Last Friday, President Obama signed a bill to extend the $8,000 first-time home buyer tax credit to April 30, 2010. In addition to the extension for first-timers, it also added a provision to provide a tax credit of $6,500 to home owners who have lived in their current residence for at least 5 years who are looking to buy a replacement home.

Brief article from Mortgage News Daily discussing the provision:

http:///www.mortgagenewsdaily.com/11062009_obama_signs_home_buyer_tax_credit_extension_will_it_be_effective.asp

With the new law, you must have entered into a purchase contract by the April 30th, 2010 deadline and then buyers will have till June 30, 2010 to actually ‘close’ the purchase contract; so in effect benefits survive until the end of the 2nd quarter as long as you get into contract by April 30th.

(See the announcement on the IRS web-site for a little more about the announcement and to get access to the form needed to receive the credit on your taxes)

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

The announcement is being seen as a positive signal from the government by many, especially ‘would be’ first-time home buyers and real estate professionals.  It was also announced they have increased the income limits to $125,000 for single buyers and $225,000 for couples. Pretty generous, in my opinion.

So the real question at this point is, or at least one of the important questions, will this help the ailing housing market?

Without getting too political, the prevailing wisdom from Washington seems to be this will help motivate those who have yet to take advantage of low-interest rates, and low home values (relatively speaking of course) and it will create economic benefits to the real estate industry, banks, and certainly county & city tax receipts, as the more homes get sold the more property taxes get collected in those areas of the country that collect them.

It is hard to argue that with the low-interest rates, lower home values, and a nice little gift from our federal government, that this is about as good time as any in recent times to buy a home.

Question still remains though will this tax credit actually stimulate more home buying between now and the end of  April of 2010? I think the answer is ‘yes’ but to what degree is hard to predict. The real incentives to buy ‘now’ are in place, low prices and low rates, thus affordability is there for many qualified first-time home buyers already. Does the tax credit really make or break the deal for most of these ‘would be’ buyers? I am not so sure it does.

The buying of a home is nearly always an emotional decision. Home buying is usually made for lifestyle reasons and even those few who make purely financial decisions, it is hard to argue against buying right now with conditions such as they are, forgetting the tax credit. The tax credit is an incentive, but I am not certain whether it is really a ‘deal maker’ for most new home buyers. My opinion is people would have continued to buy up homes at these price levels even without the tax credit, though I am sure some will be motivated by it, just not as many as some think. At the end of the day though, the faster we can get back to a stable real estate market, the better.

Is the tax credit a perfect solution?

It is not, in my opinion, however if we can accelerate the recovery by providing incentives for home buying, even if it only has a small effect, then there is hope we can get into a real economic recovery and start to see stronger consumer confidence, higher employment levels and a turnaround in our deficit spending policy.

One final thought, given the reports of banks holding back significant housing inventory to keep values higher, I predict we will see another extension to this provision in May as it is unlikely that we will be close enough to a stable housing market by then. Realistically, I can see the tax credit lasting through the end of 2010 and quite possibly into 2011.

Jack Arney is a senior mortgage advisor who works for Chestnut Mortgage, Inc in Northern California and the entries on this blog are his opinions and not necessarily the opinions of his employer Chestnut Mortgage, Inc a dba of Opes Advisors, Inc of Palo Alto, CA. If you want to contact Jack please email him jack@ChestnutMortgage.com.

MORTGAGE fraud continues to expand, in both the number of incidents and the methods that criminals use to strip equity from homeowners and lenders. Now a new online service offers free help to keep homeowners safe from an emerging form of fraud known as “house theft.”

Like other real estate Web sites, this new service, called ePropertyWatch.com, provides informal home appraisals and other information to help track neighborhood real estate activity. But unlike the others, it also monitors public documents associated with a home and promises to alert homeowners to possible criminal activity, like a forged deed that purports to transfer a home’s title in order to release an existing mortgage.

In this form of fraud, thieves take “ownership” of the home so they can “sell” it to nefarious associates who have taken out another loan on the property. The “seller” then splits the sale proceeds with the fraudulent buyer.

Industry analysts called ePropertyWatch’s service a useful tool for homeowners, though it is being offered only in major metropolitan areas right now.

EPropertyWatch is owned by First American CoreLogic, a company based in Santa Ana, Calif., which, among other things, collects real estate and mortgage data from municipalities and sells it to businesses.

Reported cases of mortgage fraud over all jumped 36 percent during the 2008 fiscal year, from the previous 12 months, to nearly 64,000 incidents, according to an annual report released in July by the F.B.I.

Although house theft, or “title theft,” is less common than other forms of mortgage fraud, Ann Fulmer, the vice president for business relations at Interthinx, a fraud-prevention company that contributed data to the F.B.I. report, said it was “incredibly easy to do.” This type of fraud is most prevalent in cities with many vacant properties, like Detroit and Miami, she said.

Users register for the ePropertyWatch service by identifying their home’s address and then choosing their name from a list of randomly generated made-up names, to help ensure that only the true property owner registers on the site.

Brad Strothkamp, an analyst with Forrester Research, a research and consulting firm in Cambridge, Mass., said the fraud detection service was particularly helpful.

“It’s so difficult to get this type of information from such a reputable source,” he said, referring to both the fraud detection and the automated appraisal information.

To estimate a home’s value, ePropertyWatch uses information like nearby home sales and recent property appraisals, among other data. That informal appraisal, said Michael Maron, a senior vice president with First American, will typically be within 10 percent of the home’s actual market value.

The Web site also shows recent sales and foreclosures in the user’s neighborhood, as well as long-term changes in the median sales price of the ZIP code. Users can sign up to receive an e-mail message whenever a new lien is placed on the home, for instance, or when their assessed value changes by any amount the homeowners deem significant.

Mr. Strothkamp said consumers might use the site’s automated appraisals to help them cut their property taxes. Mr. Strothkamp, who lives in Northern California, said homeowners in areas with declining property values could collect evidence and present it to their local tax assessor as part of the formal challenge process.

There is one weakness in the service that will affect a significant number of homeowners. Namely, it covers only major metropolitan areas, so residents in outlying areas cannot yet register for the service because First American does not have enough reliable data on such areas.

Some suburbs like Westchester County, for instance, are not yet covered, while others, like New Haven County in Connecticut, are only partly covered.

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With “easy” mortgage money a thing of the past, home buyers need the assistance of a knowledgeable mortgage officer to navigate through the complicated financing process.

Call Sonny Nguyen at (209) 534-7211

Sonny Nguyen, a loan officer with Century 21 Mortgage, said tightened credit standards and new real estate regulations can confuse most home buyers.

“Clients need to be hand held,” said Nguyen.  “You have to walk them through the process and be familiar with all the different products.”

Call John Anaya at (209) 758-4938

Loan officer John Anaya said the process at Century 21 Mortgage begins with a “pre-approving” the homebuyer.  In the lending world, Anaya said there’s a huge difference between “pre-approved” and “pre-qualified.”

He said homebuyers are pre-qualified for a loan after a brief interview with the lender.  The lender basically estimates how large a loan a buyer can secure.

The pre-approved process is much more accurate and detailed.  Lenders will order and study a credit report, verify income, savings, employment history and assets.  A pre-approval carries much more weight than a pre-qualification.

Anaya, fluent in Spanish, estimates conventional and FHA loans each account for 45 percent of the loans he’s written.  VA loans make up about 10 percent of his loan portfolio.  Interest rates, said Anaya, are at record lows — 4.8 percent.

Anaya said FHA loans, which feature low down payments, are popular with first-time buyers.  Homeowners moving up to larger residence and investors typically opt for conventional loans.

In today’s real estate market, which a bank-owned home can receive 20 or more offers, Anaya said there’s an advantage choosing a conventional loan.

“Conventional loans are not as strict,” he said.  “You don’t have to ask for pest or other inspections.  That makes for a cleaner offer to the bank.”

In addition to being able to match a home buyer with the right loan, Nguyen said there is a definite advantage to dealing with a locally owned mortgage brokerage like Century 21 Mortgage.

“If there’s a problem, you always know where to find us,” he said.  “I hear all the time, ‘I can’t get a hold of that loan officer any more.’  Our overall fees will also be about $200 cheaper.  We don’t have junk fees.”

Look for this real estate blog every Friday on the www.c21mmblog.com website. If you are looking for property in Northern California, or for more information on buying or selling a home, visit – c21mm.com.  Please send any comments, questions or suggestions, to newsandviews@c21mm.com or just leave a comment below.

This week I had the pleasure to help an 86 years old girls, she’s had no householders insurance on her home for the previous 5 years and lives in the hills of Northern California. Also she is behind on her taxes because she just does not have the additional money to pay for these things.

I was ready to provide her with a reverse mortgage that will give her $10,000 now to fix up her home and provide her with an additional $1,000 per month for the remainder of her life. The balance of her life will be lived in financial comfort rather than hardship and lack.

everyone knows seniors that are in the same or similar eventualities, they’re just getting by and they don’t want to ask family members to help because they do not want to be a burden to them. There’s also an argument of their pride, they’ve been self enough all of their lives but now they need a little help.

This great lady is sufficiently lucky to have church member that come and clean up her yard and look after her a bit, but they don’t know her financial condition either. Did you know some wonderful senior in the same or similar situation that might use a bit of money help?

Our company is in over twenty states but we have contacts in every state, if you know somebody that might use some help in their life by trying some of their equity in their home, the reverse mortgage could be a perfect solution for them.
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