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Florida’s existing home, condo sales up in October 2009

November 23rd, 2009 2:46 PM

Florida’s existing home sales rose in October, marking 14 months that sales activity has increased in the year-to-year comparison, according to the latest housing data released by Florida Realtors®. October’s statewide sales also increased over sales activity in September in both the existing home and existing condominium markets.

Existing home sales rose 45 percent last month with a total of 15,160 homes sold statewide compared to 10,444 homes sold in October 2008, according to Florida Realtors. Statewide existing home sales last month increased 5.1 percent over statewide sales activity in September.

Florida Realtors also reported an 82 percent increase in statewide sales of existing condos in October compared to the previous year’s sales figure; statewide existing condo sales last month rose 6.1 percent over the total units sold in September.

All of Florida’s metropolitan statistical areas (MSAs) reported increased existing home sales and higher condo sales in October. A majority of the state’s MSAs have reported increased sales for 16 consecutive months.

Florida’s median sales price for existing homes last month was $140,300; a year ago, it was $169,700 for a 17 percent decrease. Housing industry analysts with the National Association of Realtors® (NAR) note that sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is the midpoint; half the homes sold for more, half for less.

The national median sales price for existing single-family homes in September 2009 was $174,900, down 8.1 percent from a year earlier, according to NAR. In California, the statewide median resales price was $296,090 in September; in Massachusetts, it was $290,000; in Maryland, it was $261,718; and in New York, it was $213,900.

According to NAR’s latest industry outlook, the housing market is continuing its positive momentum. “We’re getting early indications of price stabilization, but we need a steady supply of qualified buyers to meaningfully bring inventories down and return us to a period of normal, steady price growth,” said NAR Chief Economist Lawrence Yun. “That, in turn, would help fully remove consumer fears, which would then revive the broader economy.”

In Florida’s year-to-year comparison for condos, 5,398 units sold statewide last month compared to 2,958 units in October 2008 for an 82 percent increase. The statewide existing condo median sales price last month was $105,200; in October 2008 it was $147,900 for a 29 percent decrease. The national median existing condo price was $175,100 in September 2009, according to NAR.

Interest rates for a 30-year fixed-rate mortgage averaged 4.95 percent last month, a significant drop from the average rate of 6.20 percent in October 2008, according to Freddie Mac. Florida Realtors’ sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.

Among the state’s smaller markets, the Gainesville MSA reported a total of 172 homes sold in October compared to 130 homes a year earlier for a 32 percent increase. The market’s existing home median sales price last month was $156,700; a year ago it was $173,300 for a 10 percent decrease. A total of 22 condos sold in the MSA in October, up 22 percent over the 18 units sold in October 2008. The existing condo median price last month was $116,700; a year earlier, it was $133,300 for a 12 percent decrease.

© 2009 Florida Realtors

Posted by Marcos Fullana on November 23rd, 2009 2:46 PMPost a Comment (0)

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Real estate market FAQs

November 24th, 2009 4:15 PM

NEW YORK – Nov. 24, 2009 – Do you have buyers and sellers with questions about where real estate is headed? Based on industry experts’ advice, here are informed answers to some of the most frequently asked questions about today’s housing market.

When will housing hit bottom?

There isn’t any single answer to this question. It depends on where you live. Home prices are rising again in the most convenient suburbs of such cities as New York and Washington, D.C. In other places that are in less demand, prices continue to fall.

How can I figure out the value of my home?

Talking to a real estate professional and/or hiring an appraiser is the best idea. But even after getting a professional opinion, it is hard to tell what a home will sell for until you put it on the market.

Is now a good time for a renter to buy a home?

It could be. Prices in many areas are down significantly from their peak a couple of years ago. Plus, Congress has extended the tax credit for first-time homebuyers and added a $6,500 credit for many previous owners of homes who sign a contract to buy by April 30, 2010.

Should I invest in foreclosed homes?

A foreclosure can be a risky buy, even for the most experienced real estate investors. Use caution.

Source: The Wall Street Journal, James R. Hagerty (11/17/2009)

Posted by Marcos Fullana on November 24th, 2009 4:15 PMPost a Comment (0)

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Faulty Chinese drywall causes corrosion, federal study says

November 24th, 2009 4:13 PM

What thousands of homeowners in South Florida and nationwide have believed about Chinese drywall was validated Monday when the Consumer Product Safety Commission said there is a link between the imported material and problems with corrosion in homes that have it. But the agency also said they don’t believe the problems are as widespread as early estimates predicted.

The conclusion followed testing at 51 homes in Florida, Alabama, Louisiana, Mississippi and Virginia that found “a strong association between the problem drywall, the hydrogen sulfide levels in homes with that drywall and corrosion in those homes.”

Homeowners have been complaining for about a year to federal and state government agencies that their homes smell of sulfur or rotten eggs, the copper in their air-conditioning units and electrical wires in their homes are corroding and that other metals are turning black. They have also reported problems breathing, headaches and nosebleeds.

But until this week, no agency had officially linked corrosion problems with drywall. The safety commission is still investigating the link between wallboard and health concerns. Monday’s report said chemicals found in the homes tested were at levels lower than what might be expected to cause irritation, but the combination of those compounds with other substances could lead to the symptoms families are experiencing.

The agency cautioned that not all Chinese drywall is a source of problems.

“Not all drywall is alike,” said Jack McCarthy, president of Environmental Health & Engineering, which conducted the testing for CPSC. “Not all Chinese drywall is alike. It depends on what it’s made of -- not the country it came from.”

CPSC spokesman Scott Wolfson said the agency is “not limited in the scope of our investigation to just Chinese drywall.”

To date, the CPSC has received 2,091 complaints reports from residents in 32 states, the District of Columbia and Puerto Rico who believe their health symptoms or the corrosion of certain metal components are related to Chinese drywall. The majority of those -- more than 1,400 -- are from Florida residents.

While the problem is widespread, Wolfson said previous estimates that as many as 100,000 homes nationwide may be affected are likely incorrect. Complaints reported to state and federal agencies don’t foreshadow that large of a number.

The agency has spent about $3.5 million on its investigation, which it said is the largest in its history. The next phase of the agency’s work is on finding ways to identify problem drywall and come up with ways to treat homes.

Sen. Bill Nelson, D-Fla., was unimpressed with the consumer protection agency’s efforts.

“I’m still disappointed the government is taking too long to establish whether there’s a link between drywall, corrosion and health problems,” he said.

Many homeowners who are either living in their smelly homes or have moved out -- left to juggle mortgage payments and rent -- are still waiting for financial help. Some builders, including Miami-based Lennar and Sunrise-based GL Homes, have offered to repair affected homes. Many homeowners are pursuing lawsuits against foreign manufacturers that could take years to resolve.

Only one company, Knauf Plasterboard Tianjian, has agreed to be served with a federal class-action lawsuit and not force plaintiffs to go through international legal channels.

Warren Friedman of the U.S. Department of Housing and Urban Development said it is too early to discuss specifics of any financial assistance homeowners could get from the federal government. The CPSC sent the IRS a letter Monday informing them of their findings. The IRS could decide to allow homeowners to declare a casualty loss on returns.

Some states, including Louisiana, are using federal Community Development Block Grant money to help homeowners.

Copyright © 2009, The Miami Herald, Nirvi Shah. Miami Herald staff writer Lesley Clark contributed to this report. All rights reserved.

Posted by Marcos Fullana on November 24th, 2009 4:13 PMPost a Comment (0)

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Real estate agents see return of foreign buyers

November 23rd, 2009 2:51 PM

LAS VEGAS – Canadian investor Arthur Wong is buying condos in Las Vegas and Phoenix like a shopper at Costco: In bulk, with slashed prices.

Wong, president of Optimus U.S. Real Estate Fund, has bought 60 condos at heavy discounts from developers in financial trouble. Wong paid about $62,500 each for 18 Las Vegas condos that once were priced at about $250,000 apiece.

“This could be a once-in-a-generation opportunity for real estate investment,” said Wong, whose Calgary, Alberta-based fund has already invested $5 million cash and will spend millions more in the U.S. Southwest over the next several months.

While foreign real estate investment in the first six months of 2009 was lower than last year’s level, real estate agents from New York to Las Vegas say purchases have increased rapidly in recent months.

Foreign investors have long been attracted to U.S. residential real estate, drawn by the market’s stability compared with other countries. But the dollar’s descent in the past six months has made makes homes even cheaper for foreigners, and prices are showing signs of stability.

International investors bought 154,000 homes and condos in the 12-month period ending in May, down nearly 10 percent from 170,000 for the same period a year earlier, the National Association of Realtors reports.

But since June, the dollar has tumbled by 9 to 11 percent against currencies like the Japanese yen, the European euro and the Canadian dollar. The Brazilian real has gained 17 percent against the dollar in the past six months.

Buyers from Brazil, Canada, France and the Netherlands, for example, have paid mostly cash for second homes ranging from $6 million to $15.5 million in condo buildings like 40 East 66th Street, a stone’s throw from Central Park and steps from shopping, restaurants and nightlife.

“(Foreign investors) love to have everything available to them once they walk out their front door,” said Barbara Russo, an agent with The Corcoran Group Real Estate in Manhattan.

Manhattan real estate agent Cynthia Crowley recently spoke with three different Israeli investors who have complained about rising real estate prices at home.

“They want to buy,” said Crowley, an agent with Olshan Realty in New York. “This is not tire kicking.”

Foreign investors love floor-level prices and the limp dollar but also are confident in a long-term recovery of the U.S. economy and the housing market’s resurgence. Some want vacation homes, while others are looking for rental income.

Buyers from Canada, India, the Middle East, Mexico, and Venezuela like Houston’s neighborhoods and its economy, which benefits from strong oil and health care industries.

“They also like to gravitate to where they have friends or family,” said Bill Gottfried, managing director of Gottfried International Estates.

Foreign investors often pay cash, or offer downpayments of 40 percent or more, because financing is difficult to get. Nearly half paid cash in the 12-month period ending in May, the Realtors group reports.

Florida leads the country in the amount of international buyers, accounting for nearly a quarter of foreign purchases. The Sunshine State was followed by three gateway states with warm climates - California, Texas, and Arizona.

Miami home prices are down by half from the peak period of late 2006 due to foreclosure sales and a glut of unsold units. With the dollar hitting a 15-month low this week against the euro, the bargains are enticing. Investors are buying single-family homes or condos for two-thirds the cost three years ago.

Peter Zalewski, a Miami-based real estate agent, said at least seven bulk deals involving foreign condo buyers have taken place in downtown Miami alone, with investors coming from Argentina, Canada, Colombia, Italy, Norway, and Venezuela. Similar deals also have taken place in heavily-populated Broward County and ritzy Palm Beach County.

Claudia Bacelar, an Esslinger Wooten Maxwell real estate agent, has seen more South Florida inquiries from Brazilian, Canadian and British buyers of second homes, many of whom gravitate to condos with great views in the $800,000 range. And they pay cash.

Argentina native Marco Bordoni bought a $860,000 house on a deepwater canal in the Golden Isles neighborhood last month. An importer-exporter of perfumes, he plans to spend half his time in South Florida on business.

Bordoni is spending $450,000 to remodel the house, which was valued at $1.2 million four years ago, said his agent, Scott Patterson.

“Prices fell enough that I could buy a property I would not be able to buy two years ago,” said Bordoni, 30.

Posted by Marcos Fullana on November 23rd, 2009 2:51 PMPost a Comment (0)

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Next wave of foreclosures looms

November 19th, 2009 3:54 PM

A second wave of foreclosures is poised to hit the market, potentially undermining housing recovery efforts as more homes add to the glut of inventory and drive down prices.

These homes largely represent loans that are delinquent but have not yet resulted in foreclosure sales.

About 7 million properties are destined to go into foreclosure, according to a September study by Amherst Securities Group, compared with 1.27 million properties in early 2005.

“There’s a huge supply out there,” says Dean Baker, co-director of the Center for Economic and Policy Research in Washington, D.C. “The foreclosure process can take a long time. When it comes to (the housing recovery), we’re not home free.”

There is often a long lag time between a borrower going delinquent and the bank taking the home. Here’s why:

• Moratoriums. New state laws imposing short-term moratoriums have slowed the timeline from delinquency to foreclosure.

• Overwhelmed lenders. Banks dealing with a surge in refinancing, mortgage modifications and defaults are overwhelmed with demand, so it can take longer to initiate a foreclosure sale.

• Modifications. Many loans now are first examined to see if they might qualify for a modification. This drags out the timeline and means it is taking longer for homes to go into foreclosure.

• Asset write-downs. Banks may in part be waiting to liquidate homes through foreclosure because they don’t want to write down the value of the asset. Lenders can keep homes on the books at a higher value until they are sold at foreclosure.

“There is a lot of foreclosed property in the pipeline that will hit the market and depress prices,” says Mark Zandi at Moody’s Economy.com. Foreclosed homes often sell at prices below those on the market and can therefore drag down overall home values.

The shadow market of foreclosed homes eclipses the number of homes lost this year. Zandi anticipates there will be about 2.4 million homes lost next year through foreclosure, short sales and deeds in lieu of foreclosure. That compares with 2 million homes lost in 2009.

Jumana Bauwens, a spokeswoman at Bank of America, says the bank is projecting an increase in foreclosures in part because customers will not be qualifying for existing loan-modification programs.

Copyright © 2009 USA Today.

Posted by Marcos Fullana on November 19th, 2009 3:54 PMPost a Comment (0)

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Forecast hopeful with first-time homebuyers leading the way

November 18th, 2009 10:44 AM

Aided by the homebuyer tax credit, the outlook for housing and the economy appears headed for a sustainable recovery, according to the National Association of Realtors® (NAR).

“Given the success of the first-time buyer tax credit to date, and the need for qualified buyers to continue to absorb inventory that will include additional foreclosures over the coming year, we are hopeful about the impact of the expanded tax credit because it will stabilize home prices,” says Lawrence Yun, NAR chief economist. “In fact, the credit is working better than first projected – it now looks like we’ll have 2.3 to 2.4 million first-time buyers this year.”

The 2009 National Association of Realtors Profile of Home Buyers and Sellers shows that first-time buyers accounted for a record 47 percent share of home sales over the past year, up from 41 percent in the 2008 survey. The share has risen steadily since a cyclical low of 36 percent in 2006.

Existing-home sales are expected to total 5.01 million in 2009, a gain of 2.0 percent over last year, and then are forecast to rise 13.6 percent to 5.69 million in 2010. “A steady draw-down of inventory will help home values to turn positive in 2010, but risks such as unemployment remain in the economy,” Yun says.

New-home sales are projected at 397,000 this year, recovering to 549,000 in 2010. Housing starts, including multifamily units, should total 564,000 units this year but grow to 752,000 in 2010.

The 30-year fixed-rate mortgage will probably average 5.3 percent in the fourth quarter, rising gradually to 5.8 percent by the end of next year. NAR’s housing affordability index will set a record in 2009, averaging 30 percentage points higher than 2008. Affordability will decline from record highs next year but will remain at historically attractive levels for homebuyers.

“We’ve seen a steady downtrend in housing inventory for well over a year, and home prices appear to be in the early stages of stabilizing,” Yun says. “With expansion of the tax credit to additional buyers through the middle of next year, and no major unforeseen events impacting the economy, home prices should rise between 3 and 5 percent in 2010, but with wide geographic differences.”

He expects growth in the U.S. gross domestic product to be at a pace of 2.5 percent in the current quarter, with GDP up 2.8 percent in 2010.

The unemployment rate is close to peaking and is projected to ease to 9.5 percent by the end of next year.

“The size of the U.S. budget deficit is a concern going forward and carries the risk of higher inflation. At this point, that risk appears to be restrained,” Yun says. Inflation, as measured by the Consumer Price Index, is seen contracting 0.4 percent this year, then rising 1.6 percent in 2010. Inflation-adjusted disposable personal income is estimated to grow 0.4 percent this year and 1.2 percent next year.

© 2009 Florida Realtors®

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Tax-credit extension renews buyer interest in buying a home

November 18th, 2009 10:43 AM

Real estate agent Ken Brownlee’s phone stopped ringing last month once clients figured they would be unable to close before an $8,000 federal tax credit expired.

Most of his buyers were first-timers looking for a sweet deal on a short sale or foreclosed home.

“They all want to grab a deal,” said Brownlee, an agent with Keller Williams.

Those buyers now have another chance since Congress extended the program earlier this month. Real estate agents say it could mean a boon for sales.

First-time buyers can get a credit up to $8,000 and other buyers are eligible for a credit of $6,500, as long as they’ve lived in their home for at least five years. Congress also expanded it to include some buyers who already own homes.

Business picked up immediately, Brownlee said.

“As soon as it passed, I started to get a lot more phone calls and website hits on my listings,” he said. “This tax credit will likely carry us through the normally slow season.”

That’s good news for the Bay area’s fragile housing market. As the area continues to see improvement in home sales, real estate agents say the tax credit is essential in selling off inventory. Home prices have plummeted and that has enticed buyers to act, but many are still on the sidelines.

Home sales in the Tampa-St. Petersburg-Clearwater area increased 20 percent in the third quarter, which ended Sept. 30. Experts credit the increase mainly to first-time buyers trying to take advantage of the tax credit.

There were 7,795 sales in the quarter, up from 6,502 during the same period a year ago, according to the Florida Association of Realtors. At the same time, the median sales price fell 17 percent to $140,400.

One reason is that so many people feel stuck in their homes. They want to take advantage of deep discounts, but they have to sell their existing home in order to move up. With nearly half of Tampa Bay’s homeowners owing more than their home is worth, many can’t afford to move.

That’s why the tax credit will help, said Stephanie LeFew, a real estate agent with Tampa Home Buy Realty. She’s had a number of clients decide to stay in their homes because they couldn’t sell for enough to make a move worth it.

“For some people, the credit will be just enough of a boost,” she said.

Mike Larson, an analyst with Weiss Research, said home sales would likely continue to improve, even without the tax credit. Even so, he expects the credit to lure more people into the market.

“The credit is the icing on the cake, not the cake itself,” he said. “What’s really leading to improvement is that homes are affordable again. If you throw an expanded credit into a market that already has good fundamentals, the market will respond.”

To take advantage of the credit, a prospective buyer’s home has to be under contract by April 30 and the deal must close by June 30.

Copyright © 2009 Tampa Tribune, Fla., Shannon Behnken. Distributed by McClatchy-Tribune Information Services.

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Housing agency’s financial cushion sinks

November 13th, 2009 2:45 PM

The Federal Housing Administration’s financial cushion has fallen to a dangerously low level, but government officials maintain the agency should avoid a taxpayer bailout under “most economic scenarios.”

The agency, a major source of funds for first-time homebuyers, faces mounting concerns that it will eventually need an infusion of cash. FHA losses have increased with the unemployment rate as more homeowners default on their loans. About 17 percent of FHA borrowers are at least one payment behind or in foreclosure, compared with 13 percent for all loans, according to the Mortgage Bankers Association.

Agency officials, however, said Thursday the agency won’t need a rescue unless the economy slips back into a severe recession. In that worst-case scenario, home prices in 10 large cities would fall another 28 percent and unemployment would soar to 12.5 percent from the current level of 10.2 percent.

Already, FHA’s reserves have fallen to $3.6 billion, compared with $685 billion in outstanding insured loans for the fiscal year ended Sept. 30. That’s a ratio of 0.53 percent and far below the 2 percent threshold required by Congress.

“It is absolutely critical that, going forward, we build that cushion back up,” said Housing Secretary Shaun Donovan.

Also Thursday, RealtyTrac Inc., a foreclosure listing firm, reported that the number of households that received a foreclosure-related notice fell in October, the third straight monthly decline.

“Foreclosures are still far higher than we want them to be, but we do appear to have them on the right path now,” Donovan said.

The FHA does not make loans, but rather offers insurance against default. Borrowers are willing to pay for the insurance because FHA loans only require downpayments of 3.5 percent of the purchase price.

Donovan, however, said the agency is considering raising its insurance premiums for borrowers as well as the 3.5 percent downpayment requirement. Legislation introduced by Rep. Scott Garrett, R.-N.J., would hike the downpayment to 5 percent.

“The administration has to stand up and say, ‘This is what’s best for the taxpayer,’” Garrett said.

While agency officials say they are making more loans to far more creditworthy borrowers than in the past, critics say FHA borrowers are still vulnerable to default, particularly if job losses keep climbing and the recent increase in home prices reverses course.

Edward Pinto, a financial consultant and an FHA critic, expects the agency to need a taxpayer rescue of $40 billion within two or three years. A big problem, he said, will come from condominium loans. The FHA’s efforts to limit riskier activities, he said, are bound to fall short because the agency consistently faces pressure to keep its standards relaxed to promote homeownership.

“Even though they’re tightening up, they’re not tightening up fast enough,” Pinto said.

If FHA decides to require higher down payments or insurance fees it would likely raise the hackles of real estate agents and mortgage lenders because fewer people would be able to get loans.

Since the collapse of the subprime lending market, the government has taken up the slack. The FHA has insured about one in five new loans made this year, and about half of all loans to first-time homebuyers. The FHA now insures about 5.5 million mortgages, up from about 4 million three years ago.

“If we didn’t have FHA out there, it would be a very different landscape,” said Peter Thompson, a loan officer with Wintrust Mortgage in Downers Grove, Ill. “Most of these first-time homebuyers who are really the ones keeping things going right now wouldn’t qualify at all.”

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Homebuyer tax credit has added benefits for armed services

November 13th, 2009 2:44 PM

According to the National Association of Realtors@ (NAR), the recent homebuyer tax credit extension expands benefits for the U.S. military.

Armed service, intelligence service and foreign service personnel on active duty and out of the U.S. for 90 days during any part of 2009 get an additional year to buy their homes – to May 1, 20ll.

Another benefit is a waiver on the time of occupancy. Most homebuyers using the tax credit must use that home as a principal residence for a period of no fewer than three years or forfeit the entire credit. But military, intelligence and foreign service members do not have to repay the credit if they sell their home in less than three years if they move because of official business.

“NAR is the leading advocate for private property and homeownership issues, and firmly believes that those who are in service to their country should be full participants in the homebuyer tax credit law,” says NAR President Charles McMillan. “These men and women are often hindered by hardships from full participation in the American dream of homeownership because their duty disrupts them in the buying and selling of a home.” NAR was a main advocate for the homebuyer’s tax credit extension into 2010 and its expansion to include present homeowners.

Under the tax credit extension, eligible first-time homebuyers can get a tax credit up to $8,000. Current homeowners are eligible for a $6,500 tax credit, provided they have lived in the home they are selling, or have sold, as their principal residence for five consecutive years in the past eight years.

Income limits for eligible homebuyers are expanded to $125,000 for single buyers and $225,000 for couples. The purchase price of the home cannot exceed $800,000. To help guard against fraud, buyers are required to attach documentation of purchase to their tax return.

© 2009 Florida Realtors®

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Fannie Mae offers borrowers option to foreclosure

November 6th, 2009 6:43 PM

Can’t pay the mortgage? You still might be able to stay in your home. Government-controlled mortgage company Fannie Mae is going to give borrowers on the verge of foreclosure the option of renting their homes for a year.

The change announced Thursday could give a temporary break to thousands of homeowners, but critics question whether it will only add to the mushrooming losses at the company, which has received billions in taxpayer money.

The new “Deed for Lease” program will allow homeowners to transfer title to Fannie Mae and sign a one-year lease, with potential month-to-month extensions after that. It also helps save money because the lender does not need to complete the often lengthy and time-consuming foreclosure process.

The program helps “eliminate some of the uncertainty of foreclosure, keeps families and tenants in their homes during a transitional period, and helps to stabilize neighborhoods and communities,” Jay Ryan, a Fannie Mae vice president, said in a statement.

It also does less harm to the borrower’s credit record.

“It shows that you put your best effort to work out a solution,” said Gabe del Rio, director of homeownership at Community HousingWorks of San Diego.

However, Mike Himes, director of homeownership services at NeighborWorks Sacramento, said the industry should push harder to modify loans at lower monthly payments. “The preferred option is allowing people to retain ownership,” he said.

Fannie Mae executives said the rental program is designed to help delinquent homeowners who don’t qualify for a loan modification, but still want to stay in their homes.

To qualify, homeowners have to live in the home as the primary residence and prove that they can afford the market rent, which will be established by the management company running the program. Rents are based on current market rates.

The plan is expected to be particularly attractive in places like Phoenix or Orange County, Calif., where homeowners are stuck paying large mortgage bills on properties that are now worth far less than they originally paid. At the same time, rents have been falling in those areas. So by renting the same house, former homeowners could wind up paying far less every month.

In Orange County, for example, the average monthly rent for all apartments was about $1,450 in September, down nearly 8 percent from a year earlier, according to research firm MPF Research. In Phoenix, the average renter paid about $720, also down about 8 percent from last year.

Still, the effort is likely to attract a relatively small number of homeowners.

In the first nine months of the year, Fannie Mae took ownership of nearly 2,000 properties through a process known as a deed-in-lieu of foreclosure. That pales in comparison to the 90,000 foreclosed properties the company repossessed in the period.

Deed-in-lieu works like the new program, allowing homeowners to turn over title to Fannie Mae, but rather than renting, the owners simply walk away.

While Fannie Mae executives say the company’s motives are community-minded, critics say the company is simply gambling that the properties will eventually sell for a higher price. That’s folly, says Peter Schiff, president of Euro Pacific Capital in Darien, Conn., and a longtime bearish investor.

“Taxpayers are now going to own all these houses that (Fannie Mae) should have unloaded,” he said. “It’s going to cost a fortune.”

The announcement came as Fannie Mae asked for an additional $15 billion in government aid after posting another big loss in the third quarter. The mortgage finance company, seized by federal regulators in September 2008, posted a quarterly loss of $19.8 billion, including $883 million in dividends paid to the Treasury Department.

Pessimists like Schiff say the recent stability in the housing market is just temporary, and argue that there is a huge backlog of foreclosed homes that haven’t gone on the market. Refusing to sell those homes, they say, only prolongs the problem.

But other experts say that Fannie Mae’s new policy could make sense, even if prices don’t rebound quickly. The company will get rental income while avoiding costly foreclosure expenses.

It will also help to safeguard the homes, which are less likely to be vandalized when occupied.

“There are a whole lot of costs you avoid,” said Thomas Lawler, a former Fannie Mae economist. “You don’t necessarily have to believe that home prices a year from now will be higher than today.”

Fannie Mae’s sibling company, Freddie Mac, launched a similar effort in March. That policy, however, requires the foreclosure to be completed and only allows month-to-month leases. Freddie Mac declined to detail how many borrowers have participated.

The two companies purchase loans from banks and sell them to investors. Together, they own or guarantee almost 31 million home loans worth about $5.5 trillion, about half of all U.S. mortgages. They have been badly hurt by the housing bust and have required $111 billion in federal aid since being seized by government regulators 14 months ago.

To find out whether your home loan is owned by Fannie Mae or Freddie Mac, try these Web sites:

Fannie Mae: http://loanlookup.fanniemae.com/loanlookup/
Freddie Mac: https://ww3.freddiemac.com/corporate/

Posted by Marcos Fullana on November 6th, 2009 6:43 PMPost a Comment (0)

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Obama signs bill: Homebuyer tax credit extended

November 6th, 2009 6:31 PM

President Obama signed H.R. 3548 this morning, enacting into law an extension, and adjustment, of the $8,000 tax credit for first-time buyers. Among other things, the extension adds money for certain move-up buyers; creates one deadline for signing a contract and a later deadline for closing; changes income requirements; and limits a purchased home’s cost to $800,000.

“Extending the homebuyer tax credit and expanding it to reach more homebuyers is the right thing to do,” says 2009 Florida Realtors® President Cynthia Shelton. “It is critical to maintaining the positive momentum we’ve been experiencing in the housing market and in the overall economy. Florida Realtors applaud congressional leaders for taking action to extend the homebuyer tax credit into 2010, which will help Florida families realize their dream of homeownership, improve our communities and strengthen our economy.”

Adds John Sebree, Florida Realtors vice president of public policy, “Florida residents enjoy two additional advantages. The Florida Homebuyer Opportunity Program (FHOP), created by the Florida Legislature earlier this year, still has approximately $28 million that first-time homebuyers can access and use toward their downpayment. And move-up buyers now have the ability to ‘port’ their current property tax savings to a new home.”

First-time homebuyers

Most details for first-time homebuyers mirror the rules currently in existence. The maximum tax credit remains $8,000 ($4,000 for married individuals filing separately), and anyone who has not owned a home within three years is considered a “first-time buyer.”

• A purchase must be under contract by April 30, 2010.

• A purchase under contract by April 30 must close no later than June 30, 2010.

• After Dec. 1, 2009, income limits rise to $125,000 for singles and $225,000 for married couples; up from limits effective through Nov. 30 of $75,000 for singles and $150,000 for married couples. The tax credit phases out incrementally at each $20,000 increase in income.

• Effective immediately: The maximum home value purchased cannot exceed $800,000. Prior to the law being signed, first-time homebuyers had no limitation on a home’s cost.

Current homeowner tax credit

An existing homeowner who purchases a home may now claim a tax credit of up to $6,500. To qualify, that owner must have owned and used the same residence as a principal residence for any consecutive five-year period in the previous eight years.

• This new tax credit is effective immediately. Eligible homebuyers do not have to wait until Dec. 1 to close in order to qualify.

• Personal income limits, maximum home value, and contract/closing deadlines are the same as those for first-time homebuyers.

Long-time Florida homeowners who enjoy discounted property taxes resulting from the state’s Save Our Homes amendment qualify for property tax portability, notes Sebree. For more information or to calculate how much tax savings can be transferred to a new home, visit floridarealtors.org

Florida Homebuyer Opportunity Program

Under FHOP, first-time Florida homebuyers can obtain interest-free bridge loans to access their federal tax credit before they complete a home purchase, enabling them to use that money upfront for downpayment and closing costs. Once buyers submit their returns to the IRS and receive their tax credit money, they repay their loans to the state.

The Florida Realtors-backed program came out of the 2009 session of the Florida Legislature. However, as part of the 2009-2010 budget year, did not become effective immediately. They tax credit extension will allow many first-time buyers to tap into the approximately $28 million in the program's remaining funds.

While funded by the state, the money is distributed through the city and county housing offices that operate the State Housing Initiatives Partnership (SHIP) program. There is no standardized program, and each local agency may operate under different rules for distribution. For more information, buyers should contact their local SHIP office.

To find a local SHIP office, go to: local SHIP Office

Additional changes

The tax credit extension includes other new rules, such as:

• The new law also impacts dependent purchases of homes, which weren’t addressed under the old rules.

• The new law requires a buyer to attach documentation about the home purchase to his or her income tax return. An audit found that some buyers are claiming the tax credit when they don’t deserve it, and investigators continue to seek out fraud. To minimize tax abuse going forward, buyers won’t receive the credit without submitting proof to the Internal Revenue Service (IRS).

The homebuyer tax credit is collected as part of the normal income tax process. As a credit, it’s calculated separately from an individual’s income tax, and paid regardless of taxes owed or withheld from income. As always, however, only a tax planner can render specific advice to anyone seeking the credit. For more information on the credit, contact a tax planner or visit the IRS website at: http://www.irs.gov.

Florida Realtors will update tax credit information and clarify details when available on the Homebuyer Center, part of floridarealtors.org at: http://www.floridarealtors.org/AboutFar/homebuyercenter/index.cfm.

© 2009 Florida Realtors®

Posted by Marcos Fullana on November 6th, 2009 6:31 PMPost a Comment (0)

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Tax credit extension passes House and Senate

November 5th, 2009 3:49 PM

The $8,000, first-time homebuyer tax credit has not yet been extended beyond its Nov. 30 end date, but it’s very close to gaining a longer life.

The extension was added as an amendment to an existing bill, HR 3548, that extends unemployment benefits. The U.S. Senate passed that bill on Wednesday and, after debate, the U.S. House passed HR 3548 this afternoon. It now needs only President Obama’s signature to become law, and the White House has indicated it will sign it, perhaps as early as tomorrow.

Until the president signs the bill, however, it is not law.

In addition to extending the tax credit for first-time homebuyers under the current rules, the bill adds a smaller tax credit for move-up homebuyers who have lived in the house for five of the past seven years. The bill also increases the income limits of homebuyers from $75,000 (single) to $125,000; and from $150,000 (married) to $225,000.

Florida downpayment assistance

After the president signs the bill and extends the tax credit, the Florida Homebuyer Opportunity Program – a downpayment and closing costs assistance program relating to the federal tax credit –automatically gets extended too. The state still has about $28 million available for homebuyers. The money is essentially a loan to first-time buyers; they receive it upfront, use it for a downpayment or other costs, and pay it back once they get their federal refund.

For more information on the Florida Homebuyer Opportunity Program, visit the Homebuyer Center on floridarealtors.org: http://www.floridarealtors.org/AboutFar/homebuyercenter/index.cfm

Also check floridarealtors.org for updates as they’re released; and, after the tax credit extension becomes law, details on the new program.

© 2009 Florida Realtors®

Posted by Marcos Fullana on November 5th, 2009 3:49 PMPost a Comment (0)

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