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Update:



Temporary Loan Limits Return for all FHA Loans in High Cost Areas

Recently, the President signed into law a new bill H.R. 2112, called the Consolidated and Further Continuing Appropriations Act of 2012. In response to this new legislation, HUD has issued Mortgagee Letter 2011-39 detailing the acceptance and timing of the return to higher FHA loan limits.

Visit HUD's FHA Mortgage Limits webpage for a simple way to find out your loan limits



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Archive for October 1st, 2009

$8,000 Tax Credit…Alive Into 2010?

October 1st, 2009 by Daniel C. Salas
Categories: Chico Home Loans, Home Buying, Loan Qualification, Mortgage Industry Updates
Comments: 1 Comment »
Tags: , ,

Tax Credit Getting An Extension?

$15,000 Tax Credit...or $8,000

Nation’s Housing

Legislation introduced to keep tax credit alive

San Diego Union Tribune
 
By Kenneth R. Harney
2:00 a.m. September 27, 2009

WASHINGTON — Will Congress extend the wildly popular $8,000 home-buyer tax credit beyond its Dec. 1 expiration date?

That’s a question generating huge pressure on Capitol Hill, from would-be buyers who haven’t found the right house to realty agents, builders, lenders and squads of lobbyists working on their behalf.

But here’s the first hint of an answer: On Sept. 17, the leadership of Congress’ primary tax legislative committee introduced a tax credit bill that’s likely to zip through the House and move to the Senate rapidly. Charles Rangel, chairman of the House Ways and Means Committee, sponsored the bipartisan Service Members Homeownership Tax Act (H.R. 3590), which would extend the credit for another 12 months for thousands of military, Foreign Service and intelligence agency personnel who’ve been posted abroad during 2009.

Rangel’s bill, with 29 co-sponsors, would keep the credit alive through Nov. 30, 2010, for service members who had at least 90 days of overseas duty assignments during 2009 and who otherwise meet the eligibility tests for the credit. The bill would also prohibit the IRS from “recapturing” the $8,000 credit when service members are forced to sell or rent out their houses because they are ordered to deploy to a different duty station, overseas or inside the country.

Under the regular rules of the program, buyers who obtain the credit must use their houses as a principal residence for 36 months or be required to repay the credit to the IRS. As a result of the 36-month rule, many military and diplomatic employees have been hesitant to buy a house and claim the credit, or are worried that their absence from the country could force them to repay the money.

For example, the spouse of a Foreign Service officer posted to the Philippines this summer for a two-year assignment wrote to Rep. Earl Blumenauer, D-Ore., to alert him to a flaw in the tax credit program. The Oregon couple bought their first home earlier this year, encouraged by affordable prices and the $8,000 credit. But having now been posted abroad, they cannot claim to occupy the house as their principal residence. Under current rules, they even face recapture of the full credit.
Blumenauer, who is a member of the Ways and Means Committee, said “it is absurd that thousands of Americans serving our country, away from friends and family, must choose between their service work and homeownership.” He wrote corrective legislative language that ultimately was incorporated into Rangel’s tax bill.

Though nothing is guaranteed on Capitol Hill, legislation eliminating tax penalties on the military during wartime looks like a good bet for early passage in both houses. Equally significant: It now appears likely that there will be an $8,000 tax credit available a year from now — at least for some purchasers. Which raises the question: Why not leave it in place for all first-time buyers?

There’s growing support for that on both sides of the Capitol, but there are also some complicating issues. In the Senate, the most outspoken advocate for months has been a Republican, Sen. Johnny Isakson of Georgia, a former real estate broker. He wants not only to extend the credit to Dec. 1, 2010, but to raise the maximum to $15,000, and make it available to all home buyers next year.

But recently, key Senate Democrats produced their own version of an extension, limited to six months, retaining the ceiling at $8,000 and targeting only first-time purchasers. The bill’s primary sponsor is Sen. Benjamin Cardin, D-Md. Democratic co-sponsors include Majority Leader Harry Reid of Nevada and Debbie Stabenow of Michigan. Republicans John Ensign of Nevada and Isakson have signed on as well.

In a statement, Cardin raised what may prove to be the crucial issue affecting the scope and duration of any credit extension: Cost. “A six-month extension is a fiscally responsible way to provide adequate time to nudge even more prospective home buyers off the sidelines,” he said.
Estimates of the revenue costs of the current credit vary widely, from $3 billion to $8 billion and up. How do you pay for any extension without worsening the budget deficit? The new Rangel bill includes the answer: You raise taxes somewhere else — you “pay as you go.” The Rangel bill pays for most of the servicemen’s credit extension by increasing IRS penalties on taxpayers who fail to file partnership or “S” corporation returns.

This would raise an estimated $327 million over the next 10 years. Where and how to raise taxes to cover the far larger cost of a six-month or 12-month extension of the current tax credit could prove much more controversial.

Union-Tribune

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Chico, CA Interest Rates Market Report – Economic Influences – October 1, 2009

October 1st, 2009 by Daniel C. Salas
Categories: Chico Home Loans, Home Buying, Interest Rates, Weekly Market Report
Comments: Please leave a comment.
Tags: , , , , , ,
Rates Are Smokin'

Are Your Buyers Ready?

Welcome October…Very Welcome

OK, what did I tell you?  We’d be back in the 4%-ages in October.  Don’t know how long we’ll be here, but let’s enjoy it, while we’re here.  Not to mention, I am just LOVING THE WEATHER!  Tomorrow might be the last 80 degree day we see until next summer.  Wow!

Jobless Numbers

Mortgage-Backed Securities have crawled their way back up after ending the day, down, yesterday.  So, we’re back in the 4%’s.  NICE!  Unfortunately, it comes at the expense of Stocks and worse than expected employment information.  Keep in mind tomorrow’s numbers could REALLY shake things up.  Initial Jobless Claims rose by 17,000 claims to 551,000.  Now that just sucks!  551,000!?  They expected 535,000, so, not only was it worse than expectations, but if you read yesterday’s article, you’ll understand the severity of a half a million people losing their job in one week. 

End Of The Day Rates…?

Expect them to move a little bit higher!  The annoucement of another Treasury Auction should stir things up a bit.  So, this morning’s rates might be sacraficed, until tomorrow’s unemployment numbers hit.  Which could take us right back to this morning’s rates.  You can follow rates by logging onto the home page of the website at www.accessloans.net and moving down to the left a little.  It’s a close representation, but not exact, as every borrower is different. 

What’s Better…Low Rates or Low Unemployment?

Employment is the number one category for a healthy housing market.  So, if unemployment keeps hemmorhagging, can it continue to help housing?  It will be interesting to see.  I think that a general increase in interest rates, and a progression toward a better employment situation, in the U.S., is what will drive the housing market further than termporary tax incentives and government purchase programs. 

Personal Spending

This economic factor has not increased this fast in over eight years!  Generally, this would send interest rates skyrocketing because it could show that the economy is moving in record pace leaps and bounds.  But, keep in mind that the “Cash for Clunkers” program has come to an end.  So, it’s an interesting statistic.

Fed’s Favorite Gauge Of Inflation

The Core Personal Consumption Expenditure Index (PCI) chimmed in at a meager 0.1% reading.  This brought the Core PCI year-over-year reading to 1.3%.  The Fed’s desire is to keep this reading below 2.0% to stave off inflation (interest rate’s worst enemy).  This is very good news for interest rates, coupled with tomorrow employment figures, we could be in for very opportunitic times. 

All’s Good On The Housing Front

Pending Home Sales were WAY UP!  6.4%!  /The industry only expected a 1.0% increase, so Kudos to the $8,000 Tax Credit Incentive and Realtors that are understanding the current market and helping people move into wonderfully priced home and interest rates.  I expect that the tax credit will be extended.  There is already a bill, in Congress, to extend this to military personnel that did NOT have an opportunity to take advantage of the program, while out serving our country, overseas.  We’ll see!

Related Must Reads

Why I Thought Rates Would Move Down
$8,000 Tax Credit “FAX”
What Are The REAL Unemployment Numbers?

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