Resolutions? Make it a Plan... and clear the Energy Drains first!

Do you know what you like? Do you know what is right for you? Brian Tracy says that it is important to know what is right for yourself before you think of what is possible. Do you know what brings you joy? If you do know, how often do these things show up in your life? Do you plan for them?

It is interesting - and powerful - to focus your attention on what you want in life… experiences you wish to repeat, attributes you wish to develop, goals you wish to reach and, fulfilling ways to spend your time and energy. When you keep your mind, time and energy on these things, there is little time for anything else - and the “anything else” fades away!

At this time of year it is traditional to decide on next year’s priorities. Do this very carefully. Make it a balanced plan with desires in each area of your life to move your physical, social, educational, financial, mental, emotional and spiritual self, forward. Once you have decided on the priorities, assign a daily, weekly, monthly or annual amount of time for each that will satisfy you. This is important. There is no right answer.


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“Experience is simply the name we give our mistakes. - Oscar Wilde

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What will cause you to feel good about yourself when you do it? It can be different for different people. Some folks want to run a marathon and that is what they mean when they are planning to improve their exercise program. That will take more time than for a person who wants to increase their time doing weight-bearing exercise to prevent osteoporosis. Know what your goal is and why. That will help you assign the appropriate amount of time to each priority.




Make sure that your goals are “do-able”. Build in success this way. Make them very specific, measurable and time-bounded. Your mind can capture a goal that says, “I will lose ten pounds by March 1 by eliminating ice-cream from my diet and walking three miles three times a week”, whereas it has difficulty understanding “I am eating less and exercising more.” Be specific.

Often, there are many things undone in our lives. Things we wish we had done, things we know are always sitting at the back of our minds draining our energy. These are ‘energy leaks’. You know the “(Expletive) I still haven’t ___________yet!” that hits you while you’re waiting for a red light to change. It’s a ‘leak’!

Here is a process that I find amazingly effective. Complete this Personal Integrity Checklist to start your year with no energy ‘leaks’. Download it at for free from
http://www.OptimizeInstitute.com/tools/pic.htm. Clearing away your energy leaks is a good preparation for being successful with your new plan.

Always remember - What you pay attention to expands!

[This came from http://www.progardenbiz.com/wp/lawn-care-business-advice/ but I don't know who wrote it. But it seems like a very good program to start the year! Now it's time for me to clear away my own 'energy leaks'! ~~ Ray]

Local Housing Market Needs Listings

The local housing market continues to steam forward.

As reported by the National Association of Realtors®, the Pending Home Sales Index posted its 8th consecutive monthly gain in September.

It’s the longest winning streak in the history of the index and Pending Home Sales are now at their highest levels since December 2006. A Pending Home Sale is a home under contract to sell, but not yet closed. It’s the precursor to an Existing Home Sale.

Trade group data shows that nearly 80 percent of “pending” homes close within 2 months. The majority of those remaining close within months 3 and 4.

When the Pending Home Sales Index rises, it tells us that market activity has picked up. September’s data confirms what we’ve been noticing since February — the Buyers Market is ending.

With more homes under contract in the marketplace, homebuyers typically face one or more of the following:

1. Competitive, multiple-offer situations
2. Reduced purchase price leverage over sellers
3. Fewer seller concessions

Therefore, if you’re buying a home in the next several months, know that the 8-month run in Pending Sales will lead to a run in closed sales. The extension of the home buyer tax credit will tend to keep healthy activity in the housing market, boosted by expanded eligibility to existing home owners. All in all, we should see a result in stabilized if not higher home prices, over time.

Indeed, we’re already beginning to see it with multiple offers and price overbidding in some cases, although lags in appraiser values are tending to moderate prices after the bubble's irrational exuberance in home prices.

Right now, the Santa Clarita area active listings number is at near historic lows. Low inventory, especially in the under $500,000 price range, combined with still-low interest rates has resulted in too many potential buyers chasing too few available homes. Over time, if these conditions continue, prices will rise. However, many in the housing industry think that banks are still overwhelmed with foreclosed inventory that is being held off the market and will be offered for sale starting within the next few months. The so-called 'shadow inventory', as it is released, will tend to keep home prices at or near current levels.

So I would not count on any imminent large rise in home prices just yet. But it is a volatile and fragile market. Please give us a call to find out how you can best position yourself for continued changes in the housing market at 661-290-3750.

First-Time Home Buyer Tax Credit not complete

First-Time Home Buyer Tax Credit Gets Obama Nod


An extension of the $8,000 first-time home buyer tax credit appears all but certain after the Obama administration called on Congress to give house hunters more time to claim the popular tax perk. The move comes shortly after Senate lawmakers stuck an agreement to not only push back the measure's looming deadline but expand it to allow current homeowners and more affluent buyers to claim the credit. "We welcome efforts taken by Congress to extend the first-time home buyers tax credit for a limited period," Treasury Secretary Tim Geithner and HUD Secretary Shaun Donovan said in a joint statement today. "This credit has brought new families into the housing market and contributed to three consecutive months of rising home prices nationwide." Here are five things you need to know about the development:

1. Roots and impact: A tax credit of as much as $8,000 for certain qualified first-time home buyers was included in the Obama administration's sweeping economic stimulus package, which the president signed in mid-February. The measure was designed to stimulate additional demand for residential real estate and help absorb the overhang of unsold properties that was putting downward pressure on home prices. Along with cheaper home prices and attractive mortgage rates, the perk has helped reduce the glut of unsold properties. Mark Zandi, the chief economist at Moody's Economy.com, expects the tax credit to result in as many as 400,000 additional home sales by the time of its scheduled expiration at the end of November. But trade groups—like the National Association of Home Builders and the National Association of Realtors—have been lobbying Congress to push the deadline back, arguing that failing to do so would jeopardize recent signs of stability in the housing market. The NAHB, for example, blamed yesterday's weaker-than-expected new home sales report on the tax credit's impending expiration.

2. Extending the deadline: Although various proposals to extend and expand the credit have circulated in Congress for weeks, Senate lawmakers finally reached a deal in recent days. Under the terms of the agreement, the deadline for first-time home buyers to claim the $8,000 credit would be pushed back to April 30, 2010. But the term "deadline" doesn't mean the same thing as it does in the current credit. The Senate agreement stipulates that buyers must have a sales contract on a house by April 30 to be eligible, but it gives them an additional 60 days to close the purchase. That's much different from the current credit, in which transactions must be closed by November 30. Looked at one way, the effective deadline of the credit under this agreement is actually the end of June.

3. Existing buyers: But perhaps the most significant change is that current homeowners would become eligible for the tax perk as well. The current credit prevents home buyers who have owned a primary residence within the past three years from claiming the credit. The agreement, however, would allow current homeowners to claim up to $6,500 as long as the property they are vacating has been their primary residence for at least five years. Expanding the credit beyond first-time buyers is intended to boost home sales to "move up" buyers—those moving from one house to another—which some lawmakers, most notably Georgia Republican Sen. Johnny Isakson, argue is essential to a housing recovery.

4. More-affluent home buyers: The agreement also enables more affluent Americans to claim the tax credit. Senators moved to increase its annual income limits from $75,000 to $125,000 for single buyers and from $150,000 to $225,000 for married couples. These limits apply to both first-time and move-up buyers, although neither can purchase a home for more than $800,000 and still get the credit. Anyone taking the credit on a 2010 purchase can claim it on his or her 2009 tax return. And as long as home buyers live in the property they purchased via the credit for three years or more, the tax credit does not have to be repaid.

5. Credit controversy: Zandi estimates that the Senate agreement would generate more home sales than the current credit would. "It's broader, [and] the industry is geared up to take advantage of it now," he says. But first-time home buyer tax credits have already cost the government more than $10 billion in lost revenue, and Zandi expects that the Senate agreement would cost at least as much. And although it's been popular with those purchasing homes, some economists have called the credit an inefficient use of federal resources. Calculated Risk, a financial blog, has estimated that Uncle Sam has paid $43,000 for every additional home sale. And the Senate agreement—which enables households making more than $200,000 a year to claim the credit—could certainly appear overly generous in a time of trillion-dollar budget deficits.

At the same time, the credit has recently been linked to widespread abuse. Russell George, the Treasury Department's inspector general for tax administration, told a congressional panel last week that 19,300 taxpayers had claimed the first-time home buyer credit before they had even purchased a home. In another 74,000 cases—totaling more than $500 million—taxpayers claimed the credit despite evidence that they had owned a home within the past three years. And in at least one case, a 4-year-old claimed the credit, George said.

Although the agreement appears to have broad bipartisan support, it still has to get out of the chamber. Along the way, it could be stripped of certain generous provisions. But in light of the White House support, it appears all but certain that at the very least, the first-time home buyer tax credit will be extended beyond its November 30 deadline.

Brian Woolley
Prospect Mortgage
661.645.3499
bwloans@ca.rr.com

Senate approves extends and expands home buyer credit

The measure is expected to be approved by the House and signed by Obama within days. It is aimed at giving the real estate market an added boost and would expand the credit to existing homeowners.

Reporting from Washington - The Senate today voted to extend and expand a tax credit for home buyers as an added boost for the recovering real estate market, and also approved a provision to continue giving aid to the long-term unemployed.

The measure, adopted on a strong bipartisan vote of 98-0, also would extend and expand a tax benefit for businesses with losses. The House is expected to follow suit within days, and President Obama is expected to sign it into law.

To keep fueling the real estate rebound, the legislation would extend the $8,000 tax credit for first-time home buyers to April 30. It now is set expire at the end of the month. More importantly, it also would provide a new $6,500 tax break for existing homeowners who want to move up to a new home, as long as they have lived in their current residence for five consecutive years out of the last eight.

The bill also would increase the level of qualifying incomes to $125,000 for individual tax filers and $225,000 for joint filers. Those earning up to $145,000 individually or up to $245,000 jointly would get a smaller credit that decreases as income rises.

The tax credits apply to home purchases of $800,000 or less.

"Every economist will tell you we have to steady the housing market before the economy will turn around," said Sen. Christopher Dodd (D-Conn.). "We can't afford to let this tax credit expire now."

With the unemployment rate at 9.8% and expected to go higher, senators voted to extend jobless benefits by 14 weeks in all states and 20 weeks in the hardest hit states, including California.

The $2.4-billion extension of unemployment benefits gained bipartisan support after it was written to cover all states, making it more appealing to senators. It would provide a longer extension of benefits in the 27 states now with unemployment rates of 8.5% or higher. California's 12.2% unemployment rate in September trailed only Michigan, Nevada and Rhode Island.

Congress included an extension of unemployment benefits in the economic recovery bill approved this year, but up to 600,000 people have already exhausted their benefits, and an additional 700,000 are scheduled lose them by the end of the year, according to the National Employment Law Project.

For all companies, the measure would allow them to use any losses this year or last year to offset taxes paid in the previous five years. A similar measure was included in the economic stimulus legislation approved earlier this year, but was limited to small businesses.

Depend on The Real Blog for real estate news you can use!

November 3rd Ballot Recommendation

Please do not be confused by the ballot.

In order to get what YOU want on the November ballot you MUST vote NO on
two questions and YES on only one. IF you wish the City of Santa Clarita
to Annex your area you MUST vote No on A and NO on B and YES on C.

I grew up in this area and have seen the benefits of having local government close at hand and not is some far away place in downtown LA. This City of Santa Clarita works, however imperfectly at times, but in large part because it is locally governed it has become a great area to live. I highly recommend a VOTE of YES on C on your November 3rd ballot.

Only with a VOTE of NO on A - a VOTE of NO on B and a VOTE of YES on C ...
will they consider adding adjoining areas to the city of Santa Clarita.

The disadvantages NONE... Taxes will go DOWN. The various areas considering annexation will still be Tesoro, or Stevenson Ranch, or Castaic, but they will also be Santa Clarita. Just like Northridge is Northridge but ALSO Northridge
is in the City of Los Angeles. The HOA (if any) will still be your HOA, they will
still maintain the common area through the HOA fees.

City services come on a resident first basis as you know, if you are in those areas affected you are NOT residents until you VOTE YES on C, & the city annexes those area. When you are a Santa Clarita resident you go to the front of the line for Parks & Recreation services: Parks classes, sports and activities now fill by a first-come for City residents and the left-overs are for the non-residents, the outsiders. As residents you will be on the INSIDE for dance classes, swimming lessons, sports teams etc.

Increased policing services: The Los Angeles County Sheriff is currently
our policing agency. The city of Santa Clarita also has chosen the LA County
Sheriff... BUT within the city limits they are stronger, more Sheriffs and
their services, per person than outside the city.

A governing board that lives here: Supervisor Antonovitch is not a resident
& has over 2 MILLION constituents & is 27 miles away! The City Council meetings
are at NIGHT twice a month within 5 miles of our homes... NOT during the
day, 27 miles away!

Our tax dollars spent here: We produce more tax dollars here than are spent
here - therefore the extra goes to fund areas far away.

Local Control, Tax Dollars Spent Locally, More Services, LESS taxes: VOTE
YES on C (NO on A & B).

It does not matter what you think about Tesoro, Stevenson Ranch or Westridge
or Castaic, ONLY be concerned with where YOU live... the votes are counted
separately & the City will know what your area wants.

VOTE YES on C & (NO on A & B).

Washington Update: $8,000 Home Buyer Tax Credit

by Kenneth R. Harney

Quick passage by the House last week of a bill extending the $8,000 home buyer tax credit next year for military, diplomatic and intelligence personnel serving overseas increases the odds that Congress will agree to an extension, maybe even an expansion, of the entire credit program well into 2010.

The White House is also signaling that it sees the overall tax credit program -- currently set to expire November 30 -- as an important element in cutting the unemployment rolls and stimulating new jobs next year.

After an economic policy strategy meeting last week in the Oval Office involving President Obama, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid, congressional aides said Democrats generally support an extension of the housing credit. Reid already has made clear he wants an extension. He is co-sponsoring a Senate bill that would do so for six months.

Congressman Charles Rangel, chairman of the tax-writing House Ways and Means Committee, sponsored the one-year extension of the credit for military and other personnel serving overseas, and is reported by aides as favoring an extension for the entire program.

The White House has not publicly committed to an extension, but has confirmed that the President is seriously examining that option.
An unexpected development that emerged following last week's White House meeting was the possibility of opening up the credit to a broader group of buyers next year - people who sell their current homes and buy a replacement home.

Though details were scanty, Capitol Hill sources said one option on the table would be to provide a tax credit -- most likely at the $8,000 level -- to replacement home buyers whose incomes do not exceed some limit.

The current credit phases out for single taxpayers with incomes above $75,000, and married purchasers earning $150,000.

A politically sensitive issue hovering over the entire debate on extending the housing tax credit is its cost - what it would add to the federal budgetary deficit. Mark Zandi, chief economist of Moody's Economy.com, estimates that widening the credit to all buyers through next August could cost the government upwards of $30 billion.

Rangel's 12-month extension of the credit for service personnel is estimated to cost more than $300 million, but it's mainly being paid for through an increase in penalties levied by the IRS on taxpayers who fail to file corporate or partnership returns.

The New York Times reported that one possible solution to the cost problem would be to divert money not yet spent out of 2009's $800 billion stimulus legislation.

Published: October 12, 2009

$8000 Tax Credit for First Time Buyers Ends November 30

First time buyers are a large portion of the market pool, particularly since the federal government initiated an $8000 tax credit for first time home buyers. Unfortunately, that program ends on November 30th and it is uncertain that the program will be extended.

If you are a first time home buyer, which by the program's definition is that you have not owned a home within the past three years, you need to take action right now. Here's why: your home purchase must close escrow by 11/30! Since most escrows that upwards of 45 days to close after there is written agreement for the sale between the buyer and seller, you have just a couple of weeks to find and buy a property. Later may well be too late!

Please call us at 661-290-3750 today so that we can get started!

Home Insurance Basics

One of the largest investments you will make in your life is buying a home. To protect your investment, you need a homeowners insurance policy. More importantly, you need to know how to choose one that meets your particular needs. You can get homeowner's insurance to cover a multitude of situations.

A) The standard policy will usually cover things like fire, smoke, frozen pipes, ice, snow and theft. It also provides coverage for liability claims and legal or medical costs if you find yourself in a lawsuit. For example, if your dog bites the mailman, or your kids friend falls from a tree on your property and breaks his leg, your insurance will cover the medical expenses. The most common liability coverage is $100,000 but it is important to consider whether that amount is sufficient for you. Home insurance offers a variety of deductibles averaging from $500 to $2000, so shop around and decide on what is best for you.

B) Things that are not covered in a standard policy are flood, earthquake and damage caused by an act of war, such as a nuclear accident or terrorism. If you find yourself needing any coverage for these types of things, most companies offer special endorsements, but they cost extra. An endorsement is not an additional policy, but an addendum to the one you already have. If you want coverage for things like jewelry, art and antiques, sports equipment or collections, you will need to request a Personal Property Endorsement. It is a good idea to have these items appraised beforehand. Remember to tell your agent about special security features your home has. This may get you a discount on your premium. Dead-bolt locks, security systems, storm shutters or fire-retardant roofing may lower your premium too.

C) Purchase enough coverage to replace what you are insuring. Replacement Coverage gives you the money to rebuild your house based on the value at the time of the loss. You can also get Extended Replacement Coverage which will pay the cost of the dwelling and/or appurtenant structures if the property is damaged beyond repair. The alternative to Replacement Coverage is a Cash Value Policy which is cheaper, but pays only what your property is worth at the time of the loss, less depreciation for normal wear and tear.

Why is INFLATION in the News?

AND WHAT DOES IT MEAN TO INTEREST RATES?

If you've seen the news lately, you know concerns about inflation are increasing. But what does this really mean to you?

Let's start with what it means in general. The Bureau of Labor Statistics defines inflation as the "upward price movement of goods and services in an economy." There are a variety of indices that measure different aspects of inflation-including the Consumer Price Index, whose latest reading showed that the cost of living in the US rose more than forecast due largely to a jump in energy costs.

The fact is that inflation is a very serious issue that many traders, legislators and lenders are concerned about because it will likely be on the rise as 2009 proceeds.

How Does Inflation Impact Interest Rates...and Why?

The bottom line is that as inflation increases, home loan rates will rise too. That's because lenders know that a rise in inflation actually diminishes the value of the money they receive over the life of a loan, as the money they receive for payment simply won't go as far. So when they see changes in inflation or even anticipate a rise, they increase their interest rates to make up for the loss in future buying power that will happen as a result of inflation.

Two Resources to Learn More...

To help you learn more about this important topic, take a look at two important links.

The first link takes you to a short news clip featuring the nation's foremost mortgage industry expert, Barry Habib. In this video, you'll learn how inflation impacts interest rates and what the outlook is for down the road.

The second link is as much educational as it is fun.

The Bureau of Labor Statistics has included a CPI inflation calculator on its website. This easy-to-use calculator allows you to see how much your money was worth in an earlier period-and vice versa. Simply type in an amount of money, select the years you want to compare, and hit the "calculate" button. The results are instantaneous...and may surprise you!

For instance, did you know that $33.66 in 1979 had the same buying power as $100 in 2009? That's a huge change in the last 30 years. This is a great way to see how inflation impacts your buying power. You can even use the CPI inflation calculator to have a discussion with children about inflation...and show them how much the value of a dollar has changed over the years.

What Should You Do?

Work with a real estate professional who pays close attention to what's going on with inflation-not only with the reports that come out, but also with the rumors and concerns that legislators and lenders express. After all, lenders may raise rates to protect their money as soon as they feel the tide turning.

More importantly...if you or any of your family, friends, neighbors or co-workers have been considering a purchase or refinance, this is a great time to act as home loan rates could be on the rise. The good news is that home loan rates are still near multi-year lows and present a great opportunity for those people who act quickly.

Please contact me today to discuss your specific situation, and feel free to forward this email to other people whom you think might benefit from it as well.

The $8,000 First-Time Home Buyer Tax Credit Expires December 1, 2009

If you're planning to claim use the credit and haven't started looking for a home, your clock is officially ticking. You must be closed on your new home on or before December 1.

Because purchase closings come 60-days standard, therefore, your $8,000 is in jeopardy unless you go under contract prior to October 2, 2009. That's 73 days from now.

Use it or lose it. The First-Time Home Buyer Tax Credit is part of the American Recovery and Reinvestment Act of 2009. In it, Congress authorized a first-time homebuyer tax credit of up to $8,000 for home buyers meeting certain qualifying criteria. The program's goal was to stimulate entry-level home purchases and, by most measures, the plan has been successful.

First-time home buyers accounted for about one-third of all home resales in May.
Now, the IRS definition of "first-time home buyer" may be different from what you expect. According to the IRS, a first-time home buyer is anyone who has not owned a "main home" in the last 3 years with "main home" defined as a home in which a person has lived "for most of the time". Main homes can include traditional homes, houseboats, trailers and other residence types.

For couples -- married or otherwise -- both home buyers must be first-timers to be tax credit-eligible.

Moreover, not every first-time home buyer is eligible for the $8,000 First Time Home Buyer Tax Credit. Some notable exclusionary cases include first-time home buyers who:

-- File taxes separately and whose adjusted gross income exceeds $95,000
-- File taxes jointly and whose adjusted gross income exeeeds $170,000
-- Acquire property from a mother, father, sibling or child
-- Acquire property from an entity in which they're a majority owner
-- Acquire the home by gift or inheritance

And then, the First-Time Home Buyer Tax Credit may not deliver the full $8,000.

The tax credit is limited to 10 percent of the home's purchase price the it also diminishes as home buyer income rises. Tax credit phase-outs start at $75,000 for homebuyers filing separately and $150,000 on joint returns.

Assuming you qualify, though, the good news is that it's easy to claim your tax credit.

-- Buy and close on a new, "main" home before December 1, 2009.
-- Submit IRS Form 5405 with your 2009 tax returns in April 2010.

That's it.

Meanwhile, the program does come with some gotchas. For example, If you sell your home, or cease to use it as your "main home" within 36 months of purchase, the IRS will require a full payback. There are only a few allowable exceptions to this policy and you shouldn't count on being granted one.
Not moving in the next 3 years? Don't worry about it.

Summer’s Coming, But Confusion Reigns Over Federal Pool Safety Law

Summer’s Coming, But Confusion Reigns Over Federal Pool Safety Law

Nearly four months after the federal Pool and Spa Safety Act went into effect and with summer swimming season coming soon, many public pool owners still are unsure about what they need to do to comply with the law and unscrupulous businesses are trying to cash in on the confusion.

The law requires the owners of all public pools and spas – including those in hotels, apartment complexes, home-owners associations and other common areas – to install covers on pool drains. In the past 20 years, dozens of children have become sucked into or trapped underwater in the drains and died or been severely injured.

Maybe it’s because the law was launched in the cold of winter, when most of the country is hardly thinking of taking a dip, but there seems to be a lot of uncertainty over how to comply with the newish law.

There are about 300,000 public pools in the United States, mostly in warm weather states like California, Florida, Arizona, and Texas. However, only about 30 percent of pools currently comply with the law, officials said.

Since violating the law carries some hefty fines — up to $1.8 million per infraction plus criminal penalties, including additional fines and imprisonment – it makes sense for pool owners to make sure they are in compliance.
Requirements Spelled Out, Myths Debunked

Since there has been much misinformation spread about the requirements of the pool and spa safety act, federal officials are taking some time to spell out the rules.

All public pools must include approved safety drain covers, while single drain public pools must also install approved anti-entrapment devices, such as a Safety Vacuum Release System (SVRS), an automatic pump shut-off system, a gravity drainage system, or a suction-limiting vent system, officials said.

Privately owned pools and spas in the backyards of private homes are NOT covered by the law and are not required to install any drain covers. Reports have been received about pool maintenance companies quoted thousands of dollars to install the required covers, but officials said no such costs are warranted in order to comply with the law.

Other details just re-released include:

• Single drain public pools are NOT required to install multiple drains. The federal law only requires that single drain pools install approved anti-entrapment drain covers and use one of the other secondary layers of protection listed above.

• Pools do NOT need to be drained in order for drain covers to be installed. Doing so could waste billions of dollars of water.

• The law does NOT require public pools install new sumps.

• Dual drain pools only need to install approved safety drain covers to comply with the law, but PSC and Safe Kids strongly recommend all pools and spas, even private residential pools and spas, install both approved drain covers and an additional layer of protection.

Writing this from sunny San Diego (75 degrees and sunny, again!), we nonetheless feel compelled to remind the rest of the United States that summer swimming season is approaching fast. In another couple of months, millions of U.S. school children will don swimming trunks and bathing suits and dive into one of thousands of public pools.

Without the pool drain covers and other safety measures now mandated by the Pool and Spa Safety Act, these children are increased risk of death and severe injuries. Please take time today to double check your community pool and ask the owner of the pool if they have installed the safety devices. Let’s make the summer of 2009 safe and fun when it comes to children’s pool safety.

Be The Match Marrowthon (260 x 280)

New FHA program confuses Nation

Most of you have already heard that Secretary of the U.S. Department of Housing and Urban Development announced yesterday that FHA is going to permit it's lenders to allow home buyers to use the $8,000 tax credit as down payment.
First of all, it was not clear that this was to be a short term or bridge loan from approved entities. And there are no entities offering this short term loan as of yet.
Second, the letter has been removed from HUD"s website and we have been told that it has been recinded. Speculation is that it goes against HUD's policy of allowable sources of funds for closing which includes:
1. Buyers own funds
2. Gift from relative or employer
3. Monies from Federal, state and Local Governmental agencies and non profit agencies of government.
4. Secured funds ie 401k loans

As of now, nothing has been changed in the guidelines to allow for this short term bridge loan against a future tax credit.

Please clarify this with your clients who may be getting mis information from the media, or other lenders that have jumped the gun and not gotten the facts.
For more information, please visit or refer your clients to my website for recent blogs about the subject.

www.colleencraig.com

In a later email from another lender, Eric Mitchell of Prospect Mortgage:
"FHA has announced they will allow buyers to finance their tax credit and use that as their down payment. However, this new policy will probably take at least 30 to 60 days to filter through the system before investors will buy the paper. The announcement was made but the system is not allowing it yet."


The Obama Administration's Housing and Urban Development Department has thrown open the doors to high expectations for many first-time buyers. How this will play out in the short, medium, and long term is just unknown at this point.
`` SCV Home Team

Update on FHA plan to allow use of tax credit for down payments

FHA plans to allow use of tax credit for down payments
By AUBREY COHEN
SEATTLEPI.COM STAFF

According to a release, HUD Secretary Donovan is going to allow an advance of the $8000 tax credit for first time home buyers to be used for the down payment on FHA loans. Rather than waiting for refunds after the closing, funds will be available at the closing. A second mortgage will be filed and repayment terms will vary. It is important to keep the home as a primary residence for at least 3 years.
Updates to the HUD handbook are as follows [although lenders who implement the program will have clearer instructions]:

II. FHA Guidance

The Tax Credit: Secondary Financing:

Entities that can offer tax credit advances with second liens.
• Federal, state, and local governmental agencies and nonprofit instrumentalities of government.
• FHA-approved nonprofits.

Additional information about these entities:
• Government agencies and instrumentalities of government are described in handbook HUD-4155.1 REV-5, paragraphs 1-13 A and B.
• FHA-approved nonprofits can be found, per each Homeownership Center jurisdiction, at: http://www.hud.gov/offices/hsg/sfh/np/np_hoc.cfm

How the secondary financing works:
• 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 needed for the downpayment, closing costs and prepaid expenses.
• The tax credit advance must provide that if the borrower does not repay the amount borrowed by the designated deadline, that principal and interest payments begin automatically.
• If payments on the tax credit advance are required, they must be included in qualifying the borrower and, when combined with the first mortgage, cannot exceed the borrower’s reasonable ability to pay.
• If payments on the tax credit are deferred, the deferment must be for a minimum of 36 months in order for the payment to not be included in the qualifying ratios.
• The tax credit advance second mortgage must not provide for a balloon payment before ten years.

The Tax Credit: Short-Term Loan:

Entities that can offer the tax credit advance with short-term loans:
• Federal, state, and local governmental agencies and nonprofit instrumentalities of government, FHA-approved nonprofits, and FHA-approved mortgagees may provide short-term or “bridge loans” secured only by the anticipated tax credit due the homebuyer as collateral.

How the short-term tax credit advance loan works:
• The amount that may be borrowed in this manner may not exceed the anticipated tax credit due the homebuyer based on the computations of form IRS 5405.
• Fees and charges for the tax credit advance loan are not to exceed a nominal amount necessary for preparing and administering the loan.

The Down Payment Assistance Program has come back in another form.

[Is this a repeat of the public policy mistakes of the past, using 'no-down mortgages'? Since something should be done to stop the continuing slide in prices, encouraging those who have limited means to buy homes is one way to do it. Will this just extend the time of foreclosures further into the future? Probably. However, we as Realtors and as Homebuyers will always continue to take action in our own best interest. As they say, public policy issues are above our pay grade. We just hope that those who are in that pay grade have the experience and the wisdom to make the best decisions on behalf of the national interest. If time proves them wrong, we should vote them out, and the sooner the better.]

Surprise: FHA Will Allow 'Advances' on FTHB Tax Credit

National Mortgage News and SourceMedia, Inc.
May 12, 2009

The government today gave the green light to the financing of bridge loans of up to $8,000 to first time home buyers who qualify for tax credits under the Obama Administration's economic stimulus plan. The new mortgagee letter stipulates that government agencies, non-profits and FHA-approved lenders can give advances on the tax credits. Housing secretary Shaun Donovan told a national Realtor group Tuesday that, "We want to enable FHA consumers to access the tax credit funds when they close on their home loans so that cash can be used as a downpayment." The mortgagee letter is now available online but more details are to follow.

Understanding Your Credit Part 3

Understanding Your Credit
And Making The Most Of It. (Part 3)

A Quick Recap!

A credit score is a number lenders use to help them decide: If I give this person a loan or credit card, how likely is it that he or she will become 90 days or more late in a 24 month period. A credit score is a snapshot of your credit risk at a particular point in time. It may range from 350 to 850 with the average consumer score being 686. Credit scores are provided to lenders by the three major credit reporting agencies also know as repositories: Equifax, Experian and TransUnion.

Five Factors Determining A Credit Score

1. Late payments.
2. Frequency and patterns of credit use.
3. How long credit has been established.
4. The number of times credit has been requested (inquires).
5. The types of credit (i.e. revolving, installment, secured, unsecured.)

How Credit Bureaus Rank your Credit Score

1. 35% is based on payment history.
A recent 30 day late payment is worse than a 90 day late payment that occurred more than 12 months ago. This can lower your score by 60 points or more.

2. 30% is based on existing balances.
Make sure the balances do not exceed 50% of the maximum limit on each card. Over 50% of the credit card limit will have a significant negative effect on your credit score. Distribute existing credit card debt among three to five cards.

3. 15% is based on how long your credit has been established.
Do not close accounts that have a perfect payment history and have been open for at least three years. These cards have a positive effect on your credit score.

4. 10% is based on types of credit.
A combination of credit types is best. For example, a mortgage, an auto loan and three to five revolving credit cards is ideal. Home equity lines of credit are reported as a credit card debt when the amount is less then $30,000. Try to apply for lines of credit for at least $30,000.

5. 10% is based on inquiries.
Credit inquiries from various industries can lower your credit score up to 60 points. If multiple mortgage inquiries are within a 30-day window, they count as one inquiry in total. This is also true for the auto and insurance Industry inquiries. Personal credit and bank account review inquiries do not count.

Tips To Help Protect Your Credit

1) Be very careful providing personal financial information over the internet. If you are going to provide credit card numbers, social security number, etc over the internet make sure it is through a secure website. Look for https:// instead of http:// at the website address and look for the little yellow padlock on the lower right corner of the screen.

2) Use a paper shredder when discarding any personal credit information such as credit solicitations, credit card statements, pay stubs, invoices, bank statements, etc

3) Keep a list of all credit card accounts with their respective customer service phone numbers in a safe place in the event your wallet or purse is lost or stolen.

4) Never use your full name on personal checks, use your initials instead. For example: J. Doe or J.C. Doe. If your checkbook is lost or stolen, no one will know how to sign your check (except for the bank.)

5) When paying your credit card bill, do not put your full credit card number on the memo line of your personal check. Only list the last 4 digits of your account number.

6) It is not wise nor is it necessary to carry your social security card in your wallet or purse. Commit the number to memory and keep the card at home in a safe place.

7) If your wallet or purse is stolen, contact one of the three credit bureaus immediately and have them issue a fraud alert. That credit bureau will notify the other two. This will be done free of charge and you will receive a credit report showing that the fraud alert has been issued.

Here are the three credit bureaus:

Equifax 800-685-1111 www.equifax.com
Experian 888-EXPERIAN www.experian.com
Trans Union 800-916-8800 www.transunion.com

As always, if you need help or advice, just give me a call or email. More to follow!

Understanding Reverse Mortgages

The Basics

A "reverse" mortgage is a loan against your home that you do not have to pay back for as long as you live there. No matter how this loan is paid out to you, you typically don't have to pay anything back until you die, sell your home, or permanently move out of your home. Homeowners 62 and older who have paid off their mortgages or have only small mortgage balances remaining are eligible to participate in HUD's reverse mortgage program. The property must be your principal residence. The program allows homeowners to borrow against the equity in their homes in a variety of different ways. (What is HUD? The Department of Housing and Urban Development is the Federal agency responsible for national policy and programs that address America's housing needs, that improve and develop the Nation's communities, and enforce fair housing laws.)

Obtaining a traditional loan (a "forward" mortgage) requires that the lender check your credit/income to see how much you can afford to pay back each month. But with a reverse mortgage, you don't have to make monthly repayments. Your income generally has nothing to do with getting the loan. You could have no income and still be able to get a reverse mortgage. With most home loans, if you fail to make your monthly repayments, you could lose your home. Reverse mortgages do not have monthly repayments, so you can't lose your home by failing to make them. You can turn the value of your home into cash without having to move or to repay the loan each month. The cash you get from a reverse mortgage can be paid to you in several ways:

• All at once, in a single lump sum of cash
• As a regular monthly cash payment to you
• As a "credit line" account that lets you decide when and how much of your available cash is paid to you
• As a combination of these payment methods

Another feature is that the money paid to you is not taxable. This is because it is not income, it is a loan! The amount of cash you can get from a reverse mortgage depends on the program you select and - within each program - on your age, home, and current mortgage rates. With a reverse mortgage, you are taking the equity out in cash, so your debt increases and your home equity decreases.

Reverse mortgages allow you to use debt to turn your equity into income. You are reversing the deal you used to initially buy your home. Then, you had income and wanted equity. Now, you have equity and want income. There are also no limits on the value of homes qualifying for a HUD reverse mortgage. However, the amount that may be borrowed is capped by the maximum FHA loan limit for each city and county. It varies from $172,632 in rural areas to $312,895 in many major metropolitan areas (and even higher in Alaska, Hawaii & the U.S. Virgin Islands) depending on local housing costs. The size of reverse mortgage loans is determined by the borrower's age, the interest rate, and the home's value. The older a borrower, the larger the percentage of the home's value that can be borrowed. As always, if you need help or advice, just respond to this email.

US Treasury Dept. launches mortgage rescue plan

First participants in the Treasury Department's program to help homeowners avoid foreclosure include some of the nation's largest banks.By Tami Luhby, CNNMoney.com senior writer

Last Updated: April 16, 2009: 10:15 AM ET

NEW YORK (CNNMoney.com) -- The Obama administration's loan modification program is finally underway.

The Treasury Department announced Wednesday the first six participants to sign up for President Obama's plan. They include three of the nation's largest banks: JPMorgan Chase, which will get up to $3.6 billion in subsidy and incentive payments; Wells Fargo, $2.9 billion; and Citigroup , $2 billion. The others are GMAC Mortgage, $633 million; Saxon Mortgage Services, $407 million; and Select Portfolio Servicing, $376 million.

Additional loan servicers will be added to the list over time, a Treasury spokesman said.

Several major servicers, including JPMorgan Chase and Wells Fargo, said they began modifying loans under the government initiative earlier this month. CitiMortgage signed up for the program on Monday and will start processing applications soon.

"We view this modification program as yet another incremental opportunity for thousands of homeowners to preserve and maintain the dream of homeownership," Wells Fargo said in a statement.

Distressed homeowners and housing counselors have been eagerly awaiting the program's launch since Obama first announced it on Feb. 18. However, it took weeks for the government to clarify the terms and for the financial institutions to update their systems and start accepting applications, frustrating many of those in trouble.

Billed as helping up to 9 million borrowers stay in their homes, the two-part plan calls for servicers to reduce monthly payments to no more than 31% of eligible borrowers' pre-tax income or to refinance eligible mortgages even if the homeowner has little or no equity. The government is allocating $75 billion to subsidize part of payment reduction, as well as provide thousands of dollars in incentives for servicers and borrowers to participate.

The Treasury Department said Wednesday it is capping the payments to servicers to allow more companies to participate. It is allocating $50 billion to the program, with Fannie Mae , Freddie Mac and the Department of Housing and Urban Development providing the rest.

The modification plan calls for the servicer to reduce interest rates so that the monthly obligation is no more than 38% of a borrower's pre-tax income, and then the government would kick in money to bring payments down to 31% of income. Servicers can also reduce the loan balance to achieve these affordability levels. The government will share in the cost, up to the amount the servicer would have received if it had reduced the interest rates.

Only loans where the cost of the foreclosure would be higher than the cost of modification would qualify. Also, Treasury will not provide subsidies to reduce rates to levels below 2%.

It was not immediately clear whether the servicers must pay the incentives to homeowners and investors out of their funding share.

In addition to subsidizing the interest rates, servicers will use the Treasury funding to pay for incentives for themselves, homeowners and investors. The program gives servicers $1,000 for each modification and another $1,000 a year for three years if the borrower stays current. It will also give $500 to servicers and $1,500 to mortgage holders if they modify at-risk loans before the borrower falls behind.

Homeowners, meanwhile, will get up to $1,000 a year for five years if they keep up with payments. The funds will be used to reduce their loan principals.

The Treasury Department set the caps based on public data about the mortgages the servicers handle. Though the program mandates that servicers modify all loans that meet the requirements, the department feels the servicers will have sufficient funds to cover all troubled borrowers' applications.

"We're confident we'll have enough money," said Treasury spokesman Andrew Williams.

Separately, major servicers also recently started accepting applications under the refinance portion of the program.

California Approves a $10,000 Tax Credit for New Home Purchases

By Steve Doyle, President, Brookfield Homes San Diego
Dated: Feb 25, 2009

The Legislature for the state of California passed a revised budget plan last week and Gov. Arnold Schwarzenegger signed the historic legislation Feb. 20. Included in this new budget is a $10,000 tax credit for the purchasers of a new home.

Did you hear about the California $10,000 tax credit for the purchase of a newly constructed home?

The Legislature for the state of California passed a revised budget plan last week and Gov. Arnold Schwarzenegger signed the historic legislation Feb. 20. Included in this new budget is a $10,000 tax credit for the purchasers of a newly constructed home in the state of California. There are conditions to receive this tax credit, some of which are still being worked out. Let me tell you what we do know at this time:

1. The tax credit is good for 5 percent of the value of the newly constructed home, up to $10,000. (That would mean any home priced over $200,000 would qualify for the full credit.)

2. The tax credit will be available between March 1, 2009 and March 1, 2010, or when the funding authority runs out. (The Legislature has earmarked $100 million for this credit. That mean at least 10,000 new home sales. We don’t know yet if the tax credit will be based on when the contract for sale is written or when the escrow is closed for the purchase.)

3. The tax credit will be allocated by the Franchise Tax Board and will be available to new homebuyers over a three-year period. (Roughly one third of the tax credit will be available each year, details here are still being worked out.)

4. The new home purchaser must live in the home for at least two years.

5. There are no income limitations for the purchaser.

6. There is no “first time buyer” restriction.

7. There is no repayment requirement (unless the purchaser sells or rents out the home before two years have past from the close of escrow).

This is great news for California homebuyers. And, if the homebuyer also qualifies for the $8,000 Federal Tax Credit (see blog entry from Feb. 18 at www.expectmoreinahome.com/blog), then the total tax credit for buying a newly constructed home would be $18,000. That is $10,000 from the state of California and
$8,000 from the federal government.

Steve Doyle is president of Brookfield Homes San Diego/Riverside Division. The company’s homes are found in master-planned communities in San Diego, Riverside, and Imperial Counties.

Federal Reserve Surprises Financial Markets

Here we go again, with the talking heads on financial news misinterpreting the impact of the Fed's actions on home loan rates.

Here's the scoop. What the Fed just announced is huge – they have committed to buy another $750B in Mortgage Backed Securities, and $300B in Treasuries.

But what does this mean and why do you care?

Their actions provide a demand for Mortgage Backed Securities, which should help keep a ceiling on home loan rates moving much higher in the foreseeable future. That's good news, for homebuyers who are seeing the bargains out there and understanding that now is the time to act. Good news for those who are ready to refinance too.

But an important distinction – this does not mean rates may move significantly lower. Depending on exactly which coupons the Fed purchases when they go shopping for Mortgage Backed Securities, their actions may keep a lid on rates, but not push them very much lower. And based on what they've been buying since the beginning of this year when they started their purchasing program – that is exactly how it has played out.

Present home loan rates are within inches of historic lows. What is keeping you on the sidelines from acting now to refinance and get some dollars back into your own pocket, where they belong – or moving forward to buy the home of your dreams, while it is still on sale?

If you have questions – call me. You know there's no pressure, but let's discuss options and see if there is something we should be looking at to improve your situation.