Today’s News Synopsis:
According to the Commerce Department, new home sales decreased by 33 percent in May. The MBA’s weekly survey shows mortgage application decreased by 5.9 percent last week. The Franchise Tax Board announced 80% of the credits for first-time home buyers program in California has been applied for. Borrowers who strategically default will be banned from obtaining new mortgages backed by Fannie Mae for seven years from the date of foreclosure.
In The News:
Associated Press – “New-home sales plunge 33 pct with tax credits gone” (6-23-10)
“Sales of new homes collapsed in May, sinking 33 percent to the lowest level on record as potential buyers stopped shopping for homes once they could no longer receive government tax credits.”
Mortgage Bankers Association - “Mortgage Applications Decrease in Latest MBA Weekly Survey” (6-23-10)
“The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending June 18, 2010. The Market Composite Index, a measure of mortgage loan application volume, decreased 5.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 6.0 percent compared with the previous week.”
Orange County Register – “Calif.’s first-time buyer tax credit almost gone” (6-23-10)
“Less than eight weeks after California’s home-buyer tax credits became available, nearly 80% of the credits for first-time home buyers has been applied for, the state Franchise Tax Board has announced. Meanwhile, home buyers have applied for more than $36 million of a separate $100 million tax credit program for new home sales, the state reported.”
Los Angeles Times – “California, 4 other states to get more housing aid” (6-23-10)
“The Obama administration has approved five state-designed plans to help homeowners as part of a $1.5 billion effort to assist areas slammed by the U.S. housing bust. Treasury Department officials, who spoke on condition of anonymity because the decisions had not yet been made public, said plans for Arizona, California, Florida, Michigan and Nevada had received approval. The states estimate that the plans are projected to help up to 93,000 homeowners. That’s a small part of the administration’s main existing $75 billion mortgage assistance program, which is widely viewed as a disappointment.”
Bloomberg - “Fannie Mae Will Deny New Loans to Homeowners Who Walk Away” (6-23-10)
“Borrowers who have the means to make mortgage payments and don’t work with lenders to restructure loans will be banned from obtaining new mortgages backed by Fannie Mae for seven years from the date of foreclosure, the company said today in a statement. Washington-based Fannie Mae, along with McLean, Virginia-based rival Freddie Mac, own or guarantee more than half of the $10.7 trillion U.S. mortgage market.”
Bloomberg - “IRS Audits Block 10% of First-Time Homebuyer Credits” (6-23-10)
“About $1.22 billion of the $12.6 billion in tax credits claimed through February were denied or frozen after audits, the report from the Treasury Department’s Inspector General for Tax Administration said. The IRS estimated that about 1.8 million taxpayers sought the benefit, which totals as much as $8,000, from the inception in April 2008.”
Realty Times – “Buyers Should Be Careful About Credit Use Prior to Closing” (6-23-10)
“Buyers and their agents need to be aware that it is a very bad idea for buyers to increase their credit balances or to open new lines of credit shortly before they close escrow on their new home. More specifically, they should avoid such activity during the period of time between loan application and closing. This is because policies under Fannie Mae’s Loan Quality Initiative, effective June 1, 2010, requires lenders to ‘refresh’ a borrower’s credit report just prior to closing.”
Looking Back:
One year ago, existing home sales increased by 2.4 percent in one month. The MBA forecasted $2.034 trillion of originations of mortgages for one- to four-family homes in 2009. U.S. home prices fell 6.8 percent in April from 2008.
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