More Tax Credit Extension and Expansion News

WASHINGTON – Buying a home is about to get cheaper for a whole new crop of homebuyers — $6,500 cheaper.

First-time homebuyers have been getting tax credits of up to $8,000 since January as part of the economic stimulus package enacted earlier this year. But with the program scheduled to expire at the end of November, the Senate voted Wednesday to extend and expand the tax credit to include many buyers who already own homes. The House could vote on the bill as early as Thursday.

Buyers who have owned their current homes at least five years would be eligible for tax credits of up to $6,500. First-time homebuyers — or anyone who hasn't owned a home in the last three years — would still get up to $8,000. To qualify, buyers in both groups have to sign a purchase agreement by April 30, 2010, and close by June 30.

"This is probably the last extension," said Sen. Johnny Isakson, R-Ga., a former real estate executive who championed the credits.

The homebuyers tax credit is one of two tax breaks totaling more than $21 billion that the Senate included in a bill extending unemployment benefits for those without a job for more than a year. The other would let companies now losing money recoup taxes they paid on profits earned in the previous five years.

"We are still in a world of economic hurt, and Congress must continue to act boldly and creatively," said Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee. "With the right mix of tax breaks and investments we will get through this recession and get folks working again."

The real estate industry has been pushing to extend and expand the housing tax credit. About 1.4 million first-time homebuyers have qualified for the credit through August. The National Association of Realtors estimates that 350,000 of them would not have purchased their homes without the credit.

Extending and expanding the tax credit for homebuyers is projected to cost the government about $10.8 billion in lost taxes. While the measure passed the Senate by a 98-0 vote, Sen. Kit Bond, R-Mo., questioned its efficiency in stimulating home sales.

"For the vast majority of cases, the homebuyer tax credit amounted to a free gift since it did not affect their decision to purchase a home," Bond said. "And for the small minority of buyers whose decision was directly caused by the credit, this raises the question of whether we are subsidizing buyers who may not have been able to afford buying a home in the first place."

The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.

The credit would be extended an additional year, until June 30, 2011, for members of the military serving outside the United States for at least 90 days.

Expanding the tax credit for money-losing companies is projected to cost $10.4 billion.

The business tax break would allow money-losing companies to use current losses to offset taxable profits earned in the previous five years, giving them refunds of taxes paid in those years. Under current law, businesses with annual gross receipts of more than $15 million can claim losses back only two years.

The tax break would help industries suffering losses in 2008 or 2009, including retailers, homebuilders and newspapers. Congress included a scaled-back version of the tax break — for companies with revenues of $15 million or less — in the economic recovery package enacted in February. The new tax break would be available to companies of any size, providing a quick source of cash.

The U.S Chamber of Commerce has been a big backer of the tax break for money-losing companies.

"It frees up capital that they can use to maintain jobs and potentially even hire new people as the economy returns," said Caroline Harris, senior tax counsel for the U.S. Chamber of Commerce.

The tax breaks would be paid for largely by delaying a tax break for multinational companies that pay foreign taxes. It was passed in 2004 and originally was to have taken effect this year, but would now be delayed until 2018.

Congress Agrees to Keep Homebuyers' Tax Credit

By JACKIE CALMES

Published: November 3, 2009

WASHINGTON — The Senate and House are poised to agree on a compromise measure to extend unemployment benefits that also would expand a popular $8,000 tax credit for homebuyers, despite a recent government report on extensive mistakes and suspected fraud in the program.

The Senate might pass its version as early as Wednesday, and aides to Congressional leaders say the House could accept it this week, sending the bill to President Obama to sign into law. After weeks of partisan delay in the Senate, Democrats are eager to show progress before Friday, when the October jobless report is again expected to show high unemployment.

The homebuyers’ credit — enacted last year, expanded this year and scheduled to expire Nov. 30 — would be extended to cover homes under contract by April 30. Also, it no longer would be limited to first-time buyers; people who have owned a home for at least five years could get a $6,500 credit on a new residence. Income limits for eligibility would be raised, making many more people qualify.

Extending and expanding the credit would cost an estimated $11 billion, on top of the $10 billion spent so far. It would be a big victory for the housing and real estate lobby and for the Senate majority leader, Harry Reid, Democrat of Nevada, who faces a tough re-election race next year in the state with the most claims for the credit per capita.

Critics complain that most of the credits go to taxpayers who would have bought their homes anyway, which even the industry acknowledges. Also, a Congressional subcommittee released a Treasury Department report last month about suspected criminal and civil abuses of the program.

Government officials testified, however, that many of the problems may be due to confusion among taxpayers and the Internal Revenue Service about the overlapping 2008 and 2009 versions of the tax credit. With Congress likely to change the eligibility provision again, the new measure could present further administrative problems for the I.R.S., although the measure does include several new safeguards.

“It’s not unreasonable to think that this is going to provide some further challenges for them, both in terms of implementing a third version of it and in terms of ensuring taxpayers’ compliance,” said James R. White, director of tax issues for the Government Accountability Office.

The Treasury Department report said that as of Sept. 30, the I.R.S. had identified 167 suspected criminal schemes and was examining nearly 107,000 cases of potential civil violations.

The first person to be convicted of defrauding the tax credit program was a tax preparer in Jacksonville, Fla., who was sentenced last month to 30 months in prison. According to the Justice Department, he claimed the credit for ineligible clients, many of whom were unsuspecting, and electronically paid himself $1,000 of the credit’s value each time.

Investigators found that more than 500 claimants of the tax credit nationwide were minors as young as 4, so the new measure will require applicants to be at least 18. Homes cannot be acquired from relatives, and taxpayers must submit a settlement statement as proof of purchase, though officials acknowledge that could be a problem for those who file tax returns electronically.

While real estate groups and some economists say the credit has helped stabilize the housing market, critics say it is too costly a subsidy when low interest rates and home prices are incentives enough for most.

Of the 1.4 million claimants of the credit, fewer than a third — about 350,000 to 400,000 — are believed to have bought their homes because of the credit, according to independent and industry-affiliated economists.

Under the new legislation, individuals with income up to $125,000 a year and couples earning up to $225,000 would be eligible. The current income limits are $75,000 for individuals and $150,000 for couples. Under both the House and Senate versions, smaller amounts are available to people of slightly higher incomes until the credit phases out.

The expanded homebuyers’ tax credit was attached to a bill intended to extend unemployment compensation for up to 20 weeks for people who have been out of work for long periods. Another amendment would sweeten a tax break for businesses with net operating losses in 2008 and 2009.

Rates As of 11/2/09

1. CONFORMING – UP TO $417,000

4.75% WITH 1 POINT ORIGINATION - 30 YEAR FIXED

4.25% WITH 1 POINT ORIGINATION - 15 YEAR FIXED

3.50% WITH 1 POINT ORIGINATION - 5/1 ARM FIXED

3.875%WITH 1 POINT ORIGINATION – 7/1 ARM FIXED

2. CONFORMING –JUMBO UP TO $729,750

4.875% WITH 1 POINT ORIGINATION – 30 YEAR FIXED

3.875% WITH 1 POINT ORIGINATION – 5/ 1 ARM FIXED

Rates As of 10/20/09

Today”s Rates - 10/20/2009

Conforming Loans Up-to $417,000

30 year conforming 4.75%

15 year conforming 4.25 %

5/1 arm conforming 3.50%

7/1 arm conforming 3.875%

*All with 1 point Origination*

Jumbo Conforming up to $729,750

30 year jumbo conforming 5.00%

5/1 jumbo conforming 5.375%

Jumbo over $729,751

3/1 arm 4.625%

5/1 arm 5.375%

7/1 arm 5.25 %

10/1 arm 5.50 %

15 year fixed 5.50 %

30 year fixed 5.875%

Today's Rates - 9/16/2009

Conforming up to $417,000 – 30 year fixed
4.75 % 1 point
5.00 % 0 points

Conforming up to $729,750
5.125 % 1 point
5.375 % 0 points

First Time Homebuyer Tax Credit

Existing home sales jumped 7.2% in July — the biggest monthly gain on record. First-time homebuyers are purchasing about one third of all homes sold. This is largely due to the tax incentive, interest rates hovering at historic lows and housing affordability at its best level in more than a decade.

Qualifying first-time homebuyers can claim 10% of the purchase price up to $8,000, or $4,000 for married individuals filing separately. The credit is available for purchases completed on or after January 1, 2009, and before December 1, 2009. The credit is refundable, meaning recipients receive a check for any claim amount beyond what’s owed in taxes.

Eligibility for the first-time homebuyer credit is determined by the date of the completed purchase, not the date of occupancy. One exception is if the home is being constructed, then the date of occupancy is considered the date of purchase. The home must be used as a primary residence (generally defined as where an individual spends more than 50% of their time). To be eligible, the buyer, or either spouse, cannot have owned and used a home as a primary residence within the last three years. A taxpayer who owned a rental property but not a primary residence within the past three years is eligible for the credit.

The credit does not have to be repaid unless the home is sold or ceases to be the primary residence within three years. There are some exceptions: homes sold as part of a divorce settlement, homes destroyed in a natural disaster, homes subject to condemnation, etc.

To be eligible for the credit, the home cannot be inherited, received as a gift, or purchased from a spouse or related person. The credit applies to any type of new or existing dwelling. Even some houseboats and manufactured homes used as primary residences are eligible. The $8,000 tax credit phases out for individuals with modified annual gross income (MAGI) of $75,000 to $95,000 and married couples with MAGI of $150,000 to $170,000.

Today's Rates - 8/21/2009

30 YEAR FIXED – CONFORMING UP TO $417,000

4.875% WITH 1 POINT

5.25 % WITH 0 POINT

15 YEAR FIXED – CONFORMING

4.50 % WITH 1 POINT

4.75 % WITH 0 POINT

7 /1 ARM

4.25% WITH 1 POINT

4.50 % WITH 0 POINT

30 YEAR FIXED- CONFORMING JUMBO UP TO $729,750

5.25% WITH 1 POINT

5.50% WITH 0 POINT

JUMBO UP TO $2,000,000

5/1 ARM

5.625 % WITH 1 POINT

7/1 ARM

6.00 % WITH 1 POINT

Mortgage Rate Update

Mortgage Time Mortgage Market News for the week ending August 21, 2009
Compliments of Charles Gonzalez Stearns Lending PHONE: (866) 999-7720 www.stearnswholesale.com cgonzalez@stearns.com 4 Hutton Centre Santa Ana, CA 92707 Events This Week: Inflation Low Jobless Claims Rose Existing Sales Higher Manufacturing Up Events Next Week: Tues 8/25 Confidence 2-yr Auction Wed 8/26 Durable Orders New Home Sales 5-yr Auction Thur 8/27 GDP 7-yr Auction Fri 8/28 Core PCE Income		Housing Data Exceeds Expectations Strong manufacturing and housing sector data contributed to a rally in the stock market this week. This would ordinarily push mortgage rates higher, but the strong economic news was offset by tame PPI inflation data and a significant increase in Fed purchases of mortgage-backed securities (MBS), leading to a small decline in mortgage rates during the week. The national housing market data released this week was positive. July Existing Home Sales rose 7% from June, to the highest level since August 2007, and were 5% higher than one year ago. This marked the fourth straight monthly increase. Taking advantage of the $8,000 tax credit, first-time homebuyers accounted for 30% of all transactions. Inventories of unsold homes held steady from June at a 9.4-month supply. In addition, the National Association of Home Builders (NAHB) Housing Market index rose to the highest level since June 2008, indicating an improvement in home builder confidence. The NAHB also reported that housing affordability during the second quarter of 2009 remained near record levels. The improvement in home builder confidence was reflected in a fifth consecutive month of increased single-family housing starts in July. High affordability, low interest rates, and the first-time homebuyer tax credit combined to improve sentiment and stimulate housing market activity. Also Notable: July Core PPI inflation rose at a tame 2.6% annual rate The Fed will auction a record $109 billion next week Oil prices rose to $74 per barrel, the highest level of the year The Fed purchased $25 billion in agency MBS during the week ending 8/19 Average 30 yr fixed rate: Last week: -0.25% This week: -0.05% Stocks (weekly): Dow: 9,500 +200 NASDAQ: 2,000 +25 Week Ahead Next week's first economic data will be Tuesday's report on Consumer Confidence. Durable Orders, an important indicator of economic activity, and New Home Sales will be released on Wednesday. Revisions to second quarter Gross Domestic Product (GDP) will come out on Thursday. Finally, Core PCE inflation data and Personal Income will be released on Friday. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday. To learn more about news impacting interest rates and mortgage markets, go to www.mbsquoteline.com To learn more about the newsletter, please call 800-627-1077 All material Copyright © Ress No. 1, LTD and may not be reproduced without permission.

Rates As of 7/24/09

Mortgage Rates Updated as of 7/24/09 11:34:00 AM CST

HomeServices Lending Calabasas, CA 91302 Contact me for a free Mortgage Pre Approval and to receive a complete Mortgage Plan. Pam Harris Tom Cortesi Cell: (818) 292-333 Phone: (818) 817-4261 Cell: (323) 791-8145 Email: pamela.d.harris@hsl-ca.com Thomas.c.cortesi@hsl-ca.com

Loan Amount: $417,000 to 85% CONVENTIONAL FHA to 96.5

Program Monthly Payment Rate A.P.R. Points Costs Lock 30 Year Fixed $2,403 5.250 5.382% 1 $1,200 30 days 5/1 Interest Only $1,783 4.750 4.820% 1 $1,200 30 days FHA 30YR FIXED* $2,445 5.500 5.610% 0 $1,200 30 days

Loan Amount: $729,000 to 85% FHA to 96.5%

Program Monthly Payment Rate A.P.R. Points Costs Lock 30 Year Fixed $4,548 5.375% 5.613% 1 $1,200 30 days 5/1 Interest Only $3,417 5.000% 5.139% 1 $1,200 30 days FHA 30YR FIXED* $4,623 5.500% 5.635% 0 $1,200 30 days

Loan Amount: $1,500,000 to 75% LTV OR 2,000,000 LTV to 70% High loan amounts for ARMs

Program Monthly Payment Rate A.P.R. Points Costs Lock 30 Year Fixed $9,358 6.375% 6.504% 1 $1,200 30 days 5/1 Interest Only $7,031 5.625% 5.635% 1 $1,200 30 days See conditions below These products and interest rates are subject to change at any time due to changing market conditions. Actual rates available to you may vary based on a number of factors including your credit rating, occupancy, size of down payment and amount of documentation provided. The rates and prices on this page are not a guaranteed quote. This is not an offer for extension of credit or a commitment to lend. All first mortgage products are provided by Homeservices Lending, LLC Series A dba Homeservices Lending. Homeservices Lending may not be available in your area. ©2008 Homeservices Lending. All Rights Reserved. An Equal Housing Lender.

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Rates As of 6/17/2009

RATES AS OF
6/17/2009
FOR SINGLE FAMILY RESIDENCE
Conforming Rates $417,000 ***
30 Year Fixed 5.375%
20 Year Fixed 5.250%
15 Year Fixed 5.00%
Jumbo-Conforming Limits & Rates ***
$729,750 FOR L.A. AND VENTURA
COUNTIES AT MOST LENDERS
30 Year Fixed 5.625%
15 Year Fixed 5.375%
Jumbo Rates
30 Year Fixed 6.750%
5/1 Arm 5.250%
10/1 Arm 5.625%

1 POINT
******* Please note rates are based 740 credit score. *******
PLEASE REMEMBER RATES FOR CONDOS ARE HIGHER

Rates As of 6/12/09

RATES AS OF
6/12/2009
FOR SINGLE FAMILY RESIDENCE
Conforming Rates $417,000 ***
30 Year Fixed 5.375%
20 Year Fixed 5.250%
15 Year Fixed 5.00%
Jumbo-Conforming Limits & Rates ***
$729,750 FOR L.A. AND VENTURA
COUNTIES AT MOST LENDERS
30 Year Fixed 5.625%
15 Year Fixed 5.375%
Jumbo Rates
30 Year Fixed 6.750%
5/1 Arm 5.250%
10/1 Arm 5.625%

1 POINT
******* Please note rates are based 740 credit score. *******
PLEASE REMEMBER RATES FOR CONDOS ARE HIGHER
OTHER OPTIONS AVAILABLE!

Rates As Of 6/5/2009

RATES AS OF
6/5/2009
FOR SINGLE FAMILY RESIDENCE
Conforming Rates $417,000 ***
30 Year Fixed 5.375%
20 Year Fixed 5.375%
15 Year Fixed 4.875%
Jumbo-Conforming Limits & Rates ***
$729,750 FOR L.A. AND VENTURA
COUNTIES AT MOST LENDERS
30 Year Fixed 5.750%
15 Year Fixed 5.250%
Jumbo Rates
30 Year Fixed 6.500%
5/1 Arm 5.125%
10/1 Arm 5.625%
1 POINT
******* Please note rates are based 740 credit score. *******
PLEASE REMEMBER RATES FOR CONDOS ARE HIGHER

FHA First-Time Home Buyer Tax Credit Info

DONOVAN ANNOUNCES RECOVERY ACT'S HOMEBUYER TAX CREDIT CAN IMMEDIATELY HELP THOUSANDS OF FIRST-TIME HOMEBUYERS TO BUY A HOME
FHA plan will stimulate new home sales and help stabilize housing market

WASHINGTON - Speaking to the National Association of Home Builders Spring Board of Directors Meeting, U.S. Housing and Urban Development Secretary Shaun Donovan today announced that the Federal Housing Administration (FHA) will allow homebuyers to apply the Obama Administration's new $8,000 first-time homebuyer tax credit toward the purchase costs of a FHA-insured home. Donovan said that today's action will help stabilize the nation's housing market by stimulating home sales across the country.

The American Recovery and Reinvestment Act of 2009 offers homebuyers a tax credit of up to $8,000 for purchasing their first home. Families can only access this credit after filing their tax returns with the IRS. Today's announcement details FHA's rules allowing state Housing Finance Agencies and certain non-profits to "monetize" up to the full amount of the tax credit (depending on the amount of the mortgage) so that borrowers can immediately apply the funds toward their down payments. Home buyers using FHA-approved lenders can apply the tax credit to their down payment in excess of 3.5 percent of appraised value or their closing costs, which can help achieve a lower interest rate. To read the FHA's new mortgagee letter, visit HUD's website.

"We believe this is a real win for everyone," said Donovan. "Today, the Obama Administration is taking another important step toward accelerating the recovery of the nation's housing market. Families will now be able to apply their anticipated tax credit toward their home purchase right away. At the same time we are putting safeguards in place to ensure that consumers will be protected from unscrupulous lenders. What we're doing today will not only help these families to purchase their first home but will present an enormous benefit for communities struggling to deal with an oversupply of housing."

Currently, borrowers applying for an FHA-insured mortgage are required to make a minimum 3.5 percent downpayment on the purchase of their home. Current law does not permit approved lenders to monetize the tax credit to meet the required 3.5 percent minimum down payment, but, under the terms of today's announcement, lenders can now monetize the tax credit for use as additional down payment, or for other closing costs, which can help achieve a lower interest rate. Buyers financing through state Housing Finance Agencies and certain non-profits will be able to use the tax credit for their downpayments via secondary financing provided by the HFA or non-profit. In addition to the borrower's own cash investment, FHA allows parents, employers and other governmental entities to contribute towards the downpayment. Today's action permits the first-time homebuyer's anticipated tax credit under the Recovery Act to be applied toward the family's home purchase right away. Unlike seller-funded down-payment assistance, which was a vehicle for abuse, this program will allow homebuyers to shop for the best home price and services using their anticipated tax credit.

According to estimates by the National Association of Home Builders, the Administration's homebuyer tax credit will stimulate 160,000 home sales across the nation - 101,000 of which will be first-time buyers who will receive the credit. Another 59,000 existing homeowners will be able to buy another home because a first-time buyer purchased their home. Given FHA's current market share, it's estimated that thousands of families will be able to purchase a home by allowing the anticipated tax credit to be applied toward their purchase together with an FHA-insured mortgage.

Homebuyers should beware of mortgage scams and carefully compare benefits and costs when seeking out tax credit monetization services. Programs will vary from organization to organization and borrowers should consider whether the services make sense for them, as well as what company offers the most suitable and affordable option.

For every FHA borrower who is assisted through the tax credit program, FHA will collect the name and employer identification number of the organization providing the service as well as associated fees and charges. FHA will use this information to track the business closely and will refer any questionable practices to the appropriate regulatory agencies, as necessary.

###

HUD is the nation's housing agency committed to sustaining homeownership; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development and enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet at www.hud.gov and espanol.hud.gov.