Courtesy of Greg Roberts, MBA
The Roberts Group
CS Financial Mortgage Banking
www.gregroberts.com

The real estate downturn that dominated 2009 leaves many on unfamiliar ground at tax time so here are some useful tax tips:

On Foreclosure: “Homeowners here are really getting screwed. If they do what’s called a deed in lieu of foreclosure, their credit gets slammed, just like a foreclosure, and then, even if the bank forgives you, the IRS does not. Say you borrowed $500,000 and the house now is only worth $300,000. You would get a deficiency 1099 from the IRS for that difference. Doesn’t make sense, but that’s the rule.”

“The idea was so people wouldn’t walk away from their homes, but the government never thought we would be in this situation. You are taxed as if you had $200,000 in a capital gain sale, at 15%. In certain situations you can get relief on that, but you have to prove hardship and everything else.”

On Rental losses: For rental real estate, let’s say you make decent money, say $150,000 of adjusted gross income. If you have rental losses, you can’t find a renter because there is so much available property out there now, you can’t take a loss, but you can carry it forward to a year you do not have that AGI.” Read the rest of this entry »

The rate, which has hovered around that mark since September, fell to 4.97% this week from 5.05% last week

E. Scott Reckard
The Los Angeles Times

The typical rate offered by lenders on 30-year mortgages slipped back below 5% this week, Freddie Mac said Thursday.

The mortgage giant’s weekly survey found that the average rate available on 30-year fixed-rate loans fell to 4.97%, down from 5.05% last week, with an average of 0.7% of the loan balance paid in upfront fees known as points.

The 30-year rate has bumped around the 5% level since September, falling to a record low of 4.71% in a Freddie survey in December. This year it has been above 5% in six of the weekly surveys and below seven times.

Not since the 1950s have rates remained so low for so long, said Greg MacBride, a senior financial analyst at Bankrate.com, citing data from the National Bureau of Economic Research.

The historically low rates have been engineered by the federal government in response to the deep recession.

Freddie Mac’s survey, conducted Monday through Wednesday, asks lenders to report for each loan type the interest rate they are offering, along with the points they are charging for that rate, for borrowers with good credit and at least a 20% down payment or home equity.

The 15-year fixed-rate mortgage this week averaged 4.33% with an average of 0.7% in points, down from 4.4% a week ago.

The five-year Treasury-indexed hybrid adjustable-rate loan, which has a fixed rate for the first five years, averaged 4.11% with 0.6% of the loan balance in points. The rate averaged 4.16% a week earlier.

Mortgage professionals say well-qualified borrowers often negotiate slightly better deals than lenders’ reported offering rates.

The National Assn. of Realtors index of deals under contract fell to 90.4 from 97.8 in December. It’s 12.3% higher than January 2009.

By Alejandro Lazo
The Los Angeles Times

In another sign that the U.S. housing recovery might be on a shaky foundation, the number of homes placed under sales contract fell 7.6% in January, according to a national index.

The National Assn. of Realtors said Thursday that its pending home sales index, a forward-looking indicator based on contracts signed in January, fell to 90.4 from an upwardly revised 97.8 in December.

That remains 12.3% higher than January 2009, when it was 80.5.

The group blamed the weather for the month-over-month decline.

“January pending sales, though still higher than one year ago, remain much lower than expected given that a large number of potential buyers are eligible for the expanded home buyer tax credit,” Lawrence Yun, chief economist for the Realtors group, said in a statement. “Moreover, the abnormally severe and prolonged winter weather, which affected large regions of the U.S., hampered shopping activity in February.”

The January results were the lowest since April. The biggest month-over-month drop came in the West, where the index declined 13.2%. The index fell 8.9% in the Midwest, 8.7% in the Northeast and 2.1% in the South.

By Kenneth R. Harney
The Los Angeles Times

If you plan to take out a mortgage or refinance any time soon, you might want to hear this blunt message from federal officials: Don’t fly blind. When you’re shopping among competing lenders for the best loan terms and fees, make sure you know which quotes come with a guarantee and which do not.

Depending upon how loan officers provide their quotes upfront — on an informal “work sheet” that carries no federal consumer protections or on a new, three-page “good-faith estimate” mortgage shopping tool that comes with rock-hard guarantees — there could be a world of difference.

A loan officer might quote you fees that are low-balled by hundreds of dollars on an informal work sheet to get your business. But if the quotes are made on a good-faith estimate, they’ve got to be accurate because, under federal rules that took effect Jan. 1, any significant excesses must come out of the lender’s own wallet at closing.

This month the Department of Housing and Urban Development brought together representatives of the highest-volume mortgage lenders in the country — who originate a combined 80%-plus of all new home loans — to review the agency’s reformed good-faith-estimate and closing documents.

Among the issues discussed: the widespread use of informal work-sheet estimates to quote loan shoppers mortgage rates and closing fees. HUD does not object to lenders using work sheets to give casual shoppers a rough idea of what they’ll pay. But the agency says it wants lenders and loan officers to make clear to customers that work sheets are not good-faith estimates, and they are not guaranteed. Read the rest of this entry »

Brent T. White, a University of Arizona law school professor, says that it’s in the homeowners’ best financial interest to stiff their lenders and that it’s not immoral to do so.

By Kenneth R. Harney
The Los Angeles Times

Reporting from Washington - Go ahead. Break the chains. Stop paying on your mortgage if you owe more than the house is worth. And most important: Don’t feel guilty about it. Don’t think you’re doing something morally wrong.

That’s the incendiary core message of a new academic paper by Brent T. White, a University of Arizona law school professor, titled “Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis.”

White contends that far more of the estimated 15 million U.S. homeowners who are underwater on their mortgages should stiff their lenders and take a hike.

Doing so, he suggests, could save some of them hundreds of thousands of dollars that they “have no reasonable prospect of recouping” in the years ahead. Plus the penalties are nowhere near as painful or long-lasting as they might assume, he says.

“Homeowners should be talking away in droves,” White said. “But they aren’t. And it’s not because the financial costs of foreclosure outweigh the benefits.”

Sure, credit scores get whacked when you walk away, he acknowledges. But as long as you stay current with other creditors, “one can have a good credit rating again — meaning above 660 — within two years after a foreclosure.” Read the rest of this entry »

The meltdown sent interest rates soaring and availability shrinking, but rates are declining and lenders are more willing to make loans that top the limits for Freddie Mac, Fannie Mae and the FHA.

By E. Scott Reckard
The Los Angeles Times

Phil Kelly had 18 more months to go before the fixed rate on his $2.5-million mortgage became adjustable.

But when Kelly, a former computer executive living in Rancho Santa Fe, learned he could knock his interest rate down by a full percentage point by refinancing, he went for it.

“It’s always tough to pick the exact bottom or top of anything.” Kelly said. “But I think this rate is about as low as you’re going to get.”

Rates on jumbo mortgages - loans of more than $729,750 in counties with the highest-cost housing - shot up during the financial crisis as lenders and loan investors shunned anything tainted with even a whiff of higher risk. Rates on big mortgages were especially high relative to this on smaller loans.

But in a boon for borrowers in California’s expensive housing markets, the jumbo-loan market is starting to return to normal.

Two weeks ago, the average interest rate on 30-year fixed-rate jumbos dropped to 5.79%, a nearly five-year low, according to rate tracker Informa Research Services of Calabasas. It edged up to 5.88% on Tuesday, still very attractive by historical standards. The average is down from well above 7% in late 2008.

Rates are even lower on so-called hybrid adjustable mortgages, on which the rate is fixed for, say, five years and then adjusts annually.  Kelly’s new loan is a five-year hybrid adjustable identical to his old one, except that he’s paying about 5%, down from 6%. Read the rest of this entry »

By Alejandro Lazo
The Los Angeles Times

But January’s year-over-year increase to $271,500 is a 6.1% drop from December. Total sales climb about 1% from a year earlier.

Home sale prices in Southern California showed fresh strength in January, bouncing 8.6% from the same month one year earlier - a period when the market was inundated with steeply discounted bank-owned properties.

But compared with a particularly strong December, the median fell 6.1% to $271,500 in January, ending eight consecutive months of price appreciation or stability in the Southland, MDA DataQuick, a San Diego real estate research firm, said Tuesday.

The month-to-month decline was attributable in part to the higher percentage of cheaper Inland Empire homes that sold in January compared with December as buyers in pricier locales stopped searching during the holidays and investors and first-time buyers made up a larger share of shoppers.

“The [January] numbers reflect, for the most part, people who would be out shopping in the middle of the holidays anywhere from late November to early January,” DataQuick analyst Andrew LePage said. “So it doesn’t surprise me that the concentration shifts a little bit back toward investors and first-time buyers, who probably feel the most urgency to snag what they consider a deal. A lot of other potential buyers would have been focused on other things during the holidays.” Read the rest of this entry »

By Jim Puzzanghera
The Los Angeles Times

About 4 million U.S. homeowners are 90 days or more delinquent on their loans or in foreclosure proceedings, Moody’s Economy.com says. A federal loan modification program is helping a relative few.

Reporting from Washington - Experts fear that a new wave of foreclosures will hit this year as prolonged unemployment makes it difficult for millions of homeowners to pay their mortgages - and many of them aren’t likely to get much help from a federal program aimed at keeping them in their houses.

Banks participating in the Home Affordable Modification Program, announced a year ago this week by President Obama, have been slow to turn temporarily reduced mortgage payments into permanent ones.

“The overarching sense is that the mortgage modification process has not worked that well,” said Bert Ely, an independent banking consultant.

Obama administration officials acknowledge that the $75-billion program, which offers banks cash incentives to reduce payments, has had growing pains, and they said they were considering revisions to make it more effective.

Still, the program is expected to show continued progress when data from January are released Wednesday after a strong push by Treasury Department officials to get banks to make more of the modifications permanent.

For example, Bank of America Corp., the nation’s largest servicer of mortgages, said Tuesday that it had increased the number of permanent mortgage modifications to 12,700 last month from 3,200 in December. BofA said an additional 13,700 permanent modifications were in their final stage.

But that’s a drop in the bucket considering that BofA holds about 1 million mortgages that are at least 60 days delinquent. About 4 million homeowners nationwide are 90 days or more delinquent on their mortgages or in foreclosure proceedings, according to Moody’s Economy.com, which analyzes data from credit reporting company Equifax Inc. Read the rest of this entry »

By E. Scott Reckard
The Los Angeles Times

The average interest has remained just above or just below 5% so far this year, but the end of Federal Reserve mortgage bond purchases is expected to bump up rates about half a percentage point.

Average interest rates for traditional 30-year fixed mortgages have fallen below 5% again, Freddie Mac said Thursday.

The giant mortgage buyer’s weekly survey, conducted Monday through Wednesday, pegs the average rate nationally at 4.97%, with 0.7% of the loan balance on average paid in upfront charges, or points.

Last week, 30-year rates averaged 5.01%. That continues a trend so far this year in which the average has come in either just above or just below 5%.

The survey asks 125 lenders across the country the rates they are offering to borrowers with good credit and a 20% down payment or at least 20% equity for those refinancing their home loans.

The approaching end of Federal Reserve purchases of Freddie Mac and Fannie Mae mortgage bonds is expected to result in rate increases later this year. The Mortgage Bankers Assn. estimates the typical interest rate might rise by half a percentage point.

If the average 30-year fixed rate rose half a point to 5.5%, that would still be unusually low by historical standards.

Nonetheless, such an increase would make home purchases more expensive and could put an end to a continuing mini-boom in refinancings, which have accounted for about two-thirds of home loan applications this year. Read the rest of this entry »

The average rate on a 30-year fixed mortgage was 5.01% this week, up from 4.98% last week, mortgage company Freddie Mac said.

The average rate on 15-year fixed mortgages rose to 4.40% from 4.39%. Five-year adjustable-rate mortgages averaged 4.27%, up from 4.25%. Rates on one-year adjustable-rate mortgages fell to 4.22% from 4.29%.

The rates do not include add-on fees known as points. The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 point for 30-year and 15-year mortgages. It averaged 0.6 point for five-year loans and 0.5 point for one-year loans.