Michele's Blog

The President is either receiving an early Christmas present for 2012, or maybe it is a late present from 2011, either way he has to be truly loving what is happening in the economy. As I have written before, the presidential campaigning is super dirty this year and is only going to get worse. What the President must be excited about is that there is no disputing the facts that the economy is improving. Whether you believe he is the reason for it or not, the President gets to ride the wave of good fortune. The question is will the wave last long enough for him to win re-election? (Only time will tell)

This week, almost every piece of economic data is showing signs of recovery. From housing, to manufacturing, to inflation, it has all been good news this week.

Mortgage rates continue to remain ridiculously low and last week both mortgage applications for purchases and refinances jumped a healthy 10.3% and 26.4% respectively. Many believe that the low rates and combined with the end of the holiday season, are the catalysts to moving buyers back into the market. Real estate and mortgage professionals around the country are reporting significant increases in borrower and buyer activity.

Activity in new home sales is picking up dramatically based on the Home Builders Housing Market Index. The month of December is showing the best reading in four and a half years and it is also the 4th straight month of improvement since the low of September.

Housing Starts dipped in December, which is not uncommon during the holiday season, however the overall pace remains somewhat healthy. In addition, what is quite encouraging is that permits for new construction continue to be heading in the upward direction.

Inflation on the wholesale and retail levels continues to remain virtually non-existent. We had some jumps last year which began raising concerns about rising inflation, however at this time the upward trend has stopped. Energy prices remain well under control and in fact have come down recently. The abnormally warm winter, especially in the Northeast, seems to be playing a part in the lower energy prices.

Industrial Production and Manufacturing are both increasing in a healthy fashion. Considering when you see this data improving, even during the end of the year and holidays, that is always a strong sign and one that is welcomed by many.

The employment picture, which is the biggest driver toward the economic recovery, reported the lowest week of First Time Jobless Claims since…well I can’t even remember. Claims last week dropped 50,000 all the way down to 352,000.

Finally, you know that little thing in Europe that has been playing havoc with the markets, (the Debt Crisis), even the daily panic about that seems to have subsided. By no means is the crisis over, however the markets do not seem to be making radical moves based upon every word uttered about it. In fact the stock market has been somewhat stable this week and it appears that many investors are sitting back with a wait and see attitude.

Next week’s economic reports are:

Wednesday January 25th – MBA Mortgage Report, Pending Home Sales & FOMC Announcement

Thursday January 26th - First Time Jobless Claims, New Home Sales & Durable Goods Orders

Friday January 27th – GDP and Consumer Sentiment

As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate information. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at 408-626-1879.

Posted by Michael Reen on January 20th, 2012 11:25 AMPost a Comment (0)

October 21, 2011, 12:16 AM EDT

By Phil Mattingly

Oct. 20 (Bloomberg) -- The U.S. Senate adopted a measure that would raise the maximum size of a home loan backed by mortgage companies Fannie Mae, Freddie Mac and the Federal Housing Administration to $729,750.

Senator Robert Menendez, a New Jersey Democrat, offered the increase as an amendment to a spending bill today. The measure was approved less than a month after the limit on so-called conforming loans was automatically reduced to $625,500.

“If we want to get the economy moving, the housing market has to be part of it,” Menendez said tonight on the Senate floor.

The Senate adopted the amendment 60-31. The amendment required 60 votes for approval and was offered during the chamber’s consideration of a package of spending measures. If the Senate passes the underlying bill, the House would then have to vote for it to become law.

The higher limits, should they be signed into law, would apply until Dec. 31, 2013. Lawmakers would pay for the cost of the higher limits by imposing an annual fee on the loans of 15 basis points of the unpaid principal balance of the mortgage.

The limits, which vary by locale, apply to loans backed by the FHA and government-controlled mortgage companies Fannie Mae and Freddie Mac, which together buy or guarantee about 90 percent of all residential home loans.

Posted by Michele Morse Reen on October 21st, 2011 11:05 AMPost a Comment (0)

I have just gone through the emotionally challenging experience of getting a reverse mortgage in order to stay in the home I have lived in for 45 years.  Michele Morse Reen has escorted me through the detailed and exacting procedure, holding my hand and carefully explaining the options and their consequences.   She asked perceptive questions to evaluate whether I was doing the right thing for me and called or e-mailed often to let me know how the application was proceeding.  I was especially touched by her coming to my house for the final signing.  In my experience with the world of real estate specialists, she is matchless.
Posted by Michele Morse Reen on September 16th, 2011 9:46 AMPost a Comment (0)

Moody’s has been warning that it may have to set America’s credit rating slightly lower than it now is if we can’t create a deal soon to raise the nation’s debt ceiling. I’m curious.

Rejiggering the credit rating is tantamount to messing with economic policy, and I assume we don’t want Moody’s or S&P to have much authority over our nation’s economic policy. But the very likely fact is that, should Moody’s lower our credit rating—even very slightly—our interest rates will suffer as a result. (European countries have given us lessons in how lowered ratings mean a country’s debt is less attractive to investors and therefore interest rates must climb a bit higher to attract more of those investors.)

American debt, as you know, is traditionally thought of as the safest investment play in the world—outside of, perhaps, gold. So a downgrade of our credit rating wouldn’t just affect our nation, it would cast a dizzying light on sovereign interest rates all over the world. If the safest bet is called into question, after all, where do we turn for the level of safety it used to provide?

I don’t know exactly how seriously to take all of this. It’s untried terrain. I don’t ever remember a threat to the reputation of U.S. Treasury securities in my conscious lifetime. So I suspect that I, and many like me, just watch this story unfold with a certain bemusement, not ready to get worked up by it. The fact remains, however, that there are forces out there that are very ready to push America’s interest rates higher.

This would hurt our economic recovery in outsized ways. (It would also likely push the price of gold still higher.) In short, we cannot afford to find out what would happen.

And yet, many in Congress are acting as if letting the deadline pass for raising our debt level is just the thing we need. There’s a sort of “that’ll-show-them” attitude evident in many politicians. Indeed, it may; it may show us all.

One of the most trenchant observations I’ve read recently was that our economy could slip back into recession—a double-dip—for precisely the same reasons that it went there the first time. Because we are keeping those reasons alive rather than solving the problems that still beset our economy, our financial system, and our real estate financing system.

In real estate and beyond, it feels as if most of the reform is aimed at keeping alive the investment games—the MBSs, CDOs, and credit default swaps—that plunged us into fiscal whirlpools. There is nothing inherently wrong with MBSs, of course. We just need policies that make them safe and sturdy; we need laws and regulations that allow us to prosecute those who hurt borrowers and the entire economy by turning the MBS market into a thoroughly dangerous casino.

This past weekend, as if to play Contrarian with the week’s economic indicators, the Wall Street Journal ran a lengthy article titled “Why It’s Time to Buy,” in which veteran economic reporter Ruth Simon (with Jessica Silver-Greenberg) detail the reasons it is becoming a superb time to buy a personal residence.

We’ve seen the reasons before—many of them for years. It’s rather like watching a heavy tree branch that’s bound to fall at last. What strikes me, though, is how out of place the article seems to be in a week full of weak economic data. But that, one suspects, is the point. The market will turn. Not tomorrow, probably, but reasonably soon. At which point today’s bargain prices and rates will have vanished. This is difficult for your clients to see, but you owe it to them to point it out.
Posted by Michele Morse Reen on June 6th, 2011 11:30 AMPost a Comment (0)

May 11th, 2011 11:58 AM

Propositions 60 & 90 provide property tax relief by preventing property reassessment when a person, age 55 or older, sells his/her existing residence and purchases or constructs a replacement residence of equal or lesser value than the original property.

How Do These Propositions Work?

When a person, age 55 or older, purchases or constructs a new residence, it is not reassessed if he/she qualifies. The Assessor transfers the factored base value of the original property located in the same County. Later, Proposition 90 enabled this to be modified by local ordinance. The homeowner is still eligible if moving to a County that has adopted a Proposition 90 ordinance. The meaning of equal or lesser value depends on when you purchase the replacement property. In general, equal or lesser value means:

 

100% or less of the market value of the original property if a replacement property were purchased or newly constructed before the sale of the original property, or

 

105% or less of the market value of the original property if a replacement property were purchased or newly constructed within the first year after the

sale of the original property, or

 

110% or less of the market value of the original property if a replacement property were purchased or newly constructed within the second year after the sale of the original property.

 

Counties that currently accept proposition 90:

Alameda

Santa Clara

San Diego

Los Angeles

Orange

San Mateo

Ventura

El Dorado

Posted by Michele Morse Reen on May 11th, 2011 11:58 AMPost a Comment (0)

May 11th, 2011 11:45 AM
It has been a long while, as we have been highly involved in some industry changes that began January 2011.  But as part of American Pacific Mortgage, the Team has been ideally positioned to move forward and serve clients, while avoiding the many pitfalls that may be catching others in the mortgage business unaware.  Now mid-May, we have things smoothed out and operating normally, and we are looking very forward to helping more of your friends, family, and colleagues with their home financing needs.  Pre-approvals are HOT in 2011.  Refinances, not so much due to rates, but more for financial "tuning" are working out well for our clients as well.  I will follow this post with some content on propositions 60 and 90...
Posted by Michele Morse Reen on May 11th, 2011 11:45 AMPost a Comment (0)

August 13th, 2010 2:51 PM
Rates have continued to decline during the summer months.  What you've seen in the news is true- rates are incredible right now, and this is driving quite a lot of "interest" in home financing.  However, it doesn't mean everyone has 20% to put down, or stellar credit scores.  In these situations, FHA is a powerful option.
 
Since there have been some recent announcements regarding FHA programs, I thought it may be a good time to highlight this program.
 
What is FHA?
If you are not already familiar with Federal Housing Administration (FHA) financing, these are residential loans insured by FHA and guaranteed as mortgage-backed securities (MBS) by the US government through GNMA www.ginniemae.gov
 
FHA lenders typically offer great rates and straightforward qualifying.  I am certified to consult on and originate FHA loans, and our office has been processing FHA loans since 1982, which makes up  40% of our volume.
 
Why FHA?
Here are just a few of the highlights of FHA loans:
  • FHA allows for as little as 3.5% down payment, and funds may come from a gift.
  • Loan amounts up to $729,750.
  • Credit scores as low as 620.
  • Cosigner/Co borrowers are allowed to help qualify.
  • It is possible to close an FHA loan in 30 day - 45 days.
  • Property can be taken "as is".
  • The seller can, if negotiated pay up to 6% credit towards non-recurring closing costs, recurring closing costs and/or up front mortgage insurance premium.
  • Can be useful for refinancing if equity is tight, even negative.
New FHA MI (Mortgage Insurance) Requirements Coming Soon
FHA does require up-front and monthly mortgage insurance premiums to compensate for higher risk.  For loans greater than 15 years starting on or after October 4th, the FHA upfront MI will decrease and the monthly MI will increase.  The net effect of these changes will be a lower total loan amount and a higher overall monthly obligation until the equity reaches 80% (78% if you don't ask), when the monthly MI can be removed.
 
If you or someone you know would like to learn more or make some comparisons, I would love to talk with you!  I can be reached at 408-626-1879.
Posted by Michael Reen on August 13th, 2010 2:51 PMPost a Comment (0)

January 26th, 2010 1:20 PM

Welcome to 2010-  The mortgage and real estate industry is currently going through some pretty significant changes, ultimately meant to improve the process for consumers.

We look forward to helping you understand this new environment and take advantage of the benefits that are available to you...

Tax Credit for Homebuyers

First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Current Owners: The tax credit 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.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What are the New 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.

Tax Credit Versus Tax Deduction

It’s important to remember that the tax credit is just that… a tax credit. The benefit of a tax credit is that it’s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a first-time homebuyer were to owe $8,000 in income taxes and would qualify for a tax credit of $8,000, she would owe nothing.

Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little income tax liability. For example, if a first-time homebuyer is eligible for a tax credit of $8,000 but is liable for $4,000 in income tax, she can still receive a check for the remaining $4,000!

Higher Income Caps

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 sale price of $800,000.

Posted by Michele Morse Reen on January 26th, 2010 1:20 PMPost a Comment (0)

November 11th, 2009 12:41 PM

Although we are not back to the real estate market of 2006, we are starting to see positive signs and the beginning of a recovery. Multiple offers over asking price are common and sales are increasing. This indicates that there’s still demand for homes in this area. 1st time buyers and investors are taking advantage of real estate at great bargains compared to 24 months ago.

In addition to low rates, much of the incentive for 1st time buyers has been the ability to take advantage of the $8000 tax credit if you did not own a home in the past three years. This credit has JUST been extended through April 2010. A new $6,500 tax credit is available to homeowners who have lived in a home for 5 consecutive years out of the past 8, and are looking to move. In addition, income limits have been raised, so both tax credits will be available to those individuals earning up to $125,000 (currently set at $75,000), or up to $225,000 (currently set at $150,000) for couples.

Also, Congress passed a resolution that would extend the present conventional loan limits for Fannie and Freddie through the 2010 calendar year, up to a maximum of $729,750. This is huge for those needing to refinance or purchase and still having access to lower conforming rates. Recent improvements to the Fannie Mae and Freddie Mac programs have allowed more borrowers to refinance even if the property value has temporarily declined.

I will continue to keep you up to date in this ever changing real estate market in 2010. As always, if you have any questions about your specific situation or would like to discuss how you may benefit from these programs, please call me 408-626-1879 or email Michele@reenteam.com.

Posted by Michele Morse Reen on November 11th, 2009 12:41 PMPost a Comment (0)

Just signed and sealed…a $787 Billion Stimulus Plan made up of tax cuts and spending programs aims at reviving the US economy. Although the package was scaled down from nearly $1 Trillion, it still stands as the largest anti-recession effort since World War II.

Home owners and potential homebuyers stand to gain from key provisions in this stimulus plan. Here is what we know as of today...

Tax Credit for Homebuyers

First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit.  Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.

The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.  Buyers will have to repay the credit if they sell their homes within three years. 

Tax Incentives to Spur Energy Savings and Green Jobs — This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.

Landmark Energy Savings — This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization.  According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.

Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing—This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs.Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8) to increase energy efficiency, including new insulation, windows, and frames.

Expanding Housing Assistance—This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.

More Help for Homeowners in the Future

Another thing to keep an eye on in the coming weeks is President Obama’s plan to help struggling borrowers before they are faced with a default on their mortgage.

According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.

While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That’s because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.

The Economic Stimulus Plan is huge, and impacts a number of industries. I’ve highlighted some of the major provisions that may impact you now and in the future.

As always, if you have any questions or would like to discuss how this may specifically impact you, I’d be happy to sit down with you. Just call or email me to set up an appointment.

Posted by Michael Reen on February 17th, 2009 5:25 PMPost a Comment (0)
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