In a surprise move today, the Fed commited to buying up to $750 billion in mortgage backed securities from fannie, freddie and ginnie as well as treasury bonds - This should mean a reduction in interest rates for home owners and new home buyers that should last for a while.
With the Federal Tax Credit expiring in November of 2009, there’s never been a better time to take a close hard look at buying a new home or permanantly reducing your existing mortgage payment with rates expected to reach as loweas the mid 4% range.
This just released in the Full Summary of Provisions Senate Finance, House Ways & Means Committee:
Refundable First-time Home Buyer Credit. Last year, Congress provided taxpayers with a refundable tax credit that was equivalent to an interest-free loan equal to 10 percent of the purchase of a home (up to $7,500) by first-time home buyers. The provision applies to homes purchased on or after April 9, 2008 and before July 1, 2009.
Taxpayers receiving this tax credit are currently required to repay any amount received under this provision back to the government over 15 years in equal installments, or, if earlier, when the home is sold. The credit phases out for taxpayers with adjusted gross income in excess of $75,000 ($150,000 in the case of a joint return).
The bill eliminates the repayment obligation for taxpayers that purchase homes after January 1, 2009, increases the maximum value of the credit to $8,000, and removes the prohibition on financing by mortgage revenue bonds, and extends the availability of the credit for homes purchased before December 1, 2009.
The provision would retain the credit recapture if the house is sold within three years of purchase. This proposal is estimated to cost $6.638 billion over 10 years.
This news will certainly catch the attention of first time homebuyers looking to take advantage of this highly affordable Real Estate market in the State of California.
Education is our passion - You can arm yourself against deceptive and unethical “Real Estate Professionals” by educating yourself about the home buying process.
These informative and convenient on-line classes will empower you with the ability to make educated financial decisions about choosing a lender, real estate agent, loan program and understanding everything that happens during the home buying process. Bookmark this page and check back often for new dates, times and classes.
The final draft of H.R.1 - The American Recovery and Reinvestment Act of 2009 is expected to received a it’s final votes by tomorrow. Lawmakers are working today to document all of the final touches reached yesterday in a closed door session that reportedly produced the final compromises readying it for a final vote and the President’s desk.
We have been following the Homebuyer Tax Credit part of this “recovery” bill. The latest news about the the shot-down $15,000 proposal is reported in this AP article:
A $15,000 tax credit for anybody buying a home over the next year was dropped; instead, first-time homebuyers could claim an $8,000 credit for homes bought by the end of August.
We will keep you updated as we know more.
Education is our passion - You can arm yourself against deceptive and unethical “Real Estate Professionals” by educating yourself about the home buying process.
These informative and convenient on-line classes will empower you with the ability to make educated financial decisions about choosing a lender, real estate agent, loan program and understanding everything that happens during the home buying process. Bookmark this page and check back often for new dates, times and classes.
In an AP story that was just released 7 minutes ago, as well as rumors leaked from the closed door democrat controlled Stimulus negotiation debate - It appears that the $15,000 tax credit is not going to survive.
Excerpt from the original Article -
“Working to accommodate the new, lower overall limit of the bill, negotiators effectively wiped out a Senate-passed provision for a new $15,000 tax credit to defray the cost of buying a home, these officials said”
We will keep an eye on this debate and keep you updated as we know more.
Today I reviewed the Senate’s draft of H.R.1 - American Recovery and Reinvestment Act of 2009 and dug out the Senate proposal for increasing the Homebuyer Tax Credit to $15,000. Here’s what I found…..
This article appeared in the New York Times just minutes ago - It looks like the Republicans are slowly becoming more comfortable with President Obama’s flagship reinvestment bill and is expected to be signed into law next week - Let’s hope this works!
WASHINGTON (AP) — The Senate voted Wednesday night to give a tax break of up to $15,000 to homebuyers in hopes of revitalizing the housing industry, a victory for Republicans eager to leave their mark on a mammoth economic stimulus bill at the heart of President Barack Obama’s recovery plan. The tax break was adopted without dissent, and came on a day in which Obama pushed back pointedly against Republican critics of the legislation even as he reached across party lines to consider scaling back spending.
”Let’s not make the perfect the enemy of the essential,” Obama said as Senate Republicans stepped up their criticism of the bill’s spending and pressed for additional tax cuts and relief for homeowners. He warned that failure to act quickly ”will turn crisis into a catastrophe and guarantee a longer recession.”
Democratic leaders have pledged to have legislation ready for Obama’s signature by the end of next week, and they concede privately they will have to accept some spending reductions along the way.
Sen. Johnny Isakson, R-Ga., who advanced the homebuyers tax break, said it was intended to help revive the housing industry, which has virtually collapsed in the wake of a credit crisis that began last fall.
The proposal would allow a tax credit of 10 percent of the value of new or existing residences, up to a $15,000 limit. Current law provides for a $7,500 tax break for the purchase of new homes only.
Isakson’s office said the proposal would cost the government an estimated $19 billion.
Democrats readily agreed to the proposal, although it may be changed or even deleted as the stimulus measure makes its way through Congress over the next 10 days or so.
”This bill needs to be cut down,” Republican Mitch McConnell of Kentucky said on the Senate floor. He cited $524 million for a State Department program that he said envisions creating 388 jobs. ”That comes to $1.35 million per job,” he added.
Republicans readied numerous attempts to reduce the cost of the $900 billion measure, which includes tax cuts and new spending designed to ignite recovery from the worst economic crisis since the Great Depression.
But after days of absorbing rhetorical attacks, Obama and Senate Democrats mounted a counteroffensive against Republicans who say tax cuts alone can cure the economy.
Obama said the criticisms he has heard ”echo the very same failed economic theories that led us into this crisis in the first place, the notion that tax cuts alone will solve all our problems.”
”I reject those theories and so did the American people when they went to the polls in November and voted resoundingly for change,” said the president, who was elected with an Electoral College landslide last fall and enjoys high public approval ratings at the outset of his term.
Obama did not mention any Republicans by name, and most have signaled their support for varying amounts of new spending.
Even so, the president repeated his retort word for word in late afternoon, yet softened the partisan impact of his comments by meeting at the White House with senators often willing to cross party lines.
His first visitor was Sen. Olympia Snowe, R-Maine, a moderate GOP lawmaker. Later he met with Sens. Susan Collins, R-Maine, and Ben Nelson, D-Neb.
”I gave him a list of provisions” for possible deletion from the bill, Collins told reporters outside the White House. Among them were $8 billion to upgrade facilities and information technology at the State Department and funds for combatting a possible outbreak of pandemic flu and promoting cyber-security. The latter two items, she said, are ”near and dear to her,” but belong in routine legislation and not an economic stimulus measure.
Collins and Nelson have been working on a list of possible spending cuts totaling roughly $50 billion, although they have yet to make details public.
The House approved its own version of the stimulus bill last week on a party line vote, but the political environment in the Senate is far different.
Democrats hold a comfortable 58-41 majority. But because the legislation would increase the federal deficit, any lawmaker can insist that 60 votes be required to add to its cost.
While the 60-vote threshold can impose a check on Democrats, it can also illuminate the cross-pressures at work on Republicans.
A Democratic attempt on Tuesday to add $25 billion for public works projects failed when it gained only 58 votes, two short of the total needed. But a few hours later, a proposed $11 billion tax break for new car buyers attracted 72 votes, including several from Republicans.
Today the House passed the $825 billion dollar bill HR1 - The American Recovery and Reinvestment Act which allocates $275 Billion in tax cuts and $550 billion to “thoughtful and carefully targeted priority investments with unprecedented accountability measures built in.” - That’s spending right?
“Investment” projects listed include education programs, new construction and repair of Government building, roads and infrastructure, food stamp benefits, bringing broadband internet access to isolated areas of the U.S……..and surprisingly, Not a word about the Housing Crisis?
There was some Fed news about the housing crisis however, but it wasn’t included in the American Recovery Act. Progress Illinois posted it’s disappointment at the exclusion of Democratic Senator Dick Durbin’s bill which allows bankruptcy judges to order the principle reduction on primary residences for applicants in order to avoid foreclosure and preserve homeownership.
If you’ve been reading us lately you know we’d been hoping to see Sen. Dick Durbin’s foreclosure prevention measure included in the economic recovery package being formulated by Congress. Last week, House Speaker Nancy Pelosi pledged “[W]e will get it done,” though she hinted that the stimulus bill may not be the best vehicle for the measure. Then the AP reported over the weekend that the proposal has been shelved for the timebeing — at President Obama’s request:
Sen. Dick Durbin, D-Ill., the chief Senate sponsor of the bill, said Obama persuaded him in a White House meeting Friday to remove the bankruptcy proposal from an economic recovery package to ensure it doesn’t jeopardize the stimulus bill. But Obama pledged his support for the bankruptcy solution, Durbin said.
Obama said he would work with Durbin to attach the proposal to other “must pass” legislation with the hope that supporters of the overall bill would not vote against it because of the bankruptcy provisions.
Durbin’s bill — which has provoked fierce opposition from the banking industry ever since he first introduced it last year — would allow bankruptcy judges to revise the terms of mortgages held by struggling homeowners. It represents a crucial step towards stemming the foreclosure crisis. And as Open Left’s Chris Bowers writes today, you can’t help but get frustrated watching it stall again and again:
It is pretty sad that, even with the Democratic trifecta and even with the collapse of the credibility of the banking industry, that the banking lobby can still delay, and possibly even stop, good legislation like this. They can twist Congressional arms into forking over trillions of dollars on their behalf, all the while twisting those arms to make sure homeowners facing foreclosure get nothing. At least it makes it clear who is actually running the country.
Other loan modification news came today with the Fed’s embracing the FDIC loan modification criteria and encouraged banks and servicers to embrace this model as a standardized loan modification solution and possibly even a pre-requisite to participation in the Troubled Asset Relief Program - TARP, which allows the federal government to purchased troubled assets from lenders and banks to free up capital for lending.
For additional information about the FDIC guidelines and valuable research tools that may assist you in better understanding your specific options - visit www.helpUmodify.org You will find many self help options available to you as well as third party assistance services if that turns out to be the next step in your attempts for avoiding preventable foreclosure.
This is a great article that I came across today at Bloomberg.com - The FED’s Troubled Asset Relief Program looks like it’s taken a big step today toward preventing “avoidable foreclosures”.
The Fed “Draws the Line” with this program adopting the FDIC modification guidelines which are much more strict than most troubled homeowners would like to see.
Once the definition of “avoidable foreclosure” is set in stone, which is what they are appearing to do here, my opinion is that we will begin to see a rather significant shift in universal policy from lenders wishing to participate in the government’s TARP plan.
Jan. 27 (Bloomberg) — The Federal Reserve will ease terms on residential mortgages acquired in the rescues of Bear Stearns Cos. and American International Group Inc., seeking to stem foreclosures.
The Fed policy is targeting borrowers who are 60 days or more overdue on loan payments and covers modifications of interest rates and payment plans. The program uses the Fed’s authority in the $700 billion Troubled Asset Relief Program and was released today by the House Financial Services Committee.
“It reflects the understandable desire of the Federal Reserve to have some cooperation” with the Obama administration, House Financial Services Committee Chairman Barney Frank told reporters today in Washington. “This is a very big deal.”
Frank, a Massachusetts Democrat, and other leaders in Congress have criticized the Treasury for failing to act on the foreclosure-relief provisions in the TARP law Congress approved in October. This month, Congress released the remaining $350 billion in rescue funds to the Obama administration.
“The goal of this policy is to avoid preventable foreclosures on such assets through sustainable loan modifications and other actions that are consistent with the Federal Reserve’s obligation to maximize the net present value of the assets for the benefit of taxpayers,” according to the document.
The Fed’s “Homeownership Preservation Policy” lets the central bank or its agents “promptly” review applicable mortgages to determine whether the borrowers should be offered a loan modification, the document said. Qualified borrowers must be at least 60 days late on their payments.
Modifications
Modifications will include cutting the interest rates, extending the loan terms, and deferring or reducing the outstanding principal balance, the Fed said.
The policy applies to the residential-mortgage assets the Fed acquired in its rescues of Bear Stearns in March and AIG in September.
The Fed will distinguish between loans in which the central bank may hold only a fractional interest along with other investors, the Fed said. It will encourage the servicers of those residential mortgage-backed securities “to implement a loan-modification program that is consistent with this policy,” according to the document.
“Treasury and Federal Reserve know that they are going to need more” than $350 billion, Frank said. “They also understand that they will not get any further authority for any kind of intervention if they don’t build up some political support.”
Fed Chairman Ben S. Bernanke will appear at a committee hearing on Feb. 10, Frank said, adding he plans to meet with Bernanke on Feb. 2.
“I’m very pleased that the Fed is stepping up,” Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, told reporters today about the Fed’s policy.
For additional information about the FDIC guidelines and valuable research tools that may assist you in better understanding your specific options - visit www.helpUmodify.org You will find many self help options available to you as well as third party assistance services if that turns out to be the next step in your attempts for avoiding preventable foreclosure.
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