Thurs Mar 12 2009 News Snippets

Foreclosures up 30 percent in February

Despite halts on new foreclosures by several major lenders, the number of households threatened with losing their homes rose 30 percent in February from last year's levels.

Nationwide, nearly 291,000 homes received at least one foreclosure-related notice last month, up 6 percent from January.

While foreclosures are highly concentrated in the Western states and Florida, the problem is spreading to states like Idaho, Illinois and Oregon as the U.S. economy worsens.

At least for the foreseeable future, it's going to be pretty ugly.

Two states that contributing to the increase were Florida and New York, where temporary bans on foreclosures ended.

But other states are moving to enact similar measures. On Wednesday the Michigan House approved legislation that would give homeowners facing foreclosure a 90-day reprieve. The legislation now goes to Michigan's Republican-led Senate, where its future is unclear.

While the number of foreclosures continue to soar nationwide, banks have held off listing properties for sale, Sharga said. There were around 700,000 such properties nationwide at the end of last year, making up a "shadow inventory" of unsold homes that could drag the housing crisis out even longer.

It's going to take us longer than you might anticipate to burn through the inventory of distressed properties.

The faltering economy, driven down by the collapse of the housing bubble, is causing the housing crisis to spread. Nearly 12 percent of all Americans with a mortgage — a record 5.4 million homeowners — were at least one month late or in foreclosure at the end of last year, according to the Mortgage Bankers Association. That's up from 10 percent at the end of the third quarter, and up from 8 percent at the end of 2007.

More than 74,000 properties were repossessed by lenders in February as the worst recession in decades, falling home values and stricter lending standards continue to sap the U.S. real estate market.

Nevada, Arizona, California and Florida had the nation's top foreclosure rates. In Nevada, one in every 70 homes received a foreclosure filing, while the number was one every 147 in Arizona. Rounding out the top 10 were Idaho, Michigan, Illinois, Georgia, Oregon and Ohio.

Among metro areas, Las Vegas was first, with one in every 60 housing units receiving a foreclosure filing. It was followed by the Cape Coral-Fort Myers area in Florida and five California metropolitan areas: Stockton, Modesto, Merced, Riverside-San Bernardino and Bakersfield.

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Martha, Can you say TARP?

Lawmakers voiced frustration with what they said was a continued lack of clarity from the Treasury on how banks were spending money they have received under the Troubled Asset Relief Program.

Subcommittee chairman Dennis Kucinich, D-Ohio, complained that at least three financial institutions that have received TARP money — Citigroup Inc., Bank of America Corp., and JP Morgan Chase and Co. — have made billions of dollars in foreign investments.

"If the banking system is in serious enough trouble to require massive amounts of federal support, shouldn't that federal support be channeled to the domestic economy?" Kucinich asked.

Within weeks, Treasury Secretary Timothy Geithner plans to unveil a new public-private investment fund that will be used to purchase illiquid assets, such as toxic mortgage related securities at the heart of the financial crisis. Kashkari said the private sector has voiced interest in the program and said he expects pension funds and mutual funds that hold retirement savings to be among the major investors.

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“Only Thing We Have to Fear Is Fear Itself”: FDR’s First Inaugural Address

Martha, how people "feel" about the potential for recovery affects how fast we actually do recover.

Americans Still See Economic Recovery As A Long-Term Process

Sixty-four percent (64%) of Americans say the economy will be stronger in five years than it is today, while just 17% think it will be weaker by then. Only 42% say the economy will be stronger in a year's time, and nearly as many (37%) expect it to be weaker.

Just 12% believe the stock market will recover within a year. Twenty-one percent (21%) say it will take two years, and 13% believe three years are needed. The plurality of adults (37%) predict it will take more than three years for the market to come back.

Thirty-eight percent (38%) also believe it will take more than three years for housing prices to recover. Some are more optimistic: Eight percent (8%) believe housing prices will come back within a year, 18% say two years, and 19% three years.

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America lost 2.5 million millionaires in 2008

The financial crisis has weighed heavily on American households, and millionaires are no exception, according to a report released Wednesday.The number of American households with a net worth of $1 million or more, excluding the value of their primary residence, fell 27% to 6.7 million in 2008 from an all-time high of 9.2 million the year before.

Affluent households, defined as those with a net worth of $500,000 or more, declined 28% to 11.3 million from 15.7 million.

Even the very rich have not been immune. Households worth $5 million or more, excluding primary residence, fell 28% to 840,000 last year from 1.16 million households in 2007.

The culprit is not just the stock market, which we all know has dropped precipitously, but broad declines in the asset classes available to the nation's wealthiest investors.

The average value of investments in their principal residence, mutual funds, managed accounts and IRAs all fell in 2008 versus 2007.

Millionaire households estimated that the financial crisis dented their net worth by between 30% and 40%.

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Lost a few Billionaires as well.

Today there are 793 people on our list of the World's Billionaires, a 30% decline from a year ago.
Of the 1,125 billionaires who made last year's ranking, 373 fell off the list--355 from declining fortunes and 18 who died. There are 38 newcomers, plus three moguls who returned to the list after regaining their 10-figure fortunes. It is the first time since 2003 that the world has had a net loss in the number of billionaires.

The world's richest are also a lot poorer. Their collective net worth is $2.4 trillion, down $2 trillion from a year ago. Their average net worth fell 23% to $3 billion.

Mon Mar 9 2009 News Snippets

Boyd Supports Bill To Help Florida Families Avoid Foreclosure

Congressman Allen Boyd (D-North Florida) voted in favor of legislation last week that will help responsible families, who are struggling to make ends meet, stay in their homes.

The Helping Families Save Their Homes Act (H.R. 1106) will offer an alternative to foreclosure by providing incentives to lenders to modify loans and allowing a court of last resort the ability to adjust existing mortgages.

This legislation improves the Federal Housing Administration’s Hope for Homeowners program to protect servicers that take part in loan modification programs from investor lawsuits, while providing incentives for lenders to modify loans to avoid a more costly foreclosure. The bill also allows, as a means of last resort, homeowners to permit a bankruptcy judge the authority to reduce principal, extend the repayment period, and adjust the terms of the mortgage, provided the homeowner has exhausted all steps to modify their loan outside of bankruptcy and have run out of other options.

The Helping Families Save Their Homes Act passed the House of Representatives on March 5, 2009. It has now been referred to the Senate for consideration.
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LICENSE RENEWAL

Only 27 days remain for real estate pros who must renew their license in the first quarter, which ends March 31. To maintain a license, post-licensing or continuing education requirements must be completed and renewal fees paid, even for licensees operating with a suspended license. According to DBPR, the department now has a "100% Post and Continuing Education Monitoring database." If your required education is not completed (or completed but not reported), DBPR will deny license renewal. Need to check your status to see if your license expires March 31? The DBPR Web site allows visitors to check licensee status and license renewal expirations online at:

https://www.myfloridalicense.com/wl11.asp?mode=0&SID
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Cramdownblog.com Available

Fri Mar 6 2009 News Snippets

Reading about a depression is depressing. What can I do about that? Hey, don't worry. Be happy. It's hard to be grateful for what you have when your 401(k) lost most of its value and you have no savings, but it's probably the best thing you can do for your mental health. Sonja Lyubomirsky, professor of psychology at the University of California-Riverside.

That said Martha, take a gander at some of these notes / stats.

The jobless rate jumps to 8.1% as employers cut another 651,000 jobs in February.

Harvard University economist Robert Barro has found that big market drops raise the probability of an outright depression, defined as a GDP drop of 10 percent or more.

Home prices at the national level have already plunged nearly 27 percent from their 2006 peaks.

Richard Moody, the chief economist of Mission Residential, expects values to drop another 10 to 15 percent before bottoming out in the middle of 2010.

If the ongoing recession evolves into a full-blown depression, home prices could fall an additional 25 to 30 percent

now that their 401(k) is a 201(k)

It will take the typical employee with 20 or more years on the job an extra 1.8 years working to recover recent market losses, according to calculations by Jack VanDerhei, research director of the Employee Benefit Research Institute.

Factory orders also slipped for the sixth month in a row in January, the Commerce Department reported.

Labor Department said new unemployment claims last week totaled 639,000

Florida, where 60 percent of homeowners who have a subprime ARM are at least one payment behind and one in five of all mortgage holders aren't current.

economic model from the Federal Reserve Bank of New York predicts the recession, already 16 months old, will end this year.

White House economists are predicting a strong rebound over the next three years.

private forecasters are far gloomier, predicting tepid growth going forward for several years and unemployment rising to at least 10 percent next year and staying elevated.

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Mortgage Delinquencies Hit New Record

A stunning 48 percent of the nation's homeowners who have a subprime, adjustable-rate mortgage are behind on their payments or in foreclosure, and the rate for homeowners with all mortgage types hit a new record

A record 5.4 million American homeowners with a mortgage of any kind, or nearly 12 percent, were at least one month late or in foreclosure at the end of last year, the Mortgage Bankers Association reported. That's up from 10 percent at the end of the third quarter, and up from 8 percent at the end of 2007.

That said,

Thurs Mar 5 2009 News Snippets

12 pct. are behind on mortgage or in foreclosure

A stunning 48 percent of the nation's homeowners who have a subprime, adjustable-rate mortgage are behind on their payments or in foreclosure, and the rate for homeowners with all mortgage types hit a new record, new data Thursday showed.

But that's not the worst of it.

The reckless lending practices in states like Florida, California and Nevada that were the epicenter of the housing crisis are no longer driving up the nation's delinquency rate. Instead, the foreclosure crisis now is being fueled by a spike in defaults in states like Louisiana, New York, Georgia and Texas, where the economies are rapidly deteriorating and thousands are losing their jobs.

A record 5.4 million American homeowners with a mortgage of any kind, or nearly 12 percent, were at least one month late or in foreclosure at the end of last year, the Mortgage Bankers Association reported. That's up from 10 percent at the end of the third quarter, and up from 8 percent at the end of 2007.

The only bright spot in the report is the devastation wrought by subprime ARMs appears to be waning. Their 30-day delinquency rate continues to fall and is at the lowest point since the first quarter of 2007.

That offers little reassurance to Florida, where 60 percent of homeowners who have a subprime ARM are at least one payment behind and one in five of all mortgage holders aren't current.
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House approves mortgage revision

Struggling homebuyers would get new leverage to force banks to renegotiate their mortgages under a bill that passed the House on Thursday on a vote of 234-191.
Centrist Democrats received concessions from Speaker Nancy Pelosi, California Democrat, on the original bill, winning changes to require borrowers to make more efforts to rework their loans and monthly payments with lenders before resorting to bankruptcy courts. The bill faces an uncertain fate in the Senate, which is expected to consider it in the coming weeks.

Underscoring the extent of the housing crisis, the Mortgage Bankers Association said Thursday that nearly 12 percent of U.S. homeowners were in foreclosure or behind on their payments at the end of 2008.

The trade group said mortgage delinquencies were the highest in records dating to 1972, while loans in foreclosure rose to 3.3 percent, also an all-time high.

Senate Democrats, led by Richard J. Durbin of Illinois, recently won agreement from industry giant Citigroup for a bankruptcy "cram-down" provision even more restrictive than the House measure, but virtually no other major bank or industry lobby has signed on to the Citigroup plan.

Weds Mar 4 2009 News Snippets

Feds Detail Plan to Stem Foreclosures

Rules for the Obama mortgage rescue plan were released today. The plan focuses on two distinct groups of borrowers. The first group is made up of borrowers who are delinquent and who want to modify their loans so they'll be more affordable. To qualify for loan modification help, you must have lost your job, suffered a pay cut or face higher mortgage payments.

To get help, you will need to meet the strict financial hardship guidelines of Fannie Mae or Freddie Mac.

The second group of people who will be helped consists of those seeking to refinance mortgages even though the equity in their home is lost. This group will be able to refinance even if they need to borrow as much as 105% of their home's current market value. Prior to the rescue with current tight lending conditions, people wanting to refinance could only do so if they had 20% of equity in their home and could borrow a maximum of 80% of the loan value. This rescue will help these people get out of higher interest rate mortgages. Refinancers will not have to meet the strict hardship guidelines.

Modification applicants will face the stricter rules and have to provide their most recent tax return and two pay stubs, as well as an "affidavit of financial hardship" to qualify. Help will be provided only to people living in their homes and with an unpaid principal balance of up to $729,750. Also, you will need to go for counseling if your total household debt -- including auto loans, credit cards and alimony -- totals more than 55% of your income.

Your loan must be originated before Jan. 1, 2009 to qualify for modification. Modification will go through 2012.

Hardship guidelines require people to prove they experienced a decrease in income or an increase in expenses that caused the delinquency. In other words, those who simply bought more house than they could afford would not qualify for loan modification.

Lenders could reduce a borrower's interest rate to as low as 2 percent for five years. Rates would then rise to about 5 percent until the mortgage is repaid.
Borrowers are only allowed to have their loans modified once.

Currently Fannie Mae and Freddie Mac, which were seized by the government in September, own or guarantee $5.2 trillion of the $12 trillion residential home loan market. After the Obama loan program is completed, the market will be more strongly tilted toward government ownership or loan guarantee as loans owned in the private marketplace shift to government ownership or guarantee.

Sheila Bair, Chairman of the FDIC, said in a speech yesterday about the modification program, "Servicers are ready for it. Even some of the investors are starting to soften up." Servicers will be paid $500 for each loan they modify and as much as $1,000 for three years after modification when the borrower stays current. Loan holders will get a $1,500 incentive for modifying loans for borrowers at risk. Borrowers who stay current in their modified loans for five years will get a $1,000 incentive per year toward their loan principal.

Contact loan servicer to find out if mortgages are held by Fannie or Freddie. The two mortgage finance companies own or guarantee almost 31 million home loans — more than half of all U.S home mortgages.
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FHA Mortgage Update

The importance of the FHA (Federal Housing Administration) in the home mortgage market has changed markedly over the years. This has been due less to changes in the FHA itself than to changes in the broader market in which it operates.

In the early 1990s, FHA had about 15 percent of the home-purchase market. In subsequent years through 2006, FHA lost business to the growing subprime market, which took many borrowers who could have gone FHA. In addition, FHA lost business to the prime conventional market, which developed and aggressively merchandised option ARMs and interest-only products, as well as reduced documentation underwriting, none of which FHA offered. In 2006, FHA's share of the purchase market had fallen to less than 4 percent.

Then came the financial crisis. With home prices declining and defaults rising, the subprime market largely disappeared, option ARMs declined to a trickle, and documentation requirements on prime conventional loans were substantially tightened. In addition, FHA loan limits were raised materially in 2008, and again in 2009. In early 2009, FHA's market share of new purchases was back to about 15 percent, and its share of refinances was substantially higher.

The FHA Market Niche: An FHA borrower in early 2009 1) Doesn't need a loan larger than the FHA maximum in the borrower's county; 2) Can't put more than 3.5 percent down, which is the FHA requirement; 3) Is not eligible for a VA loan, which allows zero down; and 4) Can't be approved for a conventional loan but can be approved under FHA's more liberal underwriting rules.

A borrower who can put 10 percent down on a loan smaller than the FHA maximum and can be approved for a conventional loan will usually do better with the conventional loan, but there can be exceptions.

FHA Loan Limits: The loan limits on FHAs effective until year-end 2009, established on a county basis, were the same as those applicable to Freddie Mac and Fannie Mae. On a one-family house, they ranged from $271,050 to $729,750 in 76 higher-price counties. Loan limits on 2-4 family houses are higher. On HECMs (reverse mortgages), the maximum was raised to $625,500 for the balance of 2009. You can find the limit applicable to any particular county here.

Down Payment Requirements: FHA borrowers in some cities, counties, or states have access to special programs that eliminate the need for a down payment by offering second mortgages at favorable terms. Usually no payments are required on the second mortgage until the house is sold. The public agencies offering these programs have their own eligibility rules that are independent of FHA. The only generally available zero-down loans are VAs and USDA loans in rural counties.
Underwriting Requirements: FHA will accept lower credit scores than are acceptable on prime conventional loans, and are more forgiving of past mistakes.

FHA will forgive a bankruptcy after only two years, and a foreclosure after three years.

Mortgage Insurance: FHA borrowers pay a monthly mortgage insurance premium of ½ percent per year (.55 percent on loans with less than 5 percent down), and an upfront premium of 1.75 percent, which is almost always included in the loan amount. In contrast, most conventional loans have only a monthly premium which is higher than the FHA monthly premium but disappears at 20 percent down. Because of the higher mortgage insurance premiums, an FHA will be more costly to a borrower when the rate and points are the same.

Differences in Rate and Points Between FHAs and Conventionals: In shopping lenders who offer both FHA and conventional loans, I have found that, in many cases, the rate and points quoted on FHAs are higher. Lenders often charge larger markups on FHAs, partly because they are more costly to originate, and also because "they can." There isn't as much competition for FHAs because a large proportion of brokers and smaller lenders don't offer them.

Some lenders quote the same or even lower rates and points on FHAs. This kind of market fragmentation, appears to be a consequence of the financial crisis. It places an added burden on borrowers shopping for the best deal, as if that weren't already difficult enough.

Comparing Prices: Borrowers should be able to compare the all-in costs of an FHA and a conventional by comparing their APRs. The APR takes account of the rate, points, other lender fees, and all mortgage insurance premiums. Unfortunately, the APR assumes that all loans run to term, which makes it deceptive for any borrower who expects to have the loan for less than 10 years.

Furthermore, most of the lenders are not calculating the APR on FHAs correctly. The most common mistake is ignoring the upfront mortgage insurance premium, which their software was never programmed to accommodate.

Tues Mar 3 2009 News Snippets

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.

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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.
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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.

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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.
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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.
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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.

Mon Mar 2 2009 News Snippets

Dow industrials fall below 7,000; lowest since 97

The worries pushed the blue chips below 7,000 for the first time since Oct. 28, 1997 and finishing at 6,763, lowest since 1997. The credit crisis and recession have now slashed half the average's value since it hit a record high over 14,000 in October 2007.

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Why Hair Goes Gray

Scientists may have figured out why hair turns gray, and their finding may open the door to new anti-graying strategies.

New research shows that hair turns gray as a result of a chemical chain reaction that causes hair to bleach itself from the inside out.
The process starts when there is a dip in levels of an enzyme called catalase. That catalase shortfall means that the hydrogen peroxide that naturally occurs in hair can't be broken down. So hydrogen peroxide builds up in the hair, and because other enzymes that would repair hydrogen peroxide's damage are also in short supply, the hair goes gray.