Details of FHA’s $8K downpayment advance released

WASHINGTON – May 29, 2009 – The U.S. Department of Housing and Urban Development (HUD) released more details today about its program to help first-time homebuyers use a tax credit as part of a downpayment.

HUD announced the program on May 12 at the National Association of Realtors® Housing Summit. In the interim, HUD posted an announcement and then immediately took it down, leading to speculation that the program would be pulled. In response, HUD said the rules had simply not been finalized, and the original announcement had been posted in error.

“We’ve been eager for word from the federal government since the new FHA downpayment assistance plan was announced, and even more so after the program details were first published and then quickly pulled,” says John Sebree, FAR vice president of public policy. “Luckily, that turns out to be a minor setback and there will be a federal downpayment program to complement the $30 million we were successful in securing in the Florida budget.”

The most significant change involves the amount of downpayment required by qualified first-time homebuyers. FHA mortgages require a 3.5 percent downpayment, and the $8,000 tax credit cannot be used to override that requirement. Once the 3.5 percent downpayment requirement has been met, however, the tax credit can be applied to additional costs, including a higher downpayment, paying points to lower the mortgage rate, and/or closing costs. Lenders will treat the tax credit money as a second lien on the home until it’s paid back.

“Mortgage industry leaders have indicated that this type of product may not be immediately available to consumers,” says Sebree. Since lenders will oversee the tax credit loan, they must create internal programs to handle the process.

Lenders have some flexibility on payback requirements for the upfront loan of the tax credit, though HUD also created rules to protect homebuyers from onerous terms. To read the complete overview in Mortgagee Letter 2009-15, go here.
 

© 2009 FLORIDA ASSOCIATION OF REALTORS®

Repeat buyers boost home sales

The majority of homebuyers are now repeat buyers, says NAR; first-timers’ share declined to 40% in April. Read more

Governor signs $8K homebuyer credit into law

TALLAHASSEE, Fla. – May 27, 2009 – Gov. Charlie Crist signed the budget bill (SB 2600) today that lays out how the state will spend its $65.6 billion in the fiscal year that starts July 1. Included is $30.1 million for the Florida Homebuyer Opportunity Program, which will help with downpayment assistance.

Beginning July 1, those who quality for the federal $8,000 first-time homebuyers tax credit will be able to apply for downpayment assistance before they close on the purchase of their home, and then repay the amount borrowed when they get their tax refund. The program will operate through local county housing administrators, though details are still being worked out.

The state spending plan passed today also includes the following for real estate-related programs:

• Up to $400,000 to prevent, combat and publicize the dangers of unlicensed real estate activity in Florida.

• $540,000 to continue and complete a study to make recommendations on passive strategies on nitrogen reduction that complement the use of onsite wastewater treatment systems.

• $3 million in the Real Estate Trust Fund for the Education and Research Foundation.

• A reduction in the eviction filing fees from $265 to $180 – the only fee reduction in the 2009-10 budget, and one with a negative fiscal impact of up to $36 million.

© FLORIDA ASSOCIATION OF REALTORS

Florida’s existing home, condo sales rise in April 2009

ORLANDO, Fla. – May 27, 2009 – Florida’s existing home sales rose in April – the eighth consecutive month that sales activity increased in the year-to-year comparison, according to the latest housing data released by the Florida Association of Realtors® (FAR). April’s statewide sales showed gains over the previous month’s sales level in both the existing home and existing condominium markets.

Existing home sales rose 18 percent last month with a total of 13,111 homes sold statewide compared to 11,133 homes sold in April 2008, according to FAR. April’s statewide existing home sales were slightly higher than statewide activity in March.

Florida Realtors also reported a 21 percent rise in statewide sales of existing condos in April; existing condo sales last month increased 6.2 percent over the total units sold in March.

Fourteen of Florida’s metropolitan statistical areas (MSAs) reported increased existing-home sales in April and 11 MSAs also showed gains in condo sales. A majority of the state’s MSAs have reported increased sales for 10 consecutive months.

Florida’s median sales price for existing homes last month was $138,500; a year ago, it was $199,500 for a 31 percent decrease. Housing industry analysts with the National Association of Realtors® (NAR) note, however, a significant downward distortion in the current median price due to many discounted sales, including a large number of foreclosures. The median is the midpoint; half the homes sold for more, half for less.

The national median sales price for existing single-family homes in March 2009 was $174,900, down 11.5 percent from a year earlier, according to NAR. In California, the statewide median resales price was $253,040 in March; in Massachusetts, it was $255,000; in Maryland, it was $264,302; and in New York, it was $222,500.

According to NAR’s latest housing industry outlook, it could take a few months for the housing market to gain momentum, though there are signs of stabilization. “The share of lower priced home sales has trended up, indicating a return of many first-time buyers,” says NAR Chief Economist Lawrence Yun. “Buyer traffic has been rising, and real estate offices are getting phone inquires about the tax credit. By early summer we should be seeing a positive impact on home sales from record-low mortgage interest rates in addition to the stimulus provisions.”

In Florida’s year-to-year comparison for condos, 4,660 units sold statewide compared to 3,862 units in April 2008 for a 21 percent increase. The statewide existing condo median sales price last month was $106,600; in April 2008 it was $178,900 for a 40 percent decrease. In the latest data available at press time, NAR reported the national median existing condo price was $177,600 in March 2009.

Interest rates for a 30-year fixed-rate mortgage averaged 4.81 percent last month, down significantly from the average rate of 5.92 percent in April 2008, according to Freddie Mac. FAR’s sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.

Among the state’s smaller markets, the Pensacola MSA reported a total of 316 homes sold in April compared to 272 homes a year ago for a 16 percent increase. The existing home median sales price was $143,300; a year ago, it was $157,400 for a 9 percent decrease. In the year-to-year comparison for the existing condo market, 48 units sold in the MSA last month, up 9 percent compared to 44 condos sold the previous April. The market’s existing condo median price remained level at $250,000.

© 2009 FLORIDA ASSOCIATION OF REALTORS

Condos are a great buy, but look before you leap

Median prices in South Florida have tumbled to $100,000, and buyers now evaluate the building as much as the unit. Read more.

Mortgage rates dip, remain above record lows

Average rates on 30-year, fixed-rate mortgages dropped to 4.82% this week, staying below 5 percent for the tenth week in a row. Read the full story.

Interest in purchasing foreclosed homes rises

SAN FRANCISCO – May 21, 2009 – Consumers appear to be more willing to buy foreclosures, with 55 percent of U.S. adults indicating that they are at least somewhat likely to consider a foreclosed home in the future, compared to the 47 percent of U.S. adults who indicated the same in November 2008, according to a new study. Harris Interactive conducted the survey for Trulia.com and RealtyTrac.

In the current market, adults in the U.S. believe foreclosed properties offer an even greater bargain opportunity than before, the study found. Forty percent expect to pay at least 50 percent less for a foreclosed home, compared to only 31 percent of U.S. adults surveyed in November 2008.

The May 2009 survey also found that 74 percent of U.S. adults familiar with President Barack Obama’s mortgage relief program are at least somewhat confident it will give homeowners the incentive to renegotiate with mortgage lenders in order to prevent their homes from going into foreclosure.

While overall consumer interest in buying foreclosed homes has increased, the current wave of the study also found higher levels of negative sentiment about forecloses. In November 2008, 80 percent of U.S. adults felt that there were negative aspects to purchasing a foreclosed home. In the current survey, the number of U.S. adults concerned with negative aspects rose to 85 percent.

Among the 85 percent, 71 percent cite hidden costs as their top concern, 46 percent believe the process is risky and 31 percent are concerned that the home will lose value. Not surprisingly, consumers expect hefty discounts on foreclosed homes, with 83 percent believing they should pay at least 25 percent less for a foreclosed property, perhaps to compensate for perceived risks.

“As interest in purchasing foreclosed homes increases, competition is heating up with traditional sellers competing with bank-owned prices,” said Pete Flint, co-founder and CEO of Trulia. “Across the U.S., 24 percent of existing homes for sale on the market have seen at least one price reduction in order to stay competitive, creating a tremendous opportunity for consumers to buy homes at significantly lower prices. Competition amongst sellers, along with the newly created economic incentives, has created the most significant discounts that we’ve seen in decades, presenting opportunities for first-time homebuyers and families looking to trade up to a bigger home.”

“Although consumers are aware that there may be some challenges involved in purchasing a foreclosed home, they are very interested in the bargain opportunities available in the foreclosure market,” said Rick Sharga, senior vice president of RealtyTrac. “People want the best deals they can find and they are willing to go outside their comfort zones if it means they can buy more home for less money. Consumers who educate themselves on the opportunities available will likely be rewarded.”

Most likely to buy foreclosures

• Two-thirds of U.S. adults between the ages 18-44 (66 percent) would consider purchasing a foreclosed home, compared to a little more than one-third of those ages 55 and older (38 percent). Respondents aged 45-54 fell in between, with 53 percent indicating that they would be at least somewhat likely to consider a foreclosed property.

• Current renters (68 percent) are more likely to consider purchasing a foreclosed home than current homeowners (49 percent).

• U.S. adults with children under 18 living in their household also show an increased likelihood to consider foreclosure properties, with 66 percent indicating they would be at least somewhat likely to purchase one, compared to 49 percent of those without children under 18 in the household.

Confidence in mortgage relief plan

• 74 percent of U.S. adults familiar with President Obama’s mortgage relief program are at least somewhat confident it will give homeowners the incentive to renegotiate with mortgage lenders in order to prevent their homes from going into foreclosure.

• U.S. adults aged 18-34 familiar with the program have the highest confidence level in the mortgage relief program.

• 84 percent are least somewhat confident in the plan, compared to 71 percent of those aged 35-44, 69 percent of those aged 45-54, and 71 percent of those aged 55-plus.

• Interestingly, women familiar with the program are more likely to be at least somewhat confident in its ability to give homeowners the incentive to renegotiate with their mortgage lender in order to prevent their home from going into foreclosure than men familiar with the program (79 percent vs. 69 percent, respectively).

The May 2009 survey was conducted online within the United States by Harris Interactive via its QuickQuery online omnibus service on behalf of Trulia between May 1-5, 2009 among 2,397 U.S. adults aged 18 years and older.

© 2009 FLORIDA ASSOCIATION OF REALTORS

Uniform process for short sales will help struggling homeowners, say Realtors

WASHINGTON – May 20, 2009 – Help is on the way for many homeowners facing foreclosure, thanks to new details under the Making Home Affordable Program announced by the U.S. Treasury and the U.S. Department of Housing and Urban Development (HUD).

The Making Home Affordable Program is designed to help homeowners modify their loan so they can afford to stay in their home. Where a modification is not possible, new incentives encourage the “quick private sale or voluntary transfer of property, which will save homeowners money and protect their financial future,” according to U.S. Treasury Secretary Timothy Geithner. The National Association of Realtors® (NAR) believes that a uniform process for handling short sales will facilitate the process.

“NAR is pleased that the government is stepping in to help prevent foreclosures by streamlining the short-sale and deeds-in-lieu process,” says NAR President Charles McMillan. “NAR has been calling for uniform short sales procedures and other initiatives that will help today’s homeowners in a challenging economy.”

Short sales occur when a bank agrees to let homeowners who have fallen behind on their mortgage to sell their home for less than they owe on the mortgage. Go to www.treasury.gov for detailed information on the program changes.

“Many families are finding themselves with a mortgage that is higher than their current home value, and they are struggling,” says McMillan. “As Secretary Geithner noted, and as NAR has been advocating for many months, stemming the foreclosure crisis and stabilizing the housing market are critical to our economic recovery.”

“We have heard from Realtors that the extensive delay in the short sale process caused many buyers to go elsewhere and left many would-be sellers with no option but foreclosure. We are all pleased that the government has stepped in to help homeowners and those wishing to buy a home,” McMillan says.

© FLORIDA ASSOCIATION OF REALTORS

Treasury Announces Short-Sale Support

The U.S. Treasury Department last week unveiled a plan designed to streamline and encourage short sales, a move RE/MAX leaders have been advocating for some time.

Under provisions of the newly created “Foreclosure Alternatives Program,” the process will soon include standardized documentation, cash incentives to lenders and moving allowances for homeowners.

RE/MAX International supports the government’s action.

“We applaud the administration for creating the Foreclosure Alternatives Program, which promotes the short-sale process,” says RE/MAX International Chairman and Co-Founder Dave Liniger (ABR, CRB). ”We’ve been talking with key lenders and government officials for months about the short-sale issue and couldn’t be more pleased that our hard work has finally paid off.”

Here’s a Treasury Department fact sheet about the plan, as well as a release from the National Association of Realtors.

Because RE/MAX International leadership recognized the viability of short sales as an important piece of the foreclosure puzzle, more than 5,000 Associates already have been trained through the Certified Distressed Property designation course, which covers the process in detail. The next airing on RSN is June 9-10.

“We’ve been preparing for, and pushing for, this type of action,” says Mike Ryan, RE/MAX International Senior Vice President of Media Training. “We’ve felt for a long time that short sales provide a lifeline for homeowners who can’t afford to stay in their homes, even with a loan modification. With a short sale, the sellers get out of a bad situation, the banks save on costs and the neighborhood avoids the many problems associated with vacant, foreclosed properties.”

Ryan says it’s more important than ever for Associates to learn how to handle short sales, which have traditionally been avoided by agents unwilling to navigate the long, frustrating and often unsuccessful terrain.

“It’s understandable why many Associates have been reluctant to pursue this business. But with distressed properties accounting for half of U.S. sales and a whole new level of attention now being put on making short sales easier to complete, it really is time to let go of any reservations,” Ryan says. “With the Treasury Department’s involvement, we’re going to see a lot more emphasis on short sales, through lenders, the media and the public. Our people need to be as educated as they can be about this segment of the market.”

Two days after the Treasury announcement, The New York Times published a story, headlined “Lenders More Open to Short Sales,” that included this passage:

“Mr. Mitchell of Lynx says short sales are often the best approach, even for homeowners considering a new loan to save the home. ‘It’s gotten to the point where people understand that sometimes you have to start over,’ he said. ‘A loan modification might help you in the short term, but sometimes what people need to do is get out completely.’”

The perception of short sales is clearly changing, Ryan says.

“It’s up to us, and each individual Associate and brokerage, to be prepared,” he says. “The foreclosure problem isn’t going away anytime soon, and in fact will probably get worse before it gets better. But short sales provide a source of relief – and we want our agents to be able to close them better than anyone.”

Bank of America revises short sale policy

BofA calls Treasury Dept.’s added incentives and guidance on multiple liens “a boon.” Read the full story.