10 November 2009 –Fannie Mae is primed to become a landlord on a national scale. Last Thursday, Fannie Mae announced a new program that would allow current home owners in foreclosure to stay in their homes by signing a 1-year rental agreement. After the lease expires, homeowners could then enter a month-to-month lease. This would make Fannie Mae the largest property manager in the country. While this program may keep some foreclosed homeowners from going homeless, the policy may also depress local property values. The announcement comes on the heals of Fannie Mae asking the federal government for another $15 billion in bailout money. So, who do the tenants call when the heat goes out or when a water main bursts?

10 November 2009 ?Bonds are currently at a day change of up 9bps after opening up slightly higher than yesterday. The $40 billion auction of 3-year notes yesterday was successful in strengthening mortgage bonds and the much maligned dollar. Strengthening the dollar has been the focus of foreign and domestic investors who hope to limit its decline and then use its improved standing to aid an economic recovery. There will be another auction today, starting at 1 pm EST, for $25 billion in 10-Year notes. The market, after its incredible rally yesterday, has been relatively quiet today and is currently hovering near break-even status. It has been hampered by struggling financials, including MBIA, whose shares have drop nearly 20% today. It will be interesting to see how the stock market plays out the rest of the week as investors await Ben Bernanke?s address concerning monetary policy next Monday. Mortgage rates remain strong with 4.750% (4.799% apr) on the 30 year and 4.25% (4.334% apr) on the 15 year.

On Friday, President Obama signed into law an extension and expansion of the home buyer tax credit.

A tax credit of $8,000 currently exists for first-time homebuyers who will close on a home by November 30, 2009. This credit was set to expire on December 1, but because of a continued weak economy and the efforts of  Realtors, it will now remain in effect through the end of June 2010.  To qualify, buyers must sign a contract before April 30, 2010 and close on the property by June 30, 2010. This opens up several new possibilities for buyers and sellers for the upcoming winter and spring seasons.  It continues to be a buyer’s market even though the housing market has improved significantly since October 2008.

Additionally and perhaps of even greater consequence, the signed law offers a new $6,500 tax credit for current homeowners looking to buy up. This new credit is intended to reach those who have patiently waited for the right time to buy. Those who have used their home as their primary residence for five consecutive years our of the last eight can claim the credit.  They must also close by the end of June, 2010.  Coupled with the extension of the first-time home buyers’ credit, this additional provision should boost the real estate market in ways beneficial to buyers, sellers, and the real estate industry.

Congress substantially increased the income limits on the tax breaks as well. Individuals earning less than $125,000 will now be eligible (currently $75,000), and married couples with income less than $225,000 who file jointly are eligible (up from $150,000). One item to note, the tax credit can only be used to purchase homes that cost less than $800,000. Here’s a video to explain the details.

The National Association of Realtors (NAR) also breaks down the new law in a concise and simple way.

If you have already purchased a home and intend to use the tax credit, don’t forget to file. Visit www.irs.gov to find the necessary forms to receive the tax credit.

We would like to thank rutlo for sharing today?s photo via the Creative Commons License.

4 November 2009 ?Bonds opened today 3bps up and have ceded some ground this afternoon. They ended the day down 6bps. After the highly anticipated Federal Open Market Committee meeting, the Fed announced it will keep the Fed Funds Rate low for an extended period of time. Many economists predict the rates will stay close to zero well into 2010, but they also fear that this monetary policy may bring about inflation. With rates still low, mortgage applications have risen 8.2%, the refinance index 14.5%, and the purchase index 1.8% just in the past few weeks. The number of refinances has certainly been fueled by the Fed maintaining low interest rates. As was expected, the stock market was up big today, fueled by commodities (most notably gold), a weaker dollar, and companies who reported 3Q profits. With the Fed?s announcement, expect the market to continue to gain this week and trend upwards, as it traditionally does in the month of November. Mortgage Rates are at 4.875% (4.875% apr) on the 30yr and 4.25% (4.309% apr) on the 15yr.

$7,500 Toward Your Closing Costs

Did you know that CPS (Chicago Public School) teachers are eligible for a grant of up to $7,500 that can be used toward closing costs of a home purchase? What a great way to give back to the teachers of Chicago who spend their days educating today?s youth. But just like any other grant, you must meet the following eligibility requirements to receive this benefit:

* Be a first time homebuyer
* Be a CPS teacher for at least 1 full academic year
* Make a commitment to work as a CPS teacher for at least 5 years after your purchase
* Must stay in the property for at least 5 years

Along with the above requirements, CPS teachers must attend a 1st time home buyer workshop that is run through a HUD approved housing counseling agency. You can contact Heather Hain at Rogers Park Community Development at 773.262.2290, ext. 12 to schedule an appointment. Once you have completed this workshop you will receive a certificate which you must show your lender. Along with the certificate, you will also have to provide income verification. Once your loan is approved and ready to close, your lender will send Rogers Park Community Development your loan application (Form 1003) along with a mortgage commitment. The grant money will then be wired to your closing. It’s that easy.

So what are the details of the grant?

* An interest free loan that is forgiven at the end of the 5th year
* $3000 to purchase anywhere in the City of Chicago or $7500 if you purchase in a new Plan for Transformation Development, click below for details: (http://www.rogersparkcdc.org/linkspartnerships.html)
* Matching grant assistance from Illinois Housing Development Authority (IHDA)
* Will receive a IRS-1099 for the grant money

This grant, along with the 1st time home buyer tax credit this year, will provide you with up to $15,500 in free money. One other requirement?the mortgage must be originated through 1 of the 11 preferred lending partners of CPS and guess what?A&N Mortgage is one of them. I would like to thank Rogers Park Community Development for the information regarding this program.

We would like to thank ChicagoGeek for sharing today?s photo via the Creative Commons License.

13 October 2009 ? If you thought it was tough getting a loan before? well? it just got tougher.

For those in the market to purchase a property the job of doing so just got more difficult. Due to the financial meltdown and poor loans given out in the past, Fannie Mae and Freddie Mac have tightened their purse strings yet again.

Starting Nov. 1 or Dec. 12, depending on the type of loan, anybody with a credit score of less than 620 will have a more difficult time getting a mortgage. Fannie Mae is tightening lending standards to the 620 benchmark, even for loans backed by a federal agency such as the Federal Housing Administration or Veterans Affairs. Currently the lowest credit score is 620 for a loan, but rumor has it that Fannie and Freddie will be increasing that number to 640. Stay tuned for more on what is to come.

Do you know what the minimum credit score is to qualify for a home mortgage? Currently it?s a mid credit score of 620, but this may change very soon to 640. In fact, some banks have already stopped taking loan applications with a 620 mid score.

What’s a Mid Credit Score?

Managing Your Credit Is Essential to Getting a Mortgage?Minimum Credit Scores for Mortgages Are Rising

When applying for a home loan your mortgage professional will pull your credit scores from three different reporting agencies: Transunion, Equifax, and Experian. (Keep your fingers crossed). The bank that you are applying with will then use the mid score (the one in the middle) from these 3 agencies to then assign a credit risk to you. Not only does your credit score affect whether or not you will get an approval from Fannie Mae or Freddie Mac, but it also affects the interest rate you receive on your home loan. It?s a pretty simple formula: the higher the score, the lower the interest rate.

This is why it is so important to obtain the highest possible mid score as this will save you monthly on your payments and save you thousands in interest over the term of the loan. For example, on a $250,000 loan every .25% shift in the interest rate will yield about a $40 difference in the payment. If your mid score is 740+, you will get the best possible rates available in the market.

Credit Scores Are Very Important

There has been a lot of research done on the performance of home loans and the results are in?the lower the credit score on a home loan, the higher the default rate and the more frequent are late payments. I know these results aren’t probably very shocking to you. The reality is that not everyone is ready or prepared to be a home owner, so this is why it is necessary to consult with a mortgage professional who can help you with all the details: the importance of credit, budgeting, and having sufficient savings in the bank to be ready for this huge step in your life. Being a homeowner is one the biggest steps you will take in your life next to getting married and having children. If you are serious about becoming a home owner, a strong first step is to meet with a mortgage professional to discuss the steps necessary to take this plunge. Good luck!

We would like to thank Andres Reuda for sharing today’s photo via the Creative Common’s License

Chicago's Centenial Fountain on The Chicago River

Finally Home, a mortgage program designed to help Illinois residents buy a home or keep their existing homes from going into foreclosure, changed a key guideline that will allow more Chicago home buyers and home owners to take advantage this state program. The program raised the qualifying average median income (AMI) from 115% to 150%. In Chicago, a single person who earns $ $79,200 or a family of 4 earning $113,100 now can qualify. This program helps borrowers who cannot obtain conventional, sustainable mortgages from credible lenders because of factors such as bruised credit or a high debt-to-income ratio.

Officials Listening to the Realtor^® Voice

This change resulted from when Ben Noven, a representative from Illinois Treasurer Alexi Giannoulias?s, attended the Chicago Association of Realtors® Government Affairs meeting as one of its monthly guests. He spoke and then listened to concerns of the committee. The way the guidelines were written, the program was ineffective for Chicago due to income levels and property values. By raising the qualifying AMI, many more Chicago residents will be able to take advantage of this program and keep people in their homes as well as creating more new homebuyers.

?Over the past year we have had the opportunity to have several guest speakers at the C.A.R. GA meetings, primarily public officials and civic thought leaders who are listening to REALTORS® about their issues and real sharing is taking place,? said Brian Bernardoni, C.A.R. Government Affairs Director, “Providing opportunities for sharing of ideas beyond just practitioners but to decision makers was something leadership and Chairman Bob Floss asked of us. I am happy that our input is respected and these important efforts are making a difference.?

As the upcoming chairperson of the C.A.R. government affairs committee I look forward to participating in continuing efforts to create opportunities that result in helping our members and the communities they service.

We’d like to thank Payton Chung for sharing today’s photo via the Creative Common’s License.

29 July 2009 – Today the bonds opened up 29 bps. However by noon the bonds were up 12, which is a decrease of 9bps. By 12:15 the volatility hit that I discussed in yesterday’s update and the bonds are now down 10, which is a 31 bps drop for the day. This auction results from the Treasury were very poor, which is pressuring the bonds. This morning the weak durable order report signaled that the US economy is not out of the woods and the recovery from this recession will take time. Mortgage interest rates have risen over the past 6 months, mirroring the rallying stock market. However rates are still very good and in the low 5?s for the 30-year fixed rate and in the mid 4?s for the 15 year fixed rate.

22 July 2009 ? Bonds had an excellent rally yesterday ending up 69 BPS which helped to gain back some of the previous losses. The bonds were pressured by the stock markets that had gains over the past week?the S&P and the Dow both had nice gains. Today the bond market opened down 9bps and is currently down 16bps. The bonds have levels of support and we are in an area if we can stabilize the rates can remain at the 5% to 5.25% range for the 30 year. The DOW and S&P may retreat a bit after the strong run and this morning the financial markets are weighing down on stocks after worse than expected earnings by Morgan Stanley. Wells Fargo reported good earnings but the outlook going forward comments were not that strong. The tip of the day would be to consider looking at your mortgage rate and to look to see if you can comfortably move into a 15-year or 10-year fixed rate. They are in the mid 4% range and when shortening your loan term you save thousands of dollars.