Arn Cenedella

Archive for the 'Credit Information' Category

Obama Home Mortgage Rescue Plan part 5

Obama’s plan contains 2 main parts:

1. Refinance options for loans that are up to 105% of the current market value of the home.

2. Loan modifcation programs for people where option #1 does not apply and they are having a hard time making the monthly payments.

Obama has named the plan #1 – Making Homes Affordable.

Katie Curmutte, Zillow on Mortgages Unzipped blog provides lots of details on the plan.

Katie covers option #2.

Further details are available at: http://www.financialstability.gov/ and here and over here too.

If you are a homeowner in trouble or just want to know what your options are, just let me know.

I have written several posts on this issue and these posts contain links to other great information.

More info on new California $10,000 tax credit

In an earlier post, i wrote about a recently passed California State Franchise Tax Board $10,000 credit for the purchase of a NEW principal residence. This credit is available to all purchasers of a NEW house or condominium.

Kappy Mann from beautiful Truckee Lake Tahoe area (where I will be going for a week of skiing with my buddies next Monday) has obtained lots of wonderful detailed information that explains the entire process including what paperwork to file at close. Check it out. Thanks for the good information.

This credit as well as the $8,000 Federal Tax Credit will be one of the many topics I discuss in my up-coming First-Time Home Buyer Information and Opportunity meetup March 21, 2009.

Regulations and Forms available for $8000 first time home buyer credit

Diane Tuman of Zillow provides all the latest info on this credit.

I have recently represented a young first-time home buyer who got into contract on an REO prior to the passage of the stumulus package but they closed after the package becoming law so they will receive the $8,000 credit. That was an unexpected and very welcome bonus to buying a home.

Take advantage of this credit and the $10,000 CA state credit.

Contact me for more details.

Jackie Speier proposers to raise Obama refi limit from $417,000 to $729,500

Jackie Speier one of our US House representatives rightly believes the current limit of $417,000 for Obama’s refi plan will not help many folks in the San Francisco Bay Area.

The SF Chronicle published an article that indicates only 7% to 8% of the homeowners in San Francisco, San Mateo, and Santa Clara Counties will be helped under Obama’s plan.

Julie Joyce Coldwell Banker Piedmont/Montclaire informs her readers of Jackie’s proposal.

We will also keep an eye on Obama’s latest proposal to limit the mortgage interest deduction for high-income earners.

State of California $10,000 home buyer credit

The State of California has just passed a $10,000 home buyer tax credit as part of the recent state budget bill.

This credit is in addition to the $8,000 federal tax credit.

However, the CA tax credit is different than the US tax credit.

The CA credit applies ONLY to NEW houses or condos purchased as primary residences.

The credit is limited to 5% of the purchase price or $10,000 whichever is lower.

The credit will get applied over a 3 year period and the buyer must live in the property for at least 2 years or they lose the credit.

The state tax credit is limited to $100M so time is of the essence.

There are lots of new projects on the Peninsula and in San Francisco.

Let me know and we can find the right one for you.

RIS Media Jim Wasserman provides more details.

Obama plan part 4

There is lots of good information available throughout the real estate blogging community about Obama’s plan to reduce foreclosure and increase loan modifications.

Jillayne Schlicke of Rain City provides a lot of information and asks the very important question:

“IS A LOAN MODIFICATION IN YOUR BEST INTERSTS?”

Jillayne also tells it like it is: “If your home does not sell, the price is TOO HIGH period”. Sellers please pay attention, if your home does not sell, it is proced to high – bigger ads, more open houses won’t get it sold if property is priced above current market.

I recently sold a BRAND new home in prime west Menlo Park for slightly over $1M. This spec built home came on the market at $1.5M about 6 months ago. The price was too high since property is located on a busy street. If property was priced at $1.3M, it would have sold first week. Developer then chased the market down always behind the curve and after the stock market tanked in October 08, the market slowed further. As a result of over-pricing; my client – THE BUYER – has made an excellent purchase posied for long-term appreciation – AVERAGE price in west Menlo Park is about $1.8M.

As I have mentioned before, there are signifcant and complicated legal and tax impacts on loan modification, short sale, or fireclosure. Be sure to consult legal and tax advice before AGREEING to ANYTHING. For example, a lender could agree to a short sale but NOT release you from the balance remaining on the loan that was not paid in the short-sale.

Charles Feldman of Bigger Pockets questions as I do how effective this program will be.

Obama Plan Part 3

Obama’s plan is expected to help between 7 Million and 9 Million homeowners.

The New York Times has a neat chart which tells who qualifies and who does not.

Here is a summary:

Allows “responsive homeowners” – those who are paying their mortgages on time but whose property value has dropped so the loan balance is now 80% to 100% of the current fair market value – to refinance at a lower interest rate.

But it appears this option is only available to borrowers whose loans are held by Freddie Mac and Fannie Mae.

“Responsible homeowners” – those whose loan balance is 105% or more of the current market value can not take advantage of this program.

Folks with loans above $417,000 can not take advantage of this program.

“At-risk” homeowners who arer owner occupants can hope to have the interest rate on their loans reduced to 38% of the gross income. Additional reductions in interest rate to a 31% of gross income amount may be made by “matching” contributions from US govt and lender. Again loans above conforming limit do not qualify.

My educated???? guess is that many many folks in trouble with their mortgages will NOT be able to take advantage of this program. This program will have only a limited impact on the problem.

Obama’s foreclosure and loan modification part 2

I am confident that we will gain more insight on Obama’s plan to reduce foreclosures and increase loan modifications over the next few days and weeks.

Obama’s progrma does not address ssecond mortgages. Many folks have home equity loans on their property or obtained a second loan at time of purchase to go with a larger first loan (typical for loans with less than 20% down).

Here is what NY Times says…..

Many large lenders have agreed to hold off on foreclosure proceedings as Obama’s plan kicks into action.

Here is what Bloomberg says…..

Obama says foreclosure crisis is unraveling the middle class.

Here is MSNBC’s take on the plan……

and US News and World Report…..

I believe we will get more details and analysis moving forward.

Obama’s foreclosure and loan modification plan is out

Preliminary details are out on Obama’s plan to reduce foreclosures and increase loan modifcations.

Full and final details should be out in the next 2 weeks.

Obama’s plan contains incentives for both lenders and home owners to agree to loan modifications and keep to those promises. Borrowers and lenders can receive up to $1,000 per year if borrowers keep their payments current and lenders agree to a loan modification.

Modifications would be paid to bring interest rate down so that payments are 38% of the borrower’s income. Additional reductions down to a 31% level could be made with matching lender and government funds. These lower interest rates would be in effect for five years.

Homeowners who are “under water” and whose debts exceed 55% of their income need to agree to HUD debt counseling.

One of my big concerns about any loan modifcation program is fairness to buyers who put cash into the property and now the property has dropped in value. Under Obama’s proposal, buyers who put 20% down but have seen their property values drop so they are “under water” will be allowed to refinance to a lower rate with Freddie Mac and Fannie Mae loans. In my opinion, this is a good feature of the proposal. The government if it helps anybody should help people that actually put their own money into the property.

In addition, the Obama plan allows bankruptcy courts to “cram down”mortgages.

Lenders are not happy about this.

Of course, the devil is always in the details. I wonder how many folks will be able to helped with this program. I suspect that so many borrowers are in homes well above their means that the 38% ratio may mean lenders need to reduce their rate to near zero to bring payments in line with this ratio. Will the lenders do this? Time will tell.

More can be learned at Inman News.

Info from Trulia.

Stopping Foreclosures and Loan Abatement

Barry Ritholtz of the Big Picture has an excellent summary of potential loan modifcation and foreclosure prevention stratgies.

Hi spost makes several excellent points:

1) artificially trying to “prop” up prices will not work

2) many borrowers are in loans so large realtive to their incomes that they have no chance to pay back and therefore NO loan modifcation program will work for these folks

3) it is NOT the responsibility of US taxpayers to bail out borrowers who borrowed more than they can afford or lenders who made loans that never should have been made.

Let’s see what Obama comes up with later today.

My sense is that while his plan may sound good in theory – in practice the impact may be minimal.

Any plan will raise the issue of fairness – why should someone who makes their payments on even though the value of their house has dropped NOT receive any bailout while borrowers who can’t make their payments do.

Here is one idea I suggested……