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Archive for April, 2010

This’ll be a short Blog entry, but well worth the read!

Supplement bill HR 5017 (The USDA Bill) Rural Housing Preservation and Stabilization Act of 2010 has passed the House! The majority of the House (85%), voted in favor of HR 5017. Once the bill passes the Senate and is signed into law by the president, we will have an additional 30 billion in funding.

As always thank you for your support in this much needed affordable housing program.

I will keep you updated as soon as this happens!

Travis Newton
Oregon USDA & FHA Expert
ML 137

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AMERICA, we have some good news! 

There may be some major changes to the USDA 100% Loan Program in the coming weeks/months. Below is the letter concerning Kanjorski’s Bill.

April 22, 2010                                                 

 KANJORSKI BILL PRESERVING AFFORDABLE MORTGAGES IN AMERICA’S HEARTLAND PASSES IN COMMITTEE

Washington, DC – Today, the House Financial Services Committee unanimously passed H.R. 5017, the Rural Housing Preservation and Stabilization Act of 2010, introduced by Congressman Paul E. Kanjorski (D-PA), Chairman of the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises.  This action clears the bill for consideration by the U.S. House of Representatives, which is expected to take up the bill as early as next week.  The bill ensures the continued access of rural homebuyers to affordable mortgages through the U.S. Department of Agriculture’s (USDA) loan guarantee program.  The financial crisis has spiked consumer interest in the program, tripling the number of loans annually made since 2006.  Because demand continues to grow, the program will exhaust its federal funding within days.   H.R. 5017 would, at no cost to the taxpayers, solve this problem by making the program self funded, enabling families living in rural communities to continue to access these much needed loan guarantees.

“Since its creation in 1987, USDA’s affordable rural home loan guarantee program has helped hundreds of thousands of families to realize the American dream of homeownership, including many in Northeastern Pennsylvania,” said Chairman Kanjorski.  “As a result of the unprecedented demand, the program is now unfortunately running out of money.  At no cost to taxpayers, my bill will preserve the access of millions of families living in America’s heartland to needed USDA loan guarantees, so that they can continue to buy homes with affordable mortgages.  Without action, too many families in rural America will have no options for getting home loans.  We cannot allow that to happen.”

“As a result of this program, I was able to purchase my first home which I have wanted all my life,” said Virgie Spruiell from Bushkill, Pennsylvania.  “I enjoy it every day and it is a blessing.  I greatly appreciate Chairman Kanjorski’s efforts to enable the program to continue so that other people can access these guaranteed home loans just as I did.  It has had helped me tremendously.”

Chairman Kanjorski’s legislation will correct the Section 502 Single Family Housing Guaranteed Loan Program funding shortfall by enabling the program to pay for itself, rather than relying on federal funding.  In order to pay for the program, lenders will pay up to a 4 percent fee on new home mortgages.  As a result of these changes, financing of the program will move from a combination of government funding and industry fees to a self-sustaining initiative.

The USDA’s Rural Housing Service manages the Section 502 program, which provides a vital source of mortgage credit for people living in rural communities.  Low- and moderate-income individuals and families in rural communities often have fewer mortgage credit options than those households in urban areas.  The program aims to fill that void and lower the costs of homeownership by giving rural areas access to a home loan guarantee program.  These guarantees decrease the exposure of home lenders to defaults so that they will underwrite more mortgages.  In 2009, loans made under the program averaged $112,000.  To qualify for the program, borrowers must have good credit and reliable incomes to sustain homeownership. 

Please contact me with any questions you may have.

Travis Newton

503.931.4490

ML137

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New-home sales surge 27% to 411,000 pace

 

Boosted by a soon-to-expire $8,000 and $6,500 Tax Credit, low mortgage rates and favorable weather, sales of new homes surged 27% in March to a seasonally adjusted annual rate of 411,000 after hitting a record low in February, the Commerce Department estimated Friday. It was the largest percentage gain in sales since April 1963, the government said. It was the highest sales pace since July, and much stronger than the 335,000 expected by economists surveyed.

See, there is some great news out there!

As always, please contact me with any questions you may have.

I can be reached at 503.931.4490.

Travis Newton

Sr. Mortgage Baker

Oregon FHA & USDA Expert

ML137

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Early last month we were told by a few USDA officials that the funds may not last through the end of April. With the new bill being introduced to Congress (https://oregonfhaloans.wordpress.com/2010/04/14/usda-update-and-its-a-good-one/) we may not have any funding lapses anyway.  With that said, here is an update on the 2010 Fiscal Year Funds:

The total amount allocated was $13,533,633,697. As of April 19th, 2010, we have used $11,797,934,866 of those funds, which leaves $1,645,879,942 available for purchases. 

This *should* get us through the end of the month and the $8000 tax credit rush.

There are many changes to the USDA program being discussed. As always I will forward that info as soon as I receive it.

 

Funding information as of April 19th, 2010

USDA Funds Utilization Data

Total FY2010 Allocation = $13,533,633,697

Total YTD FY 2010 Obligations (Funded Loans) = $11,797,934,886

Total available Funds for purchase transactions: $1,645,879,942

Please contact me with any questions or concerns. I can be reached at 503.931.4490.

ML137

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Capito Introduces Bill to Continue Access to Home Ownership in Rural Communities

Legislation Would Increase USDA Rural Housing Loan Guarantee Program’s Capital Reserve

Washington-Rep. Shelley Moore Capito, R-W.Va., the Ranking Republican Member of the House Financial Services Subcommittee on Housing and Community Opportunity, yesterday introduced legislation in the House Financial Services Committee to shore up funds for the U.S. Department of Agriculture 502 Rural Housing loan guarantee program.  Capito’s bill, H.R. 5003, The Rural Housing Improvement Act, would ensure that responsible families in rural communities continue to have access to the credit market to finance their homes. 

“I have received hundreds of letters, emails and calls from my constituents, including home buyers and sellers, who are concerned that the 502 loan guarantee program will soon run out of funds,” said Capito.  “My legislation would continue to assist thousands of responsible, low to moderate income West Virginians who otherwise wouldn’t have access to home ownership.”

This supplemental bill will resolve the funding crisis and will help us get through the year without any funding interruptions.  All concerned USDA GRH originators and other interested parties (real estate agents, builders, settlement agents, appraisers, community leaders, etc.) are encouraged to contact their members of Congress and Senate regarding their support for this bill.

Unites States Congress members:

http://www.house.gov/house/MemberWWW_by_State.shtml

United States Senate members:

http://www.senate.gov/general/contact_information/senators_cfm.cfm

As always feel free to call with any questions!

Travis Newton

503.931.4490

ML137

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Score: What is it Good For?
The Elements of a Credit Score

A credit score is an extremely important financial tool. It provides access to the financing you need in order to buy a car, a home, or pay for college tuition, among other things. Since higher scores equate to lower costs and vice versa, it’s vital to understand the factors involved in calculating your score. Here are the five elements that make up a credit score, in order of importance:

Payment History: 35% impact. Paying debt on time has a positive impact. Late payments, judgments, and charge-offs have a negative impact. Delinquencies that have occurred in the last two years carry more weight than older items.

When applying for a mortgage, every point in your credit score can make a big difference. So don’t make any major financial or credit decisions – even paying off an old debt or delinquency – without first discussing it with your mortgage professional.

Outstanding Credit Balances: 30% impact. This factor marks the ratio between the outstanding balance and available credit. Ideally, consumers should make an effort to keep balances as close to zero as possible, and definitely below 30% of the available credit limit when planning to enter into a loan transaction within 3-6 months.

Credit History: 15% impact. This marks the length of time since a particular credit line was established. A seasoned borrower is stronger in this area.

Type of Credit: 10% impact. A mix of auto loans, credit cards, and mortgages is more positive than a concentration of debt from credit cards alone.

Inquiries: 10% impact. This quantifies the number of inquiries (or requests for credit) that have been made on a consumer’s credit history within a 6-12 month period. Each individual inquiry – up to 10 – can hurt your credit score by as much as 5 to 30 points. Any additional inquiries thereafter will not affect your credit score.

In other words, don’t start the loan process until you’re ready to act. Otherwise each individual credit inquiry could cost you. However, scoring models have now been adjusted to count multiple “hard” inquiries within a 45-day period as a single request. So, when you’re ready, your credit will be too.

If you or anyone you know has any questions about credit scores or what can be done to repair them, please don’t hesitate to call.

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1. Free Money. April 30, 2010 is the last day to enter into a home purchase contract and still potentially qualify for a federal income tax credit of up to $8,000 for first-time homebuyers and up to $6,500 for repeat homebuyers. The credit can be claimed only on contracts that close by June 30, 2010.

2. Affordability. Based on recent property declines and current interest rates, home affordability has not been higher since it was first tracked over 40 years ago. Your grandparents couldn’t have received a better interest rate than you can today.

3. Tax Breaks. The IRS allows you to deduct the interest you pay on your mortgage, your property taxes and, in many cases for those who qualify, some of the costs to buy your home and mortgage insurance. Owning a home is a great way to lower your tax bill.

4. Build Wealth. Unlike paying rent, with each mortgage payment you make, you build equity and you decrease your income tax liability. Owning a home is still the best long-term investment.

5. Appreciation. As home prices have fallen precipitously in today’s tough economy, the basis for realizing appreciation in future years is very strong. Historically, even with other periods of declining value, home prices have exceeded consumer inflation. From 1972 through 2005, home prices increased on average 6.5%, according to the National Association of Realtors®.

6. Stability. Knowing you can establish roots and raise a family in one location, free of the desires or needs of your landlord to sell the property you are living in. This is something no other investment provides. You can’t live in a stock, and you can’t raise your kids in a bond.

7. Independence. Enjoy the freedom to do what you want to your home. After all, it’s yours to do what you wish. And, with any improvements you make, you have the ability to benefit from your investment. Try that with an apartment!

As always, feel free to call me with any questions you may have!

ML137

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