Live on the Red Line - Real Estate

What You Should Know About Rent Control in the District of Columbia

If you are a renter, or a landlord, you should take note of the information in this PDF that was released by DHCD (Dept of Housing and Community Development):

Download DCRA_Rent_Control_Pamphlet

HUD: Tax Credit Can Be Used on Closing Costs

FHA-approved lenders received the go-ahead to develop bridge-loan products that enable first-time buyers to use the benefits of the federal tax credit upfront, according to eagerly awaited guidance from the U.S. Department of Housing and Urban Development on so-called home buyer tax credit loans that was released today.

Under the guidance, FHA-approved lenders can develop bridge loans that home buyers can use to help cover their closing costs, buy down their interest rate, or put down more than the minimum 3.5 percent.

The loans can't be used to cover the minimum 3.5 percent, senior HUD officials told reporters on a conference call Friday morning.

Thus, buyers applying for FHA-backed financing with an FHA-approved lender that offers a bridge-loan program can get a bridge loan to bring down the upfront costs of buying a home significantly but would still have to come up with the minimum 3.5 percent downpayment.

There remain many sources of assistance for buyers needing help with the 3.5 percent downpayment, including many state and local government instrumentalities and nonprofit lenders.

In addition, some state housing finance agencies have developed their own tax credit bridge loan programs, so buyers in states whose HFAs offer such programs can monetize the tax credit upfront to cover all or part of their downpayment. These programs are separate from what HUD announced today.

The first-time homebuyer tax credit was enacted last year--and improved upon earlier this year--to help encourage households to enter the housing market while interest rates are low and affordability is high. The credit is worth up to $8,000 and is available to households that haven't owned a home in at least three years. The credit does not have to be repaid, and is fully reimbursable, so households can get their credit returned to them in the form of a payment.

Learn more about the credit, including how to apply for it this year even if you've already filed your taxes, at REALTOR.org.


Source: Robert Freedman, REALTOR® Magazine Online

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How to Use the $8000 Tax Credit for Home Downpayments

Short-term bridge loans are now available from a variety of lenders so that buyers can tap the benefits of the $8,000 Federal Housing Tax Credit for First-Time Home Buyers upfront. If your clients are eligible for the tax credit, these bridge loans will enable them to use the money for their down payment and closing costs with the credit as collateral. Consumers will have to pay the money back after they’ve filed their tax return and received a refund.

There are essentially four sources for this type of financing, and their terms can vary considerably.

1. State HFA Bridge Loans

As of early June 2009, 10 state Housing Finance Agencies offered tax-credit bridge loans, and more were planning to do so. The easiest way to learn whether one is offered in your state is to get your HFA’s phone number through a Housing Finance Agency list maintained by the National Council of State Housing Agencies (NCSHA). NCSHA also maintains a list of HFAs that already offer the bridge loans. The HFAs with loan programs already in place are Colorado, Delaware, Idaho, Kentucky, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, and Tennessee.

If your state HFA offers the loans, you should be able to get more information about them on the agency’s Web site. Look for “tax credit advance loan” or some variant of that, or else look for information on the HFA’s regular mortgage program, which should include info on the tax-credit advance loan somewhere. Although each state HFA loan differs, here are some typical characteristics:

• You’ll need to make a minimum downpayment from your own funds, probably around $1,000.
• You’ll have to go through local lenders approved by the HFA to actually originate the loan, since HFAs are not originators.
• In some cases, the loans are interest-free; check with the state HFA to find out.
• The HFAs have set aside a limited amount of funds for the loans, so they tend to be made on a first-come, first-served basis.
• You’ll be expected to use HFA-backed financing for the mortgage on your home purchase. This financing typically comes with a below-market interest rate and usually requires borrowers to meet eligibility criteria. These criteria will vary greatly, but they often require borrowers to be first-timer buyers and meet income-eligibility requirements. For the bridge loans, there’s a good chance the criteria will be similar to what’s required for the tax credit.

Since the bridge loans are made in tandem with your HFA’s financing products, you apply for the loans when you apply with the HFA-approved lender for your mortgage financing. You should be able to find a list of approved lenders on the HFA’s Web site.

2. Local Government or Nonprofit Loans

If your state HFA doesn’t offer the loans, you can ask an HFA staff person to direct you to local nonprofits or state or local government agencies that do. If that person can’t help you, a good place to start a search is with a national nonprofit group called NeighborWorks, which maintains a list of more than 200 local affiliates that provide housing assistance. The loan programs for each of these affiliates differ, so you or your client will need to check with them on their underwriting standards and loan terms—and even on whether they make bridge loans repayable with the tax credit.

3. Local HFAs

Another source, if your state HFA can’t help you, might be the National Association of Local Housing Finance Agencies. Local HFAs are much like state HFAs but with jurisdictions limited to their locality. To learn whether there’s a local HFA in your area, call NALHFA at 202/367-1197.

 

4. FHA-approved Lenders

If you’re unable to identify a state or local HFA or other governmental agency or nonprofit to assist you, you can tap bridge-loan assistance if you work with a lender approved by the U.S. Department of Housing and Urban Development to originate FHA-backed loans. HUD maintains a database of FHA lenders on its Web site that’s searchable by a number of criteria including city, state, county, and service area.

In a difference with the assistance provided by state and local agencies or nonprofits, the bridge loans provided by private, for-profit FHA-approved lenders must be structured in the form of a personal loan or line of credit collateralized by the tax credit. The bridge loan can’t be structured as a second mortgage.

Also, although FHA allows you to use the bridge loan to cover your closing costs or to buy down your interest rate, you can use it for the down payment only after you’ve covered the 3.5 percent minimum that’s required on any FHA loan. Thus, you’ll have to come up with the 3.5 percent minimum down payment yourself or else tap another source of assistance for it. That can include gifts from family. Seller-funded down-payment programs are not permitted. HUD provides complete details in a May 29 Mortgagee Letter on “Using First-Time Homebuyer Tax Credits” (2009-15) that went to its approved lenders.  Since it’s the HUD-approved lender and not FHA itself that’s making the bridge loan, actual loan terms will vary. At a minimum, though, the bridge loan must meet certain restrictions, most of them imposed to weed out fraud or ensure borrowers aren’t getting in over their heads. These include:

• Loans can’t result in cash back to the borrower.
• The amount can’t exceed what’s needed for the downpayment, closing costs, and prepaid expenses.
• If there’s a monthly repayment, it must be included within the qualifying ratios and, when combined with the first mortgage, can’t exceed the borrower’s reasonable ability to pay.
• Payments must be deferred for at least 36 months to not be included in the qualifying ratios.
• There can be no balloon payment required before 10 years.

Start with the Deepest Assistance First

Since state HFA bridge loans are typically allowed for as much of the downpayment as possible (up to the credit limit of $8,000), your client’s best bet is to start with the state HFA. If it doesn’t have a program in place, learn what you can from it about other state or local programs, including nonprofits. If these sources don’t pan out, your buyer can work with an FHA-approved lender. However, since HUD requires borrowers to put down a minimum of 3.5 percent, they can access bridge-loan assistance only for other upfront expenses such as closing costs, an interest-rate buy-down, or a portion of the downpayment above 3.5 percent.

By Robert Freedman | June 2009, REALTOR® magazine

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In-Depth: 2009 First-Time Home Buyer Tax Credit

The homebuyer tax credit is one of 10 key provisions of the American Recovery and Reinvestment Act signed by President Obama into law on Feb. 17, 2009.

The bill provides for a $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009.  The credit does not require repayment.  Most of the mechanics of the credit will be the same as under the 2008 rules:  the credit will be claimed on a tax return to reduce the purchaser's income tax liability.  If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.

Follow this link for more information:

http://www.realtor.org/government_affairs/gapublic/homebuyer_tax_credit

Contact Jason Bonnet via email for more detailed information or help with this $8000 tax credit.

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Washington DC - Arlington - Alexandria in the Top 10 for cities to "recover economically" early

Some cities are likely to recover more quickly from the housing downturn than others. Forbes magazine has identified the top 10 cities that it believes are poised for recovery by examining unemployment figures, projected gross domestic product from Moody’s Economy.com, and housing affordability data from the National Association of Home Builders.

Overall, cities most likely to recover first are those with strong technology capabilities.

Here is Forbes’ top 10:

1. Austin-Roundrock, Texas
2. Fayetteville-Springdale-Rogers, Ark.
3. Boulder, Colo.
4. Huntsville, Ala.
5. San Antonio, Texas
6. Mobile, Ala.
7. Dallas-Fort Worth-Arlington, Texas
8. Washington-Arlington-Alexandria, D.C.-Va.-Md.-W.Va.
9. McAllen-Edinburg-Mission, Texas
10. Seattle-Tacoma-Bellevue, Wash.

Source: Forbes, Joshua Zumbrun (6/10/09)

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Sellers: Impress First Time Home Buyers

First-time home buyers can be tough to catch because they are wary of overpaying and skeptical about buying homes in need of improvement.

A survey for Coldwell Banker last year found that 81 percent of first-time buyers said move-in conditions were very important. Only 7 percent were willing to consider fixer-uppers that they could buy cheaply.

Here, according to Coldwell Banker Associated Brokers in Southern California, are ways to lure a first-time buyer:

• New paint, decluttering, and removing odors are very important, but don’t urge too many expensive modifications.
• Offer to pay closing costs.
• Provide a home warranty.
• Make a counteroffer, even if the first offer is really low-ball.

Source: The Wall Street Journal, Amy Hoak, (06/16/2009)

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Get Rich Buying Cheap Foreclosure Homes

Speculators are buying up an uncounted, but certainly significant percentage of homes for sale in cities where the meltdown has hit hardest.

Homes.com reports a 30- to 50-percent year-over-year increase in searches for homes in foreclosure-heavy states, including California, Michigan, and Florida. In these states, helping long-distance investors find and close on properties and close has become a burgeoning real estate specialty.

The investors run the gamut from international speculators seeking a house or two to venture capital firms that buy bundles of homes for 25 cents on the dollar — most in need of renovation and some with substantial tax liens.

Will these investments lead to riches? Possibly, if housing prices go back up and if investors are able to fix up and rent the properties out while they wait to sell, experts say.

Source: Smart Money, Anne Kadet (06/01/2009)

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Washington DC - Arlington- Alexandria rated in top 10 to "start fresh"

Some parts of the United States have been less affected than others by the economic downturn.

"If people are looking for a job and they're in Detroit, they're in the wrong place. They need to be considering geographic mobility," says Ernie Goss, professor of economics at Creighton University in Omaha.

BusinessWeek magazine, with help from staffing firm Manpower, has examined job opportunities all across the country, ranking metropolitan areas based on the percentage of companies planning to hire in the third quarter.

Here are the top 10 places it identified as offering the best opportunities for anyone looking for a fresh start:

1. Anchorage, Alaska
2. Provo-Orem, Utah
3. Kennewick-Richland-Pasco, Wash.
4. Yakima, Wash.
5. Omaha, Neb.-Council Bluffs, Iowa
6. Richmond, Va.
7. Winston-Salem, N.C.
8. Colorado Springs
9. Amarillo, Texas
10. Washington, D.C., Arlington-Alexandria, Va., plus areas in Maryland and West Virginia

Source: BusinessWeek, Prashant Gopal (06/09/2009)

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Get your $8,000 First-Time Buyers Credit Up Front

The Obama administration has put out the official word: Starting soon, first-time home buyers will be able to turn their $8,000 federal tax credits into cash for use at closing if they use Federal Housing Administration mortgage financing.

But in its final guidelines to lenders and buyers issued May 29, the Department of Housing and Urban Development clarified that purchasers obtaining FHA loans through private lenders will have to invest at least some of their own funds -- whether from personal savings or gifts from relatives -- in the form of a minimum 3.5 percent down payment.

Read more by going to the article link here:

http://www.washingtonpost.com/wp-dyn/content/article/2009/06/04/AR2009060404629.html

Time to Invest: Don't Miss the DC Homeownership Expo and Foreclosure Clinic

The DC Department of Housing and Community Development, in partnership with the Greater Washington Urban League, the DC Housing Finance Agency and the DC Housing Authority, will hold the "DC Homeownership Expo and Foreclosure Clinic" on Saturday, June 20, 2009 at the Washington Convention Center.

 

This event, which will be held from 10 am - 2 pm, will provide residents with access to a variety of housing resources.  During the event, attendees will be able to receive free credit reports, as well as free credit and foreclosure prevention counseling.  Click here for more details:

http://newsroom.dc.gov/show.aspx/agency/dhcd/section/2/release/17119

Workshops at the Expo include:

• "Facing Foreclosure: What to Know, Who to Talk To and What to Avoid,"
• "Giving Seniors the Housing Resources They Need,"
• "The Ins and Outs of Home Rehabilitation,"
• "The Nuts and Bolts of District Programs for Homeownership," and
• "Battling Blight:  Best Practices from District Neighborhoods."

Big Improvement to First-Time Buyer Tax Credit

Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, on Tuesday said that the Federal Housing Administration is going to permit its lenders to allow home buyers to use the $8,000 tax credit as a down payment.

Previously, most buyers wouldn't receive the funds until after they filed their tax return, and that deterred some people from using the credit. The NATIONAL ASSOCIATION OF REALTORS® has been calling for the change.

“We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a down payment,” Donovan says. His remarks came in an address to several thousand REALTORS® gathered Tuesday morning at "The Real Estate Summit: Advancing the U.S. Economy," at the 2009 REALTORS® Midyear Legislative Meetings & Trade Expo in Washington, D.C..

He says FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.

Other Solutions for Today's Market

During his address at the summit, Donovan went on to say that the Obama administration plans to further stabilize the housing market. “I do think we have some early signs that the market overall is stabilizing,” Donovan says. “Since January we’ve seen both home sales moving up and down around a relatively stable number and we are seeing the first signs that the rapid decline in home prices is starting to abate.”

The morning session included a panel discussion that was moderated by CNBC’s Ron Insana. Panelists examined cutting-edge solutions necessary to promote and preserve homeownership and real estate development, stimulate the economy, and protect the nation’s taxpayers. They also shared their ideas on what the role and responsibility of the federal government is in the revitalization effort.

“Right now the Federal Reserve is the market,” said panelist Jay Brinkman, chief economist for the Mortgage Bankers Association. “What will be the effect when the Fed stops buying?” Brinkman explained that an exit strategy must be planned for the long-term; the federal government cannot continue to support the mortgage markets indefinitely.

“We are thrilled that so many high-caliber individuals were able to join us today at this important meeting to promote stability in the housing market and the U.S. economy,” said NAR President Charles McMillan. “We look forward to an ongoing dialogue and action toward this goal, during our midyear meetings this week and beyond.”

The real estate summit is part of the 2009 REALTORS® Midyear Legislative Meetings & Trade Expo. During the week ending May 16, more than 8,500 REALTORS® will attend meetings, visit lawmakers and inspire action on Capitol Hill.

Source: NAR

Mortgage rates lowest in at least 39 years!!!

Long-term mortgage rates this week reached the lowest level since at least 1970, falling for the third consecutive week.

Freddie Mac’s weekly rate report says the average 30 year fixed-rate mortgage fell to 4.78 percent, matching a low set April 7 and the lowest 30 year mortgage rates have been since Freddie Mac started keeping track in 1970.

Adjustable rate mortgages also eased, but one year adjustable-rate mortgages are averaging rates nearly the same as 30 year fixed rates, at 4.77 percent.

“Mortgage rates for 30 year fixed-rate mortgages, the most popular loan among homebuyers are families seeking to refinance, are more than 1.6 percentage points below the recent peak set at the end of October 2008,” says Freddie Mac (NYSE: FRE) chief economist Frank Nothaft. “For a $200,000 loan, this means a monthly savings of almost $212 in mortgage payments or over $2,500 a year.”

Freddie Mac says borrowers who refinanced their mortgages in the first quarter reduced their mortgage payments by about $2.5 billion over the coming year.

There are growing signs the housing market may be on the mend. Existing home sales stayed near their four month average in March, while sales of new homes were stronger than expected last month. The inventory of unsold new homes fell to the lowest level since January 2002.

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