Name of the blog

The U.S. Dept. of the Treasury last week announced the Home Affordable Foreclosure Alternatives Program (HAFA), which provides financial incentives to servicers, borrowers, and investors for a closed short sale or a deed-in-lieu (DIL).

The HAFA program simplifies and encourages short sale and DIL options by: 

Allowing pre-approved short sale terms before a property is listed;
Preventing servicers from attempting to reduce real estate commissions established in the listing agreement as a condition for short sale approval; and
Releasing borrowers from future liability for the debt.
Borrowers not eligible for the Home Affordable Mortgage Program must be considered for HAFA within 30 calendar days of the date the borrower does not qualify for a HAMP Trial Period Plan; does not successfully complete a HAMP Trial Period Plan; is delinquent on a HAMP modification by missing at least two consecutive payments; or requests a short sale or DIL.

The Legislature for the state of California passed a revised budget plan last week and Gov. Arnold Schwarzenegger signed the historic legislation Feb. 20. Included in this new budget is a $10,000 tax credit for the purchasers of a newly constructed home in the state of California. There are conditions to receive this tax credit, some of which are still being worked out. Let me tell you what we do know at this time:

1. The tax credit is good for 5 percent of the value of the newly constructed home, up to $10,000. (That would mean any home priced over $200,000 would qualify for the full credit.)

2. The tax credit will be available between March 1, 2009 and March 1, 2010, or when the funding authority runs out. (The Legislature has earmarked $100 million for this credit. That mean at least 10,000 new home sales. We don’t know yet if the tax credit will be based on when the contract for sale is written or when the escrow is closed for the purchase.)

3. The tax credit will be allocated by the Franchise Tax Board and will be available to new homebuyers over a three-year period. (Roughly one third of the tax credit will be available each year, details here are still being worked out.)

4. The new home purchaser must live in the home for at least two years.

5. There are no income limitations for the purchaser.

6. There is no “first time buyer” restriction.

7. There is no repayment requirement (unless the purchaser sells or rents out the home before two years have past from the close of escrow).

Fannie Mae last week announced a new Deed for Lease™ program.  Deed for Lease allows borrowers to transfer their property back to the lender and then lease back the house at market rate.  The lease period is for up to 12 months, with possible month-to-month contract extensions after that period.  The program is designed for borrowers who do not qualify for or have not been able to obtain other loan-workout solutions, such as a loan modification.

To participate in the program, borrowers must live in the home as their primary residence and must be released from any subordinate liens on the property. Tenants of borrowers in this circumstance also may be eligible for leases under the program. Borrowers or tenants interested in a lease must be able to document that the new market rental rate is no more than 31 percent of their gross income.

I hope all is well with you and your loved ones!

This is what the California Association Of Realtors Stated:

Good news to report: President Obama is expected to sign a resolution passed late yesterday by Congress extending the current limits for Fannie Mae, Freddie Mac, and FHA loans through 2010. The limits were set to expire at the end of this year. This is especially critical for California, where more than 80 percent of all loans are financed by Fannie Mae, Freddie Mac, or FHA, and will help maintain the positive signs we are now seeing in California’s mortgage market. President Obama is expected to sign the resolution today or tomorrow as part of a broader piece of budgetary legislation that will prevent a government shutdown.

While home prices in California have declined, the demand for housing has not. The market has been dominated by first-time home buyers who have faced a shortage of financing opportunities. The loan limits are set at 125 percent of local median home sales prices, up to a maximum of $729,750 in high-cost areas, including many regions in California. Sales in move-up and high-end markets have been constrained this year; the loan limits extension will help qualified home buyers in these markets to move forward with their purchases.

Although loan limits are safe through 2010, there is still work to be done. Congress has yet to act to extend the First Time Home Buyer Tax Credit past its current Nov. 30 expiration date. Yet the impact of the home buyer tax credit is clear: A C.A.R. survey of first-time home buyers shows that 40 percent would not have purchased a home without the tax credit.

If I can assist you, or someone you know in buying or selling, please contact me with their information.  Thanks and take care..