Will Taxpayers Have to Bail Out FHA?

The Federal Housing Administration stepped up to guarantee low-down-payment mortgages for riskier buyers after the mortgage market crashed. Now with many of them in default, the FHA’s losses have mounted, and it’s possible that its reserves will fall below the 2 percent level required by law. If that happens, taxpayers may have to bail out FHA.

Some housing analysts believe that this will lead to tighter restrictions FHA mortgages. "It absolutely changes the political dynamic once you have to ask taxpayers" for money, says Lisa Marquis Jackson, vice president for John Burns Real Estate Consulting.

The 10 states with the most FHA-insured mortgages are:

1. Texas


2. California


3. Florida


4. Georgia


5. Ohio


6. Illinois


7. Pennsylvania


8. Michigan


9. Virginia


10. North Carolina

Source: The Wall Street Journal, Nick Timiraos (09/05/2009)

Madoff Beach House Is Listed at $8.75 Million

The U.S. Marshals Service announced Tuesday that the Corcoran Group will list imprisoned financier Barnard Madoff’s beach home in Montauk, N.Y., for $8.75 million.

The property sits on a 1.2-acre lot, nestled close to the southeastern tip of Long Island.

Its proximity to the water and the eye-popping view are the grandest aspects of the 3,014-square-foot garageless home, observers say. The house, described by marshals as "simple, stylish and understated," is at the foot of a steep driveway off Old Montauk Highway.

"Our goal is to place the homes on the market soon to minimize the amount of time they remain in our inventory and maximize the return to the victims," U.S. Marshal Joseph R. Guccione said in a statement.

Source: The Associated Press, Tom Hays (09/01/2009)

5 Steps to Financing a Sale

Selling a home and helping the buyer finance may be a good option to getting a house sold, experts say. Yet it is imperative that the seller thoroughly investigate the buyer’s finances before agreeing to the deal.

Here are some important initial steps to take:

• Investigate the buyer by asking him to fill out a Uniform Residential Loan Application.


• Get bankruptcy details by checking out the case through Public Assess to Court Electronic Records (PACER), a service of the U.S. Judiciary.


• Pull the buyer’s credit report and eviction and criminal history via the American Apartment Owners Association Web site.


• Insist on 20 percent down or offer a contract for deed, which only confers full ownership rights after the home is paid off.


• Consider offering a lease-option with part of the payment going toward the purchase price, which gives the buyer time to repair his credit before seeking conventional financing.

Source: The Wall Street Journal, June Fletcher (08/28/2009)

Video: How To Sell A Home (Err...Maybe Not!)...

If Timothy Geithner—the current United States Secretary of the Treasury—can't price his home to sell...what does that say about the ability of your clients to price a home correctly in today's market?
Watch this hilarious outtake of how NOT to sell a home. And this is from the man with a large role in directing the Federal Government's economic response to the financial crisis—unbelievable!!...

http://www.thedailyshow.com/watch/wed-july-29-2009/home-crisis-investigation

IRS Is Scrutinizing Mortgage Deductions

According to published reports, the Internal Revenue Service is more closely examining how taxpayers are reporting mortgage interest deductions.

The IRS is reportedly examining some returns with high deductions for mortgage interest and enforcing obscure rules that most home owners and many accountants could be unfamiliar with.

The calculations are very complex and rely on precise records that some home owners may have trouble producing.

Experts advise home buyers who have borrowed more than $1 million in mortgages and home equity loans since 1987, the year deductibility limits were enacted, to consult a tax expert because the newest loan may not be tax deductible.

Source: Investment News Daily, Art Auerbach (08/25/2009)

Bill Encourages Energy Improvements

A bill that helps home buyers afford energy improvements and encourages banks to offer a discount on loans to pay for reducing energy usage passed the U.S. House in June and could pass the Senate in the fall.
The American Clean Energy and Security Act of 2009 requires Fannie Mae and Freddie Mac to offer discounts on mortgages that include extra cash for making a home more energy efficient.
These discounts, which are already in effect at some lenders like J.P. Morgan Chase & Co. and Bank of America, include savings on closing costs for homes that have Energy Star appliances.
The Federal Housing Administration is offering a plan through its approved lenders that allows borrowers to add the cost of making efficiency improvements into the mortgage, but the extra money doesn’t count toward determining how much loan a borrower can qualify for. For instance, a borrower who adds $5,000 to a $100,000 loan to afford new Energy Star appliances would only have to qualify for $100,000 – not $105,000.
Source: The Wall Street Journal (08/24/2009)

What Has the Housing Crash Cost Americans?

How much real wealth have Americans lost so far in the real estate crash?

The Federal Reserve estimates that the total market value of U.S. homes fell 18 percent from $21.9 trillion to $17.9 trillion or about $13,000 per person from the end of 2006 through March 31, 2009.

The Fed also estimates that homeowner’s equity has declined 40 percent from the peak and now accounts for just 41.4 percent of real estate values. By comparison, after the last slump in the 1990s, home equity levels remained in the high 50s.

This collapse in equity makes it difficult for potential buyers to sell their homes and trade up, which many experts say will weigh heavily on the housing recovery.

Source: The Wall Street Journal, Brett Arends (08/20/2009)