St Louis Finance: And So It Goes… the Government Giveth and Taketh Away
News Press Hot Line: 314-334-0210 | Floyd Tapia

When it rains it pours. According to a report from the Inspector General for Tax Administration, about 950,000 of the nearly 1.8 million Americans who claimed the home buyers tax credit on their 2009 tax returns will have to return the money.

Oh, no… say it ain’t so Mr. Bernanke. Sadly it is the truth.

Homeowners who bought properties during 2008 and celebrated their financial feat were actually to deduct, dollar for dollar, up to 10 percent of the home’s purchase price or $7,500, whichever was less.

But here’s the the catch: The money was a no-interest loan that had to be repaid within 15 years. What?

Well, here’s the kicker. Had they waited to buy until 2009 or the very next year, they could have gotten a much sweeter deal. That’s right. Congress extended the credit and made it a refund rather than a loan.

Now, the IRS is hard at work developing a strategy for separating the 2009 taxpayers who are required to repay the credit from those who are not.

You would think that this obvious necessity to track financial transactions would not be a potential problem.

Yet, a review by the Inspector General earlier this year found that the IRS could not easily distinguish between home purchases made in 2008 and 2009. Can you say tracking codes?

This snafu has heightened concerns that some claims could be erroneous or even fraudulent. How could this happen? For example, some buyers could claim their purchase came later (2009) than it actually occurred.

There is now news reporting that 73,000 claims, or more than 4 percent of the 1.8 million home buyers who received the credit, had incorrect purchase dates recorded by the IRS.

Some of the inaccuracies counted against the taxpayers. Nearly 60,000 were listed as purchasing in 2008 (meaning they had to repay the credit) or had no purchase dates at all, rather than their correct 2009 purchase dates,

This huge mistake could cost homeowners millions of dollars for a wrong transaction date, which if it had been recorded correctly would free them of the obligation to pay it back.

It is also taking a look at all those deceased taxpayers who received credits.  The inspector general reported that 1,326 single people listed as “dead” by the Social Security Administration claimed more than $10 million in credits.

Not surprising, the IRS threw out a whopping 528 of those 1,326 claims, saving themselves over $4 million.

But as you probably figured out, it would be very difficult for a corpse to provide any type of legal argument to substantiate their last big payout before their cashing out. I know, this is no laughing matter.

My advice: Homeowners would do well to have their financial paperwork in order and readily available if and when the IRS contacts you about that generous loan that you thought was a refund.

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When applying for any type of St Louis mortgage, call Liberty Lending Consultants, the recognized St Louis home loan and refinancing experts, at 877-334-0210 and ask for Steve Swan or Doug Stahlschmidt.

For business owners looking for small business loans and alternative financing that works, call Floyd Tapia, host of the St. Louis “Mortgage Minute” at 314-334-0210. He is a successful hedge fund originator assisting local and national business owners in getting private and public St Louis finance and commercial lending with no upfront fees.

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St Louis Finance News: MBA Says Delinquencies Down Overall But First Time Delinquencies Up
News Press Hot Line: 314-334-0210 | Floyd Tapia

Recent reports coming in from the Mortgage Bankers Association (MBA), the nation’s overall mortgage delinquency rate dropped to 9.85 percent in the second quarter of 2010.

This is down from 10.06 percent of all loans outstanding three months prior.

The percentage of seriously delinquent loans which would include ones 90 days or more late or that have already been repossessed by lenders dropped to 9.11 percent from 9.54 percent in the first quarter.

The drop in loans 90 days or more late was the biggest the MBA has ever recorded, according to the MBA’s chief economist, Jay Brinkmann. He goes on to say: “That shows we’re making headway.”

He cited three reasons for the improvement:

• Fewer loans are coming into the default process;
• The home buyer’s tax credit, which increased demand for homes, generated many pre-foreclosure sales, removing the attached delinquent loans from the statistics;
• The government and lender-led mortgage modifications “cured” some payment problems.

However, even with those bright spots, there was one troubling finding: First-time delinquencies increased after four quarters of decline. It inched up to 3.51 percent in the second quarter from 3.45 percent in the first quarter.

According to Brinkmann, the reversal reflects the weakness in both the housing market and the overall economy.  “It’s a question of jobs,” he said. “It takes a paycheck to make a mortgage payment.”

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When applying for any type of St Louis mortgage, call Liberty Lending Consultants, the recognized St Louis home loan and refinancing experts, at 877-334-0210 and ask for Steve Swan or Doug Stahlschmidt.

For business owners looking for small business loans and alternative financing that works, call Floyd Tapia, host of the St. Louis “Mortgage Minute” at 314-334-0210. He is a successful hedge fund originator assisting local and national business owners in getting private and public St Louis finance and commercial lending with no upfront fees.

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St Louis Finance News: Lower Than Expected Home Sales Could Sink the Recovery
News Press Hot Line: 314-334-0210 | Floyd Tapia

With home sales plunging to their lowest level in 15 years, economists warn that a double-dip in housing prices is just around the corner, threatening to further slow the recovery.

Existing home sales sank 27.2 percent in July, twice as much as analysts expected, to a seasonally adjusted annual rate of 3.83 million units.

Only 60 days after the end of the home buyer’s tax credit, sales were 34 percent below April’s tax incentive-induced peak.  “Home sales were eye-wateringly weak in July,” said economist Paul Dales of Capital Economics.

He goes on to say that “it is becoming abundantly clear that the housing market is undermining the already faltering wider economic recovery. With an increasingly inevitable double-dip in housing prices yet to come, things could get a lot worse.”

The sales pace of all homes including single-family homes, town homes, condominiums, and co-ops is at the lowest since NAR began tracking the figure in 1999.

Sales of single-family homes, which account for a bulk of the transactions, are at the lowest level since May 1995.

Inventory has also continued to climb, rising 2.5 percent to 3.98 million existing homes for sale. That represents a 12.5-month supply at the current sales pace, the highest since October 1982 when it stood at 13.8 months. A six-month of supply is considered normal.

The housing market and the broader economy are closely intertwined. When housing prices collapse, so does the overall wealth and confidence of Americans.

“Falling housing prices strain the overall confidence in the economy and discourage Americans from spending,” Dales said. “They also mean that banks lose money on their investments and curtail lending, meaning there is less money out there to invest and boost the economy.”

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When applying for any type of St Louis mortgage, call Liberty Lending Consultants, the recognized St Louis home loan and refinancing experts, at 877-334-0210 and ask for Steve Swan or Doug Stahlschmidt.

For business owners looking for small business loans and alternative financing that works, call Floyd Tapia, host of the St. Louis “Mortgage Minute” at 314-334-0210. He is a successful hedge fund originator assisting local and national business owners in getting private and public St Louis finance and commercial lending with no upfront fees.

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Check back daily for more financial news.

St Louis Mortgage Refinancing and Real Estate News –

News: Home Tax Buyer Credit May Not Be Doing Enough for Real Estate Sales

The country has been arguably experiencing the highest unemployment rate since the Great Depression of 1929.

So, with unemployment at around 10%, analysts hoped that the home buyer’s tax credit bailout plan was instituted to stimulate housing demand in this already decimated market.

However, to the chagrin of political experts, the Obama administration’s additional initiatives to modify loans facing foreclosure has equally failed and not met with any great success so far.

And as we talk more about this federal program designed to sell more homes, it too has met with overwhelming disappointment.

St Louis mortgage analysts fear that a huge supply of discounted homes will hit the market in 2010 and this additional supply of homes will only worsen an already horrible market situation.

As the deadline for the home tax buyer credit approaches April 30th, there is no evidence nor likelihood that we will see any increase in housing demand.

“No one is saying that they need to buy before the tax credit expires,” said Tim Surratt, a real estate agent.  But that seems to be the biggest mistake going for this sinking market.

According to a recent survey conducted by Campbell Communications and Inside Mortgage Finance, the percentage of homeowners looking to buy a home was percentage wise flat from January to February, 2010.

Some experts are saying that the size of the tax credit at $6,500 is too small to influence buyers to make any kind of immediate buying decision.

Mortgage and financial consultants have stated unequivocally that the savings on account of the home tax buyer’s credit will not offset down payments and other transaction costs.

For example, the agent’s commission for a home at the national average price of $164,000 is likely to be 6 percent or $9840.  The final commission is much higher than the tax credit of $6,500 or even $8,000 depending on your circumstances.

“You’ve got a really big problem that requires big guns, and the tax credit is just not big enough,” said Roberton Williams, senior fellow at the Tax Policy Center.

Perhaps more time should have been spent on making this program much more financially advantageous to buyers rather than the apparent wasted time on the controversial passage of the recent healthcare program.

Now it appears when things couldn’t get much worse, the social security system will no doubt need an emergency cash infusion sooner than later.  We will have to wait and see.

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St Louis Mortgage Refinancing and Real Estate News –

News: Pending Home Mortgage Sales Drop 7.6 Percent

Recent statistics from the Pending Home Sales Index of the National Association of Realtors (NAR), said according to contracts signed in January, the number had dropped 7.6 percent from a reading of 97.8 in December to to 90.4 at present.

This is 12.3 percent higher than January 2009 when it was 80.5.  NAR along with other housing analysts feel that the harsh winter throughout the United States hampered home sales more than originally anticipated.

“January pending sales, though still higher than one year ago, remain much lower than expected given that a large number of potential buyers are eligible for the expanded home buyer tax credit,” said NAR chief economist Lawrence Yun.

He continues:  “Moreover, the abnormally severe and prolonged winter weather, which affected large regions of the US, hampered shopping activity in February.”

Moreover, the same experts agree that the extension of the home buyer’s tax credit is doing very little to boost pending home sales.

And let’s not forget that the Federal Reserve will end purchase of mortgage-backed securities this month creating more pessimistic views that the housing recovery is going to take more time.

“When you take away all the support from the housing market, the underlying demand for housing is a lot weaker than we thought,” said Mark Vitner, an economist at Wells Fargo Securities.

He goes on to say:  “We clearly pushed some demand forward, and there wasn’t that much demand to pull forward anyway. The housing recovery is going to be very, very slow.”

Let’s take a quick look at the decline of home contracts on a regional basis.  The pending home sales index dropped 8.7 percent to 71.3 in the Northeast region.  In the west, it dropped 13.2 percent to 102.9.  The Midwest declined 8.9 percent to 81.2 and the southern region dropped 2.1 percent to 98.1.

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News: Mortgage Rates to Rise Is Not “New” News

The Fed is planning to end its plans to finish purchasing approximately $1.25 trillion in mortgage-backed securities.

And although they have been doing this since late 2008, this announced ‘cease-and-desist’ could be more bad news to this sinking economy.

There has been an overwhelming agreement amongst mortgage analysts saying that the removal of this support would mean higher mortgage rates.

This would obviously could hit housing prices and majority of sales hard.  Of course the worse one could imagine would be the continued collapse causing the broader economic recovery to stall.

Most realized that this was just another bailout program which became the largest single injection of cash into this financial crisis.

The question however seems to be the new topic on Capitol Hill that being even though the Fed intends to stop buying mortgages, will the central bank start selling them to private investors any time in the next few years.

Again, the consensus seems to be a resounding “no.”  But getting back to the problem at hand, even if the Fed holds onto the mortgages it has already purchased, if no future mortgages are bought, it will likely raise mortgage rates in the coming weeks.

Mortgage experts say consumers should expect a jump of at least a quarter to a half percentage point would be the likelihood.   San Francisco Federal Reserve President Janet Yellen also warned of higher rates.

The concern about this new shift in stopping support for the housing industry is equally compounded by the April 30th contract deadline for the $8,000 in tax credits for home buyers.

Dean Baker, co-director of the Center for Economic and Policy Research, argues that both the Fed’s bailout program and home buyer’s tax credit for home buyers practically “ended the free fall in home prices.”

He also goes on to say that the removal of this support could mean that home prices would most likely start to drop by as much as 1 percent each month.

His prediction is much more alarming regarding rates.  He thinks mortgage rates could climb by as much as a full percentage point in the coming months.

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Although the St. Louis mortgage and real estate market has drastically changed over the last 18 months, there are ways that consumers can avoid or at least minimize the home buying stress factor.

The following five simple yet ingenious tactics will help in making your St. Louis home loan and home buying experience a better one that will yield positive results.

1. Do not make the mistake by waiting to apply for your loan -

There have been reports that The Federal Reserve plans to stop buying mortgage-backed securities by the end of March. Many mortgage analysts feel that the added risk will precipitate higher interest rates which means that low rates will be a thing of the past. Don’t miss out on this huge potential savings.

2. Your credit report may no longer be the ideal factor concerning your loan -

Now would be the perfect time to look carefully into your credit files. If there are any errors located on your credit report, correct them now before your lender sees them. If you are looking to attain the best interest rates and lower fees, banks will expect a FICO score of 740 or higher. Anything less than 620 will definitely become a financial hurdle in getting your loan done.

3. What are you bringing to the table in regards to a down payment -

Due to more and more borrowing restrictions, most lenders require buyers to put at least 10 percent down. This will benefit you with lower interest rates when purchasing or doing a St. Louis refinance.

For consumers that don’t have ten percent down, an FHA-insured mortgage with a needed 3.5 percent down may be an option. For those who do not have a down payment, you can pursue a VA or U.S. Department of Agriculture’s Rural Housing Service loan. Although there are qualifications for both loans, neither requires a down payment.

4. Try this when refinancing your home -

Turn a common financial fumble into a refinancing game winning touchdown by not refinancing from the beginning. Instead of starting over with a new 30-year St. Louis mortgage, ask your lender to crunch the numbers with the remaining number of years left on your old loan. A lower rate may then take you further down that path of saving money.

However, if you need financial breathing room and a lower monthly payment would help, then refinancing into a new 30-year term may be the right loan for you. Make sure you discuss the possibilities with your St. Louis mortgage broker.

5. The extension of the tax credit may serve you well -

The extension of the home buyer’s tax credit would logically be a great reason to move forward with your impending home purchase decision. The savings are quite attractive.

Now having said this, be careful as to not rush into an unwise buying decision. This savings should be a “bonus” and not the deciding factor. Keep in mind that staying balanced in this matter is as equally important as not missing the tax savings and lower interest rates which may not happen again any time soon.

I would suggest sitting down and go over these five proven home buying tips before purchasing or refinancing that home of yours. If your credit score is 740 or higher and if you have some money put aside, then it only makes sense to move forward with purchasing while taking advantage of that tax credit and lower interest rates.

But, if your credit score is not where you want it to be and you are short on cash, seeking other options or perhaps waiting all together to apply until items are corrected may be the best way to go for now. Either way, I wish you the best in your financial endeavors.

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Looking to find the best deal on St Louis lending, then visit www.LibertyLendingConsultants.com to find the best advice on St Louis refinancing and mortgage news for you.

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