Tri-Valley Mortgage News

Many of us in the real estate industry are fortunate to be able to work from our home offices. In the last 5 years in my previous incarnation as a mortgage underwriter and today as an originator, I have worked from home and I love it! However, it does present its own unique set of challenges. Numero Uno on this list is distractions. Of course, no matter where you work, you can fall prey to a host of distractions but when you're at home, your home's inherent distractions conspire to rob you of your productivity.

This quick, 3 minute video  (click on Watch Tutorial and select the first one!) contains great advice on how to beat two common distractions: email and house work. It is presented by my all-time favorite organizing guru, Julie Morgenstern who wrote Organizing From the Inside Out. These two distractions are perhaps my worst enemies. I love email but I confess I check it WAY too many times a day. I have that little pop-up window from Outlook that tells me every time a message arrives in my inbox. Of course, I have to immediately check it. This breaks the rhythm of your workflow and can also be a way of procrastinating (who me?).

The household chore distraction is another I've struggled with. I have however, gotten better at designating certain time of the day for tidying up (with 2 small children it's a must!) and it's in the evening so I've gotten better at mentally ignoring things like dishes in the sink until I'm done with my work tasks. But it has been challenging.

I hope this little snippet will be a helpful reminder. There are also a few other helpful videos regarding working from home on the page. Enjoy!

Earlier today home builder Lennar Chicago posted a terrific, informative blog post cautioning home buyers to avoid possible problems in claiming the home buyer tax credit.

Anyone who has bought a home recently and has or is planning to claim the up to $8,000 tax credit would do well to read the post in its entirety to see if any of the issues apply to their circumstances.

The first step, of course, is to enlist the services of a qualified tax professional. Since the credit can only be claimed through traditional paper filing, it only makes sense to consult a professional who can guide you through the process. With that said, here are some prominent issues that have been raised regarding the tax credit.

• You occupy your new home but your parents bought it for you (and/or they secured financing in their name only). Can you still claim the credit? Yes, but you must approach claiming the credit properly. See the above post for more info and consult your tax professional.
• You were single when you purchased the home and your income was within the income limits allowable to claim the credit but during the year you were married to someone whose income exceeds the limits and/or your combined income now exceeds the limits. Can you still claim the credit? Surprisingly, yes. The credit is based upon your status as of the date of sale according to the IRS. You will need to bring specific supporting documentation to your tax professional to prove the validity of your claim.
• You have recently bought the home that you had been renting in previous years through a lease option- do you qualify for the tax credit? Yes, if you have not owned a home (principal residence) in the previous three years, and you meet all other requirements set forth by the IRS, you would be considered a first time home buyer and may qualify even if you were previously renting the house you have purchased.
• What about landlords? As long as you have not owned a principal residence in the past three years, you may qualify for the credit. There is no limit to how many rental/income properties one may own to qualify as a first time home buyer. You may have to provide proof that you have been renting your principal residence for the past three years. Consult your tax professional.
• Have a unique situation not addressed here? Check out the IRS's web page of other first time home buyer tax credit scenarios here. You just may find your question answered!

What if you qualify for the credit but haven't found a house yet? Time is running out. To be able to claim this credit, you must be in contract on a purchase by April 30^th, 2009 and must complete the sale and occupy the home by June 30^th, 2009. However, if you can't make this timeline and you live in California, you may be able to take advantage of the new state tax credit which is set to go into effect for qualified homes and home buyers who purchase between May 1^st and December 31^st, 2010.

Beginning of the Week Update

Economic News:  The Personal Income & Outlay figures were reported this morning.    Nothing really dramatic to report as personal income came in at the lower end of the expected range and spending softened with a decline in auto sales.  At the end of last week Governor Schwarzenegger signed Assembly Bill 183 into law. The bill made provisions for $200 million in homebuyer tax credits. $100 million will be allocated to qualified first time home buyers of existing homes and $100 million for buyers of new or previously unoccupied homes. The eligible taxpayer who purchases a qualified personal residence on and after May 1, 2010, and on or before Dec. 31, 2010, or who purchases a qualified principal residence on and after Dec. 31, 2010, and before Aug. 1, 2011, pursuant to an enforceable contract executed on or before Dec. 31, 2010, will be able to take the allowed tax credit. The credit is equal to the lesser of 5 percent of the purchase price or $10,000, in equal installments over three consecutive years. Under AB 183, purchasers will be required to live in the home for at least two years or forfeit the credit (i.e., repay it to the state).

Mortgage Markets:  After the turbulence of last week things in the mortgage markets are fairly quiet this morning.  The 10 Year Note is yielding 3.87 and the Mortgage Backed Securities market is stable.

Upcoming This Week:   Tuesday:  Case-Shiller Home Price Index & Consumer Confidence.  Wednesday:  ADP Employment Report.  Thursday:  Jobless Claims & ISM Manufacturing Index.  Friday:  Employment Situation.

Current Mortgage Rates

Stay tuned for the East Bay Mortgage Update on Wednesday...Have a Great Start to the Week!

End of the Week Update

Economic News:  The Jobless Claims numbers released yesterday were positive and continued the trend of month to month improvement in the payroll numbers.  New claims were reported at 442,000 versus the expected 450,000.  This morning the 4^th Quarter GDP numbers were revised downward from an annual rate of 5.9% to 5.6% which was slightly below forecast.  Lastly, the University of Michigan's Consumer Sentiment Index reported numbers slightly stronger than the mid March reporting period.    

Mortgage Markets:  What a week in the debt trading world.  Both the 10 year note and the Mortgage Backed Securities market "took it on the chin" beginning Wednesday after lackluster government bond auctions and recovered slightly on Thursday afternoon.  From Monday to this morning a 4.75% conforming 30 year fixed mortgage would cost 1.00 greater in fee.  We have come off of a very quiet period for rates during the last two months and, as the government ends the MBS purchase program next week, we will probably begin to see more volatility returning to the markets.  That does not mean that rates are going to skyrocket but that working with a mortgage professional who understands the market and is prepared to execute deliverable rate locks will be more important than ever to the consumer.  The 10 year note is trading around 3.88 this morning and the Mortgage Backed Security Market, after getting a bit battered this week, is stable.  As always this is a wonderful time to lock in your rate if you plan to close in the next couple of weeks and have yet to do so. 

Upcoming Next Week:   Monday:  Personal Income & Outlays.  Tuesday:  Case-Shiller Home Price Index & Consumer Confidence.  Wednesday:  ADP Employment Report.  Thursday:  Jobless Claims & ISM Manufacturing Index.  Friday:  Employment Situation.

Current Mortgage Rates

Stay tuned for the East Bay Mortgage Update starting again Monday...Have a great weekend!

Mid Week Update

Economic News:  Existing Home Sales data was released yesterday.  The figures remained lackluster with a .60 decrease from the January levels and supply rising over the last three months.  Distressed sales made up 35% of the market and all cash deals were at 27%.  The Midwest & Northeast showed stronger results than the struggling West & South.  This morning's Durable Goods Orders were in line with expectations.  There was an upward revision of the January numbers.  All in all the numbers show that the manufacturing sector is continuing to move along providing hope for a continued recovery.  New Home Sales were also just released and remained subdued.  A positive is that the price component is firming.  I have fielded a few questions in the last several days about a possible extension of the home buyer tax credit.  At this point I know of nothing happening in Congress that has put in motion an extension beyond the April 30^th deadline to enter into contract.

Mortgage Markets:  The 10 year note is trading around 3.77 this morning and the Mortgage Backed Security Market is losing a ground.  Rates are approximately .25 worse in fee this morning from yesterday's levels.  As always this is a wonderful time to lock in your rate if you plan to close in the next couple of weeks and have yet to do so. 

Upcoming This Week:   Thursday:  Jobless Claims.  Friday:  Gross Domestic Product, Consumer Sentiment

Stay tuned for the East Bay Mortgage Update for this Friday...Have a great day!

Start of the Week Update

Economic News:  Today is a relatively slow day but there is a good deal of data due in this week.  In addition, there is $115+ Billion dollars of notes and bonds which will be sold, and depending on the outcome, could have an effect on rates.  Keep in mind that the home buyer tax incentives are coming to a close.  You need to be in contract by April 30^th and complete the transaction by June 30^th.

Mortgage Markets:  The 10 year note is trading around 3.67 this morning and the Mortgage Backed Security Market is stable.  Rates are basically unchanged from late last week.  As always this is a wonderful time to lock in your rate if you plan to close in the next couple of weeks and have yet to do so. 

Upcoming This Week:  Tuesday:  Existing Home Sales.  Wednesday:  Durable Goods Orders, New Home Sales.  Thursday:  Jobless Claims.  Friday:  Gross Domestic Product, Consumer Sentiment

Here's some more great info regarding home maintenance from Gene in IL. Spring is coming so make a list of what you need to do and then knock out a few tasks each weekend to keep your home in tip-top shape!

Green has always been my favorite color. I am a quarter Irish. I don't like corned beef or cooked cabbage or ale so I'm not a very good Irish I guess....

Okay, that's enough about me. Here are some St. Paddy's Day facts that are actually interesting! Have a happy, festive day (and go easy on the green beer!)

• March 17^th is the feast of St. Patrick, the patron saint of Ireland who is believed to have died on that date in the year 461AD.
• According to the last US Census, 34 million Americans have Irish ancestry. That's nearly nine times the entire population of Ireland!
• Every year the Chicago River is dyed green in honor of the holiday. The dye only lasts a few hours.
• It is estimated that there about 10,000 ordinary 3 leaf clovers for every one lucky 4 leaf clover.
• A spokesperson for Guinness claims that on any given day 5.5 million pints of the ale are consumed around the world - but on St. Patrick's Day that number soars to 13 million!
• The first St. Patrick's Day parade took place in Boston in 1737 and it is still a yearly tradition there.
• St. Patrick's Day is not just a national holiday in Ireland. It is a provincial holiday in the Canadian province of Newfoundland and Labrador.  It is also a public holiday on the Caribbean island of Monserrat, which was settled by the Irish.
• There are nine cities in the US named Dublin. The largest is Dublin, Ohio. (FYI - I live just a few miles from the city of Dublin, California!)
• McDonalds has served its seasonal Shamrock Shake since 1970.
• St. Patrick wasn't Irish! He was said to have been born in either Scotland or Wales. Also, he didn't actually chase snakes out of Ireland because there have never been snakes on the island.

Mid Week Update

Economic News:  The big news yesterday was "no new news" via the Federal Open Market Committee (FOMC) announcement.  The release stated that the economy is growing, albeit at a sluggish rate, and inflation is muted at this time.  This led to a rally in the debt and equity markets and led to better mortgage pricing in the afternoon.  The Housing Starts numbers from yesterday came in slightly above estimates but permits were down and builders have to remain cautious with their inventories and new production.  The Producer Price Index (PPI) fell more than expected led by a decrease in energy costs.  This did not move the markets too much since the "Core Rate" (minus food & energy) came in right in line with expectations.

Mortgage Markets:  The 10 year note is trading around 3.64 this morning and the Mortgage Backed Security Market is stable.  It is now anticipated that the demand for agency (Fannie & Freddie) debt will be robust via overseas investors and banks once the U.S. Government MBS purchasing program ends.  This will hopefully inspire confidence in other investors to follow suit and keep rates from spiking by the end of the month.  If you are refinancing or closing on a new home in the next 21 days now is a good time to consider locking in your rate.

Upcoming This Week:  Thursday:  Consumer Price Index, Jobless Claims.

I read a blog today on the apparent lack of lending support for FHA's recent waiver of the 90 day flipping rule which has originators and real estate agents understandably frustrated.

It appears that the majority of lenders are gun shy about accepting deals where the current owner has owned the property for less than 90 days and is now attempting to sell at a profit. Of course, there is good reason behind this. The past decade of lax lending guidelines has created problems industry wide. So when HUD came forth with a proverbial dangling carrot, it's not hard to see why some have decided not to play.

Although, HUD has expressed its hope that the waiver will help to move the housing market towards recovery, it still requires that such deals comply with the guidelines they set forth. My previous blog post (here) outlines these requirements. So this is by no means a free-for-all.

That being said, there ARE lenders who will accept FHA loans that comply with the flip waiver. I am aware of two that are currently in the game. However, it's important that the originator knows of any overlays that may tighten even further HUD's guidelines. For instance, one major lender will not accept the deal if the current value is over 19.99% of the value the investor originally purchased the property for. This is due to HUD's requirement of further valuation documentation to justify the jump in value if the current value is 20% or over the original value. Personally, I feel that this is a prudent move because if the value exceeds the threshold, the additional appraisal documentation could very well hinder the transaction closing in a timely manner (if at all!). With all the RESPA and appraisal restrictions we are currently dealing with, do we really want to throw even more potential pitfalls into the mix? If the ultimate goal is to get the housing market moving forward in a positive direction, our focus must be on closing and closing in a timely manner. As we've seen, HUD has good intentions but all too often, putting these intentions into practice can be a whole other matter entirely.

As always, my goal is to not only close as quickly as possible but to leave everyone with the feeling that they've received superior service - it's harder to accomplish these days but certainly not impossible.