Renaissance Realty Group’s Blog: Georgia: Lawrenceville

Cash for Clunkers cost $24,000 per car

 An analysis released yesterday by the automotive Web site Edmunds.com has tallied up the taxpayer bill for the Cash for Clunkers program, and it comes in at a whopping $24,ooo per car with very little to show for it.  In fact, only 125,000 of those were vehicles that would not have been sold anyway.  The program gave car buyers rebates of up to $4,500 if they traded in less fuel-efficient vehicles for new vehicles that met certain fuel economy requirements. A total of $3 billion was allotted for the rebates.  The average rebate was $4,000, but if the overwhelming majority of sales would have taken place anyway at some time in the last half of 2009, it means the government ended up spending about $24,000 each for those 125,000 additional vehicle sales.  Of course the Department of Transportation (DOT) disagrees:  "It is unfortunate that Edmunds.com has had nothing but negative things to say about a wildly successful program that sold nearly 250,000 cars in its first four days  alone," said Bill Adams, spokesman for the DOT. "There can be no doubt that CARS drummed up more business for car dealers at a time when they needed help the most."  Edmunds.com's estimate of the sales increase generally matches what industry experts had thought, said George Pipas, a sales analyst with Ford Motor Co.

YES or I should say a soon to be a YES

Here is what USA Today had to say about today's announcements:

"Senators agreed to extend the existing tax credit for first-time homebuyers while offering a reduced credit of up to $6,500 to repeat buyers who have owned their current homes for at least five years, said Regan Lachapelle, a spokeswoman for Senate Majority Leader Harry Reid, D-Nev.

The tax credits would be available to homebuyers who sign sales agreements by the end of April. They would have until the end of June to close on their new homes, according to a summary of the legislation being circulated among lawmakers.

Details to follow...

HOME BUYER TAX CREDIT -- WATCH -- UPDATE - LOOKS LIKE THE EXTENSION IS

Now comes a post this morning from the mortgage chatline from someone who apparently has some very detailed information.  I will quote it verbatum, again with the understanding that this has not been confirmed but somewhat reliable:

"The Home Buyer tax credit has apparently been extended, and eligibility expanded to include some move-up buyers. Details: Income eligibility for first-time home buyers stays at $75,000 for individuals, and $150,000 for couples. For move-up buyers, income eligibility is $125,000 for individuals and $250,000 for couples. There is a minimum 5 year residency requirement - in their current home - for move-up home buyers. The tax credit is the lesser of $7,290 or 10% of the purchase price. The credit runs from Dec. 1, 2009 to April 30, 2010, with an additional 60 day period to close escrow. (So end of April to sign contract, end of June to close escrow) Expect bill to be signed by Friday, packaged with the unemployment benefit extension."

HOME BUYER TAX CREDIT EXTENSION - NEW WATCH UPDATE

HOME BUYER TAX CREDIT GEORGIA - Lawrenceville GA

Senate Close to Deal Replacing Homebuyer Tax Credit

Oct. 27 (Bloomberg) -- U.S. Senate leaders moved closer to an agreement replacing an expiring $8,000 tax credit for first- time homebuyers with a smaller one that would expand access to so-called step-up purchasers, two people familiar with the matter said.

The deal would reduce the size of the tax credit to 10 percent of the sale's price, capped at $7,290, the people said. The credit would be available on home purchases that are under contract by April 30, and borrowers would have 60 days more to close the sale. The existing credit is due to end Nov. 30.

The new agreement, which is still being negotiated and may change, would grant the credit to borrowers who have lived in their current home for at least five years. Lawmakers want to keep home sales from slipping as the economy struggles to recover from the worst drop in home prices since the Great Depression.

This will You opened up a whole new pool of people who can buy into those empty homes and empty condos that were built out and provide a strong 1st quarter for 2010 .

Reverse mortgages have hidden dangers

 Panelists at the Information Management Networks 15th annual ABS East gathering in Miami Beach conference said that in the last two years reverse mortgages have moved beyond the needs-based senior and now see a significant mix of borrowers tapping into the market.  This year alone, the percentage of owners with homes valued at above $400,000 is increasing to up to 39% of the reverse mortgage claims in some markets.  The panel also said the market is set to grow dramatically, with predictions that the next leg of growth in structured finance will come by way of reverse mortgage resecuritizations, despite warnings that the product is particularly vulnerable to misuse and even fraud. 

 Annual reverse mortgage volume has topped 110,000 units and $17bn, with top banks like Wells Fargo and Bank of America and large insurance companies like Genworth and MetLife leading the way. Despite a slowdown in originations due to the recession, reverse mortgage originations are continuing at a record pace.  In the reverse mortgage market, seniors face some of the same aggressive lending practices that were common in the subprime lending boom, said Tara Twomey, an NCLC attorney and author of the report. Well-funded marketing campaigns and perverse incentives to brokers are targeting seniors home equity and using reverse mortgages as their tools.

Fannie Mae announces relief for investors

 Fannie Mae announced that its new Payment Reduction Plan (PRP) will provide forbearance for borrowers who are ineligible for the Home Affordable Modification Program (HAMP).  The mortgage principal and interest payments will be reduced by up to 30% for borrowers qualified for PRP, which replaces Fannies HomeSaver Forbearance program. PRP reduces the payments by 30% rather than the previous 50% under HomeSaver Forbearance, because permanent solutions are closer to 30%, Faith said.  Faith added that non-owner-occupied properties became eligible under PRP, and owners will receive new options and support for their investment properties and second homes  even though they do not fit under the HAMP umbrella.  The US Treasury Department provides capped incentives to servicers for the modification of eligible loans on the verge of foreclosure through HAMP. The PRP will grant transitional support for borrowers who do not qualify for HAMP while more permanent mortgage solutions ar  e determined, according to Brian Faith, a vice president at Fannie Mae.

Home prices rise - Case-Shiller

 The Standard & Poor's/Case-Shiller home price index of 20 major cities climbed 1 percent from July to a seasonally adjusted reading of 144.5. While prices are down 11.4 percent from August a year ago, the annual declines have slowed since February.  It shows a widespread turnaround with prices rising month-over-month in 15 metro areas since June.  "If the increases are consistent across the markets, this is key," said Susan Wachter, Wharton School real estate professor, before the index was released. "Then we're seeing the formation of a bottom." However, rising unemployment and more foreclosures could stifle the rebound. Another unknown is whether a temporary federal tax credit for first-time buyers will be extended to help boost sales. The real estate industry is lobbying Congress to extend the credit past the Nov. 30 deadline. Top Democrats in the Senate are pressing a plan that would prolong the credit but gradually phase it out over the next year.

Freddie Mac announced today that its mortgage investment portfolio grew by an annualized 7.3 percent rate in September, while delinquencies on loans it guarantees accelerated.  The portfolio increased to $784.2 billion, for an annualized 3.4 percent decrease year to date, and delinquencies, which increase stress on the company's capital, jumped to 3.33 percent of its book of business in September from 3.13 percent in August and 1.22 percent in September 2008. The multifamily delinquency rate accelerated slightly in September to 0.11 percent from 0.10 percent in August. A year earlier it was 0.01 percent.

2010 is shaping up for a weak recovery The Federal Reserve is in no rush to pull back its extensive economic life support measures.  Chicago Federal Reserve President Charles Evans said: We have to think about our exit policy and are looking at it very carefully, but at the moment, that's not our first order concern, at the moment, its policy accommodation.  I think that the recovery is going to be very unsatisfactory in 2010.  Evans, who will vote on the Fed's policy-setting panel in 2010, said he expects unemployment to rise above ten percent.  The Fed has cut rates to near zero and pledged to hold rates there for an extended period.  Its next policy-setting meeting is Nov. 3-4 and it is not expected to signal any movement toward an exit then.  High unemployment and low inflation rates both indicate that policy accommodation is in order, and with economic growth, household spending will be restrained and businesses will face weaker demand for their goods and services, Evans said. "It is not going to feel l  ike a recovery for some time.

If theres another real estate collapse on the way, its in commercial real estate, and the FDIC closing Chicago's Corus Bank last month may have signaled the beginning of it.  Corus, whose balance sheet full of bad construction loans, was just one of many banks that have this type of debt on their books, and refinancing the $2 trillion in commercial mortgages is going to be tough as property values decline.  In this new age of cautious lending, few banks are willing to refinance loans.  Michael Haas, a real estate attorney at Jones Day, says, "There is a hesitancy to extend credit when there is a real possibility that the real estate may be worth less than it was a few years ago." In a situation similar to the subprime crisis, we may be looking for a wave of foreclosures and loan defaults that could, in turn, trigger a collapse in the market of the structured bonds backed by commercial real estate and construction debt.

Commercial Real Estate - Facing Foreclosure Crises