http://www.mortgagenewsdaily.com/01212010_fed_agency_mbs_purchases.asp
Fed MBS Purchase Program Update: $101 Billion Left to Spend
by Adam Quinones on
The Federal Reserve today reported on their weekly purchases of agency mortgage-backed securities (MBS).
In the holiday shortened work week between January 14 and January 20, 2010, the Federal Reserve purchased a total of $16.359 billion agency MBS. In those four days the Federal Reserve sold $4.359 billion (supported the roll market) for a net total of $12 billion purchases.The goal of the Federal Reserve's agency MBS program is to provide support to mortgage and housing markets and to foster improved conditions in financial markets more generally. Only fixed-rate agency MBS securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae are eligible assets for the program. The program includes, but is not limited to, 30-year, 20-year and 15-year securities of these issuers.Since the inception of the program in January 2009, the Fed has spent $1.148 trillion in the agency MBS market, or 91.91 percent of the allocated $1.25 trillion, which is scheduled to run out in March 2010. This leaves $101 billion left to purchase MBS coupons in the TBA market.

Rates Are expected to return the levels they were prior to Fed’s purchase program of $1.25Trillion in MortgageBackedSecurities around 6%

FHA Increases Down Payment For Some, Mortgage Insurance Premium For All. Will go into effect this Spring

Yesterday morning, Federal Housing Administration (FHA) Commissioner David Stevens announced some big changes to the FHA loan program:

• Borrowers with credit scores of 580 or less would have to put 10% down in cash in order to qualify for an FHA loan. (This may not hurt that many people, since few lenders will even grant a loan to borrowers with a credit score of 580 or less at the moment, even though FHA permits it.)
• Borrowers with higher credit scores would be able to put down only 3.5% in cash on their purchase.
• FHA's mortgage insurance premium (known in the industry as "MI" versus "PMI" for private sector private mortgage insurance) will rise from 1.75% to 2.25%.
• FHA will ask congress for approval to raise the annual mortgage insurance premium from its current .55 percent level.
• Sellers will only be allowed to give 3% to the buyer to defray closing costs, down from 6%

The moves are being made to shore up FHA's flagging finances and help the agency avoid a nasty taxpayer bailout

In last year's annual audit, it was revealed that FHA had fallen below the 2% capital reserves required by congress. The current level of capital reserves is somewhere around .53%, according to the agency, down sharply from 3% in 2008

"striking the right balance between managing the FHA's risk, continuing to provide access to under deserved communities, and supporting the nation's economic rec0very is critically important," Stevens said in a statement.

FHA has become the only lender available for many Americans. Over the past few years, FHA has gone from insuring around 3% of loans to more than 25%- a level that Stevens called unhealthy for the mortgage market.

Homebuyer Tax Credit Update!

Homebuyer Tax Credit Update!
On November 6, 2009, President Obama signed a bill to extend the tax credit for the first-time homebuyers (FTHB) through June 30, 2010. The bill also opens up opportunities for others who are not buying a home for the first time.

To learn what the new tax credit means to you and your clients, take a look at the concise overview below

TAX CREDIT OVERVIEW
Who Gets what?
First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. the credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Current owners: The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount

What are the New Deadlines?
In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010

What are the Income Caps?
The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible.

Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,ooo and above are ineligible

What is the Maximum Purchase Price?
Qualifying buyers may purchase a property with a maximum sale price of $800,000.

What is a Tax Credit?
A tax credit is a direct reduction in tax liability owed by an individual to the Internal Revenue Service (IRS). In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual is owed. Unlike the tax credit that existed in 2008, this credit does not require repayment unless the home, at anytime in the first 36 months of ownership; is no longer an individual's primary residence.

How Much Are First-Time Homebuyers (FTHB) Eligible to Receive?
An eligible homebuyer may request from the IRS a tax credit of up to $8,000 or 10% of the purchase price for a home. If the amount of the home purchased is $75,000, the maximum amount the credit can be is $7,500. If the amount of the home purchased is $100,000, the amount of the credit may not exceed $8,000.

Who is Eligible for FTHB Tax Credit?
Anyone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title, is eligible

This applies to both single taxpayers and married couples. In this case where there is a married couple, if either spouse has owned a primary residence in the last 36 months, neither would qualify. In the case where an individual has owned property that has not been a primary residence, such as a second home or investment property, that individual would be eligible.

As mentioned above, the tax credit has been expanded so that existing homeowners who have owned and occupied a primary residence for a period of 5 consecutive years during the last eight years are now eligible for a tax credit of up to $6,500.

How much are Current Home Owners Eligible to Receive?
The tax credit program includes a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Can Homebuyers Claim the Tax Credit in Advance of Purchasing a Property?
No. The IRS has recently begun prosecuting people who have claimed credits where a purchase had not taken place.

Can a Taxpayer Claim a Credit if the Property is Purchased from a Seller with Seller Financing and the Seller Retains Title to the Property
Yes. In situations where the buyer purchases the property, even though the seller retains legal title, the taxpayer may file for the credit. Some examples of this would include a land contract for deed.

According to the IRS, factors that would demonstrate the ownership of the property would include:
1. Right of possession
2. Right to obtain legal title upon full payment of the purchase price
3. Right to construct improvements
4. Obligation to pay property taxes
5. Risk of loss
6. Responsibility to insure the property
7. Duty to maintain the property

Are there Other Restrictions to Taking the FTHB Credit?
Yes. According to the IRS, if any of the following describe homebuyer's situation, a credit would not be due:
- They buy the home from a close relative. This includes a spouse, parent, grandparent, child, or grandchild (please see the question below for details regarding purchases from "step-relatives.).
- They do not use the home as your principal residence.
- They sell their home before the end of the year
- they are a nonresident alien
- They are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year ( This does not apply for a home purchased in 2009).
- Their home financing comes from tax-exempt mortgage revenue bonds ( This does not apply for a home purchased in 2009).
-They owned a principal residence at any time during the three years prior to the date of purchase of your new home. For example, if you bought a home on July, 2008, you cannot take the credit for that home if you owned, or had ownership interest in, another principal residence at any time from July 2, 2005, through July 1, 2008.

Can Homebuyers Purchase a Home from a Step-Relative and Still be Eligible for the Credit?
Yes. As long as the person they buy the home from is not a direct blood relative, the purchase would be allowed.

If a Parent (Who Will Not Live In The Property) Cosigns for a Mortgage, Will Their Child Still be Eligible for the Credit?
Yes. Provided that the child meets the other requirements for the tax credit

For more information about the homebuyer tax credit or other recent updates to the mortgage and real estate markets, just give me a call. I would be happy to assist you with your mortgage in the purchase of your new home!

To ensure compliance with requirements imposed by the Internal Revenue Service, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) was not intended or written to be used, and cannot be used, by any person for the purpose of (i) avoiding tax-related penalties or (ii) promoting, marketing or recommending to another person any transaction or matter addressed in this communication. i recommend that you consult with properly licensed legal, tax and investment advisors for specific advice pertaining to your individual situation.

Homebuyer Tax Credit

Homebuyer tax credit info package coming soon!