The U.S. Treasury Department announced new guidelines last week designed to make short sales go more smoothly. To qualify under these new guidelines: The property must be the home owner’s principal residence; The home owner must be delinquent on their loan or close to defaulting; The loan must have been made before Jan. 1, 2009, and be for less than $729,750; and The borrowers’ total payment must exceed 31 percent of their before-tax income. Under the plan, borrowers will receive $1,500 from the government for selling homes for less than the amount of their loans. Loan-servicing companies will get $1,000 for each completed short sale. Second-lien holders can receive up to $3,000 of the sales proceeds in exchange for releasing their liens. Investors who hold the first lien can collect up to $1,000 from the government for allowing the payments. Borrowers who complete a short sale under the program must be “fully released” from future liability for the debt, according to the guidelines. Sources: Associated Press and The Wall Street Journal
Parents who are looking for a gift to give their kids this holiday season should consider a house. With prices in the cellar, this could be a terrific year to give a down payment or even the whole home. The Internal Revenue Service says a married couple can each give gifts of $13,000 of money or property without triggering taxes for the gift givers or the recipients. That means a married couple can give another married couple a total of $52,000 a year. To maximize that they can give $52,000 in December and another $52,000 in January for a total of $104,000 to be used on a property before the federal tax credit expires. This would buy a house in some parts of the country and be sufficient for a down payment in most others. Source: The Wall Street Journal
What will happen to home loan rates if the Federal Reserve stops buying mortgage-backed securities next March? If and when that program ends, rates will rise, but most financial observers say it is very likely they won’t skyrocket. Keith Gumbinger, a vice president at financial publishers HSH Associates, predicts that the end of Fed intervention will push rates up about three-quarters of a point for a 30-year conforming loan–somewhere in the mid-5 percent range. By late 2010, Gumbinger says the rate will be closer to 6 percent. Michael Larson, a real estate analyst at Weiss Research, is dubious that the Fed will actually end the program. He contends that the Fed will continue buying securities as long as the housing recovery is tenuous. And as long as the Fed continues to dominate that market, “we’re not really going to move the needle on rates,” Larson says. Source: Smart Money
