Mortgage Talk with Ruth
SEC Charges Goldman Sachs with fraud

Civil suit related to alleged witholding of info regarding a CDO.

FHA’s latest folly

Did you see the front page of today’s New York Times? (and other newspapers)

With the government (and, yes,  lenders) already using FHA as the new subprime, since the real subprime companies are defunct, it sounds like today’s announcement in effect will have the government one way or the other dumping toxic loans into the FHA bin. Details still to come, but it sounds like the politicians are “saving” homeowners (and giving themselves PR for re-election campaigns) from foreclosure by taking over their loans with the remaining TARP money. I guess if they don’t miraculously start making their payments, the taxpayers will own these houses and the FHA will plummet even more quickly into the red.

Meanwhile, in their (lack of) wisdom they’ve been making it tougher for hardworking homeowners who PAY ON TIME to buy or refi into lower rates.

For example, in order to get a lower rate on an FHA loan, you now must reduce your entire housing payment by 5% — mind you, not just your mortgage payment - even if the lender is picking up the closing costs and the refi is essentially free. Think about it — you are lowering your principal and interest payment, say, $300 a month. Your taxes have jumped, say, $100 a month. You really want to take advantage of lower the mortgage rates to offset your tax increase and save money.

But the government — through FHA — says NO. Why? Because your tax payment has gone up so your total monthly housing savings which might have been 5% prior to the tax increase is now less than 5% due to the tax increase so you become ineigible for a lower payment.

So again we have politiicans dependant on re-election and bureaucrats with lifetime civil service jobs in a position to make your decisions for you. They are somehow saving you from yourself because you are not smart enough to figure out on your own what makes sense for you and your family.

  Will be interesting to see the details. More to follow.

More changes ahead for FHA - Here’s what’s next

In April, FHA up front mortgage insurance premium on new loans both purchase and refi goes from 1.75% of your loan amount to 2.250% — a big jump to your principal. Finalizing the last apps to get in under the wire this weekend. Anyone thinking FHA and ready to go, waiting a few days could cost you plenty of $$$. 

This will only get worse as FHA gets stretched to the brink.

Rates are again becoming unstable, with fresh reports predicting the inveitable increase in 2010. Ten-year yields ended the week on the upside. Interesting to see what happens Monday.

Good report on the latest data - sales way up, but fueled by buyers scrambling to make the Nov. 30 deadline for first-time homebuyer tax credit.

Sales surged ahead in September — highest increase in two years, according to the National Association of Realtors. But what does it mean? Are we out of the woods? Will prices start to rise?

Before we pop the champagne we need to keep in mind that this jump was fueled by the $8000 tax credit due to expire Nov. 30, along with people snapping up short sales and REOs.

These national statistics are borne out in my own business where many of the recent mortgage purchase loans were first time buyers, FHA low down-payment financing, who were able to finally find affordable homes to choose from and then scrambling to make a deal and close in order to get their tax credit.

All in all, a step in the right direction.

Even public radio stations are talking about it … take a look, or better yet, a listen, courtesy of my friend Len.

The $8k tax credit — going, going …

IF YOU DON’T CLOSE BY NOVEMBER 30 it’s gone. Zap. Zero. Poof. Unless Congress extends it. Uh, yeah.

So,for the procrastinators among us who are spurred to action by looming deadlines — I can relate —here is an excerpt from my February tax credit blog post in case you missed it. Now, no excuses!!! If you are thinking about Uncle Sam’s little mini-bonanza, what are you waiting for?

Here’s the scoop - revisited:

The National Association of Home Builder has a pretty straightforward Q&A about the home buyers tax credit, but I boiled down some of the best information, the stuff you need to really pay attention to, like REALLY pay attention to, right here:

Am I eligible?

First, your “modified adjusted gross income” must be less than $95,000 - or you and your spouse, filing jointly, must make less than $170,000 total. Cleared that hurdle? Now, you are eligible only if you or your spouse have NOT owned a primary residence in the past three year. That means vacation homes or investment properties are OK and do not disqualify you. Also, you must purchase the property, or close, from Jan. 1, 2009, to Nov. 30, 2009. A wide range of properties are eligible - even homes you build new yourself on land you already own.

How much will I get?

It depends on your income and on the price of the house.
If your “modified adjusted gross income” is less than $75,000 alone or $150,000 as a married couple, you will receive a credit of 10 percent of the purchase price - up to $8,000. So that means if your house is anywhere OVER $80,000, you will get an $8,000 credit. If you are lucky and the price is, say, $50,000, you’ll get a $5,000 credit.

But if you make more than that, but up to the income limit (see above), the credit is reduced proportionally.

How is this tax credit different from the one last year?

It does not have to be repaid. It’s a gift. From all of us to you.

People keep saying the tax credit is refundable. What does that mean?

It means that even people who pay little to no federal taxes can claim it. Nice!!

Sweeping changes in FHA condo mortgage rules

The US Dept of Housing and Urban Development (HUD) has issued the most sweeping changes to its condo approval process since it rolled out condo financing in the mid 1990s.

Believe me, this is cool stuff and worth paying attention to because there is real substance amid the mind-numbing jibberish of details.

The changes are effective Oct. 1 and should help make more condos available to more homeowners, especially those of you interested in new condo conversions.

Until now, unless you had your eye on one of the few projects that HUD approved in the presale stage, you had to wait until the building was “seasoned” — meaning the homeowner’s association would’ve had to be up and running for at least a year — before individual units would qualify for FHA mortgage financing. Come October, that rule will disappear.

In addition, designated lenders will be able to approve a building in one shot, and all units in the building will be FHA eligible.

The biggest bonanza may be for New York City.  Why? Because the FHA is scrubbing a rule that had prohibited lending in buildings where the condo board had a right of first refusal on a sale (ROFR). Almost all condos in the Big Apple have this sticky little provision in their bylaws.

HUD now says that as long as this little nuance isn’t used for discriminatory purposes as outlined by the Fair Housing Act, it’s no big deal and they’ll go for it.

And that’s not all. Do you live (or want to live) (or want to sell) in an area awash with teeny tiny condo associations? Like, two or three units? Communities in my home state of New Jersey where these properties are plentiful include Fort Lee, Cliffside Park, Jersey City, Hoboken, Ocean City and various other towns along the Jersey Shore.

You know the type.

A brownstone in Hoboken that’s recently been chopped up into two or three units.

Or maybe a duplex, side by side. (I’m thinking Cliffside here) You each have a garage. Your own entrance from the street. maybe even your own (small) backyard. But your roof might be a common area, the exterior stucco, the front lawn. Nice, but try to get in to one of these with 3.5 % down or less than sterling credit or with a cosigner etc… and you strike out. On October 1, you get back into the game.

Of course, as with everything the government does, there is always the “fine print,” and before I jump up and down and cheer, I’m eager to see how it all plays out in October, November and beyond.

How the recession is affecting a California community

Multimedia house by house interviews reflecting the chancing circumstances in a middle-class suburban neighborhood where some people have been laid off from their jobs, struggling to keep their homes, others have been foreclosed upon by their mortgage lenders, and yet others are doing just fine but worry about the fabric of their community.

Multimedia Feature: A Cul-de-Sac Reshaped by Foreclosures