 billion in securities backed by single-family and multifamily loans. Congress provided the secondary market agency with $400 billion in MBS guarantee authority in the FY 2009 appropriations bill. The massive stimulus bill that President Barack Obama signed in February raised the maximum loan limit for the GSEs and FHA to $729,750. But the higher limit is due to expire at year-end, if the full House as well as the Senate does not approve this bill.

Goes to Show - Inventory Is Low and Buyers Are Scrambling!

Just Listed on Friday, October 30th

4 offers in so far and we've called for highest and best by end of the business day today...offers are strong and ABOVE asking price! Don't miss out on this great listing...703-400-6757.

Loopholes Promote Foreclosures, Not Loan Modifications

By Amilda Dymi
National Mortgage News
10/28/09

Recent market data highlight a pressing need to deal with Home Affordable Modification Program loopholes and systemic problems that are costing homeowners their homes and preventing servicers from being efficient in their efforts to cope with the foreclosure crisis.

Insiders say large servicers are not set up to perform loan modifications and HAMP is not making it any easier for them.

The National Consumer Law Center in Boston is calling for mandated loan modifications before a foreclosure and additional third-party supervision of servicers. The nonprofit says it is necessary to create needed incentives so servicers pursue an effective loan modification instead of a foreclosure.

Currently, according to a new NCLC study, it is more cost effective for residential servicers — including the nation’s largest holders of receivables — to foreclosure on delinquent homeowners rather than to offer them loan modifications.

Modifications still are not happening at significant numbers because Congress, the Securities and Exchange Commission, investors and credit rating agencies “have failed to provide servicers with the necessary incentives to reduce foreclosures and increase loan modifications,” says Diane Thompson, an attorney with NCLC and author of “Why Servicers Foreclose, When They Should Modify and Other Puzzles of Servicer Behavior.”

“The report tears apart the different ways servicers get paid. And it’s pretty clear that servicers are more certain to recover their money and thereby make a profit better, if they foreclose, than if they modify.”

For example, data from one of the country’s largest servicers, Ocwen Financial Corp., West Palm Beach, Fla., and at least another six servicing agreements show that it is more profitable to go into foreclosure for servicers that own affiliates or management companies that get paid for all the foreclosure fees. (Ocwen reported it completed 44.6% of all of the HAMP permanent modifications.) “They are generating income from the defaults.”

In addition, according to Ms. Thomson, this type of business structure creates opportunity for fee padding. “In the report we cite the case of Wells Fargo testifying that they charged the homeowner, and ultimately the investor, $125 for a service that they actually paid out only $50 on. Ocwen’s annual report shows both how much money it collects from its main servicing operation and its asset management company. The difference is substantial.” Similarly, reviews from IndyMac, Chase and a few other banks, she said, “point to the fact that servicers get most of their income from the servicing fee and recover their expenses off the top in a foreclosure.”

The report reveals systemic problems, including lack of clear HAMP guidance and how they should get their money in a modification. Credit rating agencies do not provide much guidance either, Ms. Thomson says, and where given, it does not make sustainable modifications as attractive as foreclosures, “because it slows down” the recovery of their financial advances, which for servicers is one of their major costs other than staffing.

“There is an infrastructure that is set up to process foreclosures, and that is detaxed, but there isn’t an infrastructure that large servicers have set up to process modifications. So there’s a huge initial outlay for staffing, training, getting all the computer programs and the platforms going. Plus a lot of institutions have inertia to get there and move it along.”

These findings indicate that all loan modifications should have the same requirements applied on the FHA modification program.

“Until servicers are mandated to do a modification, modifications simply don’t happen. It is key because it shifts the incentive. We’re not saying: Do a loan modification no matter what. Do it when the net-present-value analysis shows that investors will make more money from a loan modification than from a foreclosure.”

That inquiry should be done first since it helps keep costs down for all parties involved.

“We looked at publicly available documents and previous studies from different sources to see how HAMP works. We don’t have hard numbers from most servicers,” Ms. Thomson said. Asked whether she tried to get data from other servicers she admitted of not even trying. “That’s because the goal was to understand what the incentives were from a macro perspective.”

The report is based on data from loans in foreclosure from 1995-2009. Recommendations include requirements to fund quality mediation programs, provide for principal reductions on existing loans through HAMP and bankruptcy reform, increase automated and standardized loan modifications for borrowers in default, ease loan modification accounting rules to facilitate standardized review, and enhance servicer recovery of the expenses incurred in performing a modification.

**The $8,000 first time buyer tax credit is set to expire Nov 30th!!

**The $8,000 first time buyer tax credit is set to expire Nov 30^th.

1. Who is eligible to claim the tax credit?
First-time home buyers purchasing any kind of home new or resale are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and before December 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner. A limited exception exists for certain contract for deed purchases and installment sale purchases. See the IRS website for more detail.

2. What is the definition of a first-time home buyer?
The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.

For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.

3. How is the amount of the tax credit determined?
The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.

4. Are there any income limits for claiming the tax credit?
Yes. The income limit for single taxpayers is $75,000; the limit is $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The phase out range for the tax credit program is equal to $20,000. That is, the tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.

5. How do I claim the tax credit? Do I need to complete a form or application?
Participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on line 67 of the 1040 income tax form for 2009 returns (line 69 of the 1040 income tax form for 2008 returns). No other applications or forms are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests. Note that you cannot claim the credit on Form 5405 for an intended purchase for some future date; it must be a completed purchase.

6. What types of homes will qualify for the tax credit?
Any home that will be used as a principal residence will qualify for the credit. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats. The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences.

It is important to note that you cannot purchase a home from your ancestors (parents, grandparents, etc.), your lineal descendants (children, grandchildren, etc.) or your spouse. Please consult with your tax advisor for more information. Also see IRS Form 5405.

Will the First-Time Home Buyer Tax Credit Extend to 2010?

Buyers interested in taking advantage of the First-Time Home Buyer Tax Credit cross your fingers - Yesterday afternoon, Senator Ben Cardin introduced S. 1678, which would extend the $8,000 first time homebuyer tax credit for another 6 months to June 1, 2010. The current tax credit is set to expire on December 1, 2009. The bill has 4 co-sponsors: Ensign, Reid, Isakson, and Stabenow. We'll be tracking the progress of this bill. If you have any questions about utilizing the current tax credit, feel free to call me at 703-400-6757.