From the Lending collection
San Diego and Surrounding Communities
The Federal Housing Finance Agency (FHFA) announced increased conforming loan limits for 2009 yesterday. The limits were revised under the American Recovery and Reinvestment Act which was signed into law on 2/17/2009. The new limits apply to all loans originated in 2009. (They have gone up - down - and back up over a six month period.)
The baseline limit remains at $417,000 for most areas in the United States. The conforming mortgage limit is the maximum size loan that Fannie Mae and Freddie Mac can purchase in 2009.
These limits depend on the property location. In San Diego County, a higher cost area, the limit for single unit properties is now $697,500. The table gives the conforming mortgage limits for 1 to 4 unit properties for San Diego County and neighboring areas. Loans above this limit are known as jumbo loans, and higher interest rates are almost always charged for these loans, and that is especially true right now!
| Location: |
One Unit |
Two Units |
Three Units |
Four Units |
| Conforming Limits |
$417,000 |
$533,850 |
$645,300 |
$801,950 |
| San Diego County |
$697,500 |
$892,950 |
$1,079,350 |
$1,341,350 |
| Imperial County |
$417,000 |
$533,850 |
$645,300 |
$801,950 |
| Orange County |
$729,750 |
$934,200 |
$1,129,250 |
$1,403,400 |
| Riverside County |
$500,000 |
$640,100 |
$773,700 |
$961,550 |
For other areas or more information visit the OFHEO (Office of Federal Housing Oversite) webpage.
Setting Conforming Loan Limits:
For single family (one unit) properties in high cost areas, the maximum loan limit is 1.15 times the median house price in the county (that’s a simplification…it’s more complicated in most metropolitan areas). The NEW maximum loan limit cannot exceed $729,750 (which is 1.50 times the 2009 conforming loan limit of $417,000), except in Alaska, Hawaii, Guam, and the Virgin Islands. Loan limits for 2-4 unit properties increase in proportion to the 1-unit limits.
References:
Federal Housing Finance Agency:
2009 Conforming Loan Limits Increased by the ARRA (American Recovery and Reinvestment Act)
OFHEO (Office of Federal Housing Oversite) Conforming Loan Information and Tables
Tags: conforming loans, conforming loans 2009, conforming mortgage limits 2009, conforming mortgages, San Diego conforming loan limit 2009, San Diego conforming mortages 2009, San Diego conforming mortgage limit 2009
This article was written
Tuesday, February 24th, 2009 and is part of the Lending Collection.
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From the Buyer Tips, First Time Buyers collection
Boost to Homebuilders
The California budget that finally passed last week contains a state tax credit for purchasers of NEW California homes. So if you’ve been eyeing a NEW home, this state stimulus is for you. The tax break is intended to assist in shoring up the state’s construction industry.
Two Breaks for First Time CA Buyers?
First time homebuyers in California who purchase a NEW home can combine the state AND federal tax credit for a total of up to $18,000! The federal program information is covered in this previous post. The details on the state credit are given below…
How do you qualify?
- The credit applies to NEW, previously unoccupied California houses and condos purchased as primary residences.
- The home must be owner-occupied for at least two years following the purchase.
- There is no income limit, and you do not need to be a first time homebuyer.
- $100 million are earmarked for the credit, which must be reserved. The credits will be awarded on a first-come first-serve basis.
How much is the credit?
- For homes priced above 100,000 - the credit is $10,000.
- For homes priced under $100,000 - the credit is 5% of the purchase price.
How do you get the money?
- You must reserve the tax credit. The credits will be awarded on a first-come first-serve basis.
- You must then claim it when you file your state tax return.
- You will receive 1/3 of the tax credit each year, for the next three years.
When do I have to purchase the qualifying home?
- The purchase must close between March 1, 2009, and March 1, 2010
- BUT you must reserve the credit, and the money may run out long before March 1st, 2010
References
At this time there is limited information available on California State Websites - California Builders Websites have information…
FAQs About the State New-Home Buyer Tax Credit - CA Building Industry Association
Tags: CA Housing, first time homeowner tax credit, real estate news, Tax Tips
This article was written
Monday, February 23rd, 2009 and is part of the Buyer Tips, First Time Buyers Collection.
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From the Mortgage Modification, Real Estate Finance collection
Some Highlights
On Wednesday President Obama unveiled his plan for the distressed homeowners and the troubled housing market. Final details of the plan will be worked out by March 4th. Called the Homeowner Affordability and Stability Plan, it will apply ONLY to primary residences, and will apply to mortgages that do NOT exceed Freddie conforming loan limits. This is a brief summary of the three main parts to the plan.
Mortgage Refininacing Assistance
This change is intended to assist homeowners obtain lowered mortgage payments by refinancing at today’s lower rates. Homeowners who have a conforming loans owned or guaranteed by Freddie Mac and Fannie Mae will be allowed to refinance their homes even if they do not have 20 percent equity in their home. The U.S. Treasury Dept. estimates that this change will allow nearly 5 million homeowners to refinance into loans with lower rates.
Limitations:
- Doesn’t cover jumbo loans, which many San Diego homeowners DO have, because of the high cost of homes in this area.
- Doesn’t cover loans which are not owned or guaranteed by Fannie Mae or Freddie Mac, which is roughly half of all loans.
- The mortgaged amount may not exceed 105% of the current value of the property. For San Diego homeowners who purchased homes near the market peak with little or no money down, this limitation may prevent them from refinancing under this plan. Some areas in San Diego County have experienced price declines so severe that their mortgaged amounts are well over this limit.
Incentives for Mortgage Modification Assistance
The plan calls for a government subsidy for banks which voluntarily modify mortgages according to specific guidelines which will be finalized in early March. The plan will call for for primary (first) mortgages to be reduced so that monthly payments that do not exceed a 38% debt-to-income ratio. (The cost is to be bourne by the lender.) Total mortgage payments will be reduced to a 31% debt to income ratio. (This cost is to be split by government and lender.) There will be incentives to bank servicers and to homeowners for each modification. Homeowners do not have to be delinquent to participate in the program. The U.S. Treasury Dept. estimates that these changes may enable up to 4 million homeowners to obtain mortgage modifications.
Limitations:
- The program is voluntary for lenders who are not receiving government funds, and past voluntary modification programs have met with limited success.
- The motivation for banks to engage in the voluntary modification of mortgages may depend on a provision allowing bankruptcy judges to require loan modification (commonly called a cramdown). That provision will require legislation by Congress.
- How or whether the program will address second mortgages was not addressed. Second mortgages make the mortgage modification process more difficult.
Strengthen Fannie Mae and Freddie Mac
The intent is to make the purchase of Fannie Mae and Freddie Mac mortgage-backed securities more attractive to investors. The purchase of these securities increases mortgage availability and lowers interest rates, so the Treasurey Dept will purchase an additional $50 billion of Fannie Mae and Freddie Mac backed-securities, which increases their holdings to $900 billion. The Treasury Dept. will also double their Preferred Stock holdings to $200 billion for each entity.
References
Homeowner Affordability and Stability Plan
Obama Proposes Package To Stave Off Foreclosures - Washington Post
President Obama’s Remarks on the Homeowner Affordability and Stability Plan - New York Times
Tags: fannie mae, foreclosure relief, freddie mac, loan modification, mortgage modification
This article was written
Saturday, February 21st, 2009 and is part of the Mortgage Modification, Real Estate Finance Collection.
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From the Real Estate Finance collection
Little Press for Investors
The recently passed stimulus package, and the President’s announcement of a Housing Plan yesterday have garnered tremendous media attention. During this time Fannie Mae announced a major change for owners of investment property which has NOT garnered much attention from the media. On February 6th Fannie Mae changed their policies regarding multiple mortgages to the same borrower. In essence, this means that they will finance up to ten single unit properties, a major increase over the previous limit of four.
These loans are subject to the following guidelines:
- 25 percent downpayment
- Minimum credit score of 720
- No late mortgage payments within the last 12 months
- No bankruptcies or foreclosures in the last 7 years
- 2 years of tax returns showing rental income from all rental properties
- 6 months of PITI reserves on each mortgaged property
- Verification of tax returns (form 4506-T)
Implications for San Diego’s Housing Market
This change will assist in stimulating San Diego’s housing market, which has seen steep price declines in the aftermath of the housing bubble. It’s really great news for experienced investors, although it does little for first time investors. The changes will provide more affordable mortgage rates for seasoned investors. Mortgage rates for the purchase of investment property have been significantly higher than rates for owner-occupied properties, so this change should motivate investors to add to their property portfolios.
References
Updates to Multiple Mortgages to the Same Borrower Policy - Fannie Mae Announcement
The Mortgage Reports - Fannie Mae Rescinds 4 Property Maximum
Tags: fannie mae, impact of fannie mae on housing market, investment
This article was written
Thursday, February 19th, 2009 and is part of the Real Estate Finance Collection.
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From the Buying or Selling Real Estate collection
Public Auction is Friday
The end of February is when the San Diego County Tax Assessor typically auctions off properties with after three to five years of unpaid tax bills. The starting bid is the amount of the unpaid tax bill, which is a very small fraction of the actual market value of the properties. The Auction is to be held Friday February 20th at 9 AM, in Ballroom 20A at the San Diego Convention Center, 111 W. Harbor Drive. You can pre-register for $30 at the Treasurer-Tax Collector’s Office – County Administration Center, Room 162, 1600 Pacific Highway before Friday, or pay $60 at the door on Friday. There will be some great deals, but before you take Friday off from work, there are some drawbacks and details you need know about.
Inconveniences and Drawbacks
Drawbacks: There are a number of drawbacks to purchasing a property at the auction. These sales are NOT for novices. In brief, the drawbacks include the fact that you must pay in cash or certified funds. The list of properties to be auctioned is available online, but the properties aren’t held open for viewing, and any property can be withdrawn or redeemed at the last moment. A buyer receives a “tax deed” which grants title with “exceptions“, leaving the buyer to investigate the title, yet the property can be withdrawn or redeemed at the last moment. In addition, the County is charging a registration fee of $30 to preregister for the auction, and $60 on the day of the auction, yet the property can be withdrawn or redeemed at the last moment. (You may notice a trend here.)
Get the Details
It’s important to read all ALL THE DETAILS on the County Assessor’s website. You should also know that a county transfer tax of $0.55 per $500 of the sale price will apply. There is a one-year statute of limitations to bring an action to overturn a tax sale, and title companies will generally not issue title insurance until after the statute of limitations has expired.
Timeshare Deals
Oddly, the safest purchase a novice investor can make at the tax sale is the purchase of a San Diego County Timeshare. If you’ve been wanting to buy a timeshare in San Diego County, THIS is the most economical way to do so. Timeshares in the communities of Carlsbad , Coronado , Del Mar , Escondido , La Jolla, Oceanside , Pacific Beach , Ramona , San Diego , and Solana Beach may be in the auction. A list of timeshare associations including addresses and phone numbers can be found on the Tax Collectors Website.
Timeshare Warning
I’m not recommending timeshares as a real estate investment, but the way. Selling a timeshare is very difficult, and WILL be at a loss, which is WHY there are so many timeshares available in the auction. Timeshares also come with recurring “maintenance fees” which can seem rather excessive. Be sure to call the timeshare associations to find out what current maintenance fees would be.
References
San Diego County Property Tax Sale Information
Tax-delinquent properties up for sale
County Tax Sales Information for Bidders
San Diego County Tax Sale FAQs
Tags: Auctions, Tax Sale, Timeshares
This article was written
Wednesday, February 18th, 2009 and is part of the Buying or Selling Real Estate Collection.
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From the First Time Buyers collection
The Economic Stimulus Bill
President Obama signed the $787 billion economic stimulus plan into law today during a ceremony in Denver. Was there anything in the stimulus package that might help the San Diego Housing Market? Well, it just might stimulate some renters into becoming homeowners.
The one component in the stimulus package that directly affects the housing market is the “so-called” First-Time Homebuyer Refundable Tax Credit. It’s important to know that the tax credit may apply to you even it it’s NOT your first home! If you haven’t owned a home in three years - keep reading…
What’s a refundable tax credit? When you file your taxes, the amount of the credit is subtracted from the taxes you owed. You are entitled to the entire credit, even if it is more than you owed in taxes. Whether you will receive a check from the IRS depends on the amount of tax withheld over the year. (Example: If you owed $6,000 in taxes, had $6,500 in withholdings, you would normally receive a tax refund of $500. With the $8,000 tax credit, you would receive an IRS refund of $8,500.)
How much is the credit? It’s 10% of the purchase price up to a maximum of $8,000. So the purchase of any residence over $80,000, will qualify for the full $8,000 credit.
Do I have to pay this back? IF you sell the property in less than THREE years, you must pay the credit back when the home sells. IF you keep the property for longer than three years, you DO NOT have to pay this back. (This is a MAJOR change from the The First Time Homebuyers Credit passed last July which was more like a 15 year loan with no interest.)
Who can claim the tax credit? There are two criteria you must meet to claim this.
- You may not have owned a single family residence for the last three years. For married couples - neither spouse may have owned a single family residence.
- There is an income limit. For individuals, the credit phases out for gross incomes between $75,000 and $95,000. For those filing joint returns it will phase out for incomes between $150,000 and $170,000. (Phasing out means the total credit declines gradually (linearly) from the full credit to zero between those limits.)
What types of homes qualify for the tax credit? Any single family U.S. residence that is used as a principal residence qualifies. It can be attached or detached.
How long is the credit available? The program applies to any home purchase where the closing date is between January first and December first of 2009. So if you’ve already purchased a home and your closing date was in 2009, this transaction would be eligible if all the other criteria are also met. If you qualify for this credit, be careful to choose a closing date that doesn’t fall to close to the cutoff date of December 1, 2009! Closing dates can slip, and that would be an terrible loss!
How do I get the credit? You simply the credit when you file your taxes for the 2009 tax year.
Tags: first time homeowner tax credit, Tax Tips
This article was written
Tuesday, February 17th, 2009 and is part of the First Time Buyers Collection.
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