Richard's Real Estate Thoughts

More time may be coming for homebuyers to close qualifying home purchases and still receive the Home Buyer Tax credit.

Senators Isakson, Dodd, and Reid have submitted an amendment (SA 4301) to the American Jobs and Closing Tax Loopholes Act of 2010, HR 4213.

The amendment would move the mandatory close date from June 30, 2010 to September 30, 2010. There seems to be widespread support for HR 4213 in general, and I would think that few politicians would balk on extending free money to the new home owners in their district.

So likely some good news for the apparently 180,000 or so home buyers who might not close by the original June 30 deadline, but who were under contract by April 30 and qualified for the tax credit.

To be clear though, this amendment does not extend the tax credit to persons who were not under contract by April 30. This does not extend the credit to new purchase contracts.

The American Jobs and Closing Tax Loopholes Act of 2010, HR 4213, is a long list of specific tax provisions related to energy, business, education, disaster areas, Medicare, unemployment, and now the Home Buyer tax credit.

Although it will be interesting to see if we hear anything from the deficit hawks who objected to the extension of unemployment benefits.

Passage seems likely, with a vote coming soon on the bill as amended by the Senate.

UPDATE 6/15/10: The Open Congress blog wrote that the main bill, HR 4213, is being held up by the Democrats who want to ease the hedge funds managers tax increase and the Republicans who want to ease up on the oil liability tax increase. See the different parties have different lobbies they are beholding to. And sometimes it slows things.

Everybody wants to extend tax credits. Everybody wants to extend unemployment. But each party wants to protect their own lobby groups, and neither lobby protection effort can stand on its own merits. It needs to be attached (hidden) in a larger bill.

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation

Home financing in Tennessee and Georgia.

www.RichardSmithHomeLoans.com

All I wanna do is have some fun.

And opening night at Riverbend was just that - fun.

Sheryl Crow opened Riverbend 2010 with a terrific show, which lasted well beyond most main stage Riverbend performances. She held "All I wanna do" for her encore and ... showing herself to be quite the Rocker ended with a Led Zeplin cover that would make Robert Plant proud. (Sorry, my video ran out of juice and I could not record the encore.)

Here though is one of her new songs that she played for us. 

The Riverbend Festival has been a part of the Chattanooga music scene for 30 years. For 9 nights a great variety of artists performs on 5 different stages -  4 stages that have multiple acts throughout the night and the main stage, sponsored by Coca-Cola, with the big name act for each night.

One of the great opening night acts this year was on the Bud Light sponsor stage: Grace Potter and the Nocturnals. What Rock N Roll is supposed to be. Great voice. Powerful guitars and drum. Energy.

Here is a short playlist for Grace Potter and the Nocturnals.

Welcome to Riverbend 2010

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation

Home financing in Tennessee and Georgia.

www.RichardSmithHomeLoans.com

One of the results of the mortgage crisis is the movement to reform the agencies and GSE's - primarily Fannie Mae, Freddie Mac, and FHA. Much of this push worries me a good bit about the potential to harm a system that for decades was successful in building home ownership in the US.  The FHA Reform Act though seems to provide some flexibility and tools to enable FHA to manage more effectively its risk and its insurance funds. 

In the bill there are provisions to:

1. Allow FHA to ncrease the Annual Mortgage Insurance premium.
2. Allow charging annual mortgage insurance premiums to be discretionary
3. Authorize HUD to require that lenders indemnify for mortgage insurance claims if the "Mortgage was not originated or underwritten in accordance with HUD requirements."
4. Allows HUD to set up additional controls and systems to manage and address credit risk and early defaults and claims and lender compliance with underwriting standards - with the goal of safety and soundness of the "Mutual Mortgage Insurance Fund."

The annual  mortgage premium is the portion of the FHA mortgage insurance that is in the monthly mortgage payment. FHA has requested this flexibility to modify monthly premiums. There is the possibility that this will allow the up front mortgage premiums to be reduced.

These changes are in response to the reviews subsequent to the insurance fund reserve falling below Congressional mandated levels. The reviews seemed to point to a concentration of delinquency problems with select lenders, a need to revamp some of the underwriting standards, and a need to monitor more closely application of underwriting standards at the origination level.

These changes seem to be mostly positive for the agency and for the industry.

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation

Home financing in Tennessee and Georgia.

www.RichardSmithHomeLoans.com

This morning Dr. David E Altig, SVP and Director of Research at the Federal Reserve Bank of Atlanta was welcomed as the speaker at Chattanooga's 7th Annual Mayors' Business and Industry Appreciation Breakfast.

I will post more on Dr Altig's talk. He gave an informative and enjoyable presentation, emphasizing employment concerns.

One point he made was especially encouraging. He indicated that in his opinion "A double dip recession is off the table of possibilities."

His other main point was that employment losses can be attributed to US productivity gains. These gains were driven by necessity as businesses had to find new ways to work. But he feels that the productivity gains are permanent, and will make for a stronger US economy in the longer run.

Both County Mayor Claude Ramsey and Chattanooga City Mayor Ron Littlefield gave introductory remarks pointing to Chattanooga's progress in recent years.

Mayor Littlefield mentioned a time capsule that had been found during renovations at the City Hall. The period of the time capsule, the early 20th Century, had been a golden age in Chattanooga. The mayor said that Chattanooga is now experiencing a second golden age.

The breakfast was held at the Chattanoogan, and was very well attended. Apparently over 100 requests to attend had to be refused.

I will post more on the comments from Dr Altig. He offered a good many insights into the near term economy.

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation
Home financing in Tennessee and Georgia.

www.RichardSmithHomeLoans.com

Rural Development loans can be one of the better choices, when the property and buyers qualify. It is does not reuire a down payment and allows closing costs to be paid by the seller, or financed with the loan. Subject to the appraisal value.

It is so popular that the allocated Rural Development funds for this fiscal year were exhausted last month.

Most lenders ceased funding Rural Development loans.

Some lenders have announced that they would close loans with a conditional commitment from Rural Development. That conditional commitment is based on the expectation that Congress will authorize additional funds for the program.

The bill to restore funding has, I think, passed the House.

It would restore authorization for Loan Guarantees, "not to exceed $30,000,000,000."

It also authorizes an increase to the Rural Development funding fee.

I'm not sure the reason for the delay in passage, given the rhetoric about restoring health to the housing market, but perhaps those who are interested could contact their US Senators are ask that they expedite passage of the Rural Housing Preservation and Stabilization Act of 2010, HR  5017.

In the meantime, we have lenders who are accepting the Rural Development Agency's offer of conditional approval.

Call to be approved, and to close your Rural Development home loan.

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation

Home financing in Tennessee and Georgia.

www.RichardSmithHomeLoans.com

Chattanooga State hosted the 2010 Hot Rod Power Tour on the Chatt State campus today. The Power Tour is one of the biggest automotive tours in the US. This is the 16th year. The event is 7 days and 7 states thoughout the Midwest and Southeast.

The crowd was large.

And the cars impressive.

The tour benefits the Austin Hatcher Foundation for pediatric cancer.

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation
Home financing in Tennessee and Georgia.

www.RichardSmithHomeLoans.com

HUD issued a press released today announcing changes to be published in a mortagee letter tomorrow. Most of these changes have been discussed in the industry over the last several months and were anticipated.

Here is a summary.

• Up front mortgage insurance increased to 2.25%
• Seller concessions will be reduced to 3%
• New borrowers with less than 580 scores will require a 10% downpayment

The changes will also increase lender liability for loan performance.

There will be a comment period before the changes to the seller concessions and the increased down payment for borrowers with lower scores are implemented.

Of these changes the seller concessions will have immediate impact on buyers, although increased lender liability and tighter enforcement of lender performance may very well prove to be the more lasting and significant change.

These changes are expected to be in effect in the Spring and early Summer. These changes are likely to be just the first of more FHA enhancements.

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation

Home financing in Tennessee and Georgia.

www.RichardSmithHomeLoans.com

MGIC is the defendant in a suit by Bank of America lending units for denying claims. This follows a prediction earlier this month by Moody' that mortgage insurance companies might start rejecting claims on defaulted loans - to the tune of an anticipated $4 billion.

The big push is to hold the lenders more accountable for the lending decision - and of course to keep the MI companies viable.

FHA is changing fast - appraiser independence, 5% downpayment, tighter streamline refinance standards, higher credit score standards, higher mortgage insurance premiums.

As the FHA market share increases, largely from the loss of competitive conventional programs, loan approvals will become more difficult.

The mortgage insurance industry may need help to rebound. Right now it appears that they are going to fight by withholding payment of many default claims.

The housing recovery needs a strong mortgage insurance industry, but it also needs mortgage insurance that actually pays on defaulted loans.

At any rate, conventional mortgage insurance remains a major aspect of the housing market that has not received needed attention.

See my previous post on this issue.

Here is a S&P report downgrading 5 mortgage insurance companies: Old Republic, PMI, MGIC, Radian, and Genworth.

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation

Home financing in Tennessee and Georgia.

www.RichardSmithHomeLoans.com

FHA has just announced that the implementation of new procedures to separate appraisal orders from the origination process has been delayed until February 15, 2010. This change is a major part of numerous changes that FHA has made or is planning to make in the near future.

The push for appraiser independence is seen by FHA to be an important part of the push to improve its loan quality.

The changes to the appraiser ordering process involve the requirement that appraisal ordering must be separated from the loan origination process both for mortgage brokers and for lenders. Generally to accomodate this change lenders have set up arrangements with third party appraisal management companies, similar to arrangements made to comply with HVCC.

This change was announced with ML2009-28. It may be that many lenders were struggling to establish procedures to handle appraisal ordering, especially on the heel of preparing to accomodate the massive changes to RESPA disclosures which also takes effect in January 2010.

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation

Home financing in Tennessee and Georgia.

www.RichardSmithHomeLoans.com

Chattanooga has made several top cities lists - and here is the most recent top city recognition for the Scenic City.

Forbe's Best Bang for the Buck

The award looks at "Solid housing markets, relatively stable employment, enviable cost of living and quick commutes make these metros among the country's most affordable to live." It looked at the 100 largest metropolitan areas.

Categories considered were housing affordability, travel time rank, real estate taxes, unemployment, vacanies, job forecast, and home prices. Chattanooga was only in the top 10 category in the travel time category, but we were relatively high in each category.

The category that we ranked lowest in is unemployment, but even there our prospects are bright with the development associated with the VW plant.

Add in other top rankings and Chattanooga is the place.

Other recognitions:

Top Natural Wonders

Top 50 Next Great Towns

Top 20 Best Towns

Top Retirement Choice

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation

Home financing in Tennessee and Georgia.

www.RichardSmithHomeLoans.com