FHA will keep funding flips

A great article I found by Inman News regarding the FHA waiver for 90-day resales are extended through 2012.

For the second year in a row, the Federal Housing Administration is extending a temporary waiver of its “anti-flipping” rule, meaning homebuyers relying on FHA-insured financing will continue to be able to buy homes that have changed hands in the last 90 days.

The waiver is a boon for investors seeking to rehab and flip properties, because it expands the pool of eligible borrowers to include those relying on FHA-backed loans, popular with first-time homebuyers and others who lack the cash to make large down payments.

In extending the waiver through 2012, FHA said all transactions must continue to be arms-length. In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will apply only if the lender can document the justification for the increase in value, FHA said.

FHA instituted the anti-flipping rule in 2003 to protect its mutual mortgage insurance program from losses on homes that were merely flipped, rather than rehabbed. Homes repossessed by Fannie Mae, Freddie Mac, and state- and federally chartered financial institutions were exempt from the rule.

In February 2010, the Obama administration waived the waiting period for resales — including homes purchased and rehabbed by private investors — in the hopes of stabilizing home prices and revitalizing communities hit by foreclosures.

It often takes less than 90 days to acquire, rehabilitate and sell properties, the Department of Housing and Urban Development said at the time. Some sellers of rehabbed properties had been reluctant to enter into contracts with FHA buyers because of the cost of holding a property for 90 days, HUD said.

That number has since grown to nearly 42,000 mortgages worth more than $7 billion on properties resold within 90 days of acquisition.

If you have any FHA related questions please either text or call Scott Groves at (818) 679-5188

What to expect in 2012

Is 2012 the year the housing market turns around? Of course, no one can say for sure, but plenty of economists say signals are pointing in the right direction.

What to expect in 2012:

Home prices bottom out. Nationally, home prices have plummeted almost 24 percent off of their peak, and most economists expect prices to continue to decline as much as 4 or 5 percent before leveling out in late 2012.

More foreclosures. Foreclosure filings have edged downward over the past few months, suggesting improvement in clearing the gigantic inventory of distressed properties in the United States.

Low mortgage rates. Rock-bottom low mortgage rates are likely here to stay, at least through the first half of 2012, in large part due to the Fed’s commitment to keep interest rates low to spur borrowing. All bets are off, though, if politicians come to a decision on the qualified residential mortgage measure included in the Dodd-Frank financial reform act.

Rising rents. The foreclosure crisis has converted millions of previous homeowners to renters and many would-be homebuyers have continued to stay on the sidelines and rent, waiting for prices to “hit bottom” before jumping into the housing market fray. With more demand comes rising rents, a trend already being seen in many metro areas across the nation. Ultimately that can be a good thing for the housing market, since it generally tips more people into buying homes. Also, with rental demand heightened, real estate investors’ ears have perked up. With prices in many metro areas at historic lows, investors are taking advantage and scooping up properties to convert into rentals.

Home sales pick up. The end sum of all these factors is an expected uptick in existing and new home sales next year. New home sales should also see an even bigger bump between 10 and 15 percent because the inventory of new constructions is so low.

As always we are going to have to wait and see what the new year brings.

If you have any questions call or text Scott Groves at (818) 679-5188

New home loans will help fund new tax cut

Starting January 1st the typical person who buys a $200,000 home or refinances that amount with a FHA loan will have to pay around $17 more a month for their mortgage, thanks to a fee increase included in the payroll tax cut bill that the Senate passed Saturday. It is said that the fee increases would be phased in gradually.

To cover its $33 billion price tag, the measure increases the fee that the government-backed mortgage giants, Fannie Mae and Freddie Mac, charge to insure home mortgages. The increase will also apply to people whose mortgages are backed by the Federal Housing Administration.

The higher fee would not apply to people who currently have mortgages unless they refinance beginning next year.

If you have any questions about these fees, please feel free to contact Scott Groves at (818) 679-5188

The end of the year and taxes

With the end of the year approaching some people think about the holidays, I start thinking about taxes. I saw this interesting article from Kay Bell regarding how to cut your taxes with an early mortgage payment.

Unlike rent, which you pay beforehand (i.e., your Jan. 1 bill covers your stay in the rental unit for that coming month), your mortgage payments are made at the end of your occupancy period. That means your Jan. 1 mortgage statement represents interest for the month of December, making it a tax-break-eligible bill for this year.

By accelerating that payment even by just a day, you get an additional tax deduction for the interest paid.

Don’t get greedy, though. You can’t make your February, or any other upcoming, mortgage payment early to boost your year-end tax deduction amounts. Tax law generally prohibits write-offs for prepaid interest (there is an exception for loan points in some cases). Each year, you can deduct only the home mortgage interest for that year.

You also want to make sure you don’t cut it too close in making the early payment. Get the check in the mail in plenty of time for it to arrive at your lender by year’s end. If you pay online, be sure you make the electronic transaction in time to have it credited to this tax year’s payment amount.

That way, the added interest will show up on the annual statement (usually a Form 1098 or an IRS-acceptable substitute) you’ll get from your lender in late January, detailing your deductible mortgage activity.

As always if you have any questions contact Scott Groves at (818) 679-5188

VA 2012 County Loan Limits

2012 loan limits:

The procedure for calculating loan limits for 2012 has changed from 2011. VA’s previous procedure expires December 31, 2011. If Congress passes legislation permitting VA to calculate maximum guaranty as it has in the past, the numbers below could increase slightly; they will NOT decrease.

VA does not impose a maximum amount that an eligible veteran may borrow using a VA-guaranteed
loan; however loan limits establish the maximum possible guaranty on a loan. The maximum guaranty amount (available for loans over $144,000) is 25 percent of the 2012 VA Limit shown below. A veteran with full entitlement available may borrow up to the limit shown below and VA will guarantee 25 percent of the loan amount. If a veteran has previously used entitlement that has not been restored, the maximum guaranty amount available to that veteran is reduced accordingly. Below are the loan amounts per county.

• LOS ANGELES $621,000
• ORANGE $621,000
• SAN DIEGO $477,000
• SANTA BARBARA $598,000
• VENTURA $518,650

Have questions aboutVA Loans?  Contact Scott Groves.