Gabe's Blog

Happy New Year!

As we kick-off the new year, we are also kicking off yet another set of changes to our lending environment.

Most of these changes went into affect on January 1, 2010, and I wanted to share them with you.

The first is known as Regulation X. It affects the process in which disclosures are handled for loans on both home purchases and refinances. This change is affecting banks, brokers and mortgage bankers, such as myself at RPM Mortgage, all the same. As part of Regulation X, we have an updated GFE (Good Faith Estimate) 2010. The importance of the GFE and the accuracy of it, have never been so crucial. Any "change", such as the interest rate, closing costs, contract extensions, final sales price, credits, etc... or anything for that matter that may affect the APR of the loan could impact our ability to close the loan on time.

With changes like these to our regulations, it has never been more important than now to partner with reputable knowledge and trust worthy professions in the lending, escrow and title profession. This is not a market for rookies! You have the choice of who you work with. Make sure your team includes the best that you can hire. When working with your real estate partner, it is crucial to set realistic timeframes. This may seem intuitive but the turnaround times of 2009 are no longer achievable. Any changes to a transaction will set into effect a need to reissue a new set of disclosure documents. Rush situations will no longer be in the control of the lender to accomadate but will be regulated by Regulation X.

The new laws which have gone into effect are said to be the biggest change to the mortgage lending industry in over 20 years. RPM Mortgage has hit the ground running with significant training and education to keep us at the front of the pack.

My promise to you is to keep you informed of these changes and the impacts on you. I guarantee that we will do everything in our power to educate you and your clients and to insure as smooth of a lending process as possible.

We are committed to our clients and know that 2010 will be an overall very good year for Real Estate in the Bay Area. If you have any specific questions, please let me know how me and my team can help you.

Thanks,

Gabe

Washington, DC – The Federal Housing Finance Agency (FHFA) today announced that the maximum conforming loan limits for mortgages originated in 2010 will remain unchanged from the maximum levels for 2009 originations. The maximum loan limits for counties across the United States can be found here (116 pages).

Consistent with the provisions of HERA, the maximum loan limit for one-unit properties in most of the contiguous United States has been left unchanged at $417,000 for 2010. Loan limits for two-, three-, and four-unit properties in 2010 will also remain at 2009 levels: $533,850, $645,300, and $801,950 respectively for homes in the contiguous U.S. Loan limits are higher in certain high cost areas, where median home prices are high, and in certain statutorily designated locations, including Alaska, Hawaii, Guam and the U.S. Virgin Islands. The full list of HERA-based loan limits for 2010 can be found here (116 pages).

In November 2008, when setting 2009 loan limits under the terms of HERA, FHFA found that the national average home price had declined over the prior year and thus left the national loan limit unchanged. This year, given the prior year’s price decline and HERA’s requirement to offset any price increases with prior declines, the relevant calculation period over which price changes are evaluated is the most recent two-year period. FHFA thus could only increase the national limit if a net price increase was found over the two-year interval.

The limits set forth under the Continuing Resolution apply to 2010-originated loans. Seasoned loans acquired by Fannie Mae and Freddie Mac in 2010 but originated in certain prior periods will be subject to the permanent HERA-based limits, which may differ in some areas. It is thus necessary for FHFA to formally establish 2010 loan limits for all areas pursuant to the HERA legislation.1

In setting 2010 HERA limits for high-cost areas, FHFA has decided to not permit declines relative to the prior HERA limits. While HERA did not explicitly prohibit declines in high-cost area loan limits, that approach is consistent with the statutory procedure for responding to changes in prices on a national basis. Subject to this policy, the 2010 HERA limits reflect the higher of the high-cost area limits initially announced for 2009 (available at http://www.fhfa.gov/webfiles/858/FullCountyLoanLimitList2009.xls) and the limits directly calculated under the HERA formula.

Questions concerning loan limits can be sent to FHFAinfo@FHFA.gov.

Thanks,

Gabe

Homebuyer Tax Credit Update!

On November 6, 2009, President Obama signed a bill to extend the tax credit for first-time homebuyers (FTHBs) through June 30, 2010. The bill also opens up opportunities for others who are not buying a home for the first time.  Here is a concise summary for you to better understand how this can help you:

Tax Credit for Homebuyers

First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Current Owners: The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What are the New Deadlines?

In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

Tax Credit Versus Tax Deduction

It’s important to remember that the tax credit is just that… a tax credit. The benefit of a tax credit is that it’s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a first-time homebuyer were to owe $8,000 in income taxes and would qualify for a tax credit of $8,000, she would owe nothing.

Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little income tax liability. For example, if a first-time homebuyer is eligible for a tax credit of $8,000 but is liable for $4,000 in income tax, she can still receive a check for the remaining $4,000!

Higher Income Caps

The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible

Joint filers who earn up to  $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

Maximum Purchase Price

Qualifying buyers may purchase a property with a maximum sale price of $800,000.

------------------------

Remember, the new tax credit program includes a number of details and qualifications. For more information or answers to specific questions, please call or email me today.

In addition, you may be able to benefit from additional housing related provisions, including the following:

------------------------

Tax Incentives to Spur Energy Savings and Green Jobs

This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.

Landmark Energy Savings

This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.

Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing

This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs. Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8) to increase energy efficiency, including new insulation, windows, and frames.

Expanding Housing Assistance

This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.

As always, if you have any questions about your specific situation or would like to discuss how you may benefit from this program, please call or email me. I’ll be happy to sit down with you.

Thanks,

Gabe Bodner

408-426-4416

First-time homebuyers have been getting tax credits of up to $8,000 since January as part of the economic stimulus package enacted earlier this year. But with the program scheduled to expire at the end of November, the Senate voted Wednesday to extend and expand the tax credit to include many buyers who already own homes. The House is scheduled to vote on the bill this week.  If the bill is passed, which we expect it to be, it will still need to be signed into law by the President.  In the case the bill is signed into law, here is some preliminary information on the tax credits:

Buyers who have owned their current homes at least five years would be eligible for tax credits of up to $6,500. First-time homebuyers — or anyone who hasn't owned a home in the last three years — would still get up to $8,000. To qualify, buyers in both groups have to sign a purchase agreement by April 30, 2010, and close by June 30.

"This is probably the last extension," said Sen. Johnny Isakson, R-Ga., a former real estate executive who championed the credits.

The homebuyer's tax credit is one of two tax breaks totaling more than $21 billion that the Senate included in a bill extending unemployment benefits for those without a job for more than a year. The other would let companies now losing money recoup taxes they paid on profits earned in the previous five years.

The real estate industry has been pushing to extend and expand the housing tax credit. About 1.4 million first-time homebuyers have qualified for the credit through August. The National Association of Realtors estimates that 350,000 of them would not have purchased their homes without the credit.

The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.

The credit would be extended an additional year, until June 30, 2011, for members of the military serving outside the United States for at least 90 days.

Stay tuned, as this bill (The bill is H.R. 3548) hopefully gets passed into law, I will keep you updated on the specifics.

Thanks,

Gabe

Many people have recently asked me “is now a good time to buy or should I wait?” I certainly understand one’s hesitation in buying due to fluctuating home prices. However, I would like to share with you some information on the market and interest rates that might affect your thought process on why now is a great time to buy versus waiting.

I was at an economic summit last week with a very reputable financial analyst, Barry Habib who specializes in analyzing the mortgage backed securities markets and treasuries. He explained many items that are currently putting pressures on interest rates (most specifically the Fed's decision on buying Treasuries and inflation) and his prediction is that in the next 6 months interest rates will be 1% higher than the current rates. He believes rates will gradually be climbing with some possible dips in the market here and there. He described this as a child playing with a yo-yo on an escalator going up (I really liked this visual). This will most certainly affect one’s affordability and one’s monthly payment when rates go up.

Additionally, he spoke about timing of the housing market and explained why it is smart to buy now, which is either at or close to "the bottom" of the market. First, it is impossible to predict the bottom. Anyone who says they know when the bottom will be is only making a prediction or lying. Second, buying now gives a buyer more negotiating power with the seller and more options of homes to choose from. If you wait until the market starts to go back up, which it has already started to do in several sub-markets, than you will have less negotiating power, less inventory (less homes to choose from), and less flexibility with terms of the purchase contract. Third, the high-balance conforming loan limit ($729,750) is scheduled to go away after December 31, 2009 and go back to $417K next year unless Congress decides to extend this through next year. Lastly, the $8K tax credit goes away after December 1, 2009 (Congress is discussing a possibly $15K tax credit next year but this has not been decided on yet). All this coupled with higher interest rates will make buying “later” a much more challenging time to buy and more expensive in my opinion. I am not saying this to put pressure on you but simply to inform you of the market knowledge that I have and to help you to make an educated decision on one’s “timing” of the market. I hope that you find this information helpful.

If you would like to further discuss your specific situation, please do not hesitate to contact me at Gabe@BayAreaHomeFinancing.com or 408-426-4416.

Thanks,

Gabe Bodner

For those of you who supported me in my fundraising efforts for Best Buddies, thank you so much!  I have successfully raised $1307 which is just shy of my goal of $1500.  If you have not had a chance to donate, there is still time, so please click on this link to donate today, http://www.hcchallenge.org/gbodner 

This year was the sixth Audi Best Buddies Challenge: Hearst Castle. Close to 1,500 people participated in the weekend’s events, including the 100-mile cycling course (which is what I did) from Carmel to San Simeon, on Saturday, September 12.

I am very grateful to have been able to participate in this event and be a part of such a wonderful organization. Throughout the weekend, I had the opportunity to learn just how important the Best Buddies programs are and how big an impact a friend and job can make on someone’s life.  Not only was this a challenging and fulfilling experience for me physically but emotionally it was just as fulfilling.  I cannot tell you how overwhelmed I was to see many of the young people with intellectual disabilities out there riding and laughing, having fun, and making lifelong friends.

I was sincerely impressed with the amount of money raised by individuals soliciting donations from their friends and family. The top fundraiser raised $56,000!  The Challenge raised almost $4M for Best Buddies International.

Thank you so much for your support.  I look forward to participating in the event again next year and I hope you will continue to support me and this wonderful organization!


With much appreciation,

Gabe Bodner

C.A.R. LAUNCHES MORTGAGE PROTECTION PROGRAM

To help provide first-time home buyers with peace of mind when purchasing a home, the C.A.R. Housing Affordability Fund (C.A.R.H.A.F.) is offering a new mortgage protection program to first-time home buyers.

Through the Housing Affordability Fund's Mortgage Protection Program, first-time home buyers who lose their jobs due to layoffs may be eligible to receive up to $1,500 per month for up to six months to help make their mortgage payments. A qualified co-buyer also can participate in the program, for a monthly benefit of $750 per month for up to six months. Program benefits also include coverage for accidental disability and a $10,000 death benefit. C.A.R.'s Housing Affordability Fund is dedicating $1 million toward its Mortgage Protection Program this year, and estimates that up to 3,000 families will benefit from the program throughout 2009.

To qualify for the Mortgage Protection Program, applicants must:
. Be a first-time home buyer - someone who has not owned a home in the last three years
. Open escrow April 2, 2009, or later, and close on or before Dec. 31, 2009
. Use a California REALTOR® in the transaction
. Purchase the property in California
. Be a W-2 employee (cannot be self-employed or military personnel)

First-time home buyers must request an application for the H.A.F. Mortgage Protection Program from their REALTOR®. For applications and other information on this exciting new program, go to www.car.org/aboutus/hafmainpage/ or contact Monica Rodriguez at (213) 739-8380 or monicar@car.org.

More info: www.car.org/aboutus/hafmainpage/