Fannie Mae Removal of 5% Market Decline!!!!!!!

Following a similar decision by Fannie Mae, Freddie Mac has eliminated its controversial policy of requiring borrowers to put up larger downpayments in markets where home prices are declining. "Beginning June 1, 2008, we will allow maximum financing up to 95% LTV for most Freddie Mac mortgages in all markets," Freddie says in a May 16 e-mail message to its approved lenders. Under its declining-markets policy, the maximum amount of financing was reduced by 5% in markets where lenders determined that house prices are falling. On May 2, Freddie issued a bulletin to its lenders revising the policy so that the loan-to-value ratio of 95% became the floor for most loan products. "The practical effect [of the May 16 change] is that lenders no longer have to make that determination about a declining market," a Freddie spokesman said. As previously reported, Fannie is scrapping its declining-markets policy starting Jun e 1. Source: National Mortgage News

Industry Update

With prices falling around the nation, home price affordability has improved dramatically in many U.S. cities. As a result, 53.8% of all new and existing homes sold nationwide during the first three months of 2008 were affordable to families earning the median household income of $61,500, according to the latest Housing Opportunity Index released Tuesday by Wells Fargo and the National Association of Home Builders (NAHB). That's up from 44% during the first three months of 2007 with home prices the most affordable they've been since the three month period that ended June 30, 2004. "Three factors combined to substantially increase housing affordability," said NAHB president, Sandy Dunn, in a press release accompanying the report. "Mortgage rates returning to near the record low levels of a few years ago, a $2,500 rise in family income nationwide (from 2007 to 2008) and lower house prices." Home prices dropped about 8% compared with a year ago, according to NAHB, but that doesn't mean that buyers are flocking back to the market. "This measure can only take you so far in implications for the market," said Dave Seiders, NAHB's chief economist. "There're several factors that the index does not capture." Source: CNN/Money

Why are rates better today and what caused the improvement.

Incase you were wondering why rates are better today
and what caused the improvement in pricing…

 

Bonds are off to a tremendous start this morning in reaction to a very weak employment report. 
The economy lost 80k jobs in March and the job losses in Feb we revised to -76k from a previously reported -63k.  January’s number was revised lower, as well.  In addition, the unemployment rate increased to 5.1%.  The first quarter of 2008 has painted a bleak picture of the labor market. 

 

So what does this mean for bonds and in turn mortgages and home sales? 
You probably know that a poor employment report is good news for the bond market (as it was today).  The main reason bonds like a poor employment report is that higher unemployment means a larger supply of labor in the economy.  A larger labor pool means wages should remain low.  Lower wages generally mean lower prices and lower prices equal lower inflation.  Inflation eats away returns on long term investments.  A lower risk of inflation also means a better chance of more Fed easing.  So as long as the bond traders aren’t the ones losing their jobs they like higher unemployment.

 

In other words, when the stock market and its driving forces are hurting, Bonds are improving and vice versa. 

 

*One issue that the bond markets haven’t seen in a very long time is that there is a massive reluctance to buy mortgage backed securities because of the instability of the housing market.  What this means is that, just because the stock market takes a hit, there is still some investor reluctance to the traditional seeking of safer investments in the bonds market.

 

This is indeed a market like none of us have ever seen.  My suggestion is that you team up with someone who not only watches the market but understands it, so they can pass along information that will be affecting you directly.  For example, just like this information today and how the weak employment reports created a dip in rates and created a favorable market for home buyers and those in need of a refinance.

 

I hope this helps!

 

 

Courtesy of,

Joe Littell
Mortgage Planner

Joe's Home Page

[Mortgage News Network] There are still a few ways to get to 100% financing!

There are still a few ways to get to 100% financing!

Keep in mind that these are the options for first time home buyers with little or no reserves or down-payments.

The market is here and as you know, there are multiple offers all over the place, so fence sitting time is over!

• 100% financing is available through VA. 6%

• FHA: Go 97% LTV. Combine it with 3% gift; 3% CHDAP thru CalHFA; or 3-6% thru Nehemiah.

• CalHFA: Go 95% on their Conventional product or 97% on their FHA: Both at 6.75% for Moderate Incomes; 6% Low Income.
  Combine it with their 2% CHAP and/or their 3% CHDAP. You can also layer their extra Credit Teacher program if qualified.

• My Community or Flex: Both at 95% LTV. You can use DAP (Down Pmt. Assistance) or gifted funds to get to 100%.

There are a few specialty products such as PERS/STRS, First House and Access. All are at 95% LTV.

Please see below for links to all programs.

Cal STRS Guidelines

http://www.chl-mrb.com/BondManuals/StaticData/MRB/BondManuals/MRBBondManual.asp?bondManual=CalSTRS

Cal PERS Program Guides

http://correspondent.citimortgage.com/calpers/CalpersServlet?PageID=GetLoanEligibilityGuidelines&type=2

Cal HFA Program Descriptions

http://www.calhfa.ca.gov/homeownership/programs/index.htm

FHA Keyword Index

http://www.hud.gov/offices/hsg/keywords.cfm

FHA Lender Resource Page

http://www.hud.gov/groups/lenders.cfm

VA Lender Home Page

http://www.homeloans.va.gov/ls.htm

NHF First House Library

http://www.nhfloan.org/pub/firsthouse_guidelines.htm

NHF ACCESS Library

http://www.nhfloan.org/pub/access_guidelines.htm

DRE Broker/Agent Licensee Search

http://www2.dre.ca.gov/PublicASP/pplinfo.asp

DRE Appraiser License Search

http://www.orea.ca.gov/html/lic_appraisers.asp

NEHEMIAH Home Page

http://www.getdownpayment.com/

HART Home Page

http://www.hartprogram.com/staging/nuke/index.php

--
Posted By Mortgage News Network to Mortgage News Network at 4/01/2008 01:05:00 PM

- Final Thought -

"Problems are only opportunities in work clothes."

~Henry Kiaser

LAST MINUTE TAX TIPS!

Last Minute Tax Tips

 

Before you file your taxes, you may want to consider several last-minute tips before sending your

W-2s to Uncle Sam by April 15.

 

IRA Contributions

The maximum contribution for 2007 to your Individual Retirement Account (either Roth or traditional)

is $4,000 (increasing to $5,000 for 2008). Individuals who have reached age 50 before Dec. 31,

2007, are allowed an additional "catch up" contribution of $1,000. It's not too late to make your 2007

IRA contribution: Taxpayers have until April 15, 2008, to make their 2007 contribution. In fact, a

deduction may be taken on your 2007 tax return even though the contribution has not as yet been

made.

 

Capital Gains

The 2007 alternative capital gains tax rate for individuals in the 10 percent or 15 percent tax bracket

is 5 percent. Beginning in 2008, a 0 percent rate replaces the 5 percent rate. If you qualify for this

rate, you might consider selling capital assets that have appreciated while this 0 percent rate is in

effect. While this rate is presently in effect for next year as well, there is no guarantee that there will

not be a tax change, so you might want to take advantage of this rate in 2008.

 

Personal Energy Credits

Individuals are entitled to a variety of personal energy credits for 2007. Among these are credits for

the installation of certain energy saving devices installed in your principal residence prior to Jan. 1,

2008 (e.g. qualified exterior doors, windows, furnaces, and the like). You also may be entitled to an

alternative motor vehicle credit on your 2007 tax return if you purchased an eligible vehicle last year

(e.g. a qualified hybrid vehicle). Among other requirements you must meet, you must be the original

user of the vehicle. You would claim this credit on form 8910.

 

Foreign Tax Credit

If you are the recipient of foreign source income (e.g. dividends from a Canadian corporation) from

which foreign income taxes were withheld at the source, you may be entitled to a credit against your

U.S. income for these taxes. There are limits to the amount of credit to which a taxpayer is entitled,

but generally most, if not all, foreign taxes paid is eligible for the credit.

 

Charitable Contributions

Unfortunately for tax years beginning after Aug. 17, 2006 (generally meaning 2007), no deduction

for any cash contribution will be allowed without some bank record or receipt. For example, weekly

cash contributions to your local church would not be deductible without some form of substantiation.

 

Excess FICA

If an individual holds two jobs, each employer is required to withhold social security taxes. Since

individuals are liable for the FICA portion of such taxes only up to a total wage base of $97,500 (for

2007), in many instances a person's actual FICA payments may exceed the maximum payments

due. Don't forget that such excess FICA is a credit against taxes owed.

 

Alternative Minimum Tax

In recent years, inflation has overtaken the AMT exemption amount. Congress passed the Tax

Increase Prevention Act of 2007 late in December, which, among other things, raises the AMT

exemption amount. If you are subject to the AMT, be sure that the AMT form you are using (form

6251) is the current form, reflecting this new exemption amount.

 

Extensions

As in prior years, individuals are entitled to an automatic six-month extension to file their individual

tax return (1040). Filing form 4868 by April 15, 2008, will extend the filing deadline to Oct. 15, 2008.

It will not, however, extend the due date for the payment of taxes. The estimated amount of your

taxes is due with the filing of form 4868. Failure pay all taxes by April 15, 2008, will result in the

assessment of penalties and interest.

 

By: John Colliander

 

Joe's Home Page