Extended and Expanded home buyer credit
The American Recovery and Reinvestment Act is the wordy name that covers the extended and expanded tax credit for homebuyers. Buyers who have not owned a home in the last 3 years can get a credit of up to $8000 on their taxes while any eligible buyer can receive up to a $6500 credit on homes purchased. The contract must be written by April 30th, 2010 and the deal must close by June 30, 2010. To read the particulars click here.

First-Time Homebuyer Credit Extended to April 30, 2010; Some Current Homeowners Now Also Qualify

IR-2009-108, Nov. 24, 2009WASHINGTON — A new law that went into effect Nov. 6 extends the first-time homebuyer credit five months and expands the eligibility requirements for purchasers.

The Worker, Homeownership, and Business Assistance Act of 2009 extends the deadline for qualifying home purchases from Nov. 30, 2009, to April 30, 2010. Additionally, if a buyer enters into a binding contract by April 30, 2010, the buyer has until June 30, 2010, to settle on the purchase.

The maximum credit amount remains at $8,000 for a first-time homebuyer –– that is, a buyer who has not owned a primary residence during the three years up to the date of purchase.

But the new law also provides a “long-time resident” credit of up to $6,500 to others who do not qualify as “first-time homebuyers.” To qualify this way, a buyer must have owned and used the same home as a principal or primary residence for at least five consecutive years of the eight-year period ending on the date of purchase of a new home as a primary residence.

For all qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 tax returns.


REO (aka Foreclosures)

REO’s or ‘Real Estate Owned’ is what most people think of when they think of foreclosed properties. These are properties that are now owned by the bank. having been bought at a trustee sale after a long drawn out foreclosure process. Since banks are not in the business of owning property they try to sell the property as quickly as possible in an effort to minimize their losses.

When selling these properties, just like most sellers, they use a local real estate agent, An appraisal is done and a broker’s price opinion, BPO, is produced by the listing agent. The house is then listed on the multiple listing service, MLS, and buyers can make an offer.

We are currently seeing a small amount of these properties entering our local market. They seem to be priced below the true market value and are generating multiple offers. Why?

Why is the supply of REO’s so low when we hear about the large number homes being foreclosed upon? Speculation in the industry about the scarce inventory is that some of it may be the result of the 90 day moratorium on foreclosures that Obama put in place this summer. In addition, banks may be slowing releasing foreclosures into the marketplace. Dumping a large quantity of low priced homes on the market will result in lower prices, reducing the banks ability to recapture some of their losses. Whatever the reason, we do have a low inventory which is selling quickly and generating multiple offers at over asking price.

The benefit to buying a foreclosed home is the lower price. The drawbacks are that the process is competitive and many buyers are investors making cash offers. The properties can be in poor condition which makes them difficult to appraise at a value that would allow a typical loan. Many are also not eligible for FHA loans due to their condition.

REO’s may make sense if you are ready to make a decision quickly, have all cash and are ready for a project house.

HomePath is a program specifically designed to finance liquidation of Fannie’s REO portfolio.   Properties offered by Fannie Mae and financed through this program are eligible for financing up to 95% (only 5% down payment) with credit scores as low as 620.  There is NO Appraisal, mortgage insurance & no condo warranty required for these properties.  These are for owner occupied homes.

There are also opportunities for borrowers looking for investment properties- these are allowed to go to 90%, meaning the borrower has to come in with only 10% in the program.  This is offered with the same waiver of appraisal, MI and condo warranty. 


Since appraisals are currently the biggest issue for homebuyers this waiver of appraisal is a huge advantage.  There are currently about 80 properties in Sonoma County eligible for this financing.
To see the property listings go to www.HomePath.com To discuss getting a HomePath mortgage and buying a FannieMae REO property email me at tenret@sonic.net or give me a call (707) 328-2621



As a means of stimulating the economy and the housing market, Congress has enacted legislation that grants a tax credit of up to $8000 to first-time homebuyers. This credit is available to buyers who have not owned a residence during the last three years. To qualify for the credit, the home being purchased must be a primary residence (meaning the buyers will live in the home). The amount of the credit will depend on the value of the property (the credit is equal to 10% of the purchase price up to $8000) and the buyer’s income. The maximum credit is available to buyers whose income is up to $75,000 for a single buyer or up to $150,000 for married couples. There is some hope that Congress will extend the credit, but unless that happens, the credit expires on Dec. 1st, 2009. To qualify the home purchase must be completed prior to that date. With escrow periods of 45 days (on average) that means we may see the market affected in the next two weeks.

(Remember a tax credit is an item that reduces your actual tax. It differs from a tax deduction that reduces your taxable income.)

For a more in-depth explanation of the tax credit click here

Short Sales

It is no surprise to you that in today’s marketplace we are seeing properties with a market value less than the amount due on the mortgage(s). This is called being ‘upside down’ or ‘underwater’. If a seller in this position needs to sell for any reason, the sale may become a ‘short sale’. In a short sale the seller will try to avoid foreclosure by listing the property for sale, continuing to make payments, if possible, and upon receipt of an offer hope the lender will accept and approve the negotiated price.

The advantage to the seller is the avoidance of foreclosure, the off-loading of the property and mortgage(s) and the hope of less damage to their credit rating. The tough sell here is getting the lender to accept the short sale price. There may be a 1st mortgage or a 1st and a 2nd. The loan(s) may have been securitized, meaning they were bundled together and sold to investors. That makes for a lot of involved parties. And most, if not all of them, are being asked to accept a reduced payoff and absorb the loss. Many 2nd mortgage lenders are being asked to accept short sell prices that mean no payoff on their investment.

The disadvantage to the seller (and the buyer) is the waiting period. After a buyer and seller negotiate a price and the house is taken off the market as an active listing, the wait begins. This wait can take several months as lenders and investors review the offer. This waiting period cools off many buyers on looking at short sales. Investors can be more accepting of this lengthy period, but a homebuyer looking to move, maybe having sold his previous residence often lacks the patience for this type of game.

Perhaps an REO is the way to go. I will discuss REO (foreclosures) next month.

(As of this writing there are 70 single family homes in Santa Rosa that are listed as short sales. To view a complete list send me an email at tenret@sonic.net.)

Sonoma County Stats

August prices were down in Sonoma County 0.3% from July 2009 for single family homes, but up for condos by 4.1%. Sales were down for both with a total of 1335 sales in August.

Many buyers have noticed a lack in inventory on the market in the range of $200,000 to $500,000. According to the California Association of Realtors the inventory of unsold properties went from 6.6 months in January 2009 to 3.9 months in July 2009.

If you love numbers and graphs click here to see the local public MLS data.

Need help valuing you house!

A good place to start is with some of the internet home value engines. Two popular sites that are often the first stop for valuation are Zillow and Cyberhomes. They are free and easy to use. Type in your address and in a few minutes you will have a rough value.

To use Zillow Click here

To use Cyberhomes Click here

(Remember these values will be based on automated engines and as such are an indicator and not a definitive value.) If you need an actual Broker Price Opinion (BPO) send me an email with your address. Click here to email me directly.