”These record low rates offer Missourians an incredible opportunity to purchase their first home at an affordable cost,” said Greg Spurgeon, Single Family Homeownership Administrator for MHDC. “The historically low mortgage rates now available through MHDC will encourage sustainable homeownership and help support the state’s housing market.”

The MHDC Cash Assistance Loan allows qualified first-time homebuyers to borrow an additional amount, up to three percent of their loan, to use for down payment and closing costs.  MHDC will forgive this amount after the homebuyer has lived in the house for five years.  Having determined that the primary obstacle faced by many first-time homebuyers is the lack of a significant down payment, MHDC created the Cash Assistance Loan program to allow more Missouri residents to purchase a home, with the added result of stimulating the housing market. 

For first-time homebuyers not needing assistance with a down payment or closing costs, the Non-Cash Assistance Loan program provides a lower interest rate than is available elsewhere. Both the Cash Assistance and Non-Cash Assistance mortgages are funded primarily through capital, raised by the sale of MHDC’s mortgage revenue bonds in the municipal bond market and the U.S. Treasury New Issue Bond Program.

MHDC’s first-time homebuyer program experiences a lower foreclosure rate as compared to the industry average, as the program’s focus on providing sustainable housing mandates prudent underwriting practices, including requiring fully documented proof of income and issuing only fixed-rate loans. MHDC intentionally avoided the practices of subprime lending institutions that helped lead to the country’s recent housing market collapse.

To take advantage of these record-setting low rates, Missouri residents interested in purchasing a first home are encouraged to contact one of MHDC’s 50 certified lenders who are authorized to offer its programs, found at www.mhdc.com. MHDC’s establishment of this network of lenders allows homebuyers to apply for a mortgage through their local financial institutions.

In addition to its first-time buyer programs, Missouri Housing Development Commission provides financing for the construction and rehabilitation of affordable housing in Missouri, and administers the Missouri Housing Trust Fund to help prevent homelessness and to provide emergency housing assistance for very low-income Missourians.

“GMAC Mortgage and JP Morgan Chase have already halted foreclosure proceedings in 23 states, following allegations that workers the companies employed failed to follow the proper legal procedures in filing paperwork related to judicial foreclosure proceedings.”

“Attorneys general in California, Florida, Colorado, Ohio, Illinois, Iowa, North Carolina and Connecticut are also looking into lenders’ foreclosure procedures. Connecticut Attorney General Richard Blumenthal today asked the state’s Judicial Department to freeze all home foreclosures for 60 days.”

“Ohio Secretary of State Jennifer Brunner has accused lenders of attempting to “concoct a chain of title they never had” in signing off on documents that supposedly demonstrated they had the right to foreclose.”

Read the full article from Inman News.

Consumers are offered free counseling from well trained non-profit counselors as well as details on preventing foreclosure.

While being “underwater” on your home may not spell disaster for some, many face very difficult choices daily in order to pay their mortgage.  So who can blame parents for moving into an affordable apartment or combining households in order provide necessities for their children?

I can site case after case of these responsible families trying to sell their property so they could get out from under the mortgage.  The plan is to get into a home that is less expensive so they can live within their means.  So they listed their property, attempted to work out short sale arrangements with the bank, and competed with the other responsible families to market and sell their homes.  In nearly every case they held on as long as they could, many attempted short sales while others just finally threw up their hands and walked away.  This “responsible” household is now reported as a foreclosure statistic.

With a declining market, high unemployment and a poor economy measures need to be implemented in order to prevent more Americans from finding themselves in a similar situation.  It was reported last week that the HAMP (Home Affordable Modification program) participants is on the rise and growing.  We need to improve and expand this program.  Let’s make a real effort to help our fellow Americans and ease up on any new regulations that may have unintended consequences.  While this program may only provide payment reduction and no mortgage balance reduction, as the rate of foreclosure declines property values will increase.

Inman News offers this report.

The Mortgage Bankers Association Forecast.

• HUD estimates that by improving upfront disclosures on the GFE, and limiting the amount estimated charges can change, consumers will save nearly $700 in total closing costs.
• Based on substantial public comment, HUD withdrew a proposed requirement that closing agents read and provide a ‘closing script’ to borrowers in favor of a new page on the HUD-1 Settlement Statement that allows consumers to easily compare their final closing costs and loan terms with those listed on the GFE.
• HUD’s new Good Faith Estimate has been reduced from four to three pages, including an instructional page to help borrowers better understand their loan offer. In addition, the GFE will consolidate closing costs into major categories to prevent junk fees and display total estimated settlement charges prominently on the first page so the consumer can easily compare loan offers. HUD will specify the closing costs that can and cannot change at settlement. If a fee changes, HUD will limit the amount it can change.
• To help borrowers compare their Good Faith Estimate with their HUD-1 Settlement Statement, each designated line on the final HUD-1 will now include a reference to the relevant line from the GFE. Borrowers will now be able to easily compare their estimated and actual costs in the same manner many commenters suggested.
• HUD will require lender payments to mortgage brokers (often called Yield Spread Premiums) to be disclosed in a more meaningful way. These payments are directly dependent on the interest rates that consumers agree to. To ensure that HUD’s new requirement will not create a consumer bias against brokers, the Department did rigorous consumer testing and found the new Good Faith Estimate helped consumers to select the lowest cost loan nine-out-of-10 times, regardless of whether the loan was originated by a lender or a broker.
• Loan originators will be required to provide borrowers their Good Faith Estimate three days after the loan originator’s receipt of all necessary information. To facilitate shopping, loan originators could not require verification of GFE information (tax returns etc.) until after the applicant makes the decision to proceed.
• HUD will allow lenders and settlement service providers to correct potential violations of RESPA’s new disclosure and tolerance requirements. Lenders and settlement service providers will now have 30 days from the date of closing to correct errors or violations and repay consumers any overcharges.
• The new, standardized GFE and revised HUD-1 will not be required until January 1, 2010.

Good Faith Estimate

Closing Statement

Starting January 2009, Missouri Housing Development Commission (MHDC) will have a new product to enable first-time homebuyers to take advantage of the $7,500 federal first-time homebuyer tax credit. This program is the first of its kind in the nation.

The federal first-time homebuyer tax credit was created by Congress this summer to encourage new homebuyers to purchase homes and thereby stimulate housing markets. However, the federal tax credit has been largely ineffective. One of the primary reasons the federal credit hasn’t worked is that the homebuyer doesn’t receive the money until he receives his federal income tax refund – which may be several months after the home is purchased. 

With over 30 years experience funding mortgages for first-time homebuyers, MHDC knows that the biggest barrier faced by first-time homebuyers is acquiring money for downpayment and closing costs. As a result, MHDC created a program that allows homebuyers to receive the value of the tax credit at the time of closing.  

Get more information from a Participating Lender about the Tax Credit Advance Loan Program.

Misouri Housing Development Commission

Internal Revenue Service tax credit aid to first-time homebuyers

Pending home sales eased against a deteriorating economic backdrop but remain in a stable range, according to the National Association of Realtors®.

The Pending Home Sales Index,¹ a forward-looking indicator based on contracts signed in October, slipped 0.7 percent to 88.9 from an upwardly revised reading of 89.5 in September, and is 1.0 percent below October 2007 when it was 89.8.

Lawrence Yun, NAR chief economist, said a review of the past year is instructive. “Despite the turmoil in the economy, the overall level of pending home sales has been remarkably stable over the past year, holding in a generally narrow range,” he said. “We did see a spike in August when mortgage conditions temporarily improved, which underscores two things – there is a pent-up demand, and access to safe, affordable mortgages will bring more buyers into the market.”

Conditions remain uneven around the country, but some areas that are showing healthy gains in pending home sales from a year ago include many Florida and California markets, Providence, R.I.; Lansing, Mich.; Oklahoma City; and Las Vegas. ²

The PHSI in the South jumped 7.8 percent to 95.9 in October but remains 2.9 percent below a year ago. In the Northeast the index rose 0.6 percent to 68.1 but is 14.1 percent below October 2007. The index in the Midwest declined 4.3 percent to 79.7 in October and is 6.8 percent below a year ago. In the West, the index fell 8.7 percent to 103.7 but is 17.4 percent higher than October 2007.

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said he’s hopeful about considerations by the U.S. Treasury. “Efforts to bring down mortgage interest rates demonstrate a clear understanding of the role housing plays in stabilizing the economy,” McMillan said. “We’re very encouraged by all of the proposals getting serious consideration in Washington to help home buyers. More sales will stabilize home prices by bringing down inventory, and would lessen foreclosure pressure.”

Yun expects growth in the U.S. gross domestic product (GDP) to contract through the first half of 2009, then stabilize and expand in latter part of the year – lifted by a home sales recovery. “Given the critical role of housing in an economic recovery, we’re confident sufficient stimulus will be offered to bring more buyers to the market,” he said.

Looking at middle-ground assumptions, existing-home sales are forecast to total 4.96 million this year, and then increase to 5.19 million in 2009 and 5.55 million in 2010.

New-home sales for 2008 should total 486,000 this year, decline to 393,000 in 2009 and then grow to 446,000 in 2010. Housing starts, including multifamily units, are projected at 934,000 units in 2008 and 731,000 next year before rising to 772,000 in 2010.

“Price projections are challenging in an environment with so many variables and divergent local conditions,” Yun said. “The home price correction to date has brought prices in line with fundamentals, but buyer pessimism could cause prices to overshoot downward, resulting in further economic deterioration.”

The 30-year fixed-rate mortgage will probably decline to 5.6 percent in the first quarter, rise slowly to 6.0 percent by the end of 2009, and average 6.2 percent in 2010. NAR’s housing affordability index is likely to remain quite favorable, averaging 138 in 2009.

The unemployment rate is estimated at 7.2 percent in the first quarter, rising to 8.3 percent by the end of 2009. Inflation, as measured by the Consumer Price Index, is seen at 0.7 percent in 2009. Inflation-adjusted disposable personal income is expected to grow 1.5 percent in 2009.

# # #

¹The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity from 2001 through 2004 parallels the level of closed existing-home sales in the following two months. There is a closer relationship between annual index changes (from the same month a year earlier) and year-ago changes in sales performance than with month-to-month comparisons.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales.

²Market information is from unpublished snapshot data; please contact your local association of Realtors® for more information.

Existing-home sales for November will be released December 23; the next Pending Home Sale

Reprinted with Permission of National Association of REALTORS®.

That means you have a perhaps once in a lifetime (certainly a once in a long-time) opportunity to buy a home at a discount and finance that home at an extremely low interest rate.  It’s known as Buying Power and today’s first time buyers have it.

Savvy buyers and investors are taking advantage of this buying opportunity.  We are already seeing multiple offers on properties that are priced well or below the market.  Take for example a property that sold for 168,000 just 2 years ago.  It was recently listed at $137,500 by the lender that foreclosed on the property.  There were competing offers.  The property needed clean-up and painting totaling approximately $3,500.  That’s a $27,000 discount from the market high of 2 years ago (more if you don’t mind painting).  Factor a low interest rate on the mortgage and there is additional savings.  If you have seen an increase in your earnings in the past 2 years you can factor that in the equation as well.  Keep in mind that this is just one example and not the normal discount you should expect in the Metro St. Louis market but I used this one to illustrate the opportunities that are available.

The truth about whether a home is a good investment.

Overnight Real Estate Rates Sink Further Inman News

Latest Housing Forecast from National Association of REALTORS

Housing Market Ready to Rebound?

Search the Metro St. Louis MLS database.  Tip: look for properties with reduced prices.

Do I qualify for a mortgage given the tightening guidelines?

The effort — the latest attempt to stabilize prices of bonds backed by residential loans as delinquencies continue to escalate and home prices tumble — will provide financing for JPMorgan Chase & Co.’s acquisition of Bear Stearns Cos. for approximately $270 million, or about $2 per share.

Meanwhile, the central bank could reduce the interest rate affecting consumers and businesses to 2 percent at its March 18 meeting, marking a decline of a full percentage point.

Source: Dallas Morning News (03/17/08)