Redding & Shasta County Real Estate

This week’s C.A.R. Mortgage Update contains information about how to avoid foreclosure scams;

assistance for struggling homeowners; a home appraisal’s affect on home sales; mortgage applications;

jumbo loans; and Fannie Mae and Freddie Mac refinance programs.

JPMorgan Chase is opening “homeownership centers” staffed with counselors who meet one-on-one with

Chase, Washington Mutual, or EMC customers at risk for foreclosure. Counselors collect financial

information and send the data to banks for evaluation. Customers are notified within 30 days if they qualify

for loan modifications.

The company currently has homeownership centers open in Oakland and Santa Clara. It plans to open two

dozen centers nationwide by April, including seven more elsewhere in California.

To read the full story, please click here:

To view additional articles about mortgages, please visit the following:

To read the full story, please click here:

To read the full story, please click here:

To read the full story, please click here:

Some housing markets, especially those with the highest rates of foreclosure, are receiving multiple offers

on properties, as declining home prices enable more first-time home buyers to enter the market, and

investors are enticed by the opportunity to purchase properties at favorable prices.

KEEP THIS IN MIND

• Some homeowners who are underwater also are at risk of foreclosing, enabling home buyers to

purchase these homes at favorable prices. Often, lenders are more willing to negotiate a short sale

on a property if it will cost less money than a foreclosure. While this should create an opportunity

for home buyers to negotiate the sales price of the home, in some cases distressed properties are

receiving multiple bids, especially those in highly desirable neighborhoods.

• Home sales in areas near government, defense contractor, healthcare, biotech, and university jobs

are flourishing, as more people relocate to these areas for employment opportunities.

To read the full story, please click here:

Officials at the Internal Revenue Service (IRS) and tax specialists have reported an increase in call volume

from home buyers who are confused about the qualifications for the $8,000 federal tax credit for first-time

home buyers. Some also need assistance understanding the differences between the $7,500 tax credit

signed into law last year, and the $8,000 tax credit added this year.

KEEP THIS IN MIND

• First-time home buyers – those who have not owned a principal residence for three or more years –

received two tax credits over the last two years. One was passed and signed into law in 2008, the

other in 2009.

• The 2008 credit is a tax credit for first-time home buyers who purchased a house between April 8

and Dec. 31, 2008. The home buyer may claim 10 percent of the home’s purchase price, as a

credit, capped at $7,500. Although called a “tax credit,” this homeowner benefit actually is a 15-

year interest-free loan, which must be paid back in equal installments over a 15-year period.

• The 2009 credit is for 10 percent of the home’s purchase price, capped at $8,000. This credit is for

first-time home buyers who purchase a house between Jan. 1 and Nov. 30 of this year. The

$8,000 tax credit does not have to be repaid.

• In both cases, the home buyer may choose to claim the tax credit on either the 2008 or 2009

federal tax return.

• The tax credits are offered on a sliding scale, based on income. Individuals with annual incomes of

$75,000 or less may be eligible for the full amount of the tax credit. Married couples filing jointly

must earn less than $150,000 to qualify for the full amount. Individuals earning between $75,000

and $95,000, and married couples filing jointly who earn between $150,000 and $170,000, may be

eligible for a smaller portion of the tax credit, but not the full amount. The tax credit is not available

to individuals who earn more than $95,000 or married couples filing jointing who earn more than

$170,000.

• Nonresident aliens, homes outside of the United States, and homes inherited, gifted, or acquired

from a relative are exempt from the tax credits.

To read the full story, please click here:

Mortgage rates are near historic lows, spurring an increase in mortgage applications and applications to

refinance. However, most financial institutions have tightened their loan underwriting standards, making it

more difficult for home buyers to qualify for the best rates. In many cases, borrowers must issue a down

payment of at least 20 percent; borrow $729,750 or less; have a credit score of at least 720; carry low debt

relative to reliable income; buy in an area where home prices are relatively stable; and use a community

bank rather than a national bank, to qualify for the best rates.

KEEP THIS IN MIND

• Most of the risky loan packages, such as “stated income” loans, where borrowers were not required

to document their income, and option adjustable-rate mortgages, where consumers could choose

to pay less than the interest due, are no longer available. Some financial institutions offer interestonly

loans, but they can be quite costly.

• The majority of today’s mortgage loans are through Fannie Mae, Freddie Mac, and the Federal

Housing Administration (FHA). Combined, the government sector accounts for 87 percent of

mortgages. Purely private financing is rare.

• The government entities purchase and/or guarantee loans up to a certain limit. In high-cost areas,

such as most areas of California, the conforming loan limit is $729,750. The best interest rates are

offered on conforming loans. Jumbo loans – those that exceed $729,750 – are more expensive

and can cost a quarter-point to a full percentage point more.

• Fannie Mae and Freddie Mac also have added a quarter-point “adverse market delivery charge”

due to declining home prices. They also have instituted “risk-based pricing,” which raises fees on

borrowers with credit scores of less than 720. Borrowers purchasing a condominium and putting

down less than 15 percent also will pay more for a Fannie Mae or Freddie Mac loan.

• Borrowers with a down payment of less than 20 percent also are required to take out private

mortgage insurance. Premiums have increased in most parts of the country, including California.

• Consumers without a 20 percent down payment may be eligible for a mortgage loan through the

FHA, which accepts down payments as low as 3.5 percent. The FHA charges an upfront mortgage

insurance premium of 1.75 percent, which can be added to the loan, in addition to a monthly

premium.

• Although rare, the U.S. Dept. of Veterans Affairs (VA) and U.S. Dept. of Agriculture offer loans in

rural areas with no down payment or mortgage insurance requirements.

To read the full story, please click here:

To read the full story, please click here:

To read the full story, please click here:

To read the full story, please click here:

To read the full story, please click here:

To read the full story, please click here:

To read the full story, please click here:

To read the full story, please click here:

• Homeowners who currently do not qualify for aid under the federal housing-rescue plan still may

qualify for tax credits on energy-efficient upgrades. As part of the stimulus plan signed into law by

President Obama, homeowners may qualify for up to $1,500 in tax credits for adding qualifying

windows, doors, insulation, roofs, heating and cooling equipment, water heaters, and wood and

pellet stoves. The installations must take place in 2009 or 2010 to qualify for the tax credit.

• Accurately pricing a home continues to be a top factor in determining which homes sell quickly.

Working with a REALTOR® to determine the right price is key, as real estate markets are local and

REALTORS® are most qualified to recommend an accurate price, based on experience and recent

sales in the area.