Tax Credit for New Home Purchase
June 24th, 2009 categories: Our Market
Important update (06/12/09):
As shown in the numbers below, we will soon reach $100 million in new home credit applications. Because many of these are duplicates, revised, or invalid, we plan to receive 12,000 applications. This will ensure we have more than enough valid applications to allocate the full $100 million. These additional applications will be subject to the availability of remaining credits.
Once we receive 11,000 applications, we will update this page each business day with the total number of applications received. We will no longer accept applications once we have received 12,000, and the fax service will be disconnected.
We will continue to report certificates issued on a weekly basis until the full $100 million has been allocated. We expect to complete processing all certificates in August. We will send a notification in response to all applications received, indicating the amount of credit allocated or denied.
In order to expedite the processing of applications, submit only one application per new home purchase. Do not send in applications before escrow closes. Applications cannot be accepted if escrow has not yet closed. Complete the application carefully and accurately.
We will update this information frequently. Please check this page often.
This tax credit is available for qualified buyers who on or after March 1, 2009, and before March 1, 2010, purchase a qualified principal residence that has never been occupied. The buyer must reside in the new home for a minimum of two years immediately following the purchase date.
We began accepting applications for allocation of credit by fax only (916.845.9754), on March 1, 2009. We began processing the applications on a first-come, first-served basis, on May 1, 2009. The processing delay was necessary to allow us time to develop a system to capture and verify the application information, allocate the credits, and send the credit allocation letters. We expect it will take until August to process all the applications we received and mail credit allocation letters. Please be patient and do not send an application more than once. (Updated 06/12/2009)
Tax credit amounts
California allocated $100,000,000 for this tax credit. Buyers must apply for credit allocation from us. We will review applications and allocate credit on a first-come, first-served basis. Once $100,000,000 has been allocated, the tax credit will no longer be available. We began issuing certificates of credit allocation on May 1, 2009. Please check this page for updates on the allocated and remaining credits available.
Certificates issued for New Home Credit through 06/17/09:
| As of | Total certificates issued: | Total credit allocated: | Remaining credit available: |
|---|---|---|---|
| 5/13/09 | 331 | $ 3,246,532 | $ 96,753,468 |
| 5/20/09 | 1,023 | $ 9,942,884 | $ 90,057,116 |
| 5/27/09 | 1,749 | $ 16,699,924 | $ 83,300,076 |
| 6/3/09 | 2,502 | $ 23,822,657 | $ 76,177,343 |
| 6/10/09 | 3,219 | $ 30,465,953 | $ 69,534,047 |
| 6/17/09 | 3,943 | $ 36,857,428 | $ 63,142,572 |
The amounts below reflect applications received, which include both processed and unprocessed applications.
Applications for New Home Credit received through 06/17/09:
| As of | Total Applications received: | Total Credit claimed: |
|---|---|---|
| 3/4/09 | 173 | $ 1,715,826 |
| 3/11/09 | 711 | $ 6,987,515 |
| 3/18/09 | 1,188 | $ 11,599,825 |
| 3/25/09 | 1,710 | $ 16,647,498 |
| 4/1/09 | 2,624 | $ 25,578,709 |
| 4/8/09 | 3,135 | $ 30,559,124 |
| 4/15/09 | 3,589 | $ 34,939,035 |
| 4/22/09 | 4,199 | $ 40,879,872 |
| 4/29/09 | 4,880 | $ 47,353,795 |
| 5/6/09 | 5,668 | $ 54,928,875 |
| 5/13/09 | 6,162 | $ 59,579,591 |
| 5/20/09 | 6,816 | $ 65,749,498 |
| 5/27/09 | 7,517 | $ 72,511,587 |
| 6/3/09 | 8,522 | $ 82,548,424 |
| 6/10/09 | 9,145 | $ 88,252,190 |
| 6/17/09 | 9,848 | $ 94,735,430 |
This reflects the total amount of credit reported on applications received as of the date indicated. This amount has not yet been verified and may include duplicate, incomplete, and invalid applications. This amount is provided for informational purposes and does not reflect the actual amount to be allocated. We will update the amount received on this webpage each Friday. Keep in mind that all applications will be processed on a first-come, first-served basis, based on the date received by fax only.
California allows qualified new home buyers a total tax credit amount equal to either five percent of the purchase price or $10,000, whichever is less. Taxpayers must apply the total tax credit in equal amounts over three successive taxable years (maximum of $3,333 per year) beginning with the taxable year (2009 or 2010) in which the new home is purchased.
How to apply
- Within one week (seven calendar days) after the close of escrow:
- The seller must complete Part I of Form 3528-A, Application for New Home Credit, certifying that the home has never been occupied, and provide a copy to the buyer or escrow person.
- The buyer will complete Parts II & III of Form 3528-A.
- The escrow person on behalf of the seller and buyer will fax the completed Form 3528-A to FTB at 916.845.9754, and provide a copy to the buyer.
- Fax is the only delivery method that will be accepted and considered for credit allocation by FTB, as the date and time stamp on the fax will determine the order in which credits are allocated.
- Fax only one completed application per residence with all qualified buyers listed. Do not include information on nonqualified buyers. An incomplete application may delay or prevent credit allocation.
- Do not fax the application to FTB before escrow closes.
- Do not fax the application to FTB more than once. We will process the applications in the order received as quickly as possible.
- Escrow companies should only send one application per fax transmission.
- The buyer keeps a copy of the completed Form 3528-A for their records.
- The Form 3528-A is now available online as a fillable form. Simply fill in all required information, print the form, and sign. If you fill out the form by hand, please print numbers as clearly and neatly as possible using CAPITAL LETTERS and staying between the lines. The faxes can be very hard to read.
Application processing
- The buyer will receive notification of credit allocation from us.
- An allocation of credit will not be issued if:
- The home has been previously occupied.
- The application is not received within one week after the close of escrow.
- The application is received after the total credits available ($100,000,000) have been allocated.
Requirements of the credit
- The home must be a “qualified principal residence” as defined under California Revenue and Taxation Code Section 17059(b)(1). The home must:
- Be a single-family residence, whether detached or attached.
- Never have been previously occupied.
- Be occupied by the taxpayer for a minimum of two years.
- Be eligible for the property tax homeowner’s exemption under California Revenue and Taxation Code Section 218.
- For over three successive taxable years, the total credit allocated among owners that occupy the home must not exceed $10,000. (Multiple qualified buyers that occupy the home will be allocated credit based on the amount paid and their percentage of ownership.)
- Any credit that reduced tax on a tax return must be repaid if the buyer does not occupy the home for at least two years immediately following the purchase date.
- FTB may request documentation to ensure buyers have complied with the requirements of the credit.
Claiming the credit
- The buyer must receive an allocation of credit from us to claim the credit. The credit allocation letter will state the amount they can claim listed by tax year.
- The buyer should refer to Publication 3528 (available by 12/2009) for instructions on claiming the credit.
- The buyer must claim the credit on an original timely filed return, including returns filed on an extension.
- Special rules apply to married/RDP (Registered Domestic Partners) taxpayers filing separately, in which case each spouse is entitled to one-half of the credit, even if their ownership percentages are not equal. For two or more taxpayers who are not married/RDP, the credit amount will have already been allocated to each taxpayer occupying the residence on their respective credit allocation letter.
- If the available credit exceeds the current year net tax, the unused credit may not be carried over to the following year.
- The credit is not refundable.
Definitions
- Purchase date:
- The date escrow closes.
- Qualified buyer:
- A taxpayer who purchases a single-family residence, whether detached or attached, that has never been occupied, that is purchased to be the principal residence of the taxpayer for a minimum of two years, and that is eligible for the homeowner’s exemption under California Revenue and Taxation Code Section 218.
- Qualified Principal Residence/New Home:
- A qualified principal residence means a single-family residence, whether detached or attached, that has never been occupied and is purchased to be the principal residence of the taxpayer for a minimum of two years and is eligible for the property tax homeowner’s exemption.
- Types of residence: Any of the following can qualify if it is your principal residence and is subject to property tax, whether real or personal property: a single family residence, a condominium, a unit in a cooperative project, a houseboat, a manufactured home, or a mobile home.
- Owner-built property: A home constructed by an owner -taxpayer is not eligible for the New Home Credit because the home has not been “purchased.”
Contact us
Phone:
- 888.792.4900 (press 5)
- 916.845.4900 (not toll-free)
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Median Home Price Hits $295,000 in May- SDBJ Excerpt
June 17th, 2009 categories: Our Market
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Posted date: 6/17/2009
Median home prices increased again in May continuing the modest recovery that began in January, according to MDA DataQuick of La Jolla.
Median prices of all homes and condos increased $5,000 in May — and $15,000 since January — to $295,000 countywide. Most of May’s gains were reflected in higher valued condo sales, which increased from $182,000 in April to $199,000 last month. Prices of existing homes stayed flat on the month at $325,000, and prices on new homes and condos increased from $438,000 to $476,000. Yet median prices are still 22.6 percent below May 2008 levels. The number of homes sold decreased, indicating fewer of those fire sale bargains. The number of all homes and condos sold fell from 3,375 in April to 3,242 in May. The number of new homes and condos sold actually increased from 181 to 200. DataQuick analysts suggested that home prices may have bottomed out, but caution that price depreciation may be hitting more affluent neighborhoods because of mortgage defaults and impatient owners of higher-end homes who need to sell in the current market. The percentage of homes sold at prices greater than $500,000 increased from 18.8 percent in March to 20.5 percent in April to 23.1 percent in May. Foreclosures overall declined in May, accounting for 43.1 percent of all resales, compared with 47.3 percent in April and 51.1 percent in March. However, many analysts say the drop in foreclosures may be temporary as banks attempt to modify loans and interest rates increase. Complicating matters is a temporary moratorium on foreclosures that took effect June 15. — Ned Randolph
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Secretaries Geithner, Donovan Announce new Details of
June 14th, 2009 categories: Our Market
May 14, 2009
Just Over Two Months after Release of Program Guidelines, Homeowners Realizing Relief under Administration Plan Join Secretaries to Share Personal Stories
To view the Program Update Fact Sheet: Foreclosure Alternatives and Home Price Decline Protection Incentives, please visit link.
To view the Making Home Affordable Progress Report Fact Sheet, please visit link.
To read biographical sketches of homeowners attending today’s event, please visit link.
WASHINGTON – With the Making Home Affordable (MHA) program delivering much-needed relief to homeowners and to our economy just over two months after the release of program guidelines, Treasury Secretary Tim Geithner and Housing and Urban Development (HUD) Secretary Shaun Donovan today provided an update on the program’s impact on stemming the housing crisis and keeping families in their homes and announced new options for homeowners facing foreclosure. The announcement and update came following a meeting with housing counselors from the National Community Reinvestment Coalition (NCRC) and with homeowners Nicholas Tekpertey of Reston, VA, and Warren Rohn of Lewiston, CA, who shared their success stories since participating in the Home Affordable Modification program.
“In just over two months, the Making Home Affordable program is up and running, helping our economy recover and making a difference in the lives and livelihoods of thousands of American homeowners. Historically low interest rates are allowing Americans to refinance and save money, and modifications are helping homeowners avoid foreclosure,” said Secretary Geithner. “Today we are announcing a new program component to help homeowners obtain modifications in areas suffering from home price declines. If a modification is not possible, we are also announcing steps to encourage the quick private sale or voluntary transfer of property, which will save homeowners money and protect their financial f uture. These are critical steps in stemming the foreclosure crisis and stabilizing the housing market, both of which are critical to our economic recovery.”
“I can’t stress enough how important our HUD-approved counseling agencies are to the success of the Making Home Affordable program, and ultimately, to helping to keep American families in their homes,” Secretary Donovan said. “That’s why HUD has requested a $100 million investment in our Housing Counseling Assistance Program for fiscal year 2010, a $35 million increase from our 2009 budget. This investment will help further support the work of our 2,600 HUD-approved housing counselors across the nation, just like those at NCRC, who play a key role in ensuring that borrowers can take part in the modification and refinancing options made available through Making Home Affordable.”
The Secretaries announced new details on the Making Home Affordable program:
Foreclosure Alternatives provide incentives for servicers and borrowers to pursue short sales and deeds-in-lieu (DIL) of foreclosure in cases where the borrower is generally eligible for a MHA modification but does not qualify or is unable to complete the process, which helps prevent costly foreclosures and minimizes the damage that foreclosures impose on borrowers, financial institutions and communities. The new details will simplify and streamline the process of pursuing short sales and deeds-in-lieu, which will facilitate the ability of more servicers and borrowers to utilize the program. The program provides a standard process flow, minimum performance timeframes and standard documentation, and it offers financial incentives to servicers and borrowers to pursue these alternatives to foreclosure.
Home Price Decline Protection Incentives will provide lenders additional incentives for modifications where home price declines have been most severe and lenders fear these declines may persist. To encourage the modification of more mortgages and enable more families to keep their homes, the Administration, building on insights pioneered by Chairman Bair and the FDIC, has developed an innovative payment that provides compensation based on recent home price declines. Together the incentive payments on all modified homes will help cover the incremental collateral loss on those modifications that do not succeed. HPD P payments will be linked to the rate of recent home price decline in a local housing market, as well as the average cost of a home in that ma rket.
Since the launch of Making Home Affordable, more than one million Americans have now refinanced, due to historically low interest rates, and thousands of underwater borrowers have refinanced under the Home Affordable Refinance Program. Fannie Mae has had over 233,000 eligible refinance applications through its refinancing program, with more than 51,000 of these having loan-to-value ratios between 80% and 105%. More than 55,000 Home Affordable Modification offers have been extended to qualifying borrowers. Additionally, servicers have mailed more than 300,000 letters to homeowners who are potential candidates for the program. The refinance application volumes and modifications underway make clear the desire of homeowners to take advantage of the Admin istration’s program.
Homeowners Nicholas Tekpertey and Warren Rohn have already seen the impact of the MHA modification program. In March, Tekpertey heard about the Home Affordable Modification from a friend, called his lender, faxed in his documents, and was qualified with relative ease. With this modification, he saves almost $600 per month and his payment is now affordable, with an annual total savings of $7,154. Warren Rohn received a Home Affordable Modification offer from his lender and was able to modify his loan with a 2% interest rate for five years.
“In February, I was facing foreclosure,” Tekpertey said. “Making Home Affordable changed my situation, and gave me my home back. All homeowners who are worried about their mortgage payments should do what I did. Go to the website like I did. See if you qualify. This program is real, and this program works.”
“This program saved my bacon,” Rohn said. “Losing my trucking business was tough enough, but I’m not sure what I would have done if I lost my home. I want to say something to all the homeowners out there — this program has made a real difference in my life. It’s given me and my wife the security to know we’re not going anywhere.”
Making Home Affordable, a comprehensive plan to stabilize the U.S. housing market, was first announced by the Administration on February 18. The three part program includes aggressive measures to support low mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac; a Home Affordable Refinance Program, which will provide new access to refinancing for up to 4 to 5 million homeowners; and a Home Affordable Modification Program, which will reduce monthly payments on existing first lien mortgages for up to 3 to 4 million at-risk homeowners. Two weeks later, the Administration published detailed guidelines for the Home Affordable Modification Program and authorized servicers to begin modifications under the plan immediately. Fourteen servicers, including th e five largest, have now signed contracts and begun modifications under the program. Between loans covered by these servicers and loans owned or securitized by Fannie Mae or Freddie Mac, Home Affordable Modification participants now account for more than 75 percent of all loans in the country.
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Pending Home Sales Up for Three Months in a Row
June 5th, 2009 categories: Our Market
WASHINGTON, June 02, 2009
Record low mortgage interest rates boosted pending home sales for the third consecutive month, with some benefit now from the first-time buyer tax credit, according to the National Association of Realtors®.
The Pending Home Sales Index,1 a forward-looking indicator based on contracts signed in April, rose 6.7 percent to 90.3 from a reading of 84.6 in March, and is 3.2 percent above April 2008 when it was 87.5.
Lawrence Yun, NAR chief economist, said buyers are responding to very favorable market conditions. “Housing affordability conditions have been at historic highs, but now the $8,000 first-time buyer tax credit is beginning to impact the market,” he said. “Since first-time buyers must finalize their purchase by November 30 to get the credit, we expect greater activity in the months ahead, and that should spark more sales by repeat buyers.”
The Pending Home Sales Index in the Northeast shot up 32.6 percent to 78.9 in April and is 0.8 percent above a year ago. In the Midwest the index rose 9.8 percent to 90.4 and is 11.1 percent above April 2008. The index in the South slipped 0.2 percent to 93.0 in April but is 3.5 percent higher than a year ago. In the West the index rose 1.8 percent to 94.8 but is 2.9 percent below April 2008.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said there are numerous buyer assistance programs around the country. “Some states are offering bridge loans that allow first-time buyers to use the tax credit for downpayment and closing costs, but there are many other local government and nonprofit programs available to buyers, depending on location,” he said.
“Just last week, HUD announced that qualifying buyers can use the tax credit for closing costs on FHA loans, to buy down the interest rate or make a larger downpayment. Buyers who are wondering about their options should contact a Realtor®, who can advise consumers on the housing assistance programs and resources available in a given area.”
NAR’s Housing Affordability Index2 is in record territory. The affordability index rose to 174.8 in April from an upwardly revised 171.9 in March, and was the second highest monthly reading on record after peaking at 176.9 in January of this year. The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income; tracking began in 1970.
A median-income family, earning $60,900, could afford a home costing $296,800 in April with a 20 percent downpayment, assuming 25 percent of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small downpayments are roughly 80 percent of that amount. The affordable price was well above the median existing single-family home price in April, which was $169,800.
Yun cautions that the reporting sample for pending home sales is smaller than that of existing-home sales, so it is subject to greater variability. “In addition, the relationship between contracts on pending home sales and closings on existing-home sales is taking longer than in the past for several reasons,” he said. “Mortgage processing time has increased, it is taking many months to close on those homes requiring short sales with lender approval, and some sales are falling through at the last moment.”
The total number of existing-home sales is expected to improve but with dramatic local market variation in the timing of recovery. “The market has already bottomed in some areas, but this is an unusual housing cycle with some areas improving rapidly while others languish or decline,” Yun said.
1The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.
The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity from 2001 through 2004 parallels the level of closed existing-home sales in the following two months. There is a closer relationship between annual index changes (from the same month a year earlier) and year-ago changes in sales performance than with month-to-month comparisons.
An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales.
2The Housing Affordability Index is a relative index where a value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced existing single-family home, taking into account the relationship between median home price, average effective interest rate for loans closed on existing homes, and median family income. The higher the index, the better housing affordability is for buyers.
The calculation assumes a downpayment of 20 percent and a qualifying ratio of 25 percent of gross income for mortgage principle and interest payments. The index is a general gauge with conditions varying widely around the country. Affordability conditions are lower for first-time buyers with smaller downpayments and less income.
Monthly publication of the index began in 1981 with annual data calculated back to 1970.
Existing-home sales for May will be released June 23; the next Pending Home Sales Index will be on July 1.
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Builder Confidence Continues To Rise In May
May 28th, 2009 categories: Our Market
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May 18, 2009 - Builder confidence in the market for newly built, single-family homes improved for a second consecutive month in May to the highest level since September of 2008, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. The HMI rose two points to 16 this month.
“Builders are responding to what they perceive to be some of the best home buying conditions of a lifetime,” said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. “You’re not likely to get a better deal in terms of mortgage rates than what’s available right now. Combine that with the affordable prices, multitude of home choices and $8,000 tax credit for first-time buyers that are now available, and you have a very appealing set of reasons to make a move.”
“The fact that the May HMI continued to tick up from April’s five-point increase provides confirming evidence that the improved confidence level was no fluke,” added NAHB Chief Economist David Crowe. “This continued increase indicates that home builders feel we’re at or near the bottom of the market and that positive signs lie ahead for builders and potential home buyers, provided that builder access to production credit significantly improves.”
Crowe also noted that recent announcements by the Department of Housing and Urban Development that would enable home buyers to use the new $8,000 tax credit at the closing table are especially encouraging. “We appreciate Secretary Donovan’s efforts to make the tax credit more useful to buyers by addressing the biggest hurdle to first-time purchasers – having enough cash for a suitable down payment,” he said.
Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.
Two out of three of the HMI’s component indexes rose in May. The index gauging current sales conditions rose two points to 14, while the index gauging sales expectations for the next six months rose three points to 27. The index gauging traffic of prospective buyers remained unchanged, at 13.
Regionally, the Northeast posted a three-point gain in its HMI score, to 18, while the South posted a one-point gain to 18, the West rose four points to 12, and the Midwest held even at 14.
EDITOR’S NOTE: The NAHB/Wells Fargo Housing Market Index is strictly the product of NAHB Economics, and is not seen or influenced by any outside party prior to being released to the public. HMI tables can be accessed online at: www.nahb.org/hmi. More information on housing statistics is also available at: www.housingeconomics.com.
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New Featured Home by JB Home Sellers
May 26th, 2009 categories: Our Market
CHARMING TOWNHOME IN SAN ELIJO HILLS
Once in a while, a tremendous value that’s just too good to miss comes along. That describes our latest gem located in the heart of San Elijo Hills, an award winning master plan on the cusp of Carlsbad and San Marcos, CA. Our home is located in the Village Square community, a top selling neighborhood within the master plan.
Walk to restaurants and groceries, boutique and retail shops. Brand new schools a stone’s throw and a beautiful planned community that is a shining star of San Diego County.
This home has been upgraded in every corner- Stainless Steel appliances, Granite counters in Kitchen and Baths, Hickory hard wood floors are just the beginning… Bountiful Storage and epoxy garage floors ice the cake and it’s all yours for a mere $359,900- A Steal in ANY Market!!
This home is already getting tons of action. Don’t wait! Call us today!
Visit our Contact page and reference Village Square 
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Loan Modifications Hard to Get- San Diego Business Journal Excerpt
May 5th, 2009 categories: Our Market
As homeowners sink further underwater — meaning they owe more than the falling value of their homes — inquiries about loan modification services are skyrocketing.
“We get 100 calls a week from people who want to do loan modifications,” said Matt Battiata, owner of Battiata Real Estate Group, with 15 real estate agents, who began offering free loan modification services last month. “Out of 100, we’ll probably do 10. The reason is we’re honest and upfront with people about whether they qualify.”
He says many homeowners don’t qualify because they either earn too much or too little.
“There is a strict criterion on who qualifies. If you make too much money, they say, ‘Yeah, you’re upside-down, but it looks to us like you can afford to make pay-ments,’ ” he said.
“If you don’t make enough money, they’ll say, ‘You wouldn’t make payments anyway, so we’re not going to do it.’ ”
Battiata cautions that loan modifications are only for those owners who want to stay in their home.
“If you qualify and the payment is comfortable and want to live there long-term, then you are a perfect candidate. But … the banks are not going to drop your balance.”
Many Default
Of homeowners who seek loan modifications, most end up defaulting anyway, says mortgage broker Mark Goldman, who lectures at San Diego State University.
“Banks aren’t writing down principal,” he said.
In some cases, the banks are just adding the fees to the loan, he says.
Homeowners who couldn’t afford the payment before, won’t be able to afford the modified loan.
“The bank is saying, ‘If I do agree with modification I have to have a high confidence you’ll be able to fulfill the revised conditions,’ ” he said.
Each financial institution has different policies. The willingness to modify loans depends on the institution that owns the note.
“Some companies are more consumer friendly than others,” Goldman said. “But the expectation of a reduced loan balance is unreasonable.”
Legal Ease
Kerry Steigerwalt’s Pacific Law Center, a San Diego firm with 30 attorneys, launched a loan modification department in December and takes 150 cases a month.
“We’re handling 600 cases right now,” said supervising attorney Elmer Heap. The firm has closed only 30 cases.
It charges between $2,200 and $6,000, depending on the complexity of case and mortgage amount.
If the negotiations are not successful, the firm will refund a portion of the fee.
Heap says it’s closed only two cases where the principal was reduced. In both, his clients were living on fixed incomes and his firm convinced the lenders that they should have never been approved for loans.
Most successful cases result in a lower interest rate for a two- to five-year period. The rate then increases before locking in, he says.
In some cases, lenders put the client on lower payments for a three-month trial.
“The lender can see if clients can meet loan obligation, then the loan modification offer will be officially made and put in place.”
He says no one should think that loan modifications are easy to obtain.
“It is a very (difficult) process and it takes time,” he said.
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It’s disheartening to hear that banks who have taken billions of dollars in taxpayer money are unwilling to work with the same people footing the bill for their mistakes. They are not helping to stabilize the housing sector by thwarting the onset of new foreclosures- in fact, I am suspicious that they intend to capitalize on the unfortunate events facing their borrowers.
I’m not usually the ‘Conspiracy Theory’ type but I must admit that I am losing faith rapidly in the ethically bankrupt banking sector. Once again, we the consumer, get stuck both with the effects of poor business decisions and the bill to rectify them and all the talk about lenders reaching out to borrowers to help forestall impending doom is just media fodder with no more reality than your typical urban legend.
Will you write to your lender and your legistlature to complain that you are not getting what you’ve paid for with your billions invested in TARP? I will.
Jennifer Bonasia
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Obama Administration Announces New Details on Making Home Affordable Program
April 29th, 2009 categories: Our Market
WASHINGTON – The Obama Administration today announced details of new efforts to help bring relief to responsible homeowners under the Making Home Affordable Program, including an effort to achieve greater affordability for homeowners by lowering payments on their second mortgages as well as a set of measures to help underwater borrowers stay in their homes.
“With these latest program details, we’re offering even more opportunities for borrowers to make their homes more affordable under the Administration’s housing plan,” said Treasury Secretary Tim Geithner. “Ensuring that responsible homeowners can afford to stay in their homes is critical to stabilizing the housing market, which is in turn critical to stabilizing our financial system overall. Every step we take forward is done with that imperative in mind.”
“Today’s announcements will make it easier for borrowers to modify or refinance their loans under FHA’s Hope for Homeowners program,” said HUD Secretary Shaun Donovan. “We encourage Congress to enact the necessary legislative changes to make the Hope for Homeowners program an integral part of the Making Home Affordable Program.”
The Second Lien Program announced today will work in tandem with first lien modifications offered under the Home Affordable Modification Program to deliver a comprehensive affordability solution for struggling borrowers. Second mortgages can create significant challenges in helping borrowers avoid foreclosure, even when a first lien is modified. Up to 50 percent of at-risk mortgages have second liens, and many properties in foreclosure have more than one lien. Under the Second Lien Program, when a Home Affordable Modification is initiated on a first lien, servicers participating in the Second Lien Program will automatically reduce payments on the associated second lien according to a pre-set protocol. Alternatively, servicers will have the option to extinguish the second lien in return for a lump sum payment under a pre-set formula determined by Treasury, allowing servicers to target principal extinguishment to the borrowers where extinguishment is most appropriate.
Separately, the Administration has also announced steps to incorporate the Federal Housing Administration’s (FHA) Hope for Homeowners into Making Home Affordable. Hope for Homeowners requires the holder of the mortgage to accept a payoff below the current market value of the home, allowing the borrower to refinance into a new FHA-guaranteed loan. Refinancing into a new loan below the home’s market value takes a borrower from a position of being underwater to having equity in their home. By increasing a homeowner’s equity in the home, Hope for Homeowners can produce a better outcome for borrowers who qualify.
Under the changes announced today and, when evaluating borrowers for a Home Affordable Modification, servicers will be required to determine eligibility for a Hope for Homeowners refinancing. Where Hope for Homeowners proves to be viable, the servicer must offer this option to the borrower. To ensure proper alignment of incentives, servicers and lenders will receive pay-for-success payments for Hope for Homeowners refinancings similar to those offered for Home Affordable Modifications. These additional supports are designed to work in tandem and take effect with the improved and expanded program under consideration by Congress. The Administration supports legislation to strengthen Hope for Homeowners so that it can function effectively as an integral part of the Making Home Affordable Program.
Making Home Affordable, a comprehensive plan to stabilize the U.S. housing market, was first announced by the Administration on February 18. The three part program includes aggressive measures to support low mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac; a Home Affordable Refinance Program, which will provide new access to refinancing for up to 4 to 5 million homeowners; and a Home Affordable Modification Program, which will reduce monthly payments on existing first lien mortgages for up to 3 to 4 million at-risk homeowners. Two weeks later, the Administration published detailed guidelines for the Home Affordable Modification Program and authorized servicers to begin modifications under the plan immediately. Twelve servicers, including the five largest, have now signed contracts and begun modifications under the program. Between loans covered by these servicers and loans owned or securitized by Fannie Mae or Freddie Mac, more than75 percent of all loans in the country are now covered by the Making Home Affordable Program.
Continuing to bolster its outreach around the program, the Administration also announced today a new effort to engage directly with homeowners via MakingHomeAffordable.gov. Starting today, homeowners will have the ability to submit individual questions through the website to the Administration’s housing team. Members of the Treasury and HUD staffs will periodically select commonly asked questions and post responses on MakingHomeAffordable.gov. To submit a question, homeowners can visit http://www.makinghomeaffordable.gov/feedback.html. Selected questions from homeowners across the country and responses from the Administration will be available at www.MakingHomeAffordable.gov/asked-and-answered.html.
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Home Builder Confidence Posts Biggest Gain In Five Years
April 22nd, 2009 categories: Our Market
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April Data Suggests Market At or Near Bottom |
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| April 15, 2009 - Builder confidence in the market for newly built, single-family homes rose five points in April to the highest level since October 2008, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. This gain was the largest one-month increase recorded since May of 2003, and brings the HMI out of single-digit territory for the first time in six months – to 14. Every component of the HMI reflected the boost, with the biggest gain recorded for sales expectations in the next six months.
“If you’re a potential buyer who’s been sitting on the fence waiting for a sign that now is the time to act, this is it,” said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. “Some of the most favorable buying conditions in a lifetime are now in place, and they are drawing more consumers back to the market.” “This is a very encouraging sign that we are at or near the bottom of the current housing depression,” said NAHB Chief Economist David Crowe. “With the prime home buying season now underway, builders report that more buyers are responding to the pull of much-improved affordability measures, including low home prices, extremely favorable mortgage rates and the introduction of the $8,000 first-time home buyer tax credit.” Crowe cautioned, however, that a key issue that still must be addressed is the ongoing lockdown on builder acquisition, development and construction (AD&C) financing. “Restoring health to our nation’s economy will require a substantial housing recovery, and that recovery is contingent on breaking the logjam in AD&C lending that presents an ever-increasing obstacle for home builders,” he said. Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations in the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor. Each of the HMI’s component indexes recorded substantial gains in April. The largest of these gains was a 10-point surge in the component gauging builder sales expectations for the next six months, which brought that index to 25. The component gauging current sales conditions and the component gauging traffic of prospective buyers each rose five points, to 13 and 14, respectively. The HMI also rose in every region in April, with an eight-point gain to 16 in the Northeast, a six-point gain to 14 in the Midwest, a five-point gain to 17 in the South and a 4-point gain to 9 in the West. |
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Housing Prices Level Out- San Diego Business Journal Excerpt
April 21st, 2009 categories: Our Market
San Diego home prices did a funny thing in late winter. They stabilized.
Median home prices were unchanged at $285,000 in February and March, even as sales volume increased, according to MDA DataQuick, a La Jolla-based research firm.
Analysts caution there is still a glut of unsold foreclosures that banks have yet to list for sale, which is likely to keep prices low.
Also, so-called jumbo loans, or loans greater than $417,000, have yet to return, leaving many buyers unable to shop in more expensive neighborhoods.
Homes in older, more costly neighborhoods have come down in value by half as much as homes in newer, more affordable neighborhoods, said DataQuick president John Walsh.
San Diego saw 3,020 new and existing homes sold in March, a big jump from 2,473 sales in February and 2,108 sales in March 2008.
DataQuick spokesman Andrew LePage said there are usually seasonal increases between February and March.
“Nothing unusual about that — you’re just starting to pull out of the winter/holiday doldrums,” he said.
Foreclosure activity in San Diego increased in March, according to ForeclosureRadar.com, which is based in Northern California.
There were 3,892 notices of default sent in March, the first step in the foreclosure process; another 2,499 notices of trustee sales were sent and 662 properties sold at auction.
That’s up from February, which saw 3,353 notices of default, 1,443 notices of trustee sales. Some 1,276 properties sold at auction.
“I expect in general many starts and stops, and foreclosures are likely to go up before they peak,” said Norm Miller with the University of San Diego Burnham-Moores Center for Real Estate. “There is an awful lot of lender inventory being held out of the market.”
DataQuick will release first quarter statistics on San Diego foreclosure sales the week of April 20.
— Ned Randolph
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