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Tax Tip for First Time Home Buyer Credit

June 29th, 2009 9:15 AM

If you’re filing an amended ’08 return for the first time home buyer credit...

Be sure to enclose a copy of the settlement statement with your 1040-X.

The Service has noticed that many of the refund claims for the credit are fraudulent, so it is giving all such claims extra scrutiny. To avoid having your refund delayed, attach a copy of the HUD-1 form with your amended return. First time home buyers can claim the tax credit...10% of the purchase price, up to a maximum of $8,000... on amended 2008 returns if they buy a primary home this year before Dec. 1, 2009.

Posted by Aaron Walker on June 29th, 2009 9:15 AMPost a Comment (0)

First-Time Homebuyer Credit

June 23rd, 2009 1:08 PM

Overview

First-time homebuyers may be able to take advantage of a tax credit for homes purchased in 2008 or 2009. The credit:

Applies to purchases that close after April 8, 2008, and before Dec. 1, 2009.
Applies only to homes used as a taxpayer's principal residence.
Reduces a taxpayer's tax bill or increases his or her refund, dollar for dollar.
Is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.

The credit is claimed using Form 5405.

For 2008 Home Purchases

The Housing and Economic Recovery Act of 2008 established a tax credit for first-time homebuyers that can be worth up to $7,500. For homes purchased in 2008, the credit is similar to a no-interest loan and must be repaid in 15 equal, annual installments beginning with the 2010 income tax year.

For 2009 Home Purchases

The American Recovery and Reinvestment Act of 2009 expanded the first-time homebuyer credit by increasing the credit amount to $8,000 for purchases made in 2009 before Dec. 1.

For home purchased in 2009, the credit does not have to be paid back unless the home ceases to be the taxpayer's main residence within a three-year period following the purchase.

First-time homebuyers who purchase a home in 2009 can claim the credit on either a 2008 tax return, due April 15, 2009, or a 2009 tax return, due April 15, 2010. The credit may not be claimed before the closing date. But, if the closing occurs after April 15, 2009, a taxpayer can still claim it on a 2008 tax return by requesting an extension of time to file or by filing an amended return. News release 2009-27 has more information on these options.

Posted by Aaron Walker on June 23rd, 2009 1:08 PMPost a Comment (0)

HUD will allow $8000 Tax Credit for FHA Closing Costs

June 23rd, 2009 1:05 PM

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

WASHINGTON, DC 20410-8000

ASSISTANT SECRETARY FOR HOUSINGFEDERAL

HOUSING COMMISSIONER

www.hud.gov espanol.hud.gov

May 29, 2009

MORTGAGEE LETTER 2009-15

TO: ALL APPROVED MORTGAGEES

SUBJECT: Using First-Time Homebuyer Tax Credits

The American Recovery and Reinvestment Act of 2009 (Recovery Act) provides for as much as an

$8000 tax credit to qualified first-time homebuyers. FHA supports this important initiative to

promote homeownership. This mortgagee letter provides:

• Basic information on the first-time homebuyer credit obtained from the Internal Revenue

Service (IRS) website. Complete information on how the first time homebuyer tax credit

works, including the eligibility requirements for the tax credit, the amount of the tax

credit that a first-time homebuyer may be eligible to receive, and how a homebuyer may

claim the tax credit is available on the IRS website at

http://www.irs.gov/newsroom/article/0,,id=204671,00.html?portlet7.

• Guidance on how FHA-approved mortgagees and FHA-approved nonprofit organizations

as well as Federal, state, and local government agencies or instrumentalities may assist

homebuyers that are eligible for the tax credit.

I. About the First-Time Homebuyer Tax Credit

Please check the IRS website to ensure you have up-to-date information. A brief overview

of the tax credit from the IRS website and a copy of IRS Form 5405 (including instructions) are

attached for reference.

Pursuant to 31 U.S.C. 3727 and 26 U.S.C. 6402, a refund of the first-time homebuyer credit

will be made by the IRS only to the taxpayer, not to a third party. In other words, any refund issued

in response to a claim for this credit cannot be assigned by a taxpayer to a third party.

II. FHA Tax Credit Guidance

Secondary Financing

Consistent with existing FHA policy, FHA will permit entities covered by Section 528 of the

National Housing Act to use the current authority to offer tax credit advances with second liens in a

manner consistent with the requirements in 12 U.S.C. 1709(b)(9). Eligible government agencies

and instrumentalities of government are described in handbook HUD-4155.1 5.C3 and 5.C4.

Conditions:

• The tax credit advance, when combined with the FHA-insured first mortgage may not result

in cash back to the borrower.

• The second lien may not exceed the total amount needed for the down payment, closing

costs, and prepaid expenses.

• Secondary financing may be “soft” (silent) or require a monthly repayment.

• If payments are required, they must be included within the qualifying ratios and, when

combined with the first mortgage, cannot exceed the borrower’s reasonable ability to pay.

• Payments must be deferred for at least 36 months to not be included in the qualifying ratios.

• If the tax credit advance loan has a short term for repayment, it must also provide that if the

borrower fails to repay by the designated deadline, principal and interest payments begin

automatically or the loan converts to a “soft” second.

• The secondary financing may not require a balloon payment before ten years.

Purchase of Tax Credit

FHA-approved mortgagees and FHA-approved nonprofit organizations as well as Federal, state, and

local governmental agencies and instrumentalities thereof may purchase the tax credit anticipated by

the homebuyer.

Conditions:

• The proceeds of the sale of the tax credit may not exceed the anticipated tax credit due the

homebuyer based on the computations of form IRS 5405;

• The borrower must submit a signed certification that the tax credit is not subject to offset

due to other indebtedness.

• A copy of the borrower’s tax refund and/or the IRS 5405 must be collected and retained in

the FHA case binder.

• Any costs attendant to the purchase of the tax credit are to be nominal and discounting the

anticipated credit to cover the costs and expenses of the transaction must be reasonable and

disclosed to the homebuyer. In FHA’s view, fees and costs that total more than 2.5% of the

anticipated credit are considered excessive. (Example: $6000 to be refunded, with all fees

and costs discounted, borrower should receive not less than $5850.00 for sale of tax credit.)

• Pursuant to 12 U.S.C. 1709(b)(9), the homebuyer’s downpayment required for eligibility for

FHA insurance may not consist of any funds (including funds derived from a sale of the

homebuyer tax credit) provided by the mortgagee, the seller, or any other person or entity

that financially benefits from the transaction (or by any third party or entity that is

reimbursed, directly or indirectly, by the financially benefiting person or entity).

Accordingly, the proceeds of the sale of the tax credit to FHA approved mortgagees, the

seller, or any other person or entity that financially benefits from the transaction (or any

third party or entity that is reimbursed, directly or indirectly, by the financing benefiting

person or entity), may not be used to meet the 3.5% minimum downpayment, but may be

used as additional downpayment, buying down of interest rate, or other closing costs.

Due Diligence

FHA expects that entities purchasing tax credit assets will employ appropriate due diligence

measures including, but not limited to:

• Require the homebuyer to draft and provide the IRS form 5405 “First-Time Homebuyer

Credit.”

• Contact the borrower’s employer and review pay stubs to confirm there are no

outstanding garnishments.

• Review the homebuyer’s credit report to ensure there are no unpaid student loans, or

other obligations that could be offset against the credit.

• Validate that all of the eligibility requirements for the tax credit are fulfilled

• Review previous tax returns and IRS tax assessment letters, if any, to determine that the

borrower does not have unsettled obligations to the IRS

III. Monitoring

In order to track the tax credit monetization activities, FHA will require FHA-approved

mortgagees to input into FHA Connection the following data:

• Name and EIN of the party who purchased the tax credit,

• The amount of the anticipated credit, and

• The amount the homebuyer paid for the monetization services.

The lender must also collect and maintain in the FHA case file the documentation that

validates all of the tax credit monetization data submitted via FHA Connection.

FHA will monitor the purchase of tax credit transactions closely. Charging of excessive

fees or costs in the purchase of the tax credit or increasing other fees or charges in the transaction

without FHA approval may result in referral to the Mortgagee Review Board, and particularly with

respect to entities that are not FHA-approved mortgagees, referral to the Federal Trade

Commission, or referral to the appropriate State Attorney General office, as may be applicable.

If you have any questions regarding this mortgagee letter, please call FHA’s Resource

Center at 1-800-CALL-FHA (1-800-225-5342). Persons with hearing or speech impairments may

access this number via TDD/TTY by calling 1-877-TDD-2HUD (1-877-833-2483).

Sincerely,

Brian D. Montgomery

Assistant Secretary for Housing-

Federal Housing Commissioner

Attachments

Posted by Aaron Walker on June 23rd, 2009 1:05 PMPost a Comment (0)

FHA 203(k) Streamline Limited Repair Program Loan Process

March 30th, 2009 1:02 PM

FHA 203(k) Streamline Limited Repair Program Loan Process

The 203(k) Streamline Limited Repair Program allows a customer to purchase or refinance a home and make limited upgrades/repairs to the property all under one single loan. The loan is not re-qualified as it is only underwritten one time, upfront.

There is no minimum amount for the repair costs; however the maximum is $35,000 (includes 10% contingency, supplemental origination fee, and final inspection fee).

There is a mandatory 10% contingency required on all 203(k) streamline loans. This contingency is held until final disbursement. If the contingency is not used it will be applied to the principal mortgage balance.

The repair funds are held in escrow.

No more than two payments may be made payable to each specialized contractor or to the borrower, if the borrower is performing the work under a self-help arrangement.

The borrower is given 3 months from the closing date to complete all the repair/rehab work.

Eligible Properties

One-to-Four (single family) residences, including HUD REO properties Manufactured Homes are allowed (must meet FHA guidelines on our website)

Spot Approval for Condos is permitted on this program

Property must be 100% complete – no partially built homes

Eligible Improvements/Work

Repair/Replacement of roofs, gutters and downspouts

Repair/Replacement/upgrade of existing HVAC systems

Repair/Replacement/upgrade of plumbing and electrical systems

Repair/Replacement of flooring

Minor Remodeling, such as kitchens, which does not involve structural repairs

Painting, both exterior and interior

Weatherization, including storm windows and doors, insulation, weather stripping, etc.

Purchase and installation of appliances, including free-standing ranges, refrigerators, washers/dryers, dishwashers and microwave ovens

Accessibility improvements for persons with disabilities

Repair/Replace/add exterior decks, patios, porches

Basement finishing and remodeling, which does not involve structural repairs

Basement waterproofing, including mold removal

Window and door replacements and exterior wall re-siding

Septic system and/or well repair or replacement

Connection to public water or sewage system

Ineligible Improvements/Work

Major rehabilitation or major remodeling, such as the relocation of a wall

New construction (including room additions)

Repair of structural damage

Repairs requiring detailed drawings, plans or architectural exhibits

Landscaping or similar site amenity improvements, including fence

Lead-based paint stabilization or abatement of lead-based paint hazards

Any repair or improvement requiring a work schedule longer than three (3) months; or Rehabilitation activities that require more than two (2) draws/payments.

Any work requiring a plan reviewer

Result in work not starting within 30 days after loan closing; or cause the borrower to be displaced from the property for more than 30 days during the time the rehabilitation work is being conducted (FHA anticipates that, in a typical case, the borrower would be able to occupy the property after the mortgage closing.

Contractors and Repair Criteria

All repairs/work must be completed within 3 months of the closing date.

Repairs must be completed by a contractor unless the borrower can demonstrate the required expertise/experience (ie: plumbing repairs would require a licensed plumber, electric work would require a licensed electrician).

The contractor making the repairs does not have to be a licensed general contractor; however, he must provide a resume along with two references (see client reference form).

The cost of repair(s) must be reasonable.

Use of Contractors:

Contractors provide estimates for the work to be done.

Contractors provide a resume and two references (see client reference form)

The lender will review the contractor’s credentials verifying jurisdictional requirements for licensing, bonding & insurance are met (we will need a copy of all these docs).

Each contractor must sign a homeowner/contractor agreement.

The cost estimate(s) provided must clearly state the nature and type of repair and cost for completion of the work item.

Additional cost estimates may be required from the borrower.

Self Help (borrowers completing work):

The borrower is required to have the necessary expertise and experience to complete the work in a satisfactory manner (ie: borrower is a licensed plumber and will complete that portion of the work).

The cost of labor is included in the repair/rehabilitation cost (in case the borrower is unable to complete the work and a contractor must be hired).

The borrower may not be compensated for his/her labor.

No sweat equity.

The borrower must provide written estimates of the repair/rehabilitation costs as well as written estimates from the suppliers of the materials that the borrower will purchase

The borrower must sign and complete the self help agreement.

“Cost Plus” or “Time and Material” contracts are prohibited.

Posted by Aaron Walker on March 30th, 2009 1:02 PMPost a Comment (0)

About Good Neighbor Next Door

March 26th, 2009 10:07 AM

About Good Neighbor Next Door

Law enforcement officers, pre-Kindergarten through 12th grade teachers and firefighters/emergency medical technicians can contribute to community revitalization while becoming homeowners through HUD's Good Neighbor Next Door Sales Program. HUD offers a substantial incentive in the form of a discount of 50% from the list price of the home. In return you must commit to live in the property for 36 months as your sole residence.

How the Program Works

Eligible Single Family homes located in revitalization areas are listed exclusively for sales through the Good Neighbor Next Door Sales program. Properties are available for purchase through the program for five days.

How to Participate in Good Neighbor Next Door

Check the listings for your state. Follow the instructions to submit your interest in purchasing a specific home. If more than one person submits on a single home a selection will be made by random lottery. You must meet the requirements for a law enforcement officer, teacher, firefighter or emergency medical technician and comply with HUD's regulations for the program.

HUD requires that you sign a second mortgage and note for the discount amount. No interest or payments are required on this "silent second" provided that you fulfill the three-year occupancy requirement.

The number of properties available is limited and the list of available properties changes weekly.

To learn more, please see our Good Neighbor Sales Frequently Asked Questions!

Posted by Aaron Walker on March 26th, 2009 10:07 AMPost a Comment (0)

Free Birthday Stuff!

March 16th, 2009 3:35 PM

You say it’s your birthday…

Everyone loves birthdays and everyone loves free stuff. Luckily for us, there are a ton of places out there that offer birthday freebies! I’ve compiled a list of some of the best birthday freebies out there. Remember that some places will want you to show proof, so be honest!

Abbot’s Frozen Custard - Join the Abbott’s Frozen Custard Fun Club to a get a free frozen custard on your birthday. The site says there will also be freebies throughout the year for their members.

Alfy’s Pizza - Get a free mini pizza on your birthday.

Applebee’s - Free dessert and song on your birthday.

Austin Grill - Register for their eClub and get a free meal on your birthday.

Auto Zone - Come in on your birthday and get a free oil change. **No longer valid**

Bakers Square - Get a free peice of pie on your birthday at Bakers Square.

Bandido’s - Get $10 off your favorite entree when you celebrate your birthday at Bandido’s in Ohio and Indiana.

Baskin Robbins - Baskin Robbins will send you a coupon for a free 2.5 oz scoop of ice cream on your birthday plus other special promotions when you join the Baskin Robbins Birthday Club.

BD’s Mongolian BBQ - Receive a free stifry on your birthday when you join Club Mongo.

Ben & Jerry’s - Get a free ice cream treat on your birthday when you become a ChunkSpelunker with Ben & Jerry’s.

Bennigan’s - Get a buy 1 entree, get 1 entrée free and a free brownie ice cream dessert coupon on your birthday.

Black Angus Steakhouse - Get a free steak dinner on your birthday when you join the BA Prime Club. You also get a complimentary dessert for signing up for the club.

Blimpie - Get a coupon for a free 6” sub on your birthday at Blimpie’s.

Blue Bell - Members of the Blue Bell Country Club will receive a gift certificate for a free half gallon of Blue Bell Ice Cream during the month of their birthday.

Bob’s Big Boy - Get a free hot fudge ice cream on your birthday.

Bob Evans - Sign up your child for their birthday club and they’ll get a free kids’ meal on their birthday at Bob Evans.

The Body Shop - The Body Shop will give you a free birthday gift up to a $10 value during the month of your birthday. **No longer valid**

Boston Market - Kids 12 and under will receive a birthday coupon good for a free kid’s meal, drink, and dessert at Boston Market.

Buffalo Wild Wings - Get a free dozen hot wings on your birthday at Buffalo Wild Wings. **No longer valid**

Burger King - Sign up your child to be a member of Club BK so they can get a free kid’s meal on their birthday.

California Pizza Kitchen - Sign up your child (10 and under) for CPKids and they will receive a free CPKids meal during the month of their birthday.

Captain D’s - Kids get a free kids meal and birthday greeting on their birthday at Captain D’s.

Caribou Coffee - Create an account and be sure to update it with your birthday. They will send you a coupon for a free coffee drink on your birthday.

Carrows - Join the Carrows E-Club to get a free dessert on your birthday as well as one for joining.

Cattlemen’s - Join the Cattlemen’s E-Club and get a free dessert when you come in on your birthday.

Charlie Brown’s Steakhouse - Get a free gift on your birthday as a member of the Charlie Brown’s Handshake Club as well as gift vouchers and special members-only events.

Chevys - Join Chevys Compadres Club and get a free dessert on your birthday.

Claim Jumper Restaurant - Join the CJ E-Club and get a free dessert on your birthday.

Cold Stone Creamery - Cold Stone Creamery will send you an email with a coupon for a free ice cream creation to enjoy on your birthday. All ages are welcome!

Country Buffet - Join the eClub and get a free birthday coupon in the mail.

Crazy Buffet - Bring a friend and your ID into Crazy Buffet on your birthday and get a free dinner buffet.

Dairy Queen - Join the Dairy Queen Blizzard Fan Club and get a free ice cream cone on your birthday as well as a coupon for a blizzard when you join.

Dave & Buster’s - Get a free $5 game card credit on your birthday.

Denny’s - Fill in and mail out this form to enroll your child (10 and under) in the Denny’s Kids’ Birthday Club where they will receive a birthday card entitling them to a free kid’s entrée and sundae.

Desparados Mexican Restaraunt - Come in and get a free meal at Desparados on your birthday.

Dockside Restaurants - Get a free meal on your birthday.

Duke’s ChowderHouse - Get a coupon for a free lunch or dinner entree on your birthday when you sign up on Duke’s website.

Famous Daves BBQ - Free food coupon via email on your birthday when you join the Famous Dave’s P.I.G. Club (could be free cake, an appetizer, or some ribs!).

Firehouse Subs - Jon the Firehouse Subs Birthday Club and enjoy a free sub on your birthday.

Friendly’s - Sign up for Friendly’s E-News and get free ice cream for your birthday. This is now for kids and adults!

Fuddruckers - Join the Fudds Club and gett a free burger on your birthday. (May not be available in all areas.)

Garozzo’s Ristorante - Bring in your driver’s license to get a free spedini meal at this Kansas City eatery.

Hana Japan - Get a free birthday lunch or dinner when you bring in 4 or more people on your birthday.

Hard Rock Cafe - Come in and get a free dessert on your birthday.

Hollywood Video - Get a free rental at Hollywood Video on your birthday with card membership. In fact, anyone on your account can get a free rental on their birthday.

Hometown Buffet - Join the eClub and get a free birthday coupon in the mail.

Houlihan’s - Visit Houlihan’s on your birthday and get free cake and ice cream.

IHOP - Come on into IHOP and get a free meal on your birthday. (May not be available in all areas.)

Joe’s Crab Shack - Go to Joe’s Crab Shack on your birthday and get a free piece of cake.

Luby’s - Free kid’s birthday meal (ages 9 and younger) on their birthday as a member of the Luby’s birthday club.

Macaroni Grill - Come on into Macaroni Grill on your birthday and get a free dessert plus a song.

Marie Callender’s - Join Marie Callender’s E-Club and get a coupon for $5 off your meal and piece of pie when you visit during the month of your birthday.

McDonald’s - Free Happy Meal for your child on their birthday. This offer is only good at participating McDonald’s in Colorado, Greater Las Vegas Area, Western Nebraska and Wyoming.

Memphis Barbecue - Receive a coupon good for a free rack of ribs and a dessert when you join the free eClub.

Moe’s Southwest Grill - Get a coupon for a free Moe’s entree on your birthday when you choose to “stay in the moe.”

Noodles & Company - Join the Noodleville Noodlegram to get a coupon for a free dish on your birthday.

Olan Mills Portrait Studios - Get a free Olan Mills portrait package that includes (1) 8X10, (2) 5X7 and (8) wallets when you join the birthday club.

Old Country Buffet - Join the eClub and get a free birthday coupon in the mail.

Old Spaghetti Warehouse - Join the Warehouse Club and get a coupon for a free meal on your birthday.

On the Border - Get a free appetizer on your birthday when you join On the Border’s Club Cantina. When you initially join you will get an instant coupon for a free bowl of queso or empanadas.

Outback - Get a free dessert and a song when you go to Outback on your birthday.

P.F. Changs - Come in and get a free dessert on your birthday.

Pancho’s - Join Pancho’s Birthday Club to get $10 off the bill for adults or $5 off the bill for kids.

Perkins - Receive an email for a free kid’s meal and birthday greeting on their birthday when you sign them up for the Bakery Buddies Kid’s Birthday Club.

Provino’s - Come on into Provino’s on your birthday and show your ID to get a free pasta speciality dinner (which includes salad, garlic rolls and a birthday dessert!).

Red Lobster - Join the Overboard Club and they will email you a suprise for your birthday.

Red Robin - Join the Red Robin eClub and get a coupon for a fee burger on your birthday. This is for all ages!

Rock Bottom - Join the Mug Club and get a free appetizer on your birthday.

Round Table - Get a free personal pizza when you visit on your birthday.

Ru Sans - Visit Ru Sans to sign up for their birthday card to get free food on your birthday.

Sephora - Sign up as a Beauty Insider and get a free gift from Sephora on your birthday.

Shoney’s - Get your child (10 and under) a free kid’s meal on their birthday when you sign them up for the the Kids Club.

Sonic - Members of the Wacky Pack Kid’s Birthday Club will receive a coupon for a free Wacky Pack during the week of their birthday.

Taco Bell - Get a free combo meal of your choice on your birthday at Taco Bell. (May not be available in all areas.)

Taco Time - Taco Time send kids ages 12 or younger a coupon for a free kid’s meal on their next birthday.

Texas Roadhouse - Become a Texas Roadie and come into Texas Roadhouse to get a free dessert on your birthday.

TGI Friday’s - Receive a coupon for a free appetizer to use on your birthday when you sign up for Friday’s E-Club. You also get a coupon for a free appetizer just for signing up!

Tony Roma’s - Get a free dinner on your birthday from Tony Roma’s.

Toys ‘R’ Us - Children ages 2 – 10 will receive a birthday card and surprise gift from Geoffrey when you sign them up for Geoffrey’s Birthday Club.

Zio’s Italian - Come in and get a free dessert on your birthday at Zio’s.

Posted by Aaron Walker on March 16th, 2009 3:35 PMPost a Comment (0)

Home Affordable Refinance FAQs

March 5th, 2009 9:28 AM

March 4, 2009

The Making Home Affordable program includes a new initiative – Home Affordable Refinance – to assist homeowners in refinancing their mortgages. The goal of Home Affordable Refinance, as announced by the President, is to "provide access to low-cost refinancing for responsible homeowners suffering from falling home prices."

The primary expectation for Home Affordable Refinance is that refinancing will put responsible borrowers in a better position by reducing their monthly principal and interest payments or moving them from a more risky loan structure (such as interest-only or short-term ARM) to a more stable product (such as a fixed-rate mortgage).

Fannie Mae’s Home Affordable Refinance initiative has three primary components:

Expand opportunities for Fannie Mae to Fannie Mae refinances through Refi Plus™, which includes Desktop Underwriter® (DU®) and manual underwriting eligibility

Allow an LTV up to 105% on the new loan and additional underwriting flexibilities

Provide a solution for borrowers with LTVs above 80 percent who currently may not be able to refinance because of mortgage insurance (MI) coverage requirements:

Original Loan LTV Ratio

Existing MI Coverage

MI Coverage for New Loan

80% or less

None

Not required

Over 80%

None (previously canceled or terminated per Selling and Servicing Guide requirements)

Not required

Yes

The level of coverage in force on the existing loan or standard coverage in accordance with the Selling Guide*

Posted by Aaron Walker on March 5th, 2009 9:28 AMPost a Comment (0)

New Arizona FHA Loan Limits

February 26th, 2009 4:09 AM

County Name	State	One-Unit Limit	Two-Unit Limit	Three-Unit Limit	Four-Unit Limit
Apache County	AZ	281,250	360,050	435,200	540,850
Coconino County	AZ	450,000	576,050	696,350	865,400
Gila County	AZ	325,000	416,050	502,900	625,000
Maricopa County	AZ	346,250	443,250	535,800	665,850
Mohave County	AZ	322,500	412,850	499,050	620,200
Navajo County	AZ	308,750	395,250	477,750	593,750
Pima County	AZ	316,250	404,850	489,350	608,150
Pinal County	AZ	346,250	443,250	535,800	665,850
Yavapai County	AZ	390,000	499,250	603,500	750,000

Posted by Aaron Walker on February 26th, 2009 4:09 AMPost a Comment (0)

Obama Unveils Homeowner Affordability and Stability Plan

February 24th, 2009 10:22 AM

President Obama unveiled his plan to help stabilize the housing market and keep millions of borrowers in their homes.

The Homeowner Affordability and Stability Plan includes two initiatives to help struggling homeowners. One is a refinancing program for homeowners with less than 20% equity in their homes, or who owe more than their home is worth. The second program attempts to lower monthly payments for homeowners at risk of losing their home. In addition, the plan includes a third initiative to support low mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac.

Many of the plan’s details are still being worked out and will not be announced until March 4, here is an overview of the plan’s main components.

Refinancing Initiative
Under current rules, those families who own less than 20% equity in their homes have a difficult time refinancing and taking advantage of the historically low interest rates. Therefore, the refinancing initiative in the new plan provides refinancing help for homeowners with less than 20% equity in their homes or who owe more than their home is worth. This initiative is open to homeowners who have conforming loans which are guaranteed by Fannie Mae and Freddie Mac, and who owe up to 5% more than their home is worth.

According to the plan, “credit-worthy” or “responsible” homeowners can refinance their mortgage into a 30- or 15-year, fixed-rate loan based on current market rates. The refinanced loan, however, cannot include prepayment penalties or balloon payments. For many families, this low-cost refinancing may help reduce their mortgage payments by up to thousands of dollars per year.

As with the rest of the plan, details about this initiative will be released at a future date—including what, if any, credit score requirements will be included.

Stability Initiative
This initiative aims at providing help to individual families as well as entire neighborhoods by helping reduce foreclosures and stabilize home prices. It is intended to help homeowners who are struggling to afford their mortgage payments, but cannot sell their homes because prices have fallen significantly.

The goal of this initiative is simple: “reduce the amount homeowners owe per month to sustainable levels.” To accomplish this, lenders are encouraged to lower homeowners' payments to 31 percent of their income by lowering their interest rate to as low as 2% or by extending the terms of the loan. In addition, lenders can also lower the principal owed by the borrower, with Treasury sharing in the costs.

Homeowners who are current on their mortgages but are struggling can still apply for this program. As such, this is one of the few programs designed to help homeowners who may face delinquency soon, but are current at the moment.

Since the focus of this initiative is on helping families and neighborhoods, investment properties do not qualify. This initiative also includes a number of additional elements and incentives that benefit homeowners and lenders alike, including:

Incentives to Help Borrowers Stay Current: To provide an extra incentive for borrowers to keep paying on time, the initiative will provide a monthly balance reduction payment that goes straight towards reducing the principal balance of the mortgage loan. As long as a borrower stays current on his or her loan, he or she can get up to $1,000 each year for five years.
Reaching Borrowers Early: To keep lenders focused on reaching borrowers who are trying their best to stay current on their mortgages, an incentive payment of $500 will be paid to servicers, and an incentive payment of $1,500 will be paid to mortgage holders, if they modify at-risk loans before the borrower falls behind.

Supporting Low Mortgage Rates
As part of the Homeowner Affordability and Stability Plan, the Treasury Department is increasing its funding commitment to Fannie Mae and Freddie Mac to ensure the strength and security of the mortgage market and to help maintain mortgage affordability. This portion of the plan will use using funds already authorized in 2008 by Congress for this purpose.

The increased funding will enable Fannie Mae and Freddie Mac to carry out ambitious efforts to ensure mortgage affordability for responsible homeowners, and provide forward-looking confidence in the mortgage market.

Again, the government plans to unveil the final details of the plan on March 4, 2009. For now, you can download a sheet of common Questions and Answers produced by the government at: www.treas.gov/initiatives/eesa/homeowner-affordability-plan/ConsumerQA.pdf

I will continue monitoring the plan as new information becomes available. If you have any questions or would like to discuss how this may specifically impact you, I’d be happy to sit down with you. Just call or email me to set up an appointment.

Posted by Aaron Walker on February 24th, 2009 10:22 AMPost a Comment (0)

Economic Stimulus Plan Benefits the Housing and Mortgage Industries

February 20th, 2009 2:28 PM

Tax Credit for Homebuyers
First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.

The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.

Tax Credit Versus Tax Deduction

It’s important to remember that the $8,000 tax credit is just that… a tax credit. The benefit of a tax credit is that it’s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a homebuyer were to owe $8,000 in income taxes and would qualify for the $8,000 tax credit, they would owe nothing.

Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little income tax liability. For example, if a homebuyer is liable for $4,000 in income tax, he can offset that $4,000 with half of the tax credit… and still receive a check for the remaining $4,000!

Phaseout Examples

According to the plan, the tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.

To break down what this phaseout means to homebuyers who are over those amounts, the National Association of Homebuilders (NAHB) offers the following examples:

Example 1: Assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time homebuyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.

Example 2: Assume that an individual homebuyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.

Remember, these are general examples. You should always consult your tax advisor for information relating to your specific circumstances.

Homes that Qualify

The tax credit is applicable to any home that will be used as a principle residence. Based on that guideline, qualifying homes include single-family detached homes, as well as attached homes such as townhouses and condominiums. In addition, manufactured or homes and houseboats used for principle residence also qualify.

Additional Housing-Related Provisions

Tax Incentives to Spur Energy Savings and Green Jobs — This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.

Landmark Energy Savings — This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.

Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing—This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs.Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8) to increase energy efficiency, including new insulation, windows, and frames.

Expanding Housing Assistance—This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.

More Help for Homeowners in the Future
Another thing to keep an eye on in the coming weeks is President Obama’s plan to help struggling borrowers before they are faced with a default on their mortgage.

According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.

While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That’s because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.

The Economic Stimulus Plan is huge, and impacts a number of industries. I’ve highlighted some of the major provisions that may impact you now and in the future.

As always, if you have any questions or would like to discuss how this may specifically impact you, I’d be happy to sit down with you. Just call or email me to set up an appointment.

Posted by Aaron Walker on February 20th, 2009 2:28 PMPost a Comment (0)