HUD AWARDS $49 MILLION IN GRANTS TO HELP LOW-INCOME FAMILIES RECEIVE JOB TRAINING, EMPLOYMENT

WASHINGTON - U.S. Housing and Urban Development Secretary Shaun Donovan announced today that public housing agencies across the U.S., Guam and Puerto Rico will receive nearly $49.3 million to provide low-income people with the necessary job training to put them on a path toward self-sufficiency. Funded through HUD's Housing Choice Voucher Family Self-Sufficiency Program (HCV/FSS), the grants allow public housing agencies (PHAs) to work with welfare agencies, schools, businesses, and other local partners to develop a comprehensive program to help participating individuals develop the skills and experience to enable them to obtain jobs that pay a living wage. "In today's economy, this program is needed more than ever to help families obtain the skills that lead to jobs," said Donovan. "On the heels of President Obama signing the jobs bill that will boost job creation, I'm pleased HUD is providing this funding to local housing authorities that will keep caseworkers on the job to assist families in HUD's voucher program find employment." Local housing authorities use the funding to hire family self-sufficiency coordinators to link adults in the Housing Choice Voucher program to local organizations that provide job training, childcare, counseling, transportation and job placement. These housing authorities can also hire coordinators to help families get homeownership counseling. Participants in the HCV/FSS program sign a contract that requires the head of the household will get a job and the family will no longer receive welfare assistance at the end of the five-year term. As the family's income rises, a portion of that increased income is deposited in an interest-bearing escrow account. If the family completes its FSS contract, the family receives the escrow funds that it can use for any purpose, including a down payment on a home, paying educational expenses, starting a business or paying back debts. ### HUD is the nation's housing agency committed to sustaining homeownership; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development ad enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet atwww.hud.gov and espanol.hud.gov. HCV FAMILY SELF-SUFFICIENCY 2009 FUNDING ALASKA $131,116 NORTH CAROLINA $1,628,128 ALABAMA $742,108 NORTH DAKOTA $201,235 ARKANSAS $765,627 NEBRASKA $308,688 ARIZONA $774,491 NEW HAMPSHIRE $323,414 CALIFORNIA $6,267,830 NEW JERSEY $1,600,629 COLORADO $615,254 NEW MEXICO $554,568 CONNECTICUT $648,316 NEVADA $417,280 FLORIDA $2,100,642 NEW YORK $2,531,924 GEORGIA $906,867 OHIO $2,520,197 GUAM $54,209 OKLAHOMA $433,952 HAWAII $574,348 OREGON $1,583,836 IOWA $930,884 PENNSYLVANIA $1,478,680 IDAHO $481,284 PUERTO RICO $128,063 ILLINOIS $1,458,605 RHODE ISLAND $769,434 INDIANA $1,255,382 SOUTH CAROLINA $404,027 KANSAS $393,733 SOUTH DAKOTA $144,478 KENTUCKY $1,202,165 TENNESSEE $875,531 LOUISIANA $337,553 TEXAS $2,469,020 MASSACHUSETTS $2,099,246 UTAH $541,955 MARYLAND $1,247,410 VIRGINIA $1,271,975 MAINE $347,189 VERMONT $336,993 MICHIGAN $1,097,981 WASHINGTON $1,121,025 MINNESOTA $655,885 WISCONSIN $368,744 MISSOURI $1,013,785 WEST VIRGINIA $277,049 MISSISSIPPI $740,197 WYOMING $34,000 MONTANA $173,963 Total $49,340,895

30 days and counting: Homebuyer tax credit expires

 Attention shoppers: You have barely a month left before the homebuyer tax credit expires. But depending on where you live, you might not want to rush out to buy.

First-time homebuyers may qualify for up to $8,000, while those who are trading up could get as much as $6,500. But either way, buyers have to ink sales contracts by the end of April and close before July 1 to see the refund.

There is little sentiment for continuing this program, especially because many consider the latest iteration's results to be disappointing. Even the Senate's biggest proponent of the homebuyer tax credit, Johnny Isakson, R-Ga., is ready to let it end.And this is absolutely, positively your last chance to claim the credit. (Probably.) So don't wait, thinking the credit will be extended for a third time.

"He has no plans to introduce legislation to extend the credit," said Isakson's spokeswoman. "Part of the benefit of the tax credit was the urgency its sun-setting generated."

That urgency was less pronounced after the latest extension, which was enacted last fall. While the first version, which just covered first-time homebuyers, netted huge sales jumps, the real estate marketslumped over the winter and early spring.

That may be because some people believed that Congress would just keep adding time to the game clock, according to Nicolas Retsinas, director of Harvard's Joint Center for Housing Study. That could have kept them home by the fireside instead of out house hunting.

Expect long delays in getting your $8,000 tax credit

"The credit's influence and impact has waned considerably," said Retsinas.

"You got a lot more bang for the buck on the first go round," added Mike Larson, a real estate analyst with Weiss Research. "Most people acted on the presumption that the credit was going away."

Should you rush?

Any house hunter considering whether to hurry a purchase to take advantage of the credit should consider where they live. There are many places where home values are projected to fall steeply over the next few months, including Los Angeles, Phoenix, Minneapolis, Washington, D.C., and most of Florida.

Take someone shopping for a typical single-family home in the Miami metropolitan area. The median price there is about $215,000 and a qualified first-time homebuyer would pay about $207,000 after the credit is factored in.

But prices in Miami are likely to fall 22.5% this year, according to projections by Fiserv and Moody's Economy.com. So by waiting a few months you could nail a $48,000 price cut -- a much better deal than the tax credit..

On the other hand, some cities are expected to post record price gains this year, including Eugene, Ore.; Napa, Calif.; Charleston, S.C.; and Cheyenne, Wyo. Buyers in those markets would receive a double benefit by making their purchases happen this month.

Of course, there's no guarantee that the forecasts will be accurate, but they're certainly something consumers should consider.

Who's eligible

Not every buyer qualifies for the credit. Here are some guidelines:

• Homebuyers who have not owned a home for the past three years may earn up to $8,000 or 10% of the purchase price, whichever is lower.
• Buyers who have owned a home for five consecutive years of the past eight qualify for up to $6,500 in credits.
• There are income limits of $125,000 for single taxpayers and $225,000 for couples.
• Anyone paying more than $800,000 for the home cannot claim the credit.

There's a prohibition on claiming the first-time homebuyer credit if either member of a couple owned a home within the three-year period. They can claim the existing homebuyer credit.

Homebuyers who are under 18 or are listed as dependents on the tax returns of others don't qualify. The home must be kept at least three years.

The credit may be claimed on 2009 taxes, even if the return was already filed. Just submit an amended return.

Note that buyers get the full amount of the credit they're due even if that exceeds the amount of taxes they owe. If you're a first-time buyer and your total tax bill for the year is $6,000, you get all that back plus another $2,000. 

Visit www.themortgagemark.com if you have more questions or email mwilkins@capitalfmc.com

Major FHA Changes Effective April 5th - Does This Mean You Should Buy Sooner?

Major FHA Changes Effective April 5th - Does This Mean You Should Buy Sooner?

There's been a lot of discussion on this site about the upcoming changes to Federal Housing Administration loans that will be effective later this year. To recap, the reason for the changes is to strengthen the FHA insurance fund's capital position. This fund, which is legally mandated to hold 2% of all outstanding insured loans in reserve, had recently dropped to 0.53% on the unusually large claim volume that has resulted from the housing crisis. To address this shortfall, FHA has announced a few steps, among them increasing its insurance premiums to bring in more cash, and tightening underwriting requirements to reduce claims.

These challenges are forcing FHA to make changes to its loan program which will especially affect First Time Homebuyers. Please follow with me for a discussion of these changes.

Specifically, on April 5th, 2010, FHA will implement an increase in its upfront Mortgage Insurance Premium to 2.25% from 1.75%. This represents a significant increase in the premiums that will be collected with each closing, however borrowers will initially be insulated from this, as FHA guidelines allow this premium to be financed into the loan. On a net $150,000 loan, the difference in premium would be $750, which translates into $4.26 per month at a 5% interest rate over 30 years. Most buyers won't even blink at a $4 per month difference in payments.

Legislation is in the works to shift a part of this rate increase from the upfront MIP to the monthly MIP. While the exact details remain to be seen, there are two rumored proposals I have seen:

1. Decrease upfront MIP to 2.0% while increasing monthly MIP to .8% per year
2. Decrease upfront MIP to 1.0% while increasing monthly MIP to .9% per year

Of these proposals, the 1st is much more likely to go forward, as the purpose of the change in premium is for FHA to rebuild its gutted reserve fund. Under the 2nd option, it will not collect more than under the current 1.75%/.55% system until the 4th year. Considering that FHA upfront premiums have historically been as high as 3.8%, the current rates are not as out of line as they might seem. The potential change does have a significant effect on qualification, though. For the net $150,000 loan previously discussed, at a 5.5% interest rate over 30 years, here's what the different options look like:

Today April 5th Proposal 1 Proposal 2

MIP Rates (UF/Annual) 1.75%/0.55% 2.25/0.55 2.0/.8 1.0/.9

Total loan $152,625 $153,375 $153,000 $151,500

Monthly Payment $936.54 $941.14 $970.72 $973.83

As previously mentioned, the upfront MIP change has a nearly meaningless effect on payments. A borrower who qualifies today needs only $11 per month in additional income to qualify in April. This difference becomes much more significant if one of the two proposals goes through, as a buyer will need $83 additional monthly income to buy the same house. Put it another way, and that $37/month difference costs the buyer about $7000 in maximum approval level. This does make a difference!

Beyond cost differences, credit requirements for FHA loans are changing. Historically, HUD hasn't set a minimum credit score for FHA loans, but effective April 5th a 620 minimum FICO score will be required to finance at the maximum 96.5% loan-to-value ratio. This changes a few things. First, it clearly sets a guideline where none had previously existed. Second, by setting a minimum, it is likely we may see lenders begin to require a credit score higher than that minimum. It has been challenging, if not impossible, to get an FHA mortgage for a client with a credit score below 620 for nearly a year now, as lenders imposed policies stricter than HUD minimum requirements. If banks continue to impose stricter standards, a 660 credit score may become more the norm. What this means is that borrowers on the edge could be left out in the cold when this goes through.

In addition to the 620 score for maximum financing, HUD also announced a 580 score would be required for 90% financing. I feel that the impact of this will be minimal, as borrowers with 580 scores present a greater risk than banks are willing to accept, even with FHA insurance.

Requirements for use of a seller concession to pay closing costs will change, too. Effective April 5th, maximum seller concessions will be reduced from 6% to 3% of the home's purchase price. While buyers of higher priced homes, usually $150,000 and more, will likely be able to have most of their closing costs paid by the seller, buyers of lower priced homes will see a meaningful increase in out of pocket expenses. 3 years ago, with a down payment gift program and seller concessions, a buyer could purchase with no own funds invested. With the reduction in seller concessions coming, the required investment will increase substantially.

The Verdict: Who should buy before April 5th?

If you're going to buy this year, there are three reasons why you have to move quickly to buy before April 5th:

1. Tight budget: if the MIP changes might cause you to not qualify
2. Lower credit score: if you're at 625, you might not qualify if requirements increase
3. Limited savings: if you only have just enough to purchase today, you won't in the future.

First-Time Homebuyers, in particular, are likely to be affected by these changes, as many are spending a larger part of their savings and monthly income to buy a home than experienced homeowners. In addition, all buyers wishing to avoid the increase in the Upfront Mortgage Insurance premium should accelerate their purchase.

There are instances where a purchase should be delayed, though. If your lease is expiring after July and carries substantial penalties, that could present a problem. Move-up buyers hoping to get the $6500 tax credit, but who will be short of the 5 year requirement until after April 5th may benefit from waiting. In some cases employment issues may make waiting a sensible option.

If you have questions about a specific scenario, please comment below or contact me directly on my cell phone at (800) 701-1775.

www.themortgagemark.com

8K FTHB Tax Credit is expiring Soon!!

Frequently Asked Questions
About the First-Time Home Buyer Tax Credit

The Worker, Homeownership, and Business Assistance Act of 2009 has extended the tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence. The tax credit now applies to sales occurring on or after January 1, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify.

For sales occurring after November 6, 2009, the Act establishes income limits of $125,000 for single taxpayers and $225,000 for married couples filing joint returns.

The income limits for sales occurring on or after January 1, 2009 and on or before November 6, 2009, are $75,000 for single taxpayers and $150,000 for married taxpayers filing joint returns.