New Foreclosure Alternative To Keep Homeowners In Homes, Temporarily

A new program to help ease the pain of some homeowners heading for foreclosure has recently been rolled out by Citi Mortgage. This new plan is aimed at homeowners who are already seriously delinquent, having missed at least three monthly payments, and are on the road to losing their homes.

Under the new program, instead of borrowers falling further and further behind on their mortgages, leading to an eventual foreclosure sale, they can stay in their homes for up to six months, if they agree to then hand over the deed to the lender.

In these cases, by giving the house back to the lender, in a transaction called a deed-in-lieu of foreclosure, the lender saves considerable expenses, especially on legal fees.

The obvious advantage for borrowers is that it allows them time to plan their move to a new home. And while borrowers still lose their homes, the program promises to make the process more orderly and provides benefits for both lender and borrowers.

In fact, under the new plan, Citi Mortgage says that it will pay the borrowers a minimum of $1,000 to help with relocation expenses.

In addition, Citi will also provide relocation counseling and may even cover some monthly property expenses while the borrowers remain in their homes, if Citi determines the borrowers can't afford the expenses.

On the borrower's end of the transaction, they must agree to keep the homes in good condition and to meet with trained relocation professionals every couple of months to facilitate their final moves.

This specific program targets borrowers Citi believes would not benefit from mortgage modifications because they could not afford even sharply reduced mortgage payments. It also applies to borrowers who went through mortgage modifications but fell behind on their payments anyway.

In order to be eligible for the program, homeowners must have their first mortgages with Citi Mortgage, no second mortgage, live in the home and be seriously delinquent on mortgage payments, at least 90 days or three months late.

This new program will initially be confined to six states: Texas, Florida, Illinois, Michigan, New Jersey and Ohio. With plans to open up the program nationally if it works in those states.

It will be interesting to see how many homeowners this affects and its initial execution. And of course we will see if it will be rolled out nationally or if other lenders follow suit. As always we will provide further updates as they become available.

Pending Home Sales Rise for Ninth Consecutive Month

Posted By susanne On December 1, 2009 @ 5:00 pm In Home Buying 101, Real Estate,
home_sales [1]RISMEDIA, December 2, 2009—

Pending home sales have risen for nine months in a row, a first for the series of the index since its inception in 2001,according to the National Association of Realtors®.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in October, increased 3.7% to 114.1 from 110.0 in September, and is 31.8% above October 2008 when it was 86.6. The rise from a year ago is the biggest annual increase ever recorded for the index, which is at the highest level since March 2006 when it was 115.2.

Lawrence Yun, NAR chief economist, said home sales are experiencing a pendulum swing. “Keep in mind that housing had been underperforming over most of the past year. Based on the demographics of our growing population, existing-home sales should be in the range of 5.5 million to 6.0 million annually, but we were well below the 5-million mark before the home buyer tax credit stimulus,” he said. “This means the tax credit is helping unleash a pent-up demand from a large pool of financially qualified renters, much more than borrowing sales from the future.

The PHSI in the Northeast surged 19.9% to 100.2 in October and is 44.2% above a year ago. In the Midwest the index rose 11.6% to 109.6 and is 36.6% higher than October 2008. Pending home sales in the South increased 5.4% to an index of 115.4, which is 31.6% above a year ago. In the West the index fell 11.2% to 127.7 but is 21.9% above October 2008.

Yun cautioned that home sales could dip in the months ahead. “The expanded tax credit has only been available for the past three weeks, but the time between when buyers start looking at homes until they close on a sale can take anywhere from three to five months. Given the lag time, we could see a temporary decline in closed existing-home sales from December 2009 until early spring when we get another surge, but the weak job market remains a major concern and could slow the recovery process.

“Still, as inventories continue to decline and balance is gradually restored between buyers and sellers, we should reach self-sustaining housing conditions and firming home prices in most areas around the middle of 2010. That would mean broad wealth stabilization for the vast number of middle-class families,” Yun said.

For more information, visit www.realtor.org

Congress Passes Tax Credit Extension/Expansion

I just got this exciting email!


To: All REALTORS®

From: Charles McMillan, 2009 NAR President

Date: November 5, 2009

Re: Congress Passes Tax Credit Extension/Expansion

Dear Fellow REALTOR®,



I am VERY excited to report that Congress has answered our call to extend and expand the homebuyer tax credit!



Both the House and the Senate have passed an unemployment insurance bill, which includes an amendment that expands and extends the tax credit. That bill will be sent to President Obama for his signature in the next day or so.



I have recorded a special edition of my President’s Podcast, with details on the new tax credit and when it takes effect. Please take just a couple of minutes to listen.






We also have posted a comparison chart on Realtor.org. This can be a helpful resource as you work with buyers to take advantage of the credit in the months ahead.







On behalf of NAR, I thank you all for your participation in our advocacy efforts on this issue. Not only did we set a new record on responses to Calls for Action, but we helped move another step closer to a brighter future for America’s families and our economy.



Sincerely,




Charles McMillan, CIPS, GRI
2009 NAR President

r emails, please add NAR@newsletters.realtor.org to your address book now.

Questions or comments? Please send an email to presidentsreport@realtors.org.

National Association of REALTORS®
MandBD
430 N. Michigan Ave.
Chicago, IL 60611
--------------------------------------------------------------------------------

Senate Clears Homebuyer Tax Credit Extension; May Pass as Early as This Week

Posted By susanne On November 4, 2009 @ 5:36 pm In Home Buying 101, Homeowner's Toolkit, Real Estate, Today's Marketplace, Today's Top Story, Today's Top Story - Consumer | Comments Disabled

senate_1105 [1]RISMEDIA, November 5, 2009—After two weeks of delay, the Senate cleared the way to pass a seven month extension and expansion of the tax credit for homebuyers. By an 85 to 2 roll call vote, the Senate voted to cut off debate on a package of measures that includes the homebuyer credit, making it virtually certain that the legislation will reach President Obama for his signature this week.

The homebuyer tax credit, due to expire at the end of November would be extended through April 30 of next year. First-time buyers who are in the process of making a purchase would not need to worry about qualifying for the $8,000 credit if they close after the November 30 deadline.

For the first time, the legislation that was recently cleared makes move-up buyers as well as first-time buyers eligible for a credit. The $8,000 maximum first-timer credit will continue and will now be available to couples with income up to $225,000, a nearly $55,000 increase above the level in existing law. A new $6,500 maximum credit would also be available to move-up homeowners who have lived in their current residence for five of the prior eight years.

For homebuyers across the country, the expanded tax credit would allow more people to qualify for the credit. While two-thirds of American families own their own home, and most earn less than the income limits that have been established within the extension, more buyers may be eligible. Move-up buyers don’t have to sell their current home to qualify for the new credit, but the money cannot be used to buy a vacation home. “It’s only for a primary residence,” said Regan Lachapelle, a spokeswoman for Sen. Harry Redi (D-Nev.), who helped engineer the deal. “In expanding the tax credit, we are helping first-time home buyers, as well as homeowners looking to move up to a new home, but we would exclude from the credit speculators who may have recently purchased a home intending to flip it for a fast profit,” said Senator Max Baucus, Democrat of Montana and chairman of the Finance Committee.

The tax credit has fired-up the housing market, driving existing home sales to the highest level in over two years. The National Association Realtors reported sales jumped 9.4% to a seasonally adjusted annual rate of 5.57 million units in September and are 9.2% higher than the 5.10 million-unit pace in September 2008.

The legislation included provisions added to address complaints of fraud as well. The Internal Revenue Service is given greater authority to oversee the process to root out fraud, and provisions are added in response to past abuses of false sales or underage buyers. An investigation by the Treasury Department’s Inspector General for Tax Administration found that more than 580 children, some as young as four years old, had received $627,000 in first-time homebuyer credits. The IRS has identified 167 suspected criminal schemes and opened nearly 107,000 examinations of potential civil violations of the first-time homebuyer tax credit.

Nelson Says Senate to Extend, Reduce Homebuyer Credit

Nelson Says Senate to Extend, Reduce Homebuyer Credit

By Ryan J. Donmoyer and Dawn Kopecki

Oct. 26 (Bloomberg) -- Senate leaders are negotiating to extend and gradually reduce an $8,000 tax credit for first-time homebuyers through 2010, Senator Bill Nelson of Florida said.

“We should be able to extend that later this week,” Nelson, a Democrat, told reporters traveling today with President Barack Obama on Air Force One to a speech in Jacksonville, Florida.

Senate Majority Leader Harry Reid of Nevada and Senate Finance Committee Chairman Max Baucus of Montana, both Democrats, may seek to add the homebuyers extension to legislation extending unemployment benefits that may be debated as early as this week, according to Regan Lachapelle, an aide to Reid.

Lawmakers are under pressure from real estate agents, mortgage brokers and homebuilders to extend the $8,000 credit before it expires Nov. 30.

Baucus and Reid made a proposal last week to Senate Republicans that would extend the homebuyer credit through 2010, Lachapelle said. First-time homebuyers who close before April 1 would get the full $8,000, and the credit’s value would be reduced by $2,000 in each successive quarter until expiring at the end of the year.

“Relative to current law, this is better. But it’s worse than people are expecting,” said Tom Gallagher, head of policy research in the Washington offices of International Strategy and Investment Group, an independent research firm. “This is a four-month extension and a nine-month phase-out.”

Homebuilder Index

A gauge of 12 homebuilders in Standard & Poor’s indexes slumped 3.4 percent, led by declines of at least 3.8 percent in Pulte Homes Inc. and D.R. Horton Inc.

The proposal was intended to counter one by Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, and Senator Johnny Isakson, a Georgia Republican and former real estate agent, to extend the full $8,000 credit through next June and to expand it to all couples earning $300,000 or less. The Baucus-Reid proposal would continue limiting the benefit to first-time homebuyers, Lachapelle said.

The terms for extending the homebuyer tax credit are still being negotiated, Lachapelle said.

House Speaker Nancy Pelosi, a California Democrat, is waiting to see the final Senate agreement before deciding whether to support it. “Generally, we do support extending it,” Pelosi spokesman Nedeam Elshami said. “But it’s premature to say anything until we see what action the Senate takes.”

Business Tax Break

Baucus and Reid also proposed an extension of a business tax break that allows companies with losses in 2008 and 2009 to amend tax returns for any of the previous four years to get a refund of taxes paid. Without the benefit, companies would have to wait years to apply those losses against future profits.

A version of the benefit was included in last February’s economic stimulus bill, though it was limited to companies with receipts under $15 million. A lobbying effort by business groups, including the Washington-based National Association of Manufacturers, to extend the benefit to all companies failed at the time; the Obama administration has since proposed a broader benefit in its budget.

The Reid-Baucus proposal was drafted to have a neutral effect on budget deficits by delaying until 2017 a tax benefit that would let multinational corporations claim more interest deductions. The break, enacted in 2004, is currently slated to take effect in 2011.

Fraudulent Claims

The first-time homebuyer credit, while popular with lawmakers, came under scrutiny last week when government officials said millions of dollars in benefits were erroneously or fraudulently claimed.

The Internal Revenue Service has identified 73,799 claims totaling almost $504 million that may not be from first-time homebuyers. They also found that 582 taxpayers under 18 years old and ineligible to buy a home claimed almost $4 million in credits. Children as young as 4 years old received the credit, Treasury Inspector General for Tax Administration J. Russell George told a House panel.

Linda Stiff, the IRS’s deputy commissioner for enforcement, told the House Ways and Means Subcommittee on Oversight that her staff has identified 160 potential criminal cases and 115 are now under investigation. In total, 8,000 claims have been flagged for potential criminal fraud, she said. “We are and will continue to vigorously pursue those who filed fraudulent claims for the credit,” Stiff said.

More than 1.2 million borrowers through Oct. 9 have claimed almost $8.5 billion of the $13.6 billion set aside for “first- time” homebuyer tax credits this year, George said. The program is aimed at easing the worst housing slump since the Great Depression.

To contact the reporters on this story: Ryan J. Donmoyer in Washington at rdonmoyer@bloomberg.netDawn Kopecki in Washington at dkopecki@bloomberg.com
Last Updated: October 26, 2009 17:58 EDT

Breaking News: Senate Plans to Extend and Expand Tax Credit

[1]RISMEDIA, October 30, 2009—(MCT/The Wall Street Journal)-The Senate has reached a compromise on extending and expanding the $8,000 tax credit for first-time home buyers, a boost the housing industry believes will help it pull out of its two-year-old downturn.

While its passage remains uncertain, the agreement would extend the existing credit for first-time homebuyers, worth up to $8,000, while offering a new credit of up to $6,500 for some existing homeowners, Senate aides said. The reduced credit would be available to all homebuyers who have been in their current residence for a consecutive five-year period in the past eight years. Lawmakers in Washington also raised the qualifying income limits to $125,000 for single taxpayers and $250,000 for joint taxpayers, from the current $75,000 and $150,000, housing-industry sources said. Under the Senate compromise, buyers must have sales agreements in hand by April 30, but they will have until June 30 to go to settlement, said the sources. The measure still faces votes in the full Senate and the House.

Treasury Secretary Tim Geithner and HUD Secretary Shaun Donovan are in full support of the Senate’s proposal to both extend and expand the first-time homebuyer tax credit and called on Congress to approve key housing measures that include the tax credit. “We welcome efforts taken by Congress to extend the First-Time Homebuyer Tax Credit for a limited period. This credit has brought new families into the housing market and contributed to three consecutive months of rising home prices nationwide,” said Secretaries Geithner and Donovan. “In extending the credit, we urge Congress to include strict measures to combat tax fraud and protect responsible homeowners.”

The current tax credit did little for the new-home market in September, the Commerce Department recently reported—news that took many industry analysts by surprise. Sales fell 3.6% from August and 7.8% from September 2008. Industry observers had expected a fifth consecutive monthly increase in new-home sales, believing that the tax incentive for qualified first-time buyers—credited with 357,000 sales of previously owned homes so far this year—would do the trick. Instead, sales of typically more expensive newly built houses slipped. “The decline in new-home sales seems to us to be more a function of the attractive pricing available on resales in the current environment than a reflection of weakening demand,” said Michael Feder, president of Radar Logic in New York, which tracks the market.

“Since hitting rock bottom in March, demand is up 20 percent,” said Joel L. Naroff of Naroff Economic Advisers in Holland, Pa. For Naroff, the robust rise in existing-home purchases—9.2% year over year in September—indicated that the housing market was not faltering. “Maybe the issue is supply, which fell to its lowest level in 27 years,” he said. “Builders, at least those left standing, have been making sure they don’t have any houses sitting around, and they have been very successful in controlling inventories.”

IHS Global Insight economist Patrick Newport echoed that, noting new-home inventories “sank for the 29th straight month to their lowest level since November 1982.” Naroff maintained housing has recovered enough to stand without the tax credit, but Newport said that if the credit were not extended and expanded, housing demand would take a hit, and home sales would drop.

The new provisions are aimed at broadening availability of the credit beyond first-time buyers and giving the weakened real estate market a bigger boost while preventing real estate investors from benefitting. While Senate lawmakers appear to have reached a deal on the substance of the tax credit, they are still at odds over how it would be brought to the Senate floor.

(c) 2009, The Philadelphia Inquirer.

Distributed by McClatchy-Tribune Information Services.

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Mortgage Help For Unemployed Borrowers? - FDIC Has A Plan

The Federal Deposit Insurance Corp has begun to push a plan to help unemployed homeowners at risk of foreclosure to get a temporary break on their mortgage payments.
The FDIC said it is encouraging certain banks to reduce mortgage payments for the unemployed or underemployed for at least six months.

However, initially only a percentage of the unemployed will benefit from this recommended plan because the effort would only apply to a handful of institutions. Specifically, it would affect those that bought failed banks and participate in loss-share agreements with the FDIC. In such deals, the agency covers some of the losses incurred on the assets of the failed banks. Some 53 institutions, mainly regional or community banks have entered into such arrangements since January 2008.

The existing foreclosure-prevention programs, including the president's loan modification plan, generally do not help the jobless because they don't have enough income to sustain even reduced monthly payments. Administration officials have said they are exploring ways to help the unemployed -- including through reduced payments, typically called forbearance plans.

This plan is also in response to the fact that while many servicers have offered forbearance plans in the past, fewer are these days. That's because financial institutions no longer feel that borrowers will be able to land a comparable job within a few months.

Under the FDIC's recommendation, unemployed or underemployed borrowers would have their payments reduced to an affordable level for at least six months. However, unlike a typical forbearance plan, where the arrears would have to be paid back within a year, the FDIC endorses allowing borrowers to catch up over the life of the loan.

Borrowers who cannot afford their payments once they get jobs would be considered for a loan modification program approved by the FDIC, which includes the president's plan. Eligible borrowers could have their monthly payments reduced to 31% of their pre-tax income if doing so would cost less than foreclosing on the home.

In the end the FDIC believes that both modification and forbearance plans could ultimately save the FDIC money if they reduce losses from foreclosure. If and when this plan takes its final shape and moves forward, additional information will be provided.

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