October home sales rise 10.1 pct from September

Associated Press, Alan Zibel

WASHINGTON (AP) - Home sales surged for the second month in a row in October, climbing to the highest level in 2½ years as first-time buyers rushed to take advantage of an expiring tax credit.

Home sales nationwide are now up nearly 37 percent from their bottom in January, data Monday showed, though they are still 16 percent below the peak in autumn 2005. At the current sales pace, there is only a 7-month supply of homes on the market and in some areas there are bidding wars.

Joey Wilson, 53, and her husband made unsuccessful offers on 20 Las Vegas homes since midsummer before closing on a four-bedroom, $136,000 home this month.
"It's insane," said Wilson, who relocated from Kentucky. "I've never seen a market like this before."

The National Association of Realtors said home resales rose 10.1 percent to a seasonally adjusted annual rate of 6.1 million in October, from a downwardly revised pace of 5.54 million in September. It was the biggest monthly increase in a decade, and far above the 5.65 million pace expected by economists, according to Thomson Reuters.

The recovery is being driven by lower prices combined with federal programs to lower mortgage rates and bring more buyers into the market. The median sales price was $173,100, down 7 percent from a year earlier and off roughly 2 percent from September.

Many experts predict prices will hit a new low next spring, perhaps falling another 5 to 10 percent, as more foreclosures get pushed onto the market. The government has tried to counter that trend by offering a tax incentive for first-time buyers and by keeping mortgage rates around 5 percent since the spring.

The tax credit of up to $8,000 for first-time owners was originally set to run out on Nov. 30, but Congress renewed it earlier this month and broadened its reach. People who have owned their current homes for at least five years can now claim a tax credit of up to $6,500 for a home purchase. To qualify, buyers must sign a purchase agreement by April 30.

The Realtors' report on October home sales reflects offers made before buyers knew the tax credit would be extended. "The incentives really did get people to go out and buy," said Wells Fargo economist Adam York. "The question is: What does the trend look like when the credit is over with?"

Home sales are likely to drop over the winter as buyers hibernate for a few months without the looming tax credit deadline.

The new deadline means "we're going to see some good activity coming out of the spring," said Pat Lashinsky, chief executive of online real estate brokerage ZipRealty Inc.

But the government support can't last forever. For example, the Federal Reserve is likely to curtail its effort to push down mortgage rates next year. If rates then rise too high, it would make home purchases less affordable and dampen housing demand. "When we do kick those crutches out from under the housing market, will it be able to stand on its own?" said Mark Fleming, chief economist with real estate information company First American CoreLogic. "It's really hard to tell."

90 Day Foreclosure Moratorium

90 Day Foreclosure Moratorium

New law imposes a 90 foreclosure moratorium if lenders don’t modify loans

(SACRAMENTO) – Assemblymember Ted Lieu (D-Torrance) announced the California Foreclosure Prevention Act, ABX2 7 (Lieu), takes effect June 15, 2009. Beginning today, a foreclosure moratorium will give distressed homeowners an additional 90 days unless the lender implements a comprehensive and systematic loan modification program designed to keep people in their homes.

“We must put a stop to the unending tidal wave of foreclosures that has crippled our economy,” said Assemblymember Ted Lieu. “This law will help people stay in their homes by giving lenders a serious incentive to modify loans.”

“We’re seeing signs that the economy may be stabilizing and I’m hopeful AB X2 7 can get more homeowners to the light at the end of the tunnel,” said Speaker Karen Bass. “This important bill by Assemblymember Lieu will keep more Californians in their homes and stabilize neighborhoods, which is a necessary step for economic recovery.”

The California Foreclosure Prevention Act is designed to force Wall Street to help the citizens of “Main Street.” The Act will give lenders a choice: either enact a systematic and comprehensive loan modification program or face an additional 90 day foreclosure delay on all of your loans.

In order to avoid the foreclosure moratorium, a lender’s comprehensive loan modification program would have to be based, in part, on criteria set forth by the Federal Deposit Insurance Corporation. Additionally, loans could only be modified in a couple ways, including interest rate reductions, extension of the loan term, or principal reduction.

Homeowners in California continue to experience record foreclosures, a direct result of irresponsible lending. According to RealtyTrac, in April 2009, California posted the highest foreclosure rate in the nation, with one in every 138 housing units receiving a foreclosure filing during the month. Total foreclosure activity was up 42% from April of last year.

The California Foreclosure Prevention Act is the first law in the nation to impose a foreclosure moratorium and encourage quality loan modifications.

Assemblymember Ted W. Lieu is Chair of the California Assembly Rules Committee, the former Chair of the Banking and Finance Committee and represents the 53rd Assembly District.

The Home Buyer Tax Credit - EXTENDED and EXPANDED!

Brought to you by the CALIFORNIA ASSOCIATION OF REALTORS®

Nov. 5, 2009

More good news for consumers, our members, and the housing market recovery. Following the Senate’s favorable vote yesterday, the U.S. House of Representatives just voted 403 to 12 to extend the home buyer tax credit, expanding the parameters to include existing homeowners and not just first-time buyers. As you may know, C.A.R. and our partners at NAR have worked for months urging Congress and the Senate to extend and expand this crucial piece of legislation. We expect President Obama to sign the legislation in short order.

As it now stands, the federal tax credit will be extended through April 30, 2010, with a 60-day extension if a binding contract is in place prior to the deadline. First-time home buyers will continue to be eligible for a tax credit of up to $8,000, while existing homeowners will be eligible for a reduced credit of up to $6,500. To qualify for the $6,500 credit, existing homeowners must have lived in their current residences for at least five years. The bill also increases the qualifying income limits from $75,000 for single tax filers and $150,000 for joint filers to $125,000 and $225,000, respectively. The purchase price of the home is capped at $800,000 in both instances.

Under additional provisions included in the bill, taxpayers can claim the credit on purchases completed in 2010 on their 2009 income tax returns. The legislation maintains the provision that home buyers do not have to repay the credit provided the home remains their primary residence for 36 months after purchase, and waives this requirement for active duty military personnel who move due to a military order.

Nationwide, more than 1.4 million first-time home buyers were given the opportunity to become homeowners as a result of the Federal Tax Credit for First-time Home Buyers. We expect that number to increase dramatically in the months ahead with this new legislation in place.

C.A.R. Insurance for First-Time Home Buyers

From the C.A.R. magazine, by Paula Hess

The California Association of Realtors' Housing Affordability Fund (C.A.R.H.A.F.) just unveiled the Mortgage Protection Program, which is designed to restore confidence and assist as many as 3,000 first-time homeowners who purchase a home between April 2, 2009 and December 31, 2o09.

C.A.R.H.A.F. has committed $1 million to support the Mortgage Protection Program - and The National Association of Realtors another $420,000 - an insurance product that kicks in when the unexpected happens: job loss. First-time buyers who enroll in the program can draw upon their mortgage protection policy in the event they lose their job after purchasing their home. Under the program, first-time buyers will be eligible to receive $1,500 per month for six months in the event of a job loss; co-buyers are eligible to receive $750 per month.

To be eligible for coverage, the home must be a principle residence in California and a first-time buyer is defined as someone who has not purchased a home in the past three years. While there are no caps on the applicant's income or the purchase price of the home, the applicants are required to use a California Realtor in their transaction; they cannot be self-employed or older than age 70. Consumers can apply for the program via their Realtor.

IRS TO EXPEDITE TAX LIEN RELIEF FOR HOMEOWNERS

IRS TO EXPEDITE TAX LIEN RELIEF FOR HOMEOWNERS

The Internal Revenue Service (IRS) recently announced it will expedite its process of providing relief from federal tax liens for distressed homeowners. With over one million current federal tax liens against real and personal property, the IRS announcement should help REALTORS® and their clients resolve federal tax lien issues in their sale and loan transactions.

As background, a homeowner seeking to sell or refinance a property must generally pay off an existing federal tax lien. However, during the current economic downturn, many homeowners don't have the cash or equity to do so. Hence, for a refinance, the homeowner may request that the IRS makes its tax lien subordinate or secondary to the lien of the refinancing lender. For a sale, the homeowner may, under certain circumstances, request that the IRS discharge its claim. The IRS's processing time for subordination or discharge requests has been about 30 days. The IRS is currently working to expedite that time frame to help distressed homeowners.

For IRS instructions on requesting relief from federal tax liens, go to the IRS Publication 783 for discharges and Publication 784 for subordinations at www.irs.gov.