DreamTeam-Jo Cel Perez & Hector Gamez

According to the Mortgage Bankers Association, the number of Mortgage applications recieved fell last week, falling 12.3 percent compared to last week.

Most of the decline was in refinances, which fell 16.2 percent and the purchase index declined 4.8 percent. Except for 15-year rates, mortgage rates were down slightly:

• 30-year fixed-rate mortgages decreased to 5.04 percent from 5.07 percent.
• 15-year fixed-rate mortgages increased to 4.53 percent from 4.51 percent.
• 1-year ARMs decreased to 6.79 percent from 6.86 percent.

Good news! Senators in Congress just agreed on Wednesday to extend the tax credit thru 2010. First-time homebuyers will get up to $8000 in tax credit and give up to $6000 in reduced credit to repeat homebuyers who have been in their homes for at least 5 years. The tax credits would be available to buyers who sign purchase agreements by April 30th, and would need to close on their homes by the end of June according to legislation being circulated amongst Congress.

Calif. median home price – August 09: $292,960 (Source: C.A.R.)
Calif. highest median home price by C.A.R. region August 09: Santa Barbara So. Coast $828,750 (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region August 09: High Desert $111,770 (Source: C.A.R.)
Calif. First-time Buyer Affordability Index – Second Quarter 2009: 67 percent (Source: C.A.R.)
Mortgage rates – week ending 10/15/09 30-yr. fixed: 4.92% Fees/points: 0.7% 15-yr. fixed: 4.37% Fees/points: 0.7% 1-yr. adjustable: 4.60% Fees/points: 0.5% (Source: Freddie Mac)

Local Median Home Prices….

  County/City/Area                August 2009               August 2008             % Change

Source:CAR

The U.S. Department of Housing & Urban Development stated this week that they will provide $60 million dollars in counseling and training grants to help families become first time home-buyers and to help them keep their homes after they are homeowners.

The organizations that provide housing counseling services help people become or remain homeowners or find rental housing, and assist homeless persons in finding the transitional housing they need to move toward a permanent place to live.  Potential homeowners will have assistance with evaluating how ready they are for a home purchase, helping them through the home-buying process, and helping to understand down payment and financing.

For more information please visit HUD’s website.

The National Association of Realtors’ V.P. Ron Phipps stated one of the most important ways for consumers to see a bright future in terms of the economy is for Congress to extend the $8000 home-buyers tax credit. The tax credit has already made an impact as home sales have increased an estimated 5.1 million for the year. Housing inventory has slowed down helping to stabilize house prices. Since the momentum takes awhile, there’s not a better time to build on that by the extension of the tax credit through next year.

The present tax credit is set to expire on November 30th. Those who are in contract now may not be able to take advantage of the credit and close by that time. A few other things that Philips is pushing for is to make the FHA, Fannie Mae and Freddie Mac limits permanent that were established for this year, keep the governments continued involvement in the secondary mortgage market, discuss the Home Valuation Code of Conduct’s side effects that are slowing down sales, and give incentives and uniform procedures for short-sales.

Making the current FHA loan limits permanent would ensure liquidity in the housing market and make mortgages more affordable for qualified buyers at a time when the market is showing signs of a fragile recovery, the NATIONAL ASSOCIATION OF REALTORS® testified to the House Subcommittee on Housing and Community Opportunity today.

Current FHA loan limits are as high as $729,750 in high cost areas, and are set to expire at the end of the year and revert to lower amounts, greatly hindering the housing recovery process.

“NAR strongly supports making FHA loan limits permanent,” said Boyd Campbell, an NAR spokesperson and managing partner-associate broker of Century 21 in Lanham, Md. He urged the subcommittee to quickly consider legislation that would do that—H.R. 2483, introduced by committee members U.S. Reps. Brad Sherman (D-Calif.) and Gary Miller (R-Calif.).

“FHA is more important than ever to homebuyers in the present market. In the wake of the collapsing private mortgage market, FHA has played a critical role in removing inventory from the market and stabilizing home prices,” he said. Present FHA housing market share is approaching 25 percent, significantly up from 3 percent two years ago.

NAR said that FHA has performed remarkably well through the housing crisis, compared to Fannie and Freddie, because FHA has never strayed from the sound underwriting and appropriate appraisals that have traditionally backed up their loans.

FHA is taking timely steps to protect taxpayers: implementing credit policy changes to enhance risk management; hiring a chief risk officer for the first time in the agency’s history; and shifting responsibility for mortgage brokers away from taxpayers to the lenders who use mortgage brokers.

Such changes would help give consumers more affordable choices when purchasing a home, would help strengthen our communities, and would reduce inventory and stabilize home prices, Campbell said.

In addition to the above enhancements, NAR recommended that FHA make these specific changes to condominium purchases:

• Eliminate the owner-occupancy requirement, or at least amend rules so all bank-owned properties are not counted in the occupancy ratio;
• Increase or temporarily suspend the 30 percent limit on total units in a condominium project that may have an FHA mortgage;
• Reduce or eliminate the requirement that at least 50 percent of the units in the condominium be sold prior to FHA’s endorsement; and
• Reconsider the elimination of the Spot Loan Approval Process, which allows certain borrowers to use FHA to purchase a condominium in a project that is not FHA approved.

Source: NAR

Tougher Federal Housing Administration standards and low investor interest in the Housing Tax Credit program has stalled construction of affordable housing according to an article from Jamie Hopkins of the Baltimore Sun. It’s still difficult to get potential home-buyers financing.
“This is a national tragedy,” said Judith A. Kennedy, president and chief executive of the National Association of Affordable Housing Lenders.

Community development leaders and Affordable Housing partners have been lobbying Congress to change tax rules. At one time everyone was able to qualify for a loan whether they qualified or not and now the consumers in the middle are the one’s being turned down and the most affected.