Let's Talk Real Estate

On May 14, 2009, the Obama Administration announced its Foreclosure Alternatives Program (FAP) providing incentives and uniform procedures for short sales and deeds-in-lieu of foreclosure under the Making Home Affordable Program. The Making Home Affordable Program is designed to help homeowners obtain modifications to their loan so they can afford to stay in their home. Where a modification is not possible, new incentives encourage a quick private sale or voluntary transfer of property, which will save homeowners money and protect their financial future. A uniform process for handling short sales and financial incentives should help facilitate this process. Click here to view a summary of the incentives and process.

Freddie Mac reports a drop in the 30-year fixed mortgage rate to 4.82 percent during the week ended May 21 from 4.86 percent the prior week. Meanwhile, the 15-year fixed mortgage rate dipped to 4.5 percent. The Federal Reserve is working to hold down rates by purchasing upwards of $1.25 trillion in mortgage-backed securities and $300 billion in Treasuries. Mortgage rate premiums have declined substantially over the last couple of months even as Treasury yields climbed.

Real estate mogul Sam Zell believes that the decrease in real estate inventory and building slowdown will soon increase demand. He predicts that the U.S. housing market will turn around this summer because the building slowdown is increasing demand. "I can't tell you if it's June 29 or Aug. 1," says Zell, who made billions in commercial real estate by buying up distressed property. Zell said the housing downturn is international, but “the U.S. will recover and recover first around the world because we have a culture and we have an environment where we face up to reality quickly and effectively.” If Zell's predictions are accurate, this may be the best time buy ever! For those of you that have been waiting to buy, you might want to start making a move soon!

Many states have already started making bridge loans available to households who want to claim the First-Time Homebuyer Tax Credit! With the announcement earlier this week that the U.S. Department of Housing and Urban Development will allow consumers to obtain a bridge loan, repayable with proceeds from their tax credit, to help cover their down payment, consumers are anxious to "get movin’". HUD Secretary Shaun Donovan stated that guidelines for the new policy will be released shortly. But even before the announcement, nearly a dozen states were one step ahead of the department by providing similar bridge loans through their housing finance agencies. Many state REALTOR® associations were behind these proactive efforts and worked with state officials to set up programs. The Washington REALTORS® association was able to convince treasury officials that the money loaned to home buyers would not only be paid back when tax credits took effect, but also increase the state’s funds.

The U.S. Department of Housing and Urban Development announced this week that the Federal Housing Administration is going to permit its lenders to allow home buyers to use the $8,000 tax credit as a down payment. Previously, most buyers could not receive the funds until after they filed their tax return, and that deterred some people from using the credit. If consumers have access to the home buyer tax credit funds when they close on their home loans the cash can be used as a down payment. Now FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table. At this point there aren’t yet any procedures in place to accommodate the “bridge” loan. But this should be available shortly. For those of you who qualify for the First Time Home Buyer Tax Credit should start looking for a home now. This should prove to be a significant benefit to the Real Estate purchase