President Obama recently signed a bill extending the closing deadline for the federal home buyer tax credit to Sept. 30, 2010. The NATIONAL ASSOCIATION OF REALTORS® estimates that as many as 17,700 home buyers in California would not have received the tax credit without the extension. Perhaps you know someone who now will benefit from this legislation.

The president also signed HR 5569, the National Flood Insurance Program Extension Act of 2010, funding the program through Sept. 30, 2010—good news for homeowners in the Sacramento-San Joaquin Valley and other 100-year floodplains. As you know, flood insurance is required for mortgages on properties in a 100-year floodplain. Congress has allowed the program to lapse three times this year, forcing many real estate transactions to be put on hold and, in some instances, cancelled. What happens in Sacramento and Washington, D.C., really does matter to your business.

The passage of these two pieces of legislation—which C.A.R. and NAR advocated for—demonstrates the importance of REALTOR® involvement in government. Legislative wins such as these require a focused and relentless presence at the state and national levels.

C.A.R.’s advocacy in the political arena this year also helped preserve property profiles after title companies stopped providing them in reaction to a letter issued by the Department of Insurance; thrice defeated a 3-percent independent contractor withholding proposal that would have accelerated income tax payments for our members; and defeated point-of-sale retrofits proposed through several pieces of legislation that could have added as much as $20,000 per home prior to closing escrow.

Despite these wins, C.A.R.’s voice has been muted in Sacramento where, it’s no secret that political action committees (PACs) vie for legislators’ attention. In the last several years, C.A.R.’s California Real Estate Political Action Committee (CREPAC) was in the top 10 of all PACs in California. In the last three years, however, CREPAC has fallen to 37th in rank. Organized real estate must stay competitive with banks, trial attorneys, and others who often are in opposition to the best interests of REALTORS® when left unchallenged.

In part, your Association’s ranking has fallen as C.A.R.’s political contribution coffers have dwindled, because an increasingly smaller percentage of REALTORS® have contributed to C.A.R.’s PACs. Rather than risk a diminished influence, C.A.R.’s board of directors approved a REALTOR® Action Assessment, a special purpose political assessment of $49 per member consistent with the variable dues formula for 2011. The board of directors agreed that the REALTOR® Action Assessment to enhance C.A.R.’s effectiveness in the political arena was needed given today’s negative fiscal environment, which has prompted proposals of a tax on commissions and more aggressive withholding for independent contractors. Further, a portion of the assessment will go to help fight local issues such as more aggressive business license taxes, maintenance fees, and other revenue generators that hit REALTORS® and their clients hard.

The REALTOR® Action Assessment will go into the California Real Estate Political Action Committee (CREPAC) or the California Real Estate Independent Expenditure Committee (CREIEC) or for other political purposes. If a C.A.R. member chooses, he or she may direct the funds entirely to the political component of the C.A.R. general fund, which is used for member education, member mobilization, and other more generic political purposes that support the real estate industry’s interests.

Government Sponsored Enterprises (GSE) Fannie Mae and Freddie Mac last week released guidelines for implementing the Treasury Dept.’s Home Affordable Foreclosure Alternatives Program (HAFA).  The new guidelines apply to loans owned or guaranteed by the GSEs; servicers are required to implement the new policies no later than Aug. 1. 

While largely consistent with the HAFA guidelines for non-GSE mortgages, both Fannie and Freddie have implemented changes. To qualify for the Freddie Mac HAFA program, borrowers must be more than 60 days delinquent and have cash reserves of less than $5,000 or three times the current monthly mortgage payment, whichever is greater.  Similar to the non-GSE HAFA program, Fannie Mae allows borrowers to qualify if they are at imminent risk of default.  However, Fannie prohibits borrowers from participating in HAFA if the borrower: Has the ability to continue making mortgage payment, but chooses not to do so; has substantial encumbered assets of significant cash reserves equal to or exceeding three times the borrower’s total monthly mortgage payment or $5,000, whichever is greater; or has high surplus income.

Fannie and Freddie both allow the real estate commission in the listing agreement, but not more than 6 percent.  Consistent with the non-GSE HAFA program, Fannie and Freddie guidelines do not permit subordinate lien holders to require contributions from the real estate agent or borrower as a condition for releasing its lien and releasing the borrower from personal liability.

More info on Fannie Mae guidelines

More info on Freddie Mac guidelines

Fannie Mae recently announced that people purchasing a Fannie Mae-owned HomePath® property will receive up to 3.5 percent of the final sales price to be used toward closing cost assistance or their choice of appliances. The offer is available to any owner-occupant who closes on the purchase of a property listed on HomePath.com before May 1.

Properties eligible for this incentive are listed on HomePath.com and most listings include detailed property descriptions; photographs; community and school information; and more. In addition, many Fannie Mae-owned properties are eligible for special HomePath Mortgage and HomePath Renovation Mortgage financing, which offers home buyers an opportunity to purchase with as little as 3 percent down.

More info.

Fannie Mae recently announced that people purchasing a Fannie Mae-owned HomePath® property will receive up to 3.5 percent of the final sales price to be used toward closing cost assistance or their choice of appliances. The offer is available to any owner-occupant who closes on the purchase of a property listed on HomePath.com before May 1.

Properties eligible for this incentive are listed on HomePath.com and most listings include detailed property descriptions; photographs; community and school information; and more. In addition, many Fannie Mae-owned properties are eligible for special HomePath Mortgage and HomePath Renovation Mortgage financing, which offers home buyers an opportunity to purchase with as little as 3 percent down.

CNN Money - On Friday, the Federal Housing Administration announced that it will assist borrowers before they become delinquent.

To read the full story, please click here.

Rep. Barney Frank (D-Ma.), chairman of the House Financial Services Committee, said Friday that Fannie Mae and Freddie Mac should be eliminated as they stand now.

“This committee will be recommending abolishing Fannie Mae and Freddie Mac in their current form and coming up with a whole new system of housing finance, that’s the approach rather than the piecemeal one,” Frank said. 

Frank made his comments during the committee’s hearings on executive compensation.

Read full story at CNBC click link below:

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Beginning mid-December 2009, Wells Fargo Home Mortgage will implement the RESPA (Real Estate Settlement Procedures Act) Reform requirements for all new applications with a property identified. The new requirements intend to help borrowers avoid surprises at closing by placing tolerance levels on all charges for services associated with obtaining the mortgage where the vendor is not borrower-selected.

While RESPA Reform has many process impacts for lenders, settlement agents and attorneys, the transaction experience should remain relatively unchanged for the consumer, REALTOR® and Builder. To help ensure a smooth experience for all parties involved, Wells Fargo Home Mortgage wants to make sure you are aware of these changes and how they impact home financing transactions. Please click here and take a few minutes to read our RESPA Reform Information Guide. It will provide you with:

• The intent of RESPA Reform
• Impacts of three of the new RESPA Reform requirements
• Previews of the new Good Faith Estimate and HUD-1 Settlement Statement
• Frequently asked questions

We hope you find this information helpful. Please contact your local Wells Fargo Home Mortgage consultant for more information and/or to answer your questions.

Wells Fargo Home Mortgage

From Nicole Adams of Construction Management Degree:

It’s the new focus of attention among homeowners struggling to keep up with falling rates, rising mortgages and homes that are underwater – while the complete details about the $75 million bailout sanctioned by the Obama government are not available as of now, there seems to be a mixture of hope tinged with doubt in the air. The question that most people are asking is – will the bailout help me?

The answer depends on a variety of factors –

It will be to your advantage if you’ve been up to date in your payments so far.
You do qualify if your loan was sanctioned by Fannie Mae and Freddie Mac.
You could get your monthly payments reduced to 31 percent of your household income.
You qualify for a refinance at a low interest rate for up to 105 percent of your home’s present value.
You are eligible for help under the bailout plan only if you are the homeowner and if the home in question is your primary residence. You do not qualify if you bought the home for investment or resale purposes.
You do not qualify if the home is a vacation residence.
The new low interest rates are fixed only for the first five years, after which they will gradually be raised to the current levels.
You could get your principal decreased if you are up to date in your monthly payments for the first five years while the interest is low.
There are no prepayment penalties, so you could pay more than the minimum amount each month and get through your mortgage in a shorter period of time, thus reducing the total amount you’re supposed to pay. The more you pay each month, the less you owe on interest on the remaining principal amount.
You do not qualify if you took out the initial mortgage knowing that you could not hope to make the subsequent payments. This is a tricky codicil – no one actually takes out a loan deliberately knowing that they cannot hope to pay it back. But if you’ve never made a single payment or if you’ve defaulted on a large number of them, you’re bound to come under scrutiny and be denied the benefits of the bailout, even though circumstances and bad luck made it impossible for you to keep up with the payments.
So where is the $75 million going? Well, a large part of it is making its way into the pockets of your lenders or loan servicers – for each loan modification (decrease in interest) a lender makes, he or she gets $1000. They also get $1000 every three years if a borrower is regular in his payments for the same period. And they also get $500 for every borrower brought under the umbrella of this plan just before he/she starts missing their payments.

While the details are sketchy at present, we will know more when March 4 arrives and the program unfolds. Till then, it’s best to keep up with your payments and keep your fingers crossed hoping that you’ll qualify.

As of November 2009, Fannie Mae and Freddie Mac implemented more than 405,000 trial and permanent loan modifications under the Home Affordable Modification Program (HAMP), according to a third quarter Federal Housing Finance Agency’s (FHFA) report.  The agency also refinanced 4 million loans. The report details the actions each enterprise has taken to prevent foreclosures and help homeowners remain in their homes.

According to the report, as of Nov. 30:

• Fannie and Freddie had implemented 405,700 HAMP active trial and permanent loan modifications.
• Foreclosure starts on loans owned or guaranteed by the GSEs declined 15 percent in the third quarter.
• Loan modifications, excluding HAMP trial loan modifications, increased 14 percent compared
  with the second quarter.
• Nearly half of loan modifications completed in the third quarter, excluding HAMP trial modifications, resulted in borrowers’ payments decreasing by more than 20 percent.
• Short sales and deeds in lieu increased by 39 percent during the third quarter.
• Loans 60 or more days delinquent increased nearly 20 percent during the third quarter to 1.6 million.

More info

During his State of the State address, Governor Schwarzenegger today announced his 2010 proposals for California.  Included in the proposals is a recommendation to set aside $200 million for a new round of $10,000 state tax credits for first-time home buyers.  The proposal expands upon the initial $10,000 state tax credit by including both new and existing homes.  Last year’s tax credit applied only to new homes.

The tax credit could be combined with the recently extended and expanded federal tax credit for home buyers.

More info

Wall Street Journal – Federal rules that take effect Friday, Jan. 1, mandate a standard, three-page Good Faith Estimate that urges consumers to shop around for the best loan and helps them compare lenders’ offerings. The rules are an update of the Real Estate Settlement Procedures Act, a 1974 law known as RESPA.

MAKING SENSE OF THE STORY FOR CONSUMERS

Although Good Faith Estimates have been in use for many years, there never has been a standard form required of all lenders. Under the new rules, lenders and mortgage brokers are required to give consumers the standard estimate forms within three days of receiving a loan application.

The Good Faith Estimate form requires lenders to combine all of the bank’s fees into one “origination charge,” enabling consumers to compare one lender’s fees with another’s. Lenders are prohibited from increasing the origination fee from the estimate. Some additional charges, including title services and recording charges, can increase by as much as a combined 10 percent. Estimates for other charges, such as homeowner’s insurance and other services provided by third parties selected by the borrower, aren’t subject to such limits.

A finance professor emeritus at the University of Pennsylvania’s Wharton School recommends that borrowers focus on two items as they shop: the interest rate and the “adjusted origination charge,” which includes any points paid to lower the rate.

Another change includes the HUD-1 form used by settlement firms in closings. The new HUD-1 includes a comparison of the estimated and final costs, as well as a summary of the loan terms.

To read the full story, please click here.