Posted To: MBS Commentary

In a week that promised to be eventful, MBS played the volatility role with the rest of the market, but left it's benchmark's in the dust when all was said and done. The measure of the secondary MBS market that takes into consideration the prepayment speed weighted yields as well as the production mix of MBS volume and expresses that notional yield at parity fell to 4.258 (that's secondary market current coupon, btw…). With the 10yr yield ringing the 3.5 bell right on the nose, that brought spreads between MBS and Tsy's to an eye-wateringly tight 75.9bps! They started the week at an already tight 87.9bps… Though I could try, I'm not sure there's much I could do to convey just how tight these spreads are… Well, I guess a chart might do… This is the current coupon…(read more)

This morning, President Barack Obama signed into law H.R. 3548 bill, The Unemployment Compensation Extension Act that includes the extension, modification and expansion of the first time home buyer tax credit.

President Obama said, “Although it will take time and it will take patience, I am confident that our economy will recover. I am confident that we’re moving in the right direction. And I promise that I won’t rest until America prospers once again.”
The first time home buyer tax credit – as it existed – has had a significant impact on the local Arizona housing market.

J. Craig Anderson, reported the following for The Arizona Republic:

Even before the deadline loomed, Arizona had the third-highest number of tax-rebate applications per capita among the 50 states, according to a recent report by the U.S. Government Accountability Office.
A GAO report issued Oct. 22 said that as of late August, 38,130 Arizona home buyers had claimed either the $8,000 tax rebate or a $7,500 deferred tax credit offered in 2008.

In all, the report said, Arizona tax-rebate claims totaled nearly $276 million, an average of $42 per resident. The No. 1 spot was held by Nevada, which had claimed an average of $56 per resident.

Nationally, about $10 billion worth of claims had been filed as of August by about 1.4 million home buyers. Those numbers are expected to be much bigger by the time Americans file their next batch of tax returns.

In his article, Mr Anderson shares that Phoenix-area real estate analysts believe that the extended and expanded home buyer tax credit “could jump-start the market for higher-priced homes and help sustain the booming low-end housing market”.

Steve Lines
Authorized FHA Loan Consultant and Co-Branch Manager
Academy Mortgage
Serving Mesa, AZ and all of the Phoenix Metropolitan Area
480-344-3662 (direct)
480-329-3346 (mobile)
slines@bestfhalender.com (email)
www.bestFHAlender.com (my blog)
www.twitter.com/stevelines
www.linkedin.com/in/stevenlines

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The $8,000 First Time Home Buyer Tax Credit has been extended into 2010 and existing homeowners may be able to take advantage of a $6,500 Tax Credit as well.  

In addition to extending the tax credit of up to $8,000 through June 30, 2010, the extension  also opens up opportunities for others who are not buying a home for the first time.

So Who Gets What?
The program that has existed for FTHBs remains intact with the one exception that more people are now eligible based on an increase in the amount of income someone may now earn.

Additionally, the program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Deadlines
In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

Higher Income Caps in Effect
The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible.

Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

Maximum Purchase Price
Qualifying buyers may purchase a property with a maximum sales price of $800,000.

First-Time Homebuyer Tax Credit – Frequently Asked Questions
Here are answers to some commonly asked questions about the tax credit.

What is a tax credit?
A tax credit is a direct reduction in tax liability owed by an individual to the Internal Revenue Service (IRS). In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual is owed. Unlike the tax credit that existed in 2008, this credit does not require repayment unless the home, at any time in the first 36 months of ownership, is no longer an individual’s primary residence.

What is the tax credit for first-time homebuyers (FTHBs)?
An eligible homebuyer may request from the IRS a tax credit of up to $8,000 or 10% of the purchase price for a home. If the amount of the home purchased is $75,000, the maximum amount the credit can be is $7,500. If the amount of the home purchased is $100,000, the amount of the credit may not exceed $8,000.

Who is eligible for the FTHB tax credit?
Anyone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title, is eligible. This applies both to single taxpayers and married couples. In the case where there is a married couple, if either spouse has owned a primary residence in the last 36 months, neither would qualify. In the case where an individual has owned property that has not been a primary residence, such as a second home or investment property, that individual would be eligible.

As mentioned above, the tax credit has been expanded so that existing homeowners who have owned and occupied a primary residence for a period of five consecutive years during the last eight years are now eligible for a tax credit of up to $6,500.

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Posted To: MBS Commentary

In breaking news, it has been determined that today's NFP report was all an elaborate hoax that was never intended to have any effect on the markets beyond today. Or at least that's how the headline could read at the top of the list of "things that would not surprise us." What do I mean? Nothing more than this: After all the sturm and drang of AM volatility, the market continues in the exact same direction suggested by it's previous trends, which would have been for a reversal at 3.56 (yesterday) and a continuation of the rally into today depositing us somewhere in the neighborhood of 3.5… For MBS, just an extension of previous trends as well (yesterday we warned against perceiving the rally in MBS as an indication of reversing downtrends from the beginning of the week…(read more)

After weeks of reporters jumping the gun and claiming several different versions of the First Time Home Buyer extension/expansion program had already been approved, we now have a finalized bill signed into law by President Obama on November 6, 2009.  Not only has the original $8,000 First Time Homebuyer Tax Credit been extended through to April 30, 2010, but existing California home owners who purchase again (move-up buyers), who qualify, will get their pockets stuffed with $6,500 cash when they purchase a home.  Move-up buyers will not be required to sell their existing home to qualify for the credit. 

To receive a Priority Buyer Status Approval from a Professional Loan Officer on a California No Down Payment Home Loan, FHA ½% Down Payment Home Loan, or a traditional FHA 3.5% Down Payment Mortgage, call me at (951) 332-7864 or complete a quick loan application on my website @ www.9651MortgageCoach.com.  

 
What I’m most excited about is that California’s Military personnel who are or were deployed overseas for a minimum of 90 days in 2008 or 2009, will have until April 30, 2011 to claim the tax credit.  This is a great additional benefit for our Military personnel who live in San Diego, Riverside, San Bernardino, Orange, and Los Angeles Counties. 

Here are Highlights and/or Changes of the New Tax Credit Legislation:

 • The home buyer tax credit expansion of $6,500 for existing California homeowners is available to those who have lived in their current residence for a consecutive five-year period

• The new bill also raises the qualifying income limits to $125,000 for single taxpayers and $225,000 for joint taxpayers, from the current $75,000 and $150,000

• The maximum allowed home purchase price is $800,000

• A home buyer must have an executed sale agreement in hand by April 30 and close escrow by June 30, 2010

• Anyone who collects either tax credit and sells the home within three years of buying must return the refund

• Buyers can’t purchase the home from a parent, spouse, or child

• Buyers can’t purchase the home from an entity in which they’re a majority owner

• Buyers can’t acquire the home by gift or inheritance

• All parties to the purchase must meet eligibility requirements

• The credit is 10 percent of the purchase price of the home, with a maximum available credit of $8,000 for either a single taxpayer or a married couple filing a joint return, but only half of that amount for married persons filing separate returns

And remember, the First-Time Home Buyer program grants a tax credit as opposed to a deduction.  This means that a tax filer will receive an actual check from the IRS/U.S. Treasury for $8,000 if he eligible for all $8,000 available under the new law.

The complete list of qualifying criteria is posted on the IRS website.  Be sure to review it with a tax professional to determine your eligibility.  Then mark your calendar for April 30, 2010.  That’s only five months away.

To explore home loan options with a Licensed Professional Loan Officer (that’s me), call (951)332-6864, email brad(at)951MortgageCoach.com, or visit my website www.951mortgagecoach.com

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Posted To: MND NewsWire

It is finally official. The homebuyers' tax credit has been extended to April 30, 2010. President Barack Obama approved the extension as part of a $24 billion economic stimulus bill signed Friday. The bill also includes an extension of unemployment benefits to the longtime jobless and tax credits for some businesses. The housing tax credit portion of the bill extends the $8,000 tax credit for home buyers who are purchasing their first home from the current November 30 deadline and expands the program to offer a credit of $6,500 to other homeowners who have lived in their current home for at least five years and are seeking to relocate. Another modification to the original legislation raises the income limits for program participation from $75,000 for a single purchaser to $125,000 and from…(read more)

Posted To: MND NewsWire

Citing 22.0 billion of credit-related expenses, Fannie Mae Thursday night announced it lost a net $18.9 billion in the third quarter of 2009. Losses in the second quarter totaled $14.8 billion and $30 billion in the third quarter of 2009. The third quarter loss resulted in a net deficit of $15 billion as of September 30 and prompted the Acting Director of the Federal Housing Finance Agency (FHFA) to request an additional infusion of that amount from the Department of the Treasury. FHFA has asked that the $15 million be made available by December 31. The loss on a per share basis was $3.47, a substantial increase from the $2.67 loss posted last quarter, but a vast improvement over the $13 per share loss during the third quarter of 2008. Fannie reported net revenues of $5.95 billion in the third…(read more)

Posted To: MBS Commentary

We'd expect the wake of a much-anticipated NFP print to be volatile… That assumption isn't really a big leap of faith for most market watchers, and indeed that's what we're seeing. But as the volatility decreases, we're seeing suggestions of both stability and correction. Traders are preparing to cash in… So should you… Let's discuss the chart for a moment… Generally, today is a green one for MBS. I wouldn't even pay much mind to the outlying levels following NFP as those are merely the more violent death throws of the volatility that almost always peaks and begins to wane on the printing of this report. 101-00 looks reasonably supportive in a technical sense, and of course it always carries the "round number" psychological impact as well. Even…(read more)

Posted To: Voice of Housing

The House Financial Services Committee’s systemic regulator bill, HR 1754 , is hung up this month on the proposed risk retention requirements. The proposal requires creditors to retain 10 percent or more of credit for securitized loans and let regulators adjust that level to between 5 percent and 10 percent. Financial institutions prefer a 5 percent base. The argument over the specific number will be resolved. The larger issue — the need for “skin in the game” in the new mortgage lending paradigm — no one disputes. Risk retention will establish a necessary sense of ownership and responsibility at the origination end of the home loan process. But any risk retention debate is incomplete unless policymakers give equal weight to time to the need for transparency. One doesn’t…(read more)

Posted To: Mortgage Rate Watch

Mortgage rates continued to hold steady yesterday as prices of mortgage backed securities slowly inched higher yesterday. AQ and MG were discussing the supply and demand dynamics of the MBS market yesterday, citing several reasons for the stable range being held by MBS coupons, even as benchmark 10 year Treasury rates held near recent highs. HERE is an explanation of the logic behind MBS stability. A few lenders who were pricing loans conservatively in the morning eventually repriced for the better by afternoon. Before we get into today’s data, I want to give a quick update on the First Time Home Buyer Tax credit. Two days ago the Senate passed a bill extending the credit and yesterday, yesterday the House of Representatives also passed the bill which in effect extends the tax credit…(read more)