Every person who owns a home in the U.S. is losing value and equity in their home because of HVCC. HVCC (Home Valuation Code of Conduct) is supposed to stop appraisal fraud by not allowing loan originators to have any direct contact with the appraiser. The problem is that all appraisals must now be ordered through Appraisal Management Companies, which are owned by none other than, the banks. hmmm… what is wrong with that picture?!

Andrew Cuomo is receiving an early Christmas present today -

Mark Sevitt, past president of NAMB (National Association of Mortgage Brokers), along with Frank Garay and Brian Stevens, are delivering 50 boxes of signed petitions (120,000 signatures) of people in the mortgage industry, real estate industry, and consumers, to Andrew Cuomo’s office today, requesting that HVCC be stopped. HVCC has done nothing to stop fraud, actually appraisal fraud is up by 46% in Q3 2009. Since brokers haven’t been able to have any direct contact with appraisers since March 2009, it appears that they have been incorrectly targeted as the problem. HVCC has done nothing but slow down the housing industry recovery and cause transaction after transaction to not close. That is the last thing the housing industry needs right now.

Here is a partial list of what HVCC does:

1. The loan originator must order the appraisal through the AMC – which on average adds about one or two weeks to the process.

2. The appraisal ordered from one lender cannot be transferred to another lender, so if something with the 1st lender doesn’t work out, the homeowner has to pay for a new appraisal to be done. ($500-$600)

3. The appraisal has to be paid upfront by the homeowner, out of pocket, before he even knows if the transaction will be approved or not. The approval, of course, is based upon the value of the home. Since no one can talk to the appraiser ahead of time, there is no way to determine if the value will be there, or not.

4. The AMCs don’t choose appraisers based upon what areas they are familiar with, as loan originators used to do. The appraisals wind up being done by appraisers who don’t even know the area the home is in.

The bottom line is that HVCC, which was intended to protect homeowners from fraudulent appraiser/lender relationships, is doing nothing but hurting them, instead. It’s only accomplishment has been to give the big banks even more power and control (along with a new revenue source) than they already have. It’s time to put a stop to HVCC – now.

These days keeping your credit score as high as possible is more important than ever. Just one point can make a difference in your interest rate, costing you thousands of dollars over the life of your loan, or even stop you from qualifying all together.

Each Friday I’ll be posting a credit tip of the week, highlighting important facts that can have an impact on your score.

Today’s tip is about collections and judgments:

If you have any outstanding collections or judgments, they will come off your credit report after 7 years. If they are still appearing on your report after 7 years, you can simply contact the bureaus that are reporting them and provide them proof of the original date to have them removed. However, if the debt is owed to the government on any level, including child support and student loans, the debt can remain indefinitely. Surprise, huh?!

All three bureaus can be contacted online at:

www.experian.com

www.transunion.com

www.equifax.com

Here is an excerpt from www.nahb.org on the new and extended Homebuyers Tax Credit. Please feel free to contact me if you have any questions.

2009-2010 Homebuyers Federal Tax Credit Fact Sheet

Who is Eligible

• First-time home buyers, who are defined by the law as buyers who have not owned a principal residence during the three-year period prior to the purchase, may be eligible for up to an $8,000 tax credit. 
• Existing home owners who have been residing in their principal residence for five consecutive years out of the last eight and are purchasing a home to be their principal residence (“repeat buyer”), may be eligible for up to a $6,500 tax credit. 
• All U.S. citizens who file taxes are eligible to participate in the program. 

Income Limits

• Home buyers who file as single or head-of-household taxpayers can claim the full credit ($8,000 for first-time buyers and $6,500 for repeat buyers) if their modified adjusted gross income (MAGI) is less than $125,000.  
• For married couples filing a joint return, the combined income limit is $225,000. 
• Single or head-of-household taxpayers who earn between $125,000 and $145,000, and married couples who earn between $225,000 and $245,000 are eligible to receive a partial credit.  
• The credit is not available for single taxpayers whose MAGI is greater than $145,000 and married couples with a MAGI that exceeds $245,000. 

Effective Dates

• The eligibility period for the tax credit is for homes purchased after Nov. 6, 2009, and before May 1, 2010. However, home purchases subject to a binding sales contract signed by April 30, 2010, will qualify for the tax credit provided closing occurs prior to July 1, 2010.  

 Types of Homes that Qualify

• All homes with a purchase price of less than $800,000 qualify, including newly-constructed or resale, and single-family detached, townhomes or condominiums, provided that the home will be used as their principal residence. Vacation home and rental property purchases do NOT qualify.   

 Tax Credit is Refundable

• A refundable credit means that if the amount of income taxes you owe is less than the credit amount you qualify for, the government will send you a check for the difference. 
• For example:  
  • A first-time buyer who qualifies for the full $8,000 credit who owes $5,000 in federal income taxes would pay nothing to the IRS and receive a $3,000 payment from the government. If you are due to receive a $1,000 refund, you would receive $9,000 ($1,000 plus the $8,000 first-time home buyer tax credit).  
  • A repeat buyer who owes $5,000 would pay nothing to the IRS and receive $1,500 back from the government. If you are due to get a $1,000 refund, you would get $7,500 ($1,000 plus the $6,500 repeat buyer tax credit). 
• All qualified home buyers can take the tax credit on their 2009 or 2010 income tax return. 

Payback Provisions

• The tax credit is a true credit. It does not have to be repaid unless the home owner sells or stops using the home as their principal residence within three years after the purchase.

First-time Homebuyers Tax Credit Extension Is Official

Great news! The extension for the First-time homebuyers tax credit is official. And it’s not limited to first-time homebuyers, either! First-time homebuyers (that is, people who have not owned a home within the last 3 years) may be eligible for the tax credit of 10% of the purchase price of the home, up to $8,000.

Homeowners who have owned and occupied a primary residence for a period of five consecutive years during the last eight years, may qualify for a tax credit of up to $6,500.

 In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

It’s important to remember that the tax credit is just that… a tax credit – a dollar-for-dollar tax reduction, rather than a reduction in a tax liability. If you owe nothing, you will receive the tax credit in full. If you have a refund coming back, you will receive the refund plus the tax credit. If you owe taxes, you will receive the tax credit minus the amount you owe.

The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit, however, single filers who earn $145,000 and above are ineligible.

Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit, however, joint filers who earn $245,000 and above are ineligible.

Qualifying buyers may purchase a property with a maximum sale price of $800,000.

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Remember, the new tax credit program includes a number of details and qualifications. For more information or answers to specific questions, please call or email me today.

In addition, you may be able to benefit from additional housing related provisions, including the following:

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Tax Incentives to Spur Energy Savings and Green Jobs

This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.

Landmark Energy Savings

This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.

Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing

This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs. Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8 to increase energy efficiency, including new insulation, windows, and frames.

Expanding Housing Assistance

This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.

WARNING: Banks are coming after more of your money again – or still…..

 As the Federal Reserve is continuing to keep interest rates artificially low, the great interest rates that we are seeing are allowing banks to fund mortgages with some pretty fat margins. The same banks that were bailed out are now in part benefactors of the same Fed policies that are intended to get people buying houses again.  It makes sense – our economic recovery is dependent on our mortgage recovery, but if recovery is the goal, and the banks are already double dipping on rate margins and bail out money, then is it fair that they are triple dipping by raising credit card rates?

 After telling the banks that they have to get their credit card rate hikes under control, the banks told Congress that they need more time to get geared up for the Congressionally  mandated changes. Congress granted them an extension through February.  So how are the banks using that time to gear up for the required changes?? They are hiking their rates!  All in time for the holiday shopping season.  Isn’t that a great way to stimulate the economy?! Chase and Citi have both raised their rates to as high as 30% – for people who have never had a late payment – ever.

 Here is what you can do about it. The banks are required to send you a letter that will trigger the higher and permanent rate.  If you get a rate hike letter in the coming weeks, you need to stop using the card. Call the bank and tell them you are opting out. This will freeze your current rate until you can transfer the balance to a card with a lower rate or simply pay it off.

Barney Frank and friends are working overtime to get rid of all those unscrupulous mortgage brokers. You know, those dishonest people who shop rates for you at the different banks. His goal is to get rid of any competition for the banks. There are now 4 major bank entities left, thanks to the government’s involvement. Citi, Bank of America, Chase and Wells Fargo – all now deemed “too big to fail”.  How any of this is good for you, the consumer, is anyone’s guess. The banks continue to show over and over again that their only concern is their own pockets.

July 9, 2009  Written by: Ron Paul

Our country currently finds itself in the midst of the worst economic crisis since the 1930s and, as during all economic crises, people search for the answer as to why this has happened. Not only have large financial firms been affected, but also mainstays of American industry such as GM and Chrysler, all the way down to the Mom & Pop stores on Main Street. The easy way out is to blame the traditional scapegoats: foreign governments, fraudulent businessmen, and greedy speculators. But the real villain is far more sinister; the organization entrusted with maintaining a stable dollar and touted as the guarantor of economic stability – the Federal Reserve.

In the United States, monetary policy has been the domain of the Federal Reserve since its inception in 1913. Since that time we have had a number of cyclical recessions, each one following a boom caused by the Federal Reserve’s loose monetary policy. The problem with the Federal Reserve is that it interferes with market pricing functions. Interest rates are a price just like any other and arise because of the fact that people prefer to consume in the present rather than in the future. The extent to which people defer present consumption is reflected in interest rates, which in a free market are determined by the spontaneous interactions and decisions of millions of people.

Fed intervention to set prices throws markets and interest rates out of equilibrium. When the Federal Reserve pushes interest rates below what the market rate would be, everyone wants to borrow money for long-term projects. Shortages of loanable funds would occur, except that the Federal Reserve has the ability to create bank balances out of thin air. The Fed can create a bank ledger on paper, or on a computer, establish a balance of millions or billions of dollars, and then spend these dollars out into the economy.

Loans become cheap, and the result of these lower interest rates is an economic boom which eventually manifests itself as a bubble. Beginning in 2001, the Federal Reserve pushed interest rates to as low as one percent, which after adjusting for inflation meant that the real interest rate was negative, so businesses were actually making money by taking out loans. This was the fuel for the housing bubble and the reason there are 19 million empty houses today.

Because of this awesome power to create money out of thin air, the Fed has jumped in to stabilize ailing financial firms by pledging over $7 trillion through various guarantee programs and credit facilities. This is equivalent to over half of the entire nation’s GDP. Over $1 trillion of this is already in play, propping up banks and other institutions that should be allowed to fail. All of this has taken place with no oversight by Congress. The Fed was created by Congress, and it is unconscionable that we have allowed it to act in such a way without our oversight. Currently the Federal Reserve’s credit facilities, open market operations, and agreements with foreign governments and central banks are all exempt from any sort of audit or oversight. Earlier this year I introduced the Federal Reserve Transparency Act, HR 1207, that would remove all restrictions on Federal Reserve audits and call for a f ull audit of the Federal Reserve System to be completed by the end of 2010. At this writing, 245 of my fellow Congressmen have cosponsored this bill and we hope to have hearings in the near future. In the Senate, Republicans Jim DeMint, Mike Crapo and David Vitter have cosponsored S. 604, companion legislation introduced by Bernie Sanders. I am very encouraged by the tremendous growing momentum on Capitol Hill.

Our Founding Fathers never intended for a single entity such as the Federal Reserve to have this much power. In fact, there is no authority in the Constitution for the federal government to create a central bank, to enact legal tender laws, or to print paper money. The Tenth Amendment is quite clear that “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” The states themselves are prohibited from emitting bills of credit, i.e. paper money, arising from the Founders’ negative experiences with paper money during the Revolutionary War. Cheap, un-backed, easily counterfeited paper money nearly lost the Revolution, until the government returned to minting gold and silver coins. Unfortunately, like too many other lessons learned by the Founders, the painful experiences of paper money have been forgotten by those living in the pres ent. We even ignore the experiences of Germans in the 1920s, Argentines in the 1980s, and Zimbabweans over the past decade. The Fed doubled the monetary base last fall in a matter of months, and God help us if any of this high-powered money begins to make its way through the economy.

An audit of the Fed is only the first step towards returning to where our Founders intended this country to be. The Founders knew that paper money could ruin a country, and drafted the Constitution in such a way that they thought would ensure sound, commodity-backed currency. Unfortunately, the Constitution was dispensed with long ago, and we find ourselves now suffering under an unconstitutional regime of un-backed paper money. Until we abolish the Federal Reserve and return to a stable currency that is not able to be manipulated to create boom and bust cycles, we will continue down the path of economic ruin.

Congress Ron Paul serves the fourteenth district of Texas and is honorary chairman of Campaign for Liberty. His new book, End the Fed (Grand Central Publishing) will release on September 16^th and is available for pre-order on Amazon.

As summer approaches and the temperature keeps climbing, so do interest rates. I had an email from a client who is looking to purchase his first home. His question is very appropriate considering the housing market and interest rate environment. He asked,

“I see the rates are on the rise once again. Is this becoming a worse deal as time passes? Do you foresee a decline at all? I am seeing ~6% for 30 year fixed when it was 5.7 a week ago and below 5 a month ago. Is it best to wait now in your opinion or get in now?”

Here was my response:

Here is a chart of the history of 30 year fixed rates since 1975. As you can see, even though rates are higher now than they have been recently, we are still at over 30 year lows. The average rate over the past 30 years is about 7.5%. Being able to get a 30 year fixed rate in the 5% range is not something to pass up. It would definitely be a big gamble to decide to wait to buy until rates go back into the 4% range. There are just no guarantees of that happening again.

The Fed has been keeping rates artificially low by purchasing mortgage bonds. They are having to do quite a balancing act between keeping rates low to help stimulate the housing market, and needing to raise them so the dollar doesn’t become too de-valued and spur inflation. The Fed will raise rates once we are on the road to recovery in order to slow down inflation. The things to watch in regard to inflation are both home sales and employment numbers. People need to be gainfully employed before they can purchase a home, and our housing market needs to back on it’s feet for our economy to recover.

The most recent pending home sales numbers had the biggest jump that we’ve seen in 7-8 years, but taking a closer look, 47% of those pending sales are foreclosures or short sales. They are not people selling one home and moving up to a larger one which is the normal pattern. They are people losing their homes and not turning around and buying again. The bottom won’t happen until we see a stop in the increase of delinquencies and foreclosures. In the 1st quarter of 2009 the increase nationwide in mortgage delinquencies rose to over 9% and foreclosures to over 2%. So almost
12% of homeowners nationally are delinquent on their mortgages, in foreclosure, or in default.

The unemployment rate is 9.4% for May. There is a good video on this subject at http://www.cnbc.com/id/15840232?video=1145383846&play=1 .
This video explains that the true unemployment rate is closer to 16%. There are 14.5 million people unemployed, but the numbers that are being left out of the calculation are the 6.6 million people that have given up looking for work, so aren’t included in the work force. Also, there are 9.0 million people
who have taken part time jobs because they can’t find full time work. When those part time people are able to find full time work, it won’t change the unemployment rate, so the unemployment rate is really a lagging indicator. If you include all of the figures, the true unemployment rate is close to 16%. They’ve only been tracking the “true unemployment” data since 1995, but since that time, this is the highest rate on record. The Fed’s unemployment forecast is 9.4% for 2009, 9.25% for 2010 and 8.1% for 2011. We are already at 9.4% halfway through 2009.

So the bottom line is that rates will continue to react to the market, but I think we are still a ways off from worries of inflation, and rates should continue to stay fairly low with intermittent spikes up and/or down. Of course, that is assuming the Fed continues it’s purchasing of mortgage backed securities.
When jobs and or employment numbers come in and consumer confidence rises, investors move their money from bonds to stocks, the market rallies, and rates go up. When consumer confidence shrinks, investors will move their money into the safety of bonds and rates will go down. Rates tend to move
up and down in ranges. I think we have a ways to go before the range is going to increase substantially.

We still have an unbeatable combination of historically low rates and home prices, and in my opinion, it’s a great time to buy. I wouldn’t rush purchasing a home in fear of rates rising rapidly, nor would I put off buying a home to wait for them to come back down. I think the most important thing is that you take the amount of time you need to find the home you want to live in.

FHA has announced that it will allow lenders to provide short term bridge loans for first time homebuyers to use the 2009 tax credit for the purchase of  a home. See my post at www.realestatetwists.com for details.