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Thursday, October 27, 2011

HARP Refinance Program Expanded

HARP Refinance Program Expanded

Borrowers who are current on their home loans may be able to refinance for lower interest rates, even if they are seriously upside down.  The Federal Housing Finance Agency (FHFA) announced today that it will broaden the scope of the Home Affordable Refinance Program (HARP) by removing the current 125 percent loan-to-value cap for fixed-rate mortgages backed by Fannie Mae and Freddie Mac.  Other program enhancements include, among other things, reducing certain fees, eliminating the need for a new property appraisal if the FHFA has a reliable automated valuation model (AVM) estimate, and extending HARP until the end of 2013.  New federal guidelines for the HARP changes should be released to mortgage lenders and servicers by November 15.

The basic eligibility requirements for an enhanced HARP loan are as follows:
Existing mortgage loan must be owned or guaranteed by Fannie Mae or Freddie Mac.  To check whether a borrower has a Fannie Mae or Freddie Mac loan, go to
Existing mortgage loan must have been sold to Fannie Mae or Freddie Mac before June 1, 2009.
Existing mortgage loan cannot have been refinanced under HARP previously (except for Fannie Mae loans refinanced between March and May 2009).
Current loan-to-value (LTV) ratio must be more than 80%.
Existing mortgage loan must be current, with no late payments in the past six months, and no more than one late payment in the past 12 months.
More information is available from FHFA at

What is the HARP plan by Obama? Refinancing.

NEW YORK (TheStreet) -- President Obama's expansion of the Home Affordable Refinance Program, or HARP, is a winner all around, for "underwater" home borrowers looking to refinance at historically low rates, for Fannie Mae (FNMA_) and Freddie Mac (FMCC_), who can limit foreclosure losses, and for the president's reelection prospects.

It's easy to go with the knee-jerk reaction and say that the expanded refinance program simply puts off a day of reckoning for Fannie and Freddie -- since the refinanced borrowers will still owe more than their homes are currently worth.

But the expansion of refinancing activity will actually lower the government-sponsored mortgage giants'risk.

Not only will the borrowers qualifying for the refinancing be limited to those who have already demonstrated that they are good credit risks, the program's incentives to steer borrowers into shorter-term mortgages mean that for many of the new loans, principal balances will be repaid faster. It will also be better for the GSEs to look for some recovery in home prices over the next several years, rather than dealing with more foreclosures now, each of which could easily lead to a 50% loss.

HARP is offered to mortgage borrowers who are current on mortgage loans that are guaranteed by Fannie Mae or Freddie Mac, whose home values have dropped so much that the current loan-to-value ratio is over 80%. The program has been extended through December 2013, and is available for loans sold to Fannie or Freddie before May 31, 2009.

Under the expanded HARP, borrowers will be able to refinance for up to 125% of a home's current value, but the 125% loan-to-value cap will be removed during the first quarter of 2012.

With long-term interest rates at historically low levels, this is a wonderful time to refinance a home mortgage, and the federal government is looking to make it much easier for borrowers whose homes have lost so much value that the outstanding loan balance is higher than the home is worth.

The Federal Housing Finance Agency, which regulates Fannie and Freddie, on Monday announced, along with the two mortgage giants, several enhancements to HARP, in order to reduce "risk for Fannie Mae and Freddie Mac and bringing a measure of stability to housing markets," according to FHFA Acting Director Edward J. DeMarco.

Wednesday, October 26, 2011

Buy A House, Get A Visa Foreign Investors and Investments

Attention Canadian snowbirds, well-heeled Brazilians and boom-era Chinese nationals looking for a little piece of that increasingly elusive thing called “The American Dream.”

America has your number and, literally, it’s $500,000.

In a comprehensive bill that aims to spur foreign travel and spending in the U.S., Senators Charles E. Schumer (D-NY) and Mike Lee (R-UT), have proposed providing a three-year residential visa to foreign nationals who invest at least $500,000 in residential real estate in the U.S. At least $250,000 must be spent on a primary residence where the visa holder will live for at least 180 days out of the year while paying taxes to the U.S.

Investor Warren Buffett offered an early version of this real estate inducement back in August. During an interview on PBS, Buffett suggested that if the U.S. altered policy and opened the door for “rich immigrants,” those resources would be welcomed in a struggling U.S. economy, especially in the area of residential housing.

Inducements for foreign national purchase of U.S. real estate is seen another important step towards bolstering prices and shoring up markets in foreclosure-centric areas.

“There is no silver bullet out there. And really, the path forward is a lot of small steps like this that we’re going to take,” according to Stan Humphries, Zillow’s chief economist.

Real estate analysts have said this proposal could lift demand for U.S. homes and help ease the housing crisis. According to Humphries, foreigners spent more than $80 billion on U.S. homes last year, a 24 percent increase from the year before. A quarter of those buyers were Canadian. Another 25 percent of foreign investors in residential U.S. property is made up of investors from China, Mexico, United Kingdom and India — a percentage that could be boosted should the proposal become law.
The proposal has gotten the thumb’s up from the U.S. Chamber of Commerce, the U.S. Travel Assocation and the American Hotel & Lodging Association.

Homes Sales Data as of 10/28/2011

Here are the talking points from Case/ Shiller:

* Some improvement noted marking the fifth straight month that at least half of the cities in the survey showed monthly gains.

* The biggest price increases were in Washington, Chicago and Detroit. The greatest declines were in Atlanta and Los Angeles.

* The August data provides a “modest glimmer of hope” that some areas may have bottomed out and could be turning around, said David M. Blitzer, chairman of S&P’s index committee. He noted that cities in the Midwest — Chicago, Detroit and Minneapolis — have shown some strength since May.

* Overall home prices were “flat” and a recovery in the struggling housing market was not on the horizon. Over the past 12 months, prices have fallen in all but two cities. Detroit and Washington were the only two cities to show year-over-year gains.

* Given the overwhelming level of inventory that remains on the market .(banks shadow inventory).. further price declines seem almost assured to help clear the market.

* Prices are certain to fall again once banks resume millions of foreclosures that have been delayed because of a yearlong government investigation into mortgage lending practices.

* Home prices have stabilized in coastal cities over the past six months.

* Home prices in many cities, including Cleveland, Detroit, Las Vegas, Phoenix and Tampa, have reached their lowest points since the housing bust more than four years ago.

* Sales of previously occupied home sales are on pace to match last year’s dismal figures — the worst in 13 years. Sales of new homes fell to a six-month low in August and this year could be the worst since the government began keeping records a half century ago.

* Foreclosures and short sales — when a lender accepts less for a home than what is owed on a mortgage — makes up about 30 percent of all home sales last month, up from about 10 percent in past years. The large number of unsold homes and foreclosures are sending prices lower and hurting sales.

Tuesday, October 25, 2011

1031 Exchanges Grass Valley Nevada City

1031 Exchange Process: Step By Step

Investors unfamiliar with 1031 Exchanges may envision the process as being intimidating and difficult. In reality, it doesn’t have to be. In order to successfully complete an exchange, investors must simply follow the following basic steps:
  1. Set up an Exchange Account with a 1031 Exchange Company - The 1031 Exchange account MUST be opened before close of escrow on the property being sold. Waiting until the last minute is not recommended, but some companies can open a ‘rush’ account if necessary.
  2. Insert the Appropriate Language into the Sales Contract - The appropriate 1031 language should be added to the Purchase & Sale contract for the property being sold. A 1031 Exchange company will provide all  language if necessary.
  3. Execute the Exchange Agreement - At the close of escrow, the 1031 Exchange company will coordinate with the escrow company to obtain all of the necessary signatures on all exchange documentation.
  4. Locate Replacement Property - The most difficult process of the exchange can often be finding the right replacement property within the required timeframe. The IRS requires that potential replacement property is identified on or before day 45 of the exchange and property must be acquired on or before day 180 of the exchange.
  5. Submit 45 Day Identification Letter - The Identification Letter MUST be submitted no later than day 45 of the exchange. All potential replacement properties must be identified in writing in an unambiguous manner.
  6. Request Funds for Deposits - Money for deposits can be disbursed from the exchange account. Clients are required to send the 1031 Exchange company the “Disbursement Form” indicating how much money needs to be distributed and to whom. Deposits can also come from the clients personal funds and then reimbursed to the client at the closing of the property.
  7. Obtain Appropriate Signatures - At the close of escrow of the replacement property, 1031 Exchange company will work with the new escrow company to obtain all appropriate signatures for all exchange documentation. Depending on the nature of the transaction, additional steps may need to take place. The 1031 Exchange company will work closely with the client to ensure a successful transaction.  

    I can help you with your 1031 Exchanges and refer you to a 1031 Exchange company. Please contact me today to get started.



In Tuesday's other main economic report, the S&P/Case Shiller composite index of house prices in 20 metropolitan areas was flat compared with the month before on a seasonally adjusted basis, frustrating expectations for a gain of 0.1 percent. (that's called a gain? more like a statistical variation of nothingness)

On a seasonally adjusted basis, prices fell in 14 of 20 cities, with Atlanta and Las Vegas among the biggest losers, according to the S&P/Case-Shiller data.

The annual rate of decline slowed, however, with prices in the 20 cities down 3.8 percent compared with a year-over-year decline of 4.1 percent the month before. That still was a bigger drop than the expected 3.5 percent decline in August.

Analysts said the weaker-than-expected home price data was disappointing but not altogether shocking as the market struggles to get out from under a glut of unsold homes and ongoing foreclosures that are holding prices down.

While prices are forecast to remain depressed for some time, any further declines are expected to be modest.

"This has been a five-year process and I think we are at least closer to the end of the hemorrhaging in housing prices than we've been in a long, long time," said Chan.

The struggling housing market continues to be one of the biggest hurdles for the economic recovery as attempts to bolster the sector have had limited success.

In the latest efforts, the Obama administration said on Monday it would expand a mortgage refinancing program in a step that could help up to a million borrowers.

"I'm glad that they're trying. This was a clever idea. But more needs to be done," Yale economist and index co-founder Robert Shiller told Reuters Insider.

A separate home price index from the Federal Housing Finance Agency showed prices declined 0.1 percent in August from July.

The index is calculated using purchase prices of houses financed with mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac.

(Well, are we done yet?)
(Gotta sell? Wanna buy? Want to talk about this stuff? I'm here for you.)

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