Housing "Cramdown" vote may happen Thursday Obamas "Big Stick"
The Helping Families Save their Homes in Bankruptcy Act of 2009, approved by a U.S. House committee on Feb. 24, is headed to the full House for consideration.
The bill would allow bankruptcy judges to order banks to reduce mortgage principal amounts or restructure terms — a practice known as a “cramdown” — for homeowners that file for Chapter 13 bankruptcy protection.
Would let federal judges lengthen loan terms, cut principal payments and reduce interest rates for borrowers in Chapter 13 bankruptcy protection.
Would try to ensure that bankruptcy court is a last resort for strapped homeowners who have first tried to work through a voluntary modification with the lender or servicer of their mortgage.
Democrats have said the provision, known as “cramdown” in the financial services industry, is a necessary way to force lenders to write down the principal and interest payments on mortgages for primary residences.
The concern is we want to ensure that the people who get relief have tried other avenues.
Don’t want people to get loan modifications in bankruptcy if they could get it outside of bankruptcy.
The language that was circulated on Tuesday includes a provision saying the court should consider whether the modification offered to a homeowner is a “good faith” effort to meet the standards set up by Obama’s housing plan as a “qualified loan modification.” The main component of that plan would mean that the modification would result in the homeowner’s first mortgage payment equaling no more than 31 percent of his income, according to draft language circulated on Tuesday afternoon.
Borrowers would also need to certify that they’ve provided their income, expenses and debts to the mortgage holder.
Judges would be required to use federal appraisal guidelines to calculate home values to determine whether a loan is “under water,” which is when the mortgage balance owed exceeds the property’s worth. To qualify, the loan must be unaffordable to the borrower, not just under water, according to the summary. Borrowers would also need to share a portion of the price gains with lenders if the house is sold during the bankruptcy plan, according to the summary.
About 350,000 additional U.S. households likely would file for Chapter 13 in the 10 years after the measure becomes law, according to estimates published Feb. 23 by the Congressional Budget Office. Even without the change, the office expects Chapter 13 filings to rise 13 percent this year to nearly 400,000.
=======================
Unlock your IRA to take advantage of Bargain Priced Real Estate with a "self-directed" IRA
IRA (Individual Retirement Account) holders can use their retirement funds to purchase real estate before the age of retirement without getting hit with taxes or penalties. In addition, you can realize real estate investment profits tax-deferred in your retirement account!
A self-directed IRA LLC gives you even more control, you get to use a checkbook tied to your retirement funds. "The checkbook control of a self-directed IRA LLC enables you to write checks on the spot to purchase foreclosures, tax liens, and other timely investments.
=======================
Citigroup to lower some mortgage payments
Citigroup Inc. said Tuesday that it will lower mortgage payments for some homeowners to an average of $500 a month for three months as part of a new program to help the unemployed.
The struggling bank makes the move as President Barack Obama looks to lenders to adjust the way loans are handled.
Citigroup's new mortgage efforts also come on the heels of the latest attempt to bail out the company, which includes the U.S. government's exchange of up to $25 billion in emergency bailout money given to Citigroup for as much as a 36 percent equity stake in the company. The deal between the Treasury Department and Citigroup represents the third rescue attempt for the bank in the past five months.
Unemployed homeowners who may qualify for assistance from Citigroup under the Homeowner Unemployment Assist program include those that are 60 days or more past due on their mortgages or in foreclosure and can pay the reduced amount. Customers must also have a first mortgage loan that is owned and serviced by CitiMortgage Inc. and conforms to government sponsored enterprise limits. The house must also be the customer's primary residence, with homeowners meeting all insurer and guaranty requirements.
"Our Homeowner Unemployment Assist program is intended to serve as a bridge toward a longer-term solution, helping homeowners stay in their homes and in their communities while they get their feet back on the ground,"
Citigroup predicts thousands of homeowners may be eligible for the program over the next two years.
Those that partake in the program and are still without jobs after three months will have their mortgages handled on a case-by-case basis to come up with the best payment option, Citigroup said. Others that find work within the three-month period can go back to paying their original mortgage amount or receive a long-term loan modification if qualified.
The program may also be expanded to include customers that are in early delinquency stages or are current on their mortgage at a later point in time once an initial evaluation of the program is complete.
========================
4 ways stimulus helps homeowner, buyer
A refundable first-time homebuyer tax credit of up to $8,000 is the centerpiece of four housing incentives found in the 2009 American Recovery and Reinvestment Act.
Lawrence Yun, chief economist for the National Association of Realtors, predicts homebuyers will purchase an additional 300,000 homes in 2009 as a result of the tax credit.
"The impact will likely not be felt for at least three or four months, because it generally takes buyers that long to qualify for a mortgage and search for a home," says Yun.
The new credit improves on a first-time homebuyer credit passed in 2008. That credit had to be paid back over a period of 15 years, making it more of a loan than a true credit.
"We think this year's tax credit will certainly have a much bigger impact because it is a true tax credit which is also refundable," Yun says. "For instance, if you owe $1,000 in taxes and qualify for the first-time homebuyers tax credit, you will receive a tax refund of $7,000."
Yun believes activity spurred by the new credit will help bring down housing inventory and stabilize prices.
Rules for 2009 first-time homebuyers tax credit
Does not have to be repaid unless the home is sold within three years.
Applies only to first-time homebuyers, defined as those who have not owned a home within the previous three tax years.
Available only for homes purchased between Jan. 1, 2009, and Dec. 1, 2009.
Restricted by income; phases out for individuals with an adjusted gross income of $75,000 or above and for married couples with a combined adjusted gross income of $150,000 or above.
Tax credit is for up to 10 percent of the purchase price, up to a maximum of $8,000. For example, a buyer of a $150,000 home could receive a tax credit of a maximum of $8,000, while a first-time buyer of a $70,000 home would be eligible for a tax credit of $7,000.
The credit can be taken on 2008 taxes even when the purchase is made in 2009.
a provision allowing homebuyers to claim their credit immediately.
Homebuyers can take advantage of this filing exception in one of three ways:
closing on the home prior to April 15, 2009, getting an extension to file taxes later in the year or filing an amended return.
Some state housing programs are introducing programs that allow homebuyers to access the tax credit money at settlement.
For example, the Missouri Housing Development Commission's Tax Credit Advance Loan Program allows qualified homebuyers to obtain a no-interest second mortgage worth up to 6 percent of the home purchase or $6,750, whichever is less.
This second mortgage can be applied to down payment and closing costs, then repaid with the proceeds from the income tax credit.
While the tax credit is meant to cover 10 percent of the purchase price (up to $8,000), an $8,000 credit covers only about 4 percent of the purchase price of a home with the 2008 national median single-family price of $197,000.
Meanwhile, more affluent homeowners will not be able to take advantage of the new credit, which phases out for individuals with an adjusted gross income of $75,000 or above and for married couples with a combined adjusted gross income of $150,000 or above.
Another shortcoming of the income limitations. Some of the same places where the housing market has been hit hardest, such as Southern California, are also communities where incomes are high.
Because of the income caps, homebuyers in such markets -- which are most in need of a boost in sales -- will be unable to take advantage of the credit.
Other incentivesIn addition to the first-time homebuyer tax credit, the stimulus legislation includes three more measures that could have a positive impact on homeowners, homebuyers and home sellers.
Expansion of the home improvement tax credit. The tax credit for making energy-efficient home improvements has been raised to 30 percent of the cost of the improvements, up to a maximum of $1,500.
Eligible improvements -- which must meet the standards established by the federal government -- include replacing doors and windows, adding insulation, and installing new heating and air conditioning systems and water heaters.
The fact that these incentives are "credits" rather than "deductions" makes them more appealing.
It is well worth taking advantage of a tax credit (as opposed to a deduction), since you get 100 percent back on your taxes from a credit. "In this case, the homeowners will also have the benefit of reduced utility bills in future years."
It could motivate some homeowners to make energy efficiency improvements. But he also cautions that people who fear unemployment are less likely to take advantage of the incentive.
But people need to be able to pay for these improvements upfront.
Higher FHA reverse mortgage loan limits. Loan limits for reverse mortgages insured by the Federal Housing Administration have been increased to $625,500 across the country.
"The loan limits for reverse mortgages have been too low for some time, so this increase could have a big impact.
The previous limit was $417,000 across the country, which meant that in markets where homes are more costly --such as the San Francisco area, New York City and its suburbs, and Washington, D.C. -- FHA-insured reverse mortgages were not available for many homes.
Many private reverse-mortgage programs have disappeared, making FHA loans virtually the only game in town.
The higher FHA reverse-mortgage limits are especially important in light of the "HECM for Purchase" program passed into law as part of 2008 federal stimulus legislation.
The program -- which took effect Jan. 1 -- allows older homeowners to use the proceeds from a reverse mortgage to purchase a new principal residence. To qualify for a new purchase reverse mortgage, buyers need to be seniors over age 62 and presently own a home.
Senior citizens who want to move have been stuck in this market, but now they can take a reverse mortgage on a new purchase and pay it off when their existing home sells. They don't have to wait until their current home sells to move.
The changes to reverse mortgage rules, which took effect Jan. 1, could improve markets in places popular with retirees, such as Florida and Arizona.
Higher FHA and conforming loan limits. The maximum FHA loan limit for high-cost areas has been restored to the 2008 level of $729,750.
Stimulus legislation passed by Congress in the first half of 2008 temporarily raised the FHA loan cap from $362,790 to $729,750 in cities where housing is particularly expensive. However, the higher loan limit expired in January and was replaced by a lower loan limit of $625,000.
The stimulus package restores the 2008 limits through the rest of 2009. This will help keep a greater percentage of loans in expensive cities (such as New York and San Francisco) in the "conforming loan" category.
Conforming loans are eligible for guarantees from mortgage giants Fannie Mae and Freddie Mac. Such guarantees help reduce mortgage rates on conforming loans. The guarantees also make it easier for first-time and low-income borrowers to qualify for mortgage loans.
=====================
Pending home sales fell 7.7 pct to new low in Jan.
The number of homebuyers who agreed to purchase an existing home sank to a new low in January as economic woes turned them away from the staggering housing market, the National Association of Realtors said Tuesday.The group's seasonally adjusted index of pending sales contracts fell 7.7 percent to 80.4 in January from a downwardly revised December reading of 87.1.January's reading was far worse than the 85.1 economists expected, according to Thomson Reuters, and came in below the previous record low of 83.1 in November.
The index, which started in 2001, tracks signed contracts to buy previously owned homes. Typically there is a one- to two-month lag between a contract and a done deal, so the index is a barometer for future home sales.
======================
Fed launches new $200B consumer credit program (dubbed the Term Asset-Backed Securities Loan Facility)
The Federal Reserve on Tuesday rolled out a much-awaited program aimed at boosting the availability of credit to consumers and small businesses. The Fed will lend up to $200 billion to spur consumer lending — for autos, education, credit cards and other consumer debt. The money will be used to provide financing to investors to buy up the debt.
Participants — companies and investors that pledge eligible collateral to back the loan — must request the new government loans by March 17. The Fed will provide the three-year loans on March 25. The Fed said the program has the potential to generate up to $1 trillion of lending for businesses and households.
No comments:
Post a Comment