News Release
HUD No. 09-072
Lemar Wooley
(202) 708-0685
www.hud.gov/news/index.cfm For Release
Friday
May 29, 2009
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DONOVAN ANNOUNCES RECOVERY ACT'S HOMEBUYER TAX CREDIT CAN IMMEDIATELY HELP THOUSANDS OF FIRST-TIME HOMEBUYERS TO BUY A HOME
FHA plan will stimulate new home sales and help stabilize housing market
WASHINGTON - Speaking to the National Association of Home Builders Spring Board of Directors Meeting, U.S. Housing and Urban Development Secretary Shaun Donovan today announced that the Federal Housing Administration (FHA) will allow homebuyers to apply the Obama Administration's new $8,000 first-time homebuyer tax credit toward the purchase costs of a FHA-insured home. Donovan said that today's action will help stabilize the nation's housing market by stimulating home sales across the country.
The American Recovery and Reinvestment Act of 2009 offers homebuyers a tax credit of up to $8,000 for purchasing their first home. Families can only access this credit after filing their tax returns with the IRS. Today's announcement details FHA's rules allowing state Housing Finance Agencies and certain non-profits to "monetize" up to the full amount of the tax credit (depending on the amount of the mortgage) so that borrowers can immediately apply the funds toward their down payments. Home buyers using FHA-approved lenders can apply the tax credit to their down payment in excess of 3.5 percent of appraised value or their closing costs, which can help achieve a lower interest rate. To read the FHA's new mortgagee letter, visit HUD's website.
"We believe this is a real win for everyone," said Donovan. "Today, the Obama Administration is taking another important step toward accelerating the recovery of the nation's housing market. Families will now be able to apply their anticipated tax credit toward their home purchase right away. At the same time we are putting safeguards in place to ensure that consumers will be protected from unscrupulous lenders. What we're doing today will not only help these families to purchase their first home but will present an enormous benefit for communities struggling to deal with an oversupply of housing."
Currently, borrowers applying for an FHA-insured mortgage are required to make a minimum 3.5 percent downpayment on the purchase of their home. Current law does not permit approved lenders to monetize the tax credit to meet the required 3.5 percent minimum down payment, but, under the terms of today's announcement, lenders can now monetize the tax credit for use as additional down payment, or for other closing costs, which can help achieve a lower interest rate. Buyers financing through state Housing Finance Agencies and certain non-profits will be able to use the tax credit for their downpayments via secondary financing provided by the HFA or non-profit. In addition to the borrower's own cash investment, FHA allows parents, employers and other governmental entities to contribute towards the downpayment. Today's action permits the first-time homebuyer's anticipated tax credit under the Recovery Act to be applied toward the family's home purchase right away. Unlike seller-funded down-payment assistance, which was a vehicle for abuse, this program will allow homebuyers to shop for the best home price and services using their anticipated tax credit.
According to estimates by the National Association of Home Builders, the Administration's homebuyer tax credit will stimulate 160,000 home sales across the nation - 101,000 of which will be first-time buyers who will receive the credit. Another 59,000 existing homeowners will be able to buy another home because a first-time buyer purchased their home. Given FHA's current market share, it's estimated that thousands of families will be able to purchase a home by allowing the anticipated tax credit to be applied toward their purchase together with an FHA-insured mortgage.
Homebuyers should beware of mortgage scams and carefully compare benefits and costs when seeking out tax credit monetization services. Programs will vary from organization to organization and borrowers should consider whether the services make sense for them, as well as what company offers the most suitable and affordable option.
For every FHA borrower who is assisted through the tax credit program, FHA will collect the name and employer identification number of the organization providing the service as well as associated fees and charges. FHA will use this information to track the business closely and will refer any questionable practices to the appropriate regulatory agencies, as necessary.
Friday, May 29, 2009
Tuesday, May 19, 2009
Home Price Declines May Be Slowing
Monday, May 18, 2009, 11:43am MST
Phoenix Business Journal - by Matt Culbertson
The decline in Phoenix-area home prices is slowing down, following a record annual drop in values in February, according to a new study by Arizona State University.
The ASU-Repeat Sales Index, which measures changes in year-to-year average home prices, shows a record drop of 37 percent in the index from February 2008 to February 2009.
But the declining values appear to be slowing, with a March-to-March drop of 36 percent and a predicted 34 fall for April 2008 to April 2009.
Karl Guntermann, Fred E. Taylor professor of real estate at ASU W. P. Carey School of Business, said in a news release that the figures suggest a slower rate of decline than previous months.
“In this market, this would be considered good news,” he said. “Before this reversal, we were seeing the index drop another 1 or 2 percent every month.”
According to the ASU-RSI report, declining prices from February 2008 to February 2009 were ranged from 40 percent in Glendale to 16 percent in Tempe.
The index shows declines in home prices for every month in the last two years, eclipsing the previous record set in the early 1990s of 17 months. Guntermann’s initial estimate for median Phoenix-area home prices in April is $117,500, which would be equivalent to November 1998 levels.
The ASU-RSI is based on repeat sales — comparing prices of a single house against itself at different times — which according to the report is the most reliable way to gauge price fluctuations in the housing market.
Phoenix Business Journal - by Matt Culbertson
The decline in Phoenix-area home prices is slowing down, following a record annual drop in values in February, according to a new study by Arizona State University.
The ASU-Repeat Sales Index, which measures changes in year-to-year average home prices, shows a record drop of 37 percent in the index from February 2008 to February 2009.
But the declining values appear to be slowing, with a March-to-March drop of 36 percent and a predicted 34 fall for April 2008 to April 2009.
Karl Guntermann, Fred E. Taylor professor of real estate at ASU W. P. Carey School of Business, said in a news release that the figures suggest a slower rate of decline than previous months.
“In this market, this would be considered good news,” he said. “Before this reversal, we were seeing the index drop another 1 or 2 percent every month.”
According to the ASU-RSI report, declining prices from February 2008 to February 2009 were ranged from 40 percent in Glendale to 16 percent in Tempe.
The index shows declines in home prices for every month in the last two years, eclipsing the previous record set in the early 1990s of 17 months. Guntermann’s initial estimate for median Phoenix-area home prices in April is $117,500, which would be equivalent to November 1998 levels.
The ASU-RSI is based on repeat sales — comparing prices of a single house against itself at different times — which according to the report is the most reliable way to gauge price fluctuations in the housing market.
Wednesday, May 13, 2009
HUD Announces Plan To Offer Bridge Loans For $8000 First Time Homebuyer Tax Credit
by Ben Martin, blogmaster emeritus on May 12, 2009
Today at NAR’s Midyear Legislative meetings, HUD Secretary Donovan announced that the housing agency is planning to offer bridge loans to allow first time homebuyers to use the $8000 tax credit towards their down payment. As an aside, we have also heard — unconfirmed rumor at this point — that VHDA is planning a similar program. We’ll announce details as they become available.
NAR’s Speaking of Real Estate blog says details will be announced during Secretary Donovan’s keynote address.
UPDATE: Here is the text of Secretary Donovan’s prepared remarks, given during his keynote address this afternoon:
We all want to enable FHA consumers to access the tax credit funds when they close on their home loans so that the cash can be used as a downpayment. So FHA will permit trusted FHA-approved lenders and HUD-approved nonprofits, as well as state and local governmental entities to “monetize” the tax credit through short-term bridge loans. We think the policy is a real win for everyone, ensuring that borrowers can tap into the numerous organizations that are already part of the FHA network to receive this additional benefit. FHA will be publishing the details shortly.
Today at NAR’s Midyear Legislative meetings, HUD Secretary Donovan announced that the housing agency is planning to offer bridge loans to allow first time homebuyers to use the $8000 tax credit towards their down payment. As an aside, we have also heard — unconfirmed rumor at this point — that VHDA is planning a similar program. We’ll announce details as they become available.
NAR’s Speaking of Real Estate blog says details will be announced during Secretary Donovan’s keynote address.
UPDATE: Here is the text of Secretary Donovan’s prepared remarks, given during his keynote address this afternoon:
We all want to enable FHA consumers to access the tax credit funds when they close on their home loans so that the cash can be used as a downpayment. So FHA will permit trusted FHA-approved lenders and HUD-approved nonprofits, as well as state and local governmental entities to “monetize” the tax credit through short-term bridge loans. We think the policy is a real win for everyone, ensuring that borrowers can tap into the numerous organizations that are already part of the FHA network to receive this additional benefit. FHA will be publishing the details shortly.
Thursday, May 7, 2009
8 Signs of Hope for the Economy
by Beth Kowitt
Tuesday, May 5, 2009
Are we on the brink of a rebound, or is it a false Spring? Fortune looks at the evidence for an imminent recovery.
Is the economy looking up, or at least bottoming out? Lately there has been much talk about "glimmers of hope," in President Obama's words, and "green shoots," a phrase du jour used by the likes of Fed Chairman Ben Bernanke.
Meanwhile, many economists have warned about a false spring, pointing to numbers that are still getting worse, like the unemployment rate. Fortune takes a closer look at the upbeat news to assess whether how strong a case they make for an imminent recovery.
1. Housing Starts
The government reported that the overall number of housing starts fell in March, but those for single-family homes during the month came in unchanged from the February figure of 358,000.
IHS Global Insight noted that this suggests single-family home construction may be stabilizing and is "testing the bottom."
2. The Stock Market
The S&P 500 was up 9.4% in April, its biggest monthly rally since March 2000. The Wilshire 5000 Total Market Index ended the month at 8,962.96, up 849.85, or 10.48%. This is the best monthly return since December 1991, when the index was up 10.72%.
"The initiatives of the federal government and some of the improvements in the credit markets are making investors more confident," said Thomas Cowhey, chief investment strategist at Hirtle Callaghan.
3. Consumer Confidence
Preliminary figures for the Conference Board's Consumer Confidence Index showed a jump of more than 12 points during April, to 39.2. The reading, which measures consumer views on the economy, beat analyst expectations and was the highest so far in 2009.
Lynn Franco, director of the organization's research center, attributed the rise in confidence to "significant improvement in the short-term outlook."
4. Single-Family Home Prices
The S&P/Case-Shiller Home Price Indices showed that while 20-city and 10-city Composite Home Price figures declined through February 2009 (down 18.6% and 18.8%, respectively, from a year ago), for the first time in 16 months the annual decline did not set a new record.
While it signals that the market may be showing some stabilization, or at least what Chairman of the Index Committee David Blitzer called "deceleration in the rate of decline," Blitzer warned that we "need a few more months of data before we can determine if home prices are finally turning around."
Meanwhile, the Pending Home Sales Index rose for the second straight month in March and was up more than 1% over the year-ago figure. The index from the National Association of Realtors (NAR) increased 3.2% during the month, to 84.6%.
"This increase could be the leading edge of first-time buyers responding to very favorable affordability conditions and an $8,000 tax credit," wrote Lawrence Yun, the NAR chief economist.
5. Earnings
The collapse in profits may be nearly played out. As of the last day in April, the 341 S&P 500 companies that had reported earnings for the first quarter were on average about 2% below estimates, according to Howard Silverblatt, senior index analyst at Standard & Poor's. Silverblatt says the results are overall "not good but definitely not bad" and show that "deterioration has slowed down."
Financial companies reported surprisingly strong numbers. But we can't count on an earnings turnaround for many months, says Silverblatt, who won't consider the numbers to show definitive proof of improvement until fourth-quarter results are in.
6. Jobless Benefit Claims
While unemployment figures are expected to rise still further, there was a signs of hope in the Unemployment Insurance Weekly Claims Report for the week ending April 25. The Department of Labor reported that seasonally adjusted initial claims for unemployment aid fell by 14,000 to 631,000.
"The past few weeks' claims data are beginning to look increasingly like a peak," wrote Ian Shepherdson of High Frequency Economics.
7. New Orders and Exports
Orders are starting to pick up. While reports from the Institute for Supply Management showed that the manufacturing sector failed to grow for the 15th straight month in April, its New Orders Index increased six percentage points to 47.2%, the highest level since August. The New Exports Orders Index increased 5 percentage points, to 44%.
"While this is a big step forward, there is still a large gap that must be closed before manufacturing begins to grow once again," said Norbert Ore, chair of the institute's survey committee, in a statement. "This is definitely a good start for the second quarter."
8. Credit Markets
Banks are starting to trust one another again. In May, the three-month London interbank offered rate (Libor), a benchmark for interbank loans, fell below 1% for the first time on record. That was down from 1.16% a month ago and 2.51% six months prior.
John Ewan, director of the British Bankers' Association, which sets the rate, told Fortune in an email that "the continued easing of the rates demonstrates that liquidity and confidence are returning to the wholesale markets."
Copyrighted, CNNMoney. All Rights Reserved
Tuesday, May 5, 2009
Are we on the brink of a rebound, or is it a false Spring? Fortune looks at the evidence for an imminent recovery.
Is the economy looking up, or at least bottoming out? Lately there has been much talk about "glimmers of hope," in President Obama's words, and "green shoots," a phrase du jour used by the likes of Fed Chairman Ben Bernanke.
Meanwhile, many economists have warned about a false spring, pointing to numbers that are still getting worse, like the unemployment rate. Fortune takes a closer look at the upbeat news to assess whether how strong a case they make for an imminent recovery.
1. Housing Starts
The government reported that the overall number of housing starts fell in March, but those for single-family homes during the month came in unchanged from the February figure of 358,000.
IHS Global Insight noted that this suggests single-family home construction may be stabilizing and is "testing the bottom."
2. The Stock Market
The S&P 500 was up 9.4% in April, its biggest monthly rally since March 2000. The Wilshire 5000 Total Market Index ended the month at 8,962.96, up 849.85, or 10.48%. This is the best monthly return since December 1991, when the index was up 10.72%.
"The initiatives of the federal government and some of the improvements in the credit markets are making investors more confident," said Thomas Cowhey, chief investment strategist at Hirtle Callaghan.
3. Consumer Confidence
Preliminary figures for the Conference Board's Consumer Confidence Index showed a jump of more than 12 points during April, to 39.2. The reading, which measures consumer views on the economy, beat analyst expectations and was the highest so far in 2009.
Lynn Franco, director of the organization's research center, attributed the rise in confidence to "significant improvement in the short-term outlook."
4. Single-Family Home Prices
The S&P/Case-Shiller Home Price Indices showed that while 20-city and 10-city Composite Home Price figures declined through February 2009 (down 18.6% and 18.8%, respectively, from a year ago), for the first time in 16 months the annual decline did not set a new record.
While it signals that the market may be showing some stabilization, or at least what Chairman of the Index Committee David Blitzer called "deceleration in the rate of decline," Blitzer warned that we "need a few more months of data before we can determine if home prices are finally turning around."
Meanwhile, the Pending Home Sales Index rose for the second straight month in March and was up more than 1% over the year-ago figure. The index from the National Association of Realtors (NAR) increased 3.2% during the month, to 84.6%.
"This increase could be the leading edge of first-time buyers responding to very favorable affordability conditions and an $8,000 tax credit," wrote Lawrence Yun, the NAR chief economist.
5. Earnings
The collapse in profits may be nearly played out. As of the last day in April, the 341 S&P 500 companies that had reported earnings for the first quarter were on average about 2% below estimates, according to Howard Silverblatt, senior index analyst at Standard & Poor's. Silverblatt says the results are overall "not good but definitely not bad" and show that "deterioration has slowed down."
Financial companies reported surprisingly strong numbers. But we can't count on an earnings turnaround for many months, says Silverblatt, who won't consider the numbers to show definitive proof of improvement until fourth-quarter results are in.
6. Jobless Benefit Claims
While unemployment figures are expected to rise still further, there was a signs of hope in the Unemployment Insurance Weekly Claims Report for the week ending April 25. The Department of Labor reported that seasonally adjusted initial claims for unemployment aid fell by 14,000 to 631,000.
"The past few weeks' claims data are beginning to look increasingly like a peak," wrote Ian Shepherdson of High Frequency Economics.
7. New Orders and Exports
Orders are starting to pick up. While reports from the Institute for Supply Management showed that the manufacturing sector failed to grow for the 15th straight month in April, its New Orders Index increased six percentage points to 47.2%, the highest level since August. The New Exports Orders Index increased 5 percentage points, to 44%.
"While this is a big step forward, there is still a large gap that must be closed before manufacturing begins to grow once again," said Norbert Ore, chair of the institute's survey committee, in a statement. "This is definitely a good start for the second quarter."
8. Credit Markets
Banks are starting to trust one another again. In May, the three-month London interbank offered rate (Libor), a benchmark for interbank loans, fell below 1% for the first time on record. That was down from 1.16% a month ago and 2.51% six months prior.
John Ewan, director of the British Bankers' Association, which sets the rate, told Fortune in an email that "the continued easing of the rates demonstrates that liquidity and confidence are returning to the wholesale markets."
Copyrighted, CNNMoney. All Rights Reserved
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