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FHFA Says NO to State and Local Energy Loans

July 8th, 2010 4:36 AM

The Federal Housing Finance Agency (FHFA) which regulates mortgage giants Fannie Mae and Freddie Mac agreed they should avoid participating in the fledgling state and local energy home loan programs called Property Assessed Clean Energy or PACE. Fannie and Freddie have refused to participate in or approve refinancing of mortgages because the PACE loans are senior to the existing mortgage, posing significant risk to mortgage lenders and investors. Read the July 7, 2010 Wall Street Journal article here…Home-Efficiency Program Takes Hit

Posted by Tom Studebaker on July 8th, 2010 4:36 AMPost a Comment (0)

Boulder to Make All Homeowners Go Green

July 20th, 2010 3:08 PM

Watch out! I told you so a few months back. City offices are considering adopting the 2009 Iternational Poroperty Maintenance Code as part of the SmartRegs overhaul. The code provides regulations for ALL residential units within the city. While they say it will be used MOSTLY to regulate rental properties it is clearly the first step at creating a tool to force everyone who owns a home to go green. A fine and good goal but what if you can't afford the changes which could amount to $10,000 or more?

Posted by Tom Studebaker on July 20th, 2010 3:08 PMPost a Comment (0)

Negotiating the best interest rates from your lender.

July 20th, 2010 2:58 PM

This is oversimplified a bit but it covers the bases:

There is nothing that prevents a lender from advertising a 5%, 3% or even a 1% mortgage rate. It is not uncommon to see this on television or newsprint with disclosures that pass so quickly and are so small that they are impossible to read.

Most consumers of mortgage loans are "blinded" by interest rates in advertising and understand little about what creates the rate. Understanding how lenders make their money and how loan programs work adds clarity to the process and simplifies the shopping and negotiation process.

To simplify it you must understand that the "Market" meaning that ultimately investors on Wall Street create demand for investment instruments and mortgage backed securities are one of these. When demand rises rates drop. When demand diminishes interest rates increase. It is the same for every lender in America. So in theory, every lender is selling the same rates.

So why are they different?

Lenders generally make their money from charging upfront fees on the loan (e.g. discount points, origination fees, doc prep fees, underwriting fees etc) or by selling you a higher interest rate for which Wall Street will pay backend fees (kickbacks) to the lender.

That means they either charge you upfront fees for a low interest rate or sell you a higher interest rate with lower upfront fees and get backend fees. Sometimes it is a combination of the two.

For example: If Wall Street is looking to invest in 30 year fixed rate mortgages at 4% they will buy 30 year fixed rate loans that the lender sells to borrowers at 4%. The lender makes money by charging you fees upfront. However, most lenders will sell you a 4.375% loan and charge fees upfront that way Wall Street sends them money back for the premium .375% on the loan. This is how lenders increase their profits.

In simple terms you pay one way or another.

Okay so how do you get the lowest rate possible? Aside from having good credit and a sizable down payment paying fees like discount points and origination fees will lower your interest rate. The more you pay upfront the lower the rate. You have to decide if paying these fees upfront makes sense so you need to calculate the break even point for the reduced payment vs. the upfront money. Usually this is about 5 years.

Another way to get a low rate is to look to adjustable rate mortgages. The rates are low because the investor is protected against inflation if rates rise in the future. Some of these are fixed for 5 to 7 years before they adjust. While they have been bad mouthed by the press recently they are actually quite effective for saving money especially if you don't plan on being in the home more than 5 to 7 years. However, you need to compare the cost benefit vs. a 30 year fixed rate.

Each lender will quote you a similar though not the same rate for any given program. You need to get quotes from multiple lenders for similar programs along with a Good Faith Estimate which shows you the fees you are paying for that loan. Compare them apples to apples to see if they are really the same. Then it is up to you to negotiate with your lender for a better rate. Sometimes just asking will get you a discount or even a reduced fee. However, lenders are working against a fixed cost so they can only do so much not to mention loans are ever more difficult and time consuming.

Remember rates change continually. So until you "lock" in your rate it may change from day to day. You need to compare lenders on the same day. Ask your lender if they have the ability to float the rate down if interest rates go down after you lock.

Posted by Tom Studebaker on July 20th, 2010 2:58 PMPost a Comment (0)

EPA Delays Enforcement of Lead-Based Paint Contractor Licensing

July 8th, 2010 4:37 AM

The Environmental Protection Agency (EPA) has delayed the enforcement of theLead Renovation, Repair and Painting rule to provide time to get more contractors trained. While remodelers, electricians, heating and air conditioning technicians and other contractors must adhere to lead-safe work practices, including special equipment filters and a ban on open flames, EPA will not take enforcement action against firms that have been unable to obtain certification until October 1, 2010.

Posted by Tom Studebaker on July 8th, 2010 4:37 AMPost a Comment (0)

Tax Credit Closing Date Extended to September 30, 2010

July 8th, 2010 4:34 AM

It wasn't pretty, and the debate went well into the evening, but on June 30 the Senate passed a stand- alone bill that extended the date for closing on a tax credit-eligible home from June 30 to September 30, 2010. The bill passed the Senate on a voice vote in a process known as "unanimous consent." A stand-alone bill is a single issue bill that contains just one provision (and, if needed, its "pay-fors.") Stand-alone tax bills are a rarity in the Senate, but the urgency was well understood. The House had passed a stand-alone extension (HR 5623) by a vote of 409 - 5.

The White House has said that President Obama will sign the bill, although the timing for the signing is not yet known. The extension is seamless, so closings that occur between July 1 and the date the President signs the legislation will satisfy the requirements of the credit. In order to get the benefit of this closing date extension, the parties must have entered into a contract for the purchase on or before April 30, 2010. Read more at The Home Buyer Tax Credit >

Check out this video that aired July 1, 2010 to see how Realtors® and the housing lobby influence Congress…CNBC Video: Housing's Powerhouse Lobbyists.

Posted by Tom Studebaker on July 8th, 2010 4:34 AMPost a Comment (0)

Million Dollar Market Sales Improve

July 7th, 2010 10:35 AM

2008 and 2009 were disastrous years for owners of homes priced more than $1,000,000. During 2008 most were unaware of the receding demand and upon the market melt down that followed in 2009 if you owned a home valued at more than $1,000,000 and you needed to sell prospects were slim and none. Little did it help that along with a crumbling economy, high unemployment, a crashing stock market, the rules and requirements for jumbo loans made them difficult and expensive to obtain.

Jump to 2010. As of today in Boulder County, 1/3 of the market for sale is priced above $1,000,000. Out of these 368 homes for sale 22 have pending contracts. That is 6% of the market under contract. This is a pathetic demand curve in almost any market but when compared with last year at this time there were only 3% of the homes under contract.

Roughly 12 million dollar plus homes per month are selling. If no other new homes come on the market this means it will take 2 1/2 YEARS to absorb this inventory. However, this is half the rate we saw in 2009 where it was at nearly 6 years of inventory.

So, homes are moving slowly but much improved over last year. I expect to see this trend continue and maybe by next summer we will see 10% of the market under contract.

Posted by Tom Studebaker on July 7th, 2010 10:35 AMPost a Comment (0)

Obama Plans to Extend Deadline for First-Time Homebuyer Tax Credit

July 2nd, 2010 3:40 AM

By Lorraine Woellert

July 1 (Bloomberg) -- President Barack Obama plans to extend a deadline for first-time homebuyers to complete purchases and qualify for an $8,000 tax credit, a White House official said.

Obama may sign the extension as soon as today, the person said, declining to be identified before the White House receives the bill from Congress. Qualified homebuyers who signed purchase contracts before April 30 will have until Sept. 30 to complete paperwork and settle on the house. The original settlement deadline was June 30.

“They’re cheering out there, they’re really rejoicing,” Lucien Salvant, a spokesman for the National Association of Realtors, said of homebuyers. The group sought the extension.

The House voted 409-5 on June 29 to extend the deadline, and the Senate approved the measure on a voice vote last night. Republicans, including Senator Jim DeMint of South Carolina, had tried to block the extension, calling the tax-credit program flawed.

“We only created a bubble, which will eventually burst,” DeMint said on the Senate floor late yesterday as the deadline was about to expire. “For the people who haven’t closed on their homes by today, it’s not that they won’t get their house, only that they won’t get a taxpayer subsidy for having bought a house now rather than later.”

The incentive, enacted last year as part of an economic stimulus package, offered an $8,000 tax credit to first-time homebuyers.

Backlog of Paperwork

To qualify, homebuyers had to sign a purchase contract by April 30 and finish the deal by June 30. A jump in sales produced a backlog of paperwork that kept some homebuyers from completing transactions by the June 30 deadline. As many as 180,000 home buyers might be helped by the extension, Salvant said.

The tax credit may have fueled a temporary increase in home sales, which fell after the April deadline passed. Sales of new homes dropped 33 percent to a record low of 300,000 in May, the Commerce Department reported. Sales of previously owned homes fell 2.2 percent that month, according to the National Association of Realtors. Applications for loans to purchase properties fell at the end of May to the lowest level since 1997, according to a Mortgage Bankers Association report.

--With Brian Faler and Roger Runningen in Washington. Editors: David Scheer, Gregory Mott.

To contact the reporter on this story: Lorraine Woellert in Washington at lwoellert@bloomberg.net.

To contact the editor responsible for this story: Lawrence Roberts at lroberts13@bloomberg.net.

Posted by Tom Studebaker on July 2nd, 2010 3:40 AMPost a Comment (0)