The data is in! According to the National Association of REALTORS ® existing-home sales rose again “ increasing 7.6 percent to a seasonally adjusted annual rate of 5.77 million units in April“due to buyers motivated by the tax credit, improving consumer confidence, and favorable affordability conditions.

That™s great news for real estate and the economy, but one question still remains: what happens beyond the homebuyer tax credit?

Answer: distressed properties. The market for distressed properties “ including foreclosures, short sales and REOs “ remains high and many buyers stand to save considerable money on the purchase of one of these homes.

Is a distressed property the right deal for you?

With the first-time homebuyer tax credit deadline having come and gone, you may be asking yourself, œWhat now? Fortunately, the door is now open to a new wave of savings: distressed properties.

For many buyers, the term foreclosure brings up images of run-down homes with no heat and rotting wood. While this is still the case for some homes, it™s no longer the standard. In fact, first time buyers are snatching up distressed deals in decent condition for great prices.  

According to a November 2009 Keller Williams Research Buying Distressed Properties Survey, 40 percent of all buyers for bank-owned foreclosures (REOs) were first-time buyers in 2009. 50 percent of all short sale buyers were first-time buyers.

By definition, a distressed property is one that was purchased with a loan and the homeowner is no longer able to make their mortgage payment resulting in foreclosure “ or if they™re lucky a short sale “ meaning they owe more on the home than it™s currently worth. With a 20 percent increase in foreclosures from 2009, distressed properties still remain a large portion of home sales and are going to continue well into 2010 as homeowners continue to feel the effects of an economy on the mend.

If you™re in the market for a home and are prepared for a unique transaction, a distressed property can be a great option. Here™s why:

Prices are low “ Buying a foreclosed property is an excellent way to get a home for less. Research shows you can save 10-40 percent over the price of similar properties in a traditional sale.

Mortgage costs are low “ With rates hovering near historic lows, financing costs to are favorable. Keep in mind, rates are always changing. It™s important to begin the pre-approval process so that you know how much you can realistically afford.

You have options “ The number of homes in some stage of the foreclosure process still remains high. RealtyTrac, a site dedicated to tracking foreclosures across the country, estimates that there are approximately 2.1 million homes in some stage of foreclosure in the United States.

Sellers and lenders are motivated “ According to data from RealtyTrac, in  April, one in  every  387 households in the country has received a foreclosure filing. The bottom line is that many sellers are still feeling the pain of a down economy and are anxious to out get from under a home that is putting stress on their current financial frustrations. While it is still an emotional transaction, these sellers are willing to come down on price or even consider concessions such as helping out on closing costs. Banks holding on to large portfolios of Real Estate Owned (REO) properties want to unload quickly “ and price these home to sell.

Your best ally when purchasing a distressed property is an expert. Always have a professional REALTOR ®  by your side to help you make informative decisions

Good news: The U.S. Department of Housing and Urban Development and the U.S. Department of Veterans Affairs have issued several new rules that will help loosen the tight credit markets.

1. Waiver of flipping restrictions
On Jan. 15, HUD announced a one-year waiver of the resale rules applicable to Federal Housing Administration-insured loans. FHA’s anti-flipping rules do not allow FHA-insured loans to be used to purchase a home if a seller acquired a title within 90 days of the date of sale.

To qualify for this waiver, the sale of the property must be an arm’s-length transaction with no commonality interest between buyer, seller or other parties participating in the sale transaction. If the new price exceeds the initial price by 20 percent or more, additional conditions must be satisfied, such as proof of the seller’s legitimate renovations or repairs that support the increase in value; if no such work has been performed, the appraiser must provide an appropriate explanation of the increase in property value.

2. New rules designed to help consumers better compare settlement costs
The most significant changes to the Real Estate Settlement Procedures Act have modified the manner in which settlement charges are disclosed on the new good faith estimate forms. As of Jan. 1, 2010, HUD’s new GFE form must be used in all residential mortgages.
HUD recently clarified the level of change it will tolerate on the new GFE. Depending on the type of settlement service, the charges quoted on the GFE fall into three categories:

charges that cannot change on the GFE (HUD calls these “first bucket” charges);

charges that can increase up to 10 percent on the GFE (“second bucket” charges);

and charges that can change without regard to the amount stated on the GFE (“third bucket”).

The loan origination fee would be a first bucket charge. Appraisal fees would be a second bucket charge. Daily interest fluctuation would be a third-bucket charge.

The intent of the new GFE is to disclose all charges in a simpler form so that the consumer can make an appropriate comparison of services provided by a variety of lenders. The estimates on the new GFE must be good for 10 business days and must be fully disclosed on the new HUD-1 settlement statement forms.

3. Disclosure of real estate broker commissions under RESPA
On Jan. 22, HUD’s general counsel issued a clarification of how real estate broker commission fees are to be disclosed on the HUD-1 settlement statement. RESPA now allows Realtors to charge a flat fee or a percentage fee, as long as: (a), the fee is disclosed in the listing or buyer’s broker agreement; (b), the fee charged on the HUD-1 form is equal to what was disclosed; and (c), the fee disclosed on line 700 of the HUD-1 is disclosed as part of the commission.

HUD goes on to state that RESPA does not prescribe how commissions should be distributed between the listing and seller brokers; therefore the division of compensation is negotiable.

4. New rules addressing the disclosure of VA origination fees on the new GFE
A qualifying borrower may be charged up to a 1-percent loan origination fee on VA loans, together with certain other allowable charges. But the new GFE form lumps all origination fees and other allowed charges into one category called “our origination charge.” The VA’s new circular explains how to properly identify these charges on the GFE when the origination fee, together with other allowable fees, exceeds 1 percent of the loan amount.

Two options are available: The lender can itemize the charges in section 800 of the HUD-1 settlement statement, or the lender can issue a separate origination statement, to be signed and dated by the borrower, indicating the purpose of the charges and the amount.

If a lender chooses the second option, the HUD-1 should not be separately itemized.
While the VA is encouraging lenders to comply with its new rule immediately, lenders are not required to comply with this new rule until May 1.

Lenders are no longer required to issue an interest rate and discount disclosure statement for VA-guaranteed loans if the new GFE and HUD-1 have been used. But in all cases the GFE and HUD-1, as well as copies of any invoices for all third-party service providers, must be maintained in the file and submitted to the VA if a file is selected for review.

The residential mortgage lending community was hit hard when the housing bubble burst in 2008. HUD and the VA, however, are taking steps to help the market recover. Any questions should be directed to a legal representative.

Prices bottom, mortgage rates increase, and foreclosures move upstream

 Is 2010 the year to buy a house? It certainly looks that way: After a steep run-up in prices during the first half of the decade, home values have plummeted back to 2003 levels. Fixed mortgage rates are sitting near record lows. And the foreclosure epidemic”while painful for many home owners”has created some wonderful opportunities for bargain hunters. If that’s not enough, Uncle Sam is handing out thousands of dollars in tax credits to nearly all first-time buyers and the bulk of existing home owners who close a purchase by June.

But while the 2010 outlook appears inviting, there’s one key catch. “You need to have a stable job,” says Mark Zandi, the chief economist of Moody’s Economy.com. The economy is showing signs of life, but the unemployment rate is already at 10 percent and expected to go higher. And while those mortgage rates are attractive, buying a house makes sense only if you can bank on your income stream. So before you consider purchasing a home, take a hard look at your job, your company, and your industry.

That said, here are 10 things to know about real estate in 2010:

1. Prices to bottom: After more than three years of falling, real estate values have shown signs of stabilization in recent months. At the national level, home prices slid nearly 9 percent between the third quarter of 2008 and the same period this year, according to the S&P/Case-Shiller home price report. That’s a notable improvement from the second quarter’s nearly 15 percent annual drop and the first quarter’s 19 percent decline. This improvement will give way to a bottom in home prices”finally!”in 2010, but not before additional declines, Zandi says. Zandi projects home prices will hit bottom in the third quarter of 2010 after logging a peak-to-trough decline of roughly 37 percent, based on the S&P/Case-Shiller national home price index. “That means we’ve got another roughly 10 percent [decline] to go,” Zandi says.

2. Mortgage delinquencies up: Amid falling home prices and a nasty labor market, roughly 1 in every 7 mortgages was either past due or in foreclosure by the end of the third quarter”the highest delinquency rate in the 37-year history of the Mortgage Bankers Association’s National Delinquency Survey. Two factors are expected to drive delinquencies even higher next year. First, nearly 1 in 4 homeowners currently owes more on their mortgage than the property is worth, which increases their odds of default. And secondly, the national unemployment rate”which already stands at 10 percent”will peak at about 10.5 percent in the first quarter of 2010, says Patrick Newport, an economist at IHS Global Insight. Additional job losses mean more borrowers won’t be able to pay their mortgage bills. “The [delinquency] rate is going to stay up there for quite a while because the job market is going to be really weak for a while,” Newport says.

3. Foreclosures move upstream: The number of foreclosure sales will increase to about 1.9 million in 2010, according to Moody’s Economy.com. And while we’ve already seen a growing number of more expensive homes heading into foreclosure, Heather Fernandez, vice president of marketing at the real estate search engine Trulia, expects the trend to pick up steam next year. (Trulia is a U.S. News partner.) “We are poised in 2010 to see a surge of foreclosures from prime borrowers. Hundreds of billions of dollars in option [adjustable rate] mortgages are set to be recast” next year, Fernandez says. Option adjustable rate mortgages allow borrowers to make lower monthly payments for an initial period, after which the payments adjust”or “recast””higher. For some borrowers, the new payments can be more than twice their initial payments. Combined with other factors, like the loss of a job, a recasting option adjustable rate mortgage can make borrowers more likely to default. “These are [properties] at higher price points [and] potentially in more desirable neighborhoods,” Fernandez says.

4. Mortgage rates to rise: Anyone who purchased a home in 2009 was presented with some extremely attractive mortgage rates. Rates on 30-year, fixed mortgages fell to an average of 4.88 percent in November, down sharply from 6.09 a year earlier. A key factor behind the plunge was a Federal Reserve program, first announced in November of 2008, that purchased debt and mortgage-backed securities from Fannie Mae and Freddie Mac. But the program is slated to expire at the end of the first quarter, and if private investors don’t step up, fixed mortgage rates could jump. (The Fed, of course, could always decide to extend the program.) The unwinding of this Fed program, the improving economy, and mounting concern over government deficits could push rates on 30-year, fixed mortgages to roughly 5.5 percent by mid-2010 and close to 6 percent by the end of the year, says Mike Larson of Weiss Research. “Almost all signs to me point higher,” Larson says.

5. Buyer’s market remains: With prices still falling, mortgage rates remaining historically attractive, and additional homes hitting the market in the form of foreclosures, the dynamics of the real estate market will continue to favor buyers over sellers in 2010. That means those looking to buy a home next year should not feel pressured to act impulsively. “You don’t need to have a sense of urgency, but understand that as time progresses the balance of power as we get into 2010 is going to slowly but surely shift away from [buyers],” Larson says. “It is not going to be a strong seller’s market, but it will be more evenly distributed as the year goes on.” Data from the real estate firm Zillow show that home buyers are already losing the leverage they once enjoyed. While home buyers landed a median discount of 4.6 percent off listing prices in January, the size of the gap fell to 2.7 percent by October. Expect this gap to close further as 2010 marches on.

6. Modification plan could be modified: While the Obama administration has put nearly 700,000 borrowers into temporarily restructured mortgages, it had found permanent fixes for just 31,382 struggling homeowners through November. What’s more, critics have identified two key shortcomings of the government’s $75 billion antiforeclosure plan. First, the program isn’t much help for borrowers struggling to stay in their homes as the result of a job loss. And the rickety labor market is a key factor behind rising delinquencies. At the same time, the plan does not sufficiently address the issue of negative equity”owing more on your home loan than the property is worth”which also works to increase foreclosures. “The current modification program does not address negative equity and is therefore destined to fail,” Laurie Goodman, a senior managing director at Amherst Securities Group, told a congressional committee in written testimony on December 8. “It must be amended to explicitly address this problem.” Zandi says the government may move next year to overhaul the modification program in two ways: improving troubled borrowers’ negative equity positions by writing down some of the mortgage principal, and helping to turn troubled homeowners into renters.

7. FHA lending standards may increase: While banks have jacked up lending standards in the face of mounting delinquencies, mortgages backed by the Federal Housing Administration”which come with a minimum down payment of just 3.5 percent”have remained accessible to a wide swath of borrowers. The FHA guarantees nearly 30 percent of new-home purchase mortgages today, up sharply from just 3 percent in 2006. But the rapid growth has occurred alongside an increase in mortgage delinquencies. As a result, the FHA’s reserves have dipped below congressionally mandated levels. The development has put pressure on the Obama administration to beef up its requirements for agency-backed home loans. In early December, the Department of Housing and Urban Development announced that it would make several changes to FHA mortgage requirements: raising up-front cash requirements, boosting minimum credit scores, and perhaps charging more for insurance premiums. Additional new restrictions may be in store. Taken together, the developments could work to choke off the supply of mortgage credit to borrowers who can’t get financing elsewhere.

8. Tax credit available through June: On top of lower prices and cheap mortgage rates, Uncle Sam is offering an additional incentive to get buyers into the market next year. In early November, President Obama signed a bill extending and expanding a popular tax perk for home buyers. The legislation gives qualified first-time home buyers a tax credit of up to $8,000 if they close the purchase of a primary residence by the end of June. Meanwhile, qualified current home owners are eligible for a credit of up to $6,500 when they buy their next principal residence. But while the tax perk may make a home purchase more tempting, would-be buyers should make sure they have the job security and financial wherewithal to handle the transaction before going ahead. “Don’t let [the home buyer tax credit] be the thing that drives you to act,” Larson says.

9. Markets will vary a great deal by region: The performance of the national housing market is much less important that the dynamics of your local market, and sales and pricing trends will vary a great deal from one area to the next in 2010. “There will be geographic pockets where the values will still continue to decline, and there will be geographic pockets where they increase,” said Dale Siegel, a mortgage broker and the author of The New Rules for Mortgages. That means anyone interested in buying real estate next year can’t just read the national headlines. Instead, find a good blog that covers the local housing market and consider speaking with a real estate agent with experience in the area. Check out online listings”pay close attention to pricing and inventory trends. And make sure to head out to open houses to get a firsthand feel for the market.

10. Mobile maps can help: Advances in technology have enabled would-be home buyers to increase the efficiency of their searches. For example, Zillow’s iPhone app allows home buyers to see the estimated values and listed prices of the properties they pass on the street. The app, which is free, has been downloaded more than 830,000 times. Trulia has unveiled a similar product that allows users to find nearby open houses as well. “If you are sitting in a neighborhood having brunch on a Sunday, you can very easily pull up your phone [and] walk into open houses,” says Trulia’s Fernandez.

By Diana Olick   ” CNBC Real Estate Reporter¨Big Banks Accused of Short Sale Fraud

His companies include 1-800-CashOffer, HomeFlux.com and FastHomeOffer.com. Brandt has a huge network of short sale real estate agents, and over the past several months he™s been receiving all kinds of questions and complaints about trouble with second lien holders.

(RESPA is the Real Estate Settlement Procedures Act, the 2008 law requiring that consumers receive disclosures at various times in the transaction. It outlaws kickbacks that increase the cost of settlement services. RESPA is a HUD consumer protection statute designed to help homebuyers be better shoppers in the home buying process, and is enforced by HUD.  Read more about it here.).

U.S. home buyers are less willing to buy foreclosed properties than they were six months ago, citing risks like hidden costs, but demand could grow because of the government’s expanded tax credit, a survey showed on Tuesday.

A continued drop in demand for the glut of foreclosed properties would add a fresh layer of pain to a housing market just emerging from a three-year nosedive.

The percentage of Americans at least somewhat likely to consider buying a foreclosed home fell to 43 percent in November, sharply below May’s 55 percent, according to a survey by Harris Interactive.

The survey was conducted November 5-9 on behalf of Trulia.com, a real estate search engine, and RealtyTrac, which tracks foreclosures.

Buyer expectations are becoming more realistic, Trulia Chief Executive Pete Flint said on a conference call.

Next year “government interventions will start to disappear, shadow inventory will hit the market and mortgage rates will start to rise” to around 6 percent from under 5 percent, he said. “We’re in a false state of stability.”

Shadow inventory includes houses that banks now hold but have yet to put up for sale.
Double-digit unemployment will push more owners into foreclosure, further destabilizing the housing market and pressing prices down another 5 to 10 percent, said Flint.

Some closely watched measures show prices have toppled by about 30 percent on average from 2006 peaks. Although prices are rising in some areas, the survey found lingering concern about buying now, when prices could fall still further.

Demand for foreclosed properties, which are often deeply discounted compared with other homes on the market, is of particular concern. RealtyTrac expects over 3 million properties will receive at least one foreclosure notice this year, up from a record 2.3 million last year.

About half of those properties will ultimately go back to banks, RealtyTrac said last week.

The company reported that November was the fourth straight month of declines in foreclosure actions, thanks to various loan modification efforts. But it said many of those problem mortgages would fail anyway.

Foreclosures could escalate to 4 million in 2010, RealtyTrac Senior Vice president Rick Sharga said.

“Unemployment, negative equity are driving factors, as is credit availability,” he said. “We don’t believe we will get back to normal levels of foreclosure activity on a month-to-month basis until probably the end of 2012, and we will still be going through the shadow inventory well into 2013.”

Banks will place the unsold homes on the market at a measured pace to thwart prices on all homes from falling off a cliff anew, he said.

AGE, MARITAL STATUS MATTER

Real estate investors, renters and homeowners looking to “trade up” to a larger house still show strong interest in foreclosed properties, the survey found. Although overall demand dropped, a large share of current homeowners looking to trade up are willing to consider such a purchase.

About 24 percent of homeowners are at least somewhat likely to trade up to a larger home. Of these, 88 percent are at least somewhat likely to consider a foreclosure, the survey found.

Demand from those buyers could rise due to the government’s new $6,500 tax credit for current homeowners who buy a new home. These are the “trade-up” or “move-up” buyers.

Buyers looking to lock in that incentive, as well as buyers wanting to take advantage of the $8,000 first-time homebuyer credit, need to sign contracts by the end of April and close on mortgage loans by the end of June.

Fifty-seven percent of renters are at least somewhat likely to buy a distressed home. Demand from renters, as well as all adults, fades as ages rise.

Marital status also impacts demand, with more never-married adults willing to consider a foreclosed property than those who are married, divorced or widowed.

Two-thirds of buyers expect to get a discount of at least 30 percent for a foreclosure.

The survey found that 95 percent of foreclosure buyers are willing to invest in renovations, with more than half expecting to spend 20 percent or more of the purchase price to improve the property. Such spending can help stimulate the economy.

Kenneth R. Harney
The Washington Post
Saturday, December 5, 2009

If you’re thinking about applying for the new $6,500 federal tax credit for repeat home buyers or the extended $8,000 version for first-time buyers, here’s some news: The IRS has just issued its first formal guidelines for you.

Tops on the agency’s list of advice? Cool it for a couple of weeks. Even if you qualify for one of the credits, don’t send in any requests to the Internal Revenue Service quite yet. Wait until later this month, when the agency publishes its revised Form 5405 with all the key instructions needed to get you a check from the government.

The forthcoming version of the form will incorporate the major changes to the tax credit program made by Congress in legislation signed by President Obama last month. These include expanded income limits, a cap on home prices, additional documentation requirements and prohibitions against claims by dependents, among others.

In a tax bulletin issued just before Thanksgiving, the IRS emphasized that all home purchasers after Nov. 6 “must use this new version [of Form 5405] to claim the credit.” Put another way: If you send in the old version — which happens to be the one you can currently download from the agency’s Web site, IRS.gov — your request for the credit is likely to go nowhere.

The legislation — known as the Worker, Homeownership and Business Assistance Act of 2009 — extended the $8,000 first-time-buyer credit until April 30 for signed contracts and June 30 for closings. The law also created a new tax credit for people who have owned a principal residence for a consecutive five of the previous eight years and who purchase a replacement principal residence with a signed contract no later than next April 30, followed by a closing no later than June 30.

Qualified repeat buyers can get credits up to $6,500. For both the first-time and repeat buyer programs, the credit is equal to 10 percent of the purchase price of the house, up to a maximum of either $6,500 or $8,000.

The new IRS bulletin also outlined the agency’s guidance on other important features of the amended credit program:

• Members of the armed forces, plus diplomatic and intelligence personnel who are in service in foreign countries, will get an extra year to buy a principal residence and still qualify for a credit. They will have until April 30, 2011, to enter into a binding contract to purchase a house and until June 30, 2011, to close on it.
• Anyone who buys a house after Nov. 6 — even those who had intended to get in the door before the previous Nov. 30 expiration date for the $8,000 credit — will now need to comply with several new rules. First, the house cannot cost more than $800,000. Second, no one under 18 can claim the credit, no matter what the circumstances. And finally, anyone who is counted as a dependent on another taxpayer’s federal filings is ineligible for the credit.
• The expanded income limits for purchasers after Nov. 6 range to $125,000 in “modified adjusted gross income” for single taxpayers and to $225,000 for those who file jointly. Singles with incomes between $125,000 and $145,000 may be eligible for phased-down credit amounts, as are joint filers with incomes from $225,000 to $245,000. Anyone with an income above these amounts cannot qualify for either of the credits. Under the pre-Nov. 6 rules, by comparison, taxpayers applying for the $8,000 credit were limited to income of $75,000 (single filer) or $150,000 (joint filers).

The IRS continues to offer detailed consumer information on the credits, including Q&As on a variety of home-purchase scenarios.

For example, some taxpayers seeking the extended $8,000 credit are uncertain about co-purchase and co-signing situations, especially involving parents and adult children. When a homeowning parent co-signs for a mortgage with a son or daughter and both names appear on the note, can the son or daughter qualify for the first-time purchaser credit?
The IRS says the parent clearly does not qualify for any portion of the credit because he or she already owns a principal residence. But if the son or daughter has not owned a house during the three years preceding the purchase and qualifies on income, he or she can be allocated the entire $8,000.

Similarly, when unmarried individuals co-purchase a house and only one of them is eligible for the credit, the full $8,000 can be allocated to the eligible buyer. The ineligible co-purchaser, in other words, does not spoil the deal — as long as none of the credit goes to that person.

Many experts are predicting a rise in inflation and consequently a rise in interest rates as a result of the government™s stimulus spending. The chart below  demonstrates just how historically low interest rates are.Take a look at where rates were in the early eighties – the last time inflation skyrocketed. This is certainly food for thought for anyone wondering if now is a good time to get off the fence regarding a home purchase or refinance.

After a slow start, the Obama administration’s mortgage relief program has reached one in five eligible homeowners, a government report says.

More than 650,000 borrowers, or 20 percent of those eligible, have signed up for trials lasting up to five months, the Treasury Department says. The modifications reduce monthly payments to more affordable levels.

Launched with great fanfare in March, the plan got off to a weak start, but now nearly 920,000 loan modification offers have been sent to more than 3.2 million eligible homeowners. That works out to 29 percent, up from 15 percent at the end of July.

The next big challenge for the program is converting trial modifications to permanent ones. The government expects to release information on that later this month.

Breaking News

The U.S. Congress has approved a bill that extends and broadens tax credits that were set to expire this month. The bill extends the credit for contracts signed by April 30th and closing by June 30th.  Income limits are expanded to cover more affluent buyers; couples earning up to $225,000 and individuals earning up to $125,000 annually now qualify. It also creates a new $6,500 credit for buyers who have owned their current home for at least five years. Homes worth more than $800,000 wouldn™t be eligible.
President Obama is expected to sign the bill as early as tomorrow.As always please contact me with any real estate questions or needs.

Senate leaders have announced that they have agreed to an extension of the $8,000 first-time home buyer tax credit through April 30. The popular credit, which has strong support from the Mortgage Bankers Association, is set to expire Nov. 30.

The CR, which keeps the federal government running through Dec. 18, passed the House on a 247-178. The Senate vote was 72-28.

MBA commended both chambers on their actions. “Given the lack of a private secondary mortgage market, FHA, Fannie Mae and Freddie Mac are pretty much the only game in town,” said MBA Chairman Robert Story Jr., CMB. “Extending the current loan limits through 2010 will allow more loans to qualify for these important programs and will help keep mortgage credit more accessible and affordable for qualified borrowers.”

The CR provision would keep in place current conforming loan limits of $625,000 ($729,750 in designated high-cost areas). Without approval from the Senate, those limits will expire on Dec. 31.

MBA and other industry trade groups sent a letter this week to leadership of the House and Senate urging Congress to pass legislation “as soon as possible” to extend current higher loan limits. The letter called the higher limits a “key component of the economic recovery efforts because they help make affordable loans available for a broader spectrum of consumers who want to purchase a home or refinance an existing mortgage.”

“As we try to maintain the momentum of the housing recovery, providing affordable financing for qualified borrowers is critical,” Story said. “Extending the loan limits, along with other initiatives such as extending and expanding the homebuyer tax credit, will help restore stability to the housing and mortgage markets.

“Meanwhile, members of the Senate said they substantially reached an agreement on extending the first-time home buyer tax credit, adding it to a bill that would extend expiring unemployment benefits.

The amendment would extend the existing $8,000 tax credit for first-time home buyers and offer a new $6,500 credit for existing homeowners who have lived in their current residence for a consecutive five-year period within the past eight years. Under the amendment, home buyers would be required to be under contract by April 30 and close before July 1.

MBA has supported extension and expansion of the tax credit, noting that the Internal Revenue Service recently reported that more than 1.4 million taxpayers have benefited from the tax credit, enacted by Congress as part of the Housing and Economic Recovery Act of 2008.”

MBA believes the first-time home buyer tax credit has had a stimulating impact on our economy, and MBA supports extending and expanding it so it can help more buyers and sellers,” MBA said in a recent Call to Action from its grassroots advocacy arm, the Mortgage Action Alliance. “Our fragile economy is just beginning to show signs of stabilizing. We should not jeopardize our recovery by letting this tax credit expire. The home buyer tax credit is helping hundreds of thousands of Americans realize the American dream, and it is creating thousands of jobs that rely on homeownership.”