Fannie Mae To Become A Landlord
Leave a CommentIf you have foreclosed on your home and Fannie Mae is the owner of it they will rent the home back to you for up to a year. I guess it’s not a bad idea if it keeps some of the supply of foreclosures off the market for a little and hope values are higher in a year.
Fannie better hope that these borrowers are better at paying rent than they are with their mortgage. The article below did state that the person has to be behind on their mortgage and the monthly rent has to be 31% or less of your gross income. Not a bad idea but we will see how it works out.
“If you keep more people in their homes, it’s better for the community. It’s better for the financial institutions that own those homes,” says Jay Ryan, vice president of equity investments at Fannie Mae. “Hopefully less foreclosure product on the market will help stabilize those communities.”
http://online.wsj.com/article/SB125743289932030933.html?mod=rss_whats_news_us
Is Mortgage Insurance Tax Deductible?
Leave a CommentYes it is but there are income limits. If your adjusted gross income is more than $100,000 the deduction is limited and if you’re over $109,000, no deduction is allowed.
This is very important because I know there are people who tell their clients that it is tax deductible when trying to sell them a product. Make sure to always consult your CPA or accountant. You can also go onto www.irs.gov and search for yourself.
Foreign Home Buyers Betting On Florida
Leave a CommentIt looks like an Israeli company is betting on condos in Florida according to The Wall Street Journal. And why wouldn’t they with prices as low as they are and a weak dollar. Their strategy is a smart one, buy, rent the unit out for a few years, and then sell. This is buying and holding. That isn’t to say there aren’t people out there making money flipping properties because there are but it is certainly a riskier strategy.
The company is looking to buy at less than replacement cost. The reason I bring this up is because there are properties in South Florida that you can buy for below replacement cost. Meaning you couldn’t even build it for that amount of money and that doesn’t even take into account the land. A lot of the value of a property in Florida comes from the land.
http://blogs.wsj.com/developments/2009/11/03/an-israeli-company-bets-on-florida-condos/
Modifying Pay-Option-Arms
It looks like this is Wells Fargo’s new strategy and in my opinion it is a big gamble. Since Wells Fargo never offered these loans it must be the loans from Wachovia where most of the loans were originated from Golden West and World Bank, 2 banks Wachovia acquired.
The reason I state it is a gamble is that 2/3rds of modified loans end up back in default. Now keep in mind in part of that statistic are loans that were modified that ended up with a higher payment after the modification. Regardless, the majority of borrowers who took these loans out never could afford the property from the beginning. Some of the calls I get amaze me where someone is behind on their mortgage, trying to get a new mortgage, and they wouldn’t even qualify for half of the mortgage that they current have. And that has nothing to do with tighter restrictions, etc.
“To solve that conundrum, Wells Fargo is taking a gamble: The San Francisco company is issuing thousands of interest-only loans that will defer borrowers’ balances for as long as six to 10 years. Wells Fargo is wagering that an eventual rise in housing prices in the worst-hit regions of the U.S. and a rise in consumer income, will eventually cover the bank’s underwater Pick-A-Pay debt. “We’re banking on the fact the economy will improve and recover over time,” Michael Heid, co-president of Wells Fargo Home Mortgage, said in an interview.”
http://online.wsj.com/article/SB125728972492326499.html?mod=rss_whats_news_us_business
Tax Credit Passes The Senate
And now it’s on to the House. The final vote should come on Friday and it appears as though it will pass. Lawmakers voted 85 to 2 on Monday night in favor of it. President Obama would then have to sign it next week.
It does look like it will include the credit for those that have owned a home for 5 years in the past 8 years for up to $6500 and would increase the income limits from $75,000 if you are single to $125,000 and from $150,000 to $250,000 for married couples.
According to Reuters “The tax credit would apply for homes under contract by the end of April, although buyers would have until the end of June to close on the purchase.”
http://news.yahoo.com/s/nm/20091103/pl_nm/us_usa_congress_hoyer_housing
Mortgage Rates Will Rise
Yes that is right and if you are still waiting to refinance you better lock in your interest rate sooner than later. Also, if you are buying a home you will want to get it under contract soon because the Fed’s buying of mortgage-backed securities will end at the end of the first quarter of 2010. Mortgage-backed securities are what move interest rates.
The only way this could change is if the Fed decided to increase their purchasing of mortgage-backed securities which I feel is highly unlikely even though there was discussion of it at last month’s FOMC meeting.
I have used this example before but here is it again. If you get a loan at $100,000 today with a rate of 5% your payment would be $536.82. Let’s say property values drop even more and now your loan amount is 10% less but interest rates have increased to 6%, your payment would be $539.60. Need I say more?
If Your Bank Fails
With 9 more banks failing this past Friday, this is a good article to read below. It goes into detail about why a bank would fail, what the FDIC covers, and more importantly what it doesn’t cover.
Here is another important question:
Q: How long does it take for the FDIC to pay people back?
A: In most cases, another bank takes over the closed bank’s deposits, and ATM cards, debit cards and checks continue to work until the new bank transitions customers to its systems.
If the FDIC can’t find another bank to take over, the agency uses its insurance fund to make payouts to the failed bank’s customers. The law requires that deposits be paid out “as soon as possible” after an insured bank fails. That has typically been just a few days after the bank closes. In most of these cases, the FDIC will provide new accounts at another insured bank, but it will issue a check to each depositor if new accounts can’t be arranged.
http://www.msnbc.msn.com/id/33554271/ns/business-personal_finance/
Home Improvement Costs Are Down
The whole US is on sale. It doesn’t matter what you are buying, most things are cheaper today. This is a good thing seeing as many of the homes people may buy, especially in South Florida, are foreclosures and short sales that need work. A lot of the properties need some work. This is partly why you are buying the home at such a large discount. Make sure you get a good home inspector to check EVERYTHING because you don’t want to get hit with “hidden costs” down the road.
This is also nice for those who want to stay put in their homes and they are outdated. Now is the time to do the work. It is also a great time for preventive maintenance. It’s almost like going to the dentist every 6 months, it costs you less in the long run.
“Depending on the region and the job, some homeowners are paying as much as 20% less for home-remodeling projects than they would have a few years ago. Many contractors are willing to accept smaller jobs and “handyman” projects that they used to snub. And more projects are being delivered on time and on budget—a stark contrast from the boom years.”
http://online.wsj.com/article/SB10001424052748703790404574471683619819154.html?mod=rss_PJ_Main
Tax Credit’s Tentative Extension
This is good news but it is still unclear how it will be brought to the Senate floor.
According to The Wall Street Journal “Senate negotiators reached a tentative deal to extend a tax credit for first-time home buyers, but its passage remains uncertain. The agreement would extend the existing credit for first-time home buyers, worth up to $8,000, while offering a new credit of up to $6,500 for some existing homeowners, Senate aides said. The reduced credit would be available to all home buyers who have been in their current residence for a consecutive five-year period in the past eight years.
The credit would be extended from its current expiration date of Dec. 1 to all contracts entered into by April 30, and closed before July 1. It is expected that income limits on people claiming the credit would be increased to $125,000 for singles and $250,000 for couples, from the current $75,000 and $150,000, aides said. The credit phases out for people making more than those amounts.”
http://online.wsj.com/article/SB125678511901015147.html?mod=rss_PJ_Main
Home Price Data
It is amazing how you can play around with numbers. You could view today’s Case-Shiller Index release as good or bad.
CNN reported that “Prices in the S&P Case-Shiller Home Price index of 20 cities rose a non-seasonally adjusted 1.2% in August. It was the fourth consecutive monthly increase and followed a 1.6% gain in July. Prices were down 11.3% versus August 2008, but that drop was less severe than expected. Analysts surveyed by Briefing.com had forecast an 11.9% year-over-year drop.”
Whether prices are increasing or decreasing month over month or year over year, it all depends on where you live. In South Florida, things seem to be stabilizing with all of the first-time homebuyers, cash offers, and bidding wars going on.
