With mortgage rates returning to levels seen before the Fed pledged to buy up billions in mortgage securities, it might be time to turn to a costly Plan B, subsidizing mortgage rates.

Rising interest rates have already extinguished a short-lived refinance boom, with applications dropping precipitously over the past three weeks.

Mortgage rates, which slipped to a record low 4.78 percent on the popular 30-year fixed as recently as early April, have since risen above 5.50 percent, following the surging 10-year bond yield.

So now it appears as if the Obama Administration will need to come up with something more, which could be in the form of explicitly guaranteed rates.

Remember that whole plea for 4.5 percent mortgage rates to stabilize housing?

Then the National Association of Home Builders went a step further, calling for interest rates as low as 2.9 percent to spark sales and shed inventory; that wild proposal clearly fell on deaf ears.

Now the newly formed Housing Working Group of Business Roundtable, composed of the nation’s top CEOs, has called for lower mortgage rates to stimulate the housing market and lead an overall economic recovery, but it appears the only way that will happen now is with subsidized rates.

Unsurprisingly, the National Association of Realtors applauded the efforts of the roundtable group, asking for more concessions to spark flagging home sales and buoy corresponding home prices.

“NAR has called on Congress and the Obama administration to expand the first-time home buyer tax credit to all home buyers, regardless of income,” the Realtor group said in a statement.

“In addition, it is imperative to maintain mortgage interest rates below 5 percent, make the loan limit increases permanent, and strengthen foreclosure mitigation and loan modification efforts. These are all actions that BRT is fully supporting and we welcome their involvement.”

Seeing that lowering mortgage rates seems to be the Fed’s main solution to this housing mess, it appears likely something will be done to get rates back down near record lows.

Unfortunately, the repercussions of such a move could extend the housing crisis, keeping home prices elevated and subsequently pushing future home buyers out of the market.

Then there’s the cost of funding such a program, and the fact that subsidized rates tend to benefit the wealthiest of homeowners.

Ugh.

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With this new law and some other indicators like “The national home ownership rate — defying all gloom and doom predictions — jumped to 68.1 percent in the latest quarter, up from 67.8 percent”, I think this is it I truly believe it.

More home buyers mean more home sellers. Where do those sellers go? Yes to buy more hoses. The wheels of the Real Estate Market are starting to move, we are going some where.

Are you still an “on the fence” home buyer not sure if this is the right time to jump in the game?

Did you feel that just a few years back home ownership was slipping away from you due to the steep rise in home prices?

Well, if you answered yes to those questions you don’t need to wait any longer. Your dream of home ownership can come true if you act now TIME IS OF THE ESSENCE!

• The credit is available for homes purchased on or after April 9, 2008 and before July 1, 2009.
  Do you know a friend who bought a home after April 9 this year? Share it with them.

• Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.

• Married Couples can qualify to a maximum of $7500
• Single people can qualify to a maximum of $3,750
• You have to be a First-Time Home Buyers or a Renter who hasn’t owned a home in the last 3 years.

Here are some more resources

• Video News at a Glance
  Watch the Mortgage and Real Estate Video New Channel you can sign up on the top right of this page.
  Frequently Asked Questions
  The Law’s Other Provisions
  Home Buyer Resources
  www.federalhousingtaxcredit.com

Please remember, We are here to serve you.

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And now the $7,500 Tax credit

Act now or you may have to waive this opportunity “Good By”

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Fannie Mae, the single biggest player in the American mortgage market, plans to crank up the pace of short sales on properties in its bulging portfolio. Fannie intends to “streamline” procedures to enable pre-foreclosure sales to speed through what is currently an extended, and often complicated, process.

Fannie says it plans to “pre-approve” certain short sales–a major change from current practices–and wants to provide higher commission incentives to realty agents who can connect sellers with qualified buyers.

Fannie Mae thus joins its rival, Freddie Mac, who months ago began emphasizing faster, more efficient short sales – to great success.

Freddie Mac’s program, which allows some loan servicers to submit short sale packages with minimal documentation, doubled the number of completed short sales for the company in the last quarter, according to a report in the American Banker, a financial trade journal.

Investors like Freddie and Fannie want to speed up the pace of short sales because — to put it bluntly — it saves them a ton of money. They avoid the crushing costs of foreclosures. Plus, they generally get a much higher payoff percentage of what they’re owed.

Despite complications — ranging from uncooperative banks holding second liens on properties to title, financing and inspection problems — short sales are booming. Some industry estimates suggest that so far this year, one of every five home sales in the U.S. has been a pre-foreclosure transaction of one sort or another.

The opportunities for small investors and realty brokers here are huge. But investors need to have patience and the ability to handle what are sometimes contentious negotiations.

For example, Nancy Gusman, a Maryland real estate attorney, told Realty Times that “everybody in these deals is after every last dollar they can negotiate, and sometimes they hold out forever.”

The mortgage holder is looking for the highest possible current appraisal to justify the highest possible payoff price; the short-sale buyer is looking for the lowest possible appraisal to justify a bargain-basement price for the house; and of course, listing realty agents want a fair commission for their work in putting the transaction together.

The bottom line here for investors and agents: Fannie Mae’s forthcoming policy emphasizes getting short sales DONE — faster. That, in turn, should mean more opportunities for everybody — investors, first-time home buyers, and brokers alike.

Written by Kenneth R. Harney
April 11, 2008 

There are literally dozens of bills on Capitol Hill that are aimed at relieving the mortgage and housing crisis. Some of them — like FHA reform — have been bouncing around for months with no final action.

On the House side right now, what could be the mother of all housing-relief bills is taking shape. Reportedly it will roll together reform of Fannie Mae and Freddie Mac, plus all sorts of new add-ons, including a $300 billion authorization for FHA to buy up and refinance delinquent mortgages held by private lenders.

Meanwhile, in the Senate, there’s legislation to provide huge new tax benefits for home builders, new deductions for home owners who don’t itemize, and tax incentives for buyers of foreclosed houses.

But the White House warned last Wednesday that it didn’t like the way that bill was shaping up — hinting at a possible veto if it passes in its current form.

With the total number of legislative days left before the Fall elections down to less than a month, can this Congress actually deliver housing market relief? That’s a tough question, but it would speak volumes, if, during the worst foreclosure crisis since the Great Depression, the U.S. Congress could not gets its act together to produce much of anything.

Just about the only action spot in town at the moment appears to be at the Federal Housing Administration.

Last week, in a significant expansion of its efforts to reach out to troubled subprime and other borrowers, the FHA announced new criteria for its “FHASecure” program. Under the revised plan, even borrowers with seriously delinquent payment histories will get a shot at refinancing into an FHA fixed rate loan:

• Homeowners with adjustable-rate loans who have been late on two consecutive monthly payments during the prior 12 months, will now qualify for regular 3 percent equity FHA-insured mortgages.
• Owners who were late on three consecutive payments will qualify for FHA refinancing, but will need to have 10 percent minimum equity stakes.

These borrowers’ current lenders will be allowed to help their clients by writing down principal balances to the 90 or 97 percent loan-to-value level required by FHA. Lenders will get a little “haircut” — they’ll have to forgive some debt, but it should a lot less than if they went to foreclosure.

FHA estimates that with the expanded reach of FHASecure, a total of 500,000 troubled families will refinance into fixed-rate loans by the end of 2008.

Bottom line: At least somebody in Washington is producing solutions. But so far, it hasn’t been Congress.

Written by Kenneth R. Harney
April 14, 2008