Tax Tip #1: Selling your home and making a profit

The tax season is now upon us. We will be posting homeowner-related tax break tips over the next couple weeks that may help you.

#1: Selling your home and making a profit:

Congratulations! This is hard to do in this economy. Selling your home for more than you paid gives you a "capital gain". This gain that you made on your home is exempt from income taxes as long as you meet the following criteria:

• The gain is less than $250,000 single, or $500,000 for married couples filing jointly
• You owned the home for at least two years
• You lived in it for two out of the last five years before selling

If you do not meet these requirements, the IRS will only partially tax you if you had to sell your home because of one of the following:

• Death
• Divorce or legal separation
• Multiple births from one pregnancy
• Damage from a natural or man-made disaster
• Loss of a job that grants you unemployment compensation
• Change in employment that makes paying the mortgage and other basic expenses difficult
• Involuntary conversion under eminent domain law by the local government

For more specific information about this, please visit the IRS website directly.  If you have any mortgage-related questions, call Crosscountry Mortgage at 877-828-8851.

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FHFA's 2013 Conservatorship Scorecard for the GSEs

Edward J. Demarco, the Acting Director of the Federal Housing Finance Agency (FHFA), has recently released the 2013 Conservatorship Scorecard for Fannie Mae and Freddie Mac.  This "Scorecard" is literally rating their performances on things like "the quality, thoroughness, creativity, effectiveness, and timeliness of their work products." They are also graded on how well they cooperate and collaborate with FHFA, each other, and the industry.

The three keywords that they must focus on are "Build, Contract, and Maintain." These were brought up in 2012 as the three goals of the FHFA's Strategic Plan for the GSEs.

"Build" refers to their goal to "build a new securitization infrastructure platform for the secondary mortgage market."

They must also "Contract the Enterprises dominant presence in the marketplace while simplifying and shrinking certain operations by lines of business."

And finally, they must "Maintain foreclosure prevention activities and credit availability for new and refinanced mortgages."

"Despite some signs of normalization in the housing market, our nation finds itself in the uncomfortable position of having over 90 percent of new mortgage originations supported by the federal government," said DeMarco. "That support is provided directly through government loan programs like the Federal Housing Administration (FHA), and through the financial support that the Treasury Department provides to maintain the solvency of Fannie Mae and Freddie Mac."

In the works is a new "joint company" headed up by the FHFA to focus on securitizing home loans. This is hoped to lead to decreased government involvement in the mortgage market. It would also mean that the FHFA is forcing Fannie Mae and Freddie Mac to abandon their current separate systems and construct a single infrastructure to support the mortgage market. This new entity will be the previously mentioned "joint company". It will be more structured and it will be owned by Fannie Mae and Freddie Mac.

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Unemployment Rate Dropped; Economy Recovering

According to the Labor Department, businesses around the nation have added 146,000 new jobs! As a result, the unemployment rate has dropped from 7.9% to 7.7%. This rate is the lowest that it has been since December 2008 when President Obama took office.

There was concern initially that businesses would slow down their hiring out of fear of the federal budget's "fiscal cliff" and what it might do to next year's economy, but this appears to not be an issue. Also, Hurricane Sandy did not have as big of an effect on the job market as originally anticipated. The holiday season seems to be keeping moods high as Christmas sales are booming. As a result, most of November's job gains were in clothing, electronics and general merchandise stores.  However, there were declines in employment for manufacturing, construction, and government workers. The average hourly wages only rose 1.7% over the past year and the average worker continues to work 34.4 hours a week.

Economy analysts were expecting weaker growth because of the storm but are currently increasing their forecasts due to the better-than-expected jobs performance. The economy is slowly but surely recovering. And of course, the stronger the job market, the stronger the housing market.

If you are currently doing well and in need of a new home, let Quest Loans know! Don't wait until the new year, take advantage of the Christmas Mortgage Rates we have available for a limited time! Call for more information 888-883-5252!

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Number of Home Sales Rises in October

Compared to last year, the month of October saw a 17.8% rise in home sales. This means that more people are buying homes and taking advantage of the low interest rates!

Also, the Median Home Price has gone up, meaning that you could potentially sell your home for a higher amount than you could in previous months.

If you are looking to buy a home, the overall inventory of available houses is declining so it may be harder to find the perfect home for your family. However, if you do find a suitable candidate, the low interest rates are in your favor!

If you find that these statistics are pleasing to your pocketbook, don't hesitate! We'd love to help you start the loan application right away.

Keep in mind that Quest Loans specializes in HARP and FHA loans, as well as refinancing! Give us a call today! 888-883-5252

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Obama Adminstration's May Housing Scorecard

The May Housing Scorecard has been released, courtesy of HUD, the Department of the Treasury and the Obama Administration. It is a comprehensive report on the status of the nation's housing market. All indicators point to signs of stability. There's been an overall increase in the sale of existing homes across the nation. The inventory of newly constructed homes has also increased. The only slight hindrance right now comes in the form of delinquencies and underwater mortgages. However, the economy is continuing to recover. More than 180,000 borrowers have taken advantage of the Home Affordable Refinance Program to secure mortgage relief. This has helped foreclosure starts to decline.

The Obama Administration has many programs in place to aid homeowners with the woes of the housing market. So far, these programs have established some critical standards and accountability for mortgage servicers. These have forced the industry to provide struggling homeowners with more effective assistance than ever before. Millions of American homeowners have received relief from these foreclosure programs, and the Administration hopes to continue providing it. It is very important that the nation's housing market crisis can recover.

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Sneak Peak at the April Mortgage Monitor Report

We have a sneak peak of the "April Mortgage Monitor" report from Lender Processing Services, Inc (LPS). The report is scheduled to be released in full at the end of the month, and takes its data from more than 40 million loans. According to our sources, the report states that the total U.S. delinquency rate (loans 30 or more days past due but not yet in foreclosure) is at 7.12%. That figure is up 0.4% from March but it is down by 10.6% compared to last year. Currently, there are 3,522,000 delinquent mortgages on residential homes, including 1,595,000 that are more than 90 days late.

We reported on the foreclosure pre-sale in the past. Its inventory is now made up of 2,048,000 properties. Combining that with the past-due mortgages gives us a total of 5,570,000 properties that are either delinquent or in foreclosure. The states that have the highest percentages of non-current loans include Florida, Mississippi, Nevada, Illinois and New Jersey.

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Banks Tighten Lending Standards

We have been reporting about the economic recovery of the nation. Things are continuing to look up as time goes on. However, the banks are being very strict and cautious about their lending practices. They are not giving out loans to just anyone anymore. Overall, the banks have been tightening their lending standards for residential mortgages for prime borrowers. These borrowers are those with very good credit history, high credit scores and a low debt-to-income ratio. This tightening happened mostly between January and March, putting a strain on the housing market.

These days, getting a loan is much more difficult than it used to be. Banks are demanding higher credit scores and larger downpayments. However, many people are taking advantage of various mortgage options such as the FHA's 3.5% downpayment program.

Despite all of this, banks are still eager to lend money to those who qualify. Now is still a good time to buy a new home or to refinance one if you are in the market for it. Give us a call at 1-888-883-5252 for more information or for assistance in getting started with your loan today!

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Greece Stable For Now; Impact on U.S.?

Europe's Finance ministers have officially given Greece 130 billion euros. As we reported last, Greece was given enough debt relief to help them not default on their bond repayment due in March. Greece is holding steady for the moment, but this in no way fixes their long-term problems. Additionally, the bailout has certainly had an impact on the overall European market. The euro has fluctuated since a whopping 386 billion euros have been spent to rescue not only Greece, but also Ireland and Portugal.

Greece is now forced to abide to these strict austerity measures and economic reforms that come with the deal. Adhering to these rules, however, might prove to be too rigorous for the Greek citizens which could ultimately lead to social unrest and more rioting, something that the Greek politicians do not want to deal with, especially with elections around the corner.

While Greece is currently not defaulting on its debt in March, officials find it unlikely that they can avoid default in the near future. Greece has implemented numerous spending cuts, and adding the austerity measures and the unhappy citizens, the conditions of the bailout may cause more problems to arise in the coming years. Greece will find it hard to stick to the rules, which could be a problem for the market down the road.

The reason we focus so much on Europe's debt crisis is that the US equity market is based everyday on how Europe's market is doing. If their market falters, it will have an affect on our economy. In fact, on the back of Greece's news, the US interest rates slightly rose today. 30-year fixed-rate mortgages (FRM) were averaging at 3.87 percent but are now at 3.95 percent. However, this is not a bad increase. The mortgage markets have held strong despite the weak markets overseas.

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Retirement Growing Increasingly Difficult for Americans

In this rough economy, most people cannot afford to be unemployed. This is especially the case when these people have mortgages to pay. However, money woes do not discriminate against age. More and more, people are finding themselves unable to retire at the traditional age of 55. In fact, surveys have shown that just over 40% of Americans 55 and older are still working. Comparatively, this figure was below 30% in the early 1990s.

Granted, there are people in this age range that choose to work. But overall, people don't have much of a choice otherwise. The economy can take the blame for that. Fortunately, there are more jobs today that are not physically demanding as compared with past decades, so those who are forced to work are at least able to do so relatively well. Those who have held onto a job throughout the recession are reluctant to give them up quite yet.

This economy has made it increasingly difficult to save money in a retirement plan. Even those who had a significant nest egg in the past are finding that it has dwindled due to drops in the stock market. Wisely, people are holding on to every penny they can. Specifically, it is women between 55 and 64 who are now working more often to make up for child raising years when they may not have worked, and therefore did not have retirement savings during that time.

There is also the issue of health insurance. Those who worked full time for years may have had health insurance through their employer that took care of most of their medical needs. It would be very expensive for someone at retirement age to purchase private health insurance and pay on it every month, so this has also had an affect on the decision to retire. Health care coverage is very linked to employment, and many have depended on this over the years. In fact, it is almost vital for some people to continue working until they've become eligible for Medicare.

Additionally, many older homeowners have refinanced in recent years expecting to sell their home at a profit so they could downsize and not have a mortgage. However, they are now finding themselves unable to profit, which forces them to continue making monthly mortgage payments. This of course, leads to a greater need for a job despite being near or past retirement age.

Overall, people are afraid to give up their jobs despite their age, or simply cannot afford to retire in this economy.  Are you in a similar situation?

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Mortgage Rates Reach NEW Record Lows

According to Freddie Mac's Primary Mortgage Market Survey, mortgage rates have dropped even more! They are now at NEW all-time record lows. This includes all rates except for the 1-year ARM which didn't reach a new low.

30-year fixed-rate mortgages (FRM) are averaging at 3.87 percent. This time last year it was at 4.81 percent. The 15-year FRM averaged 3.14 percent which is down from 4.08 percent last year. The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.80 this week and was at 3.69 last year.

These new record lows make it a great time to get a mortgage. However, economic growth has fallen short of market projections which is why these rates have eased. Although, both residential construction spending and fixed residential investment have increased.

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Congressional Push for Fannie/Freddie Principal Reduction

Congressional Democrats are currently pushing for a Fannie Mae and Freddie Mac Principal Reduction. If a settlement with banks isn't helpful enough for homeowners, they want a federal housing regulator to write down mortgage principal for these government-backed loans.

The federal government is actually very close to coming to an agreement with mortgage servicers that could help nearly a million homeowners. The deal would require the nation's five largest banks -JP Morgan Chase, Wells Fargo, Bank of American, Citigroup and Ally Financial- to spend more than $25 billion to help borrowers who had signed off on foreclosure paperwork without reviewing the documents properly.

It is not yet clear who would be eligible for this settlement that would offer 1 million borrowers an average of $20,000 in principal reduction.

If this settlement doesn't help those who are with Fannie Mae and Freddie Mac, more than likely the Democratic lawmakers will continue to push the Federal Housing Finance Agency (FHFA) to provide homeowners with these principal reductions. They especially want to help those who owe more than their houses are worth.

This settlement is expected to be the largest principal reduction of the housing crisis and will hopefully boost the economy and housing market. However, this deal could take several more weeks to complete. The White House was hoping for a resolution by Christmas, but they are now hoping it will be resolved by Tuesday's State of the Union address. They want to have all 50 states sign on to a final deal but they may not meet that goal.

For more information about this, view our source.

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The American People Place High Value on Homeownership

According to a recent nationwide survey of American voters, We The People really value homeownership. After all, it is the American dream to own your own house, complete with a yard and a white picket fence! So it's not surprising, then, that Americans are overall opposed to any government efforts to weaken or eliminate the mortgage interest deduction. People expect the feds to have a role in helping qualified home buyers obtain 30 year mortgages at affordable rates.

If we want to maintain a somewhat thriving middle class economy, the government needs to realize how important homeownership really is to the American public. A good, healthy and stable market would do wonders for the country.

3 out of 4 voters find it appropriate for the government to promote homeownership by way of new tax incentives to keep stimulating the economy. And two-thirds of people feel as though the feds should actually help home buyers to afford long-term fixed-rate mortgages. So much so that 73 percent of voters are against the elimination of the mortgage interest deduction, (and 68% of people would be less likely to vote for a candidate who proposed to abolish it).

People are also against proposals to reduce the mortgage interest deduction, or to eliminate the deduction for interest paid for a second home. They don't want to see any limits either.

Homeownership is definitely a cornerstone of America. So much so that 96% of homeowners are happy with their decision to own a house. Even those who are "underwater", a whopping 84% of voters say that they too are happy to own, despite the mortgage costing more than their home is worth. In fact, owning a home is considered to be the best long-term investment that could possibly be made, despite the ups and downs of the market.

We hope that the government, and those running for office, will take all of these feelings of the American people into serious consideration.

Source

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New Freddie Mac Loan Forbearance Policy

As of February 1st, 2012, Freddie Mac will begin allowing unemployed borrowers an additional 6 months of forbearance on their mortgages. That's 6 months without prior approval from Freddie Mac, and an additional 6 months on top of that with prior approval.  So unemployed borrowers will now have up to 12 months to find jobs before they need to pay their loans. This direction comes straight from the Federal Housing Finance Agency (FHFA).

"These expanded forbearance periods will provide families facing prolonged periods of unemployment with a greater measure of security by giving them more time to find new employment and resolve their delinquencies," said Tracy Mooney, SVP of single-family servicing and REO for Freddie Mac. "We believe this will put more families back on track to successful long-term homeownership."

  The above quote was taken from this article where you can find additional information about this new policy.

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Helping your Clients Understand the Loan Process

If you are looking for a way to simply break-down the mortgage application process to your clients, follow our other blog, 411 Rates. We provide a detailed but easy to follow explanation of all things mortgage related.  We hope that this resource will prove helpful to you!

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Current State of the Mortgage Banking Industry

As a Mortgage Professional yourself, you are likely aware of all the economic issues going on in our country. We at Quest Loans found this article to be informational. It discusses the state of the industry regarding the loan process, the new LO compensation reform, and more.  The following is an excerpt of the article written by Leif Boyd.

"As we look at the current industry and where it will likely head over the next few years, many brokers have more questions than answers. Companies, brokers and loan officers are still figuring out how loan originator (LO) compensation reform will impact their balance sheets and wallets. As the government and banks have continued to add more requirements to get loans approved, it has become harder for once-qualified individuals to get loans. A few large companies seem to control a large share of the market."

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Fed White Paper: "The U.S. Housing Market: Current Conditions and Policy Considerations"

The Federal Reserve wrote a report addressing the current problems in the US housing market. They say that it doesn't cover everything but it is to serve as a "framework for thinking about certain issues and tradeoffs that policymakers might consider."

It discusses the American economy, the unemployment rate, housing foreclosures and more. They may push the government-owned mortgage buyers to rent out the homes they own as a possible way to improve the housing market.

Read all about it by clicking on this link here.

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Tricks of the Trade

Hello Fellow Realtors and Loan Originators,

Welcome to Mortgage Jive! This is the place to gather together and share tips and information regarding mortgages, loans and the real estate market in general. I will be posting the latest news from the industry here.

Please feel free to contribute anything you have come across that would benefit everyone. The goal is to increase our knowledge to stimulate our businesses so that we are fully equipped to do our jobs and help home buyers with all their needs. This is all about connecting, networking and thriving in this economy!

Bookmark the page and visit back often! Thank you!

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