Your FHA Fact of the Day...

Your FHA Fact of the Day!

DID YOU KNOW:

The guidelines we will use are the following:

We require a minimum of three pieces of credit that have a perfect 12 month history.

At least two of the three must be traditional credit – ie: rent, mortgage, auto loan, credit card, etc

(Note, if rent is to an individual, we will require canceled checks or bank statements for a minimum of 6 months)

One piece of credit can be from the following – Utilities, Auto insurance, rent to own, school tuition, cell phones, department stores, personal loan (with repayment terms in writing and canceled checks) This type of credit reference is not acceptable if it is payroll deducted.

IF A TRADELINE CLOSED OR WAS LAST USED WITHIN THE PAST 12 MONTHS BUT HAD A 12 MONTH HISTORY, IT IS ACCEPTABLE AS PART OF THE THREE TRADELINES.

NOTE: Accounts shown as “authorized user” do not count in building the borrower’s credit history.

REMINDER – if a borrower does not meet the above credit guidelines, the following guidelines come into play.

• Qualifying ratios are to be computed only on those occupying the property and obligated on the loan, and may not exceed 31 percent for the payment-to-income ratio and 43 percent for the total debt-to-income ratio. Compensating factors are not applicable for borrowers with insufficient credit references.

AND

• Borrowers (with or without non occupying co-borrowers) should have two months of cash reserves following mortgage loan settlement from their own funds (no cash gifts from any source should be counted in the cash reserves for borrowers in this category).

Acceptable Types of non-traditional credit references:

Utilities if not included in rent

-gas

-electricity

-water

-land line home telephone service

-cable TV

School Tuition

Retail Stores

Rent to Own stores

Internet/Cell phone services

Payment to child care providers – made to a business providing such services

A personal loan from an individual with repayment terms in writing and supported by cancelled checks for 12 months

New Law Expands Benefits for Taxpayers

This is the latest newsletter from Riolo, Roberts & Freddi, LPP our favorite local CPA Firm. They are located at 1227 Pleasant Grove Blvd. Roseville, CA 95678 and their number is (916) 771-4134 ext 202

The new Worker, Homeownership, and Business Assistance Act of 2009 contains several key provisions
affecting individuals and business owners. The following is a brief summary.
♦ Homebuyer’s Credit
Under prior law, an eligible first-time homebuyer could claim a maximum credit of $8,000 for a principal
residence purchased before December 1, 2009. This credit, however, began to phase out for single filers
with a modified adjusted gross income (MAGI) above $75,000 and joint filers above $150,000.
Under the new law, the credit is available for home purchases made before May 1, 2010 (July 1, 2010, if a
binding contract exists before May 1). Also, the phase-out threshold increases to $125,000 of MAGI for
single filers and $225,000 for joint filers. The homebuyer credit may be elected on a 2009 tax return for a
qualified purchase in 2010.
New limit for everyone: No credit is allowed for purchases after November 6, 2009, if the price exceeds
$800,000.
Not just for first-timers: If you buy a home after November 6, 2009, and have owned and used the previous
home as your principal residence for five consecutive years in the last eight years, you may claim a credit of
up to $6,500.
♦ NOL Carryback
Normally, a business can carry back a net operating loss (NOL) for only two years before carrying it forward
for up to 20 years. A prior law change allowed a carryback for three, four, or five years to qualified small
business for NOLs in tax years beginning or ending in 2008.
The new law extends the longer carryback regardless of the size of the business. This election is generally
available for NOLs incurred in either 2008 or 2009.
Caveat: Under the new law, an NOL carried back to the fifth year is limited to 50% of the taxable income
for the year. Any remaining NOL may offset income in the remaining four years.
♦ Other Provisions
Unemployment benefits are extended for up to 14 weeks (20 weeks for individuals in states with high unemployment
rates). But the tax exclusion for the first $2,400 of unemployment benefits received in 2009 isn’t
extended.
Finally, the new law includes several revenue-raisers to pay for the favorable changes, such as expanded use
of e-filing by small tax return preparers, an extension of the FUTA surtax, and increased penalties for failing
to file partnership and S corporation returns.
NEW LAW EXPANDS BENEFITS FOR TAXPAYERS


NEW RULES IN 2010 FOR ROTH IRA CONVERSIONS
Beginning in 2010, the rules governing Roth IRA conversions will undergo a significant change. Traditional
IRA to Roth IRA conversions will be available to everyone, creating a financial planning opportunity that
didn’t exist previously. Under the 2009 rules, taxpayers with income of more than $100,000 cannot convert a
traditional IRA to a Roth IRA. Tax legislation enacted in 2006 changed the rules and ends the $100,000
income limit, effective January 1, 2010.
The Roth IRA has been a popular investment vehicle, with its ability to give taxpayers tax-free distributions
once the account has been in existence for five years and the taxpayer has reached age 59½. Another Roth
benefit is the lack of required minimum distributions once the owner reaches age 70½.
* * The conversion to a Roth does have a cost. When you convert a traditional deductible IRA to a Roth, you
must include the entire amount converted in your taxable income.
If you do a conversion in 2010, you are allowed to report half of the income on your 2011 tax return and the
remaining half on your 2012 tax return. You can also choose to pay the taxes due on the conversion on your
2010 return. While prepaying seems counterintuitive, remember that present federal tax rates are set to expire
December 31, 2010. Postponing income into future years could mean a bigger tax bill.
The new conversion rules are particularly advantageous to those upper-income taxpayers who could never
participate in a Roth. Now taxpayers in high tax brackets will have access to Roth IRAs. One possible
strategy is to set up a traditional IRA with nondeductible contributions in 2009 and then convert it to a Roth
in 2010.

100% Financing Still Available - check it out

What Is A.P.R.?

What is the difference between the interest rate and the A.P.R.?

You will see an interest rate and an Annual Percentage Rate (A.P.R.) for each mortgage loan you see advertised. The easy answer to "why" is that federal law requires the lender to tell you both. The A.P.R. is a tool for comparing different loans, which will include different interest rates but also different points and other terms.

The A.P.R. is designed to represent the "true cost of a loan" to the borrower, expressed in the form of a yearly rate. This way, lenders cannot "hide" fees and upfront costs behind low advertised rates.

While it's designed to make it easier to compare loans, it's sometimes confusing because the A.P.R. includes some, but not all, of the various 3rd party fees, title fees, and insurance premiums that accompany a mortgage. And since the federal law that requires lenders to disclose the A.P.R. does not clearly define what goes into the calculation, A.P.R.s can vary from lender to lender, loan to loan, amounts change acording to what month property tax’s are due for payment and even prepaid interest for days remaining in the given month funding occurs.

The A.P.R. on a loan tied to a market index, like a 5/1 ARM, assumes the market index will never change. But ARMs were invented because the market index changes and makes fixed rate loans cheaper or more expensive to make -- that's why they're variable rate in the first placed!

So, A.P.R.s are at best inexact. The lesson is, that A.P.R. can be a guide, but you need a mortgage professional to help you find the truly best loan for you. Note when you are browsing for loan terms that the A.P.R. will not tell you about balloon payments or prepayment penalties, or how long your rate is locked. In addition, you will see that A.P.R.s on 15-year loans will carry a higher relative rate due to the fact that points are amortized over a shorter period of time.

You Caught Me!

Now there are two dates I want you to keep in mind because there’s a time limit and we want to make sure that you make it.
1. You have to be under contract to buy the new home by April 30th and
2. You have to close before June 30th.
That might sound like a long time off. But you need to go out and start looking right now because it will be here before you know it. Again, the credit is for first time home buyers and now for those of you that already own a home. If you’ve had a house for five of the last eight years you get a $6,500 credit when you buy a house. Very cool stuff. We’ll put a link right here on this page so that you can get the details for more information.My question to you today is what would you do with the $8,000 or the $6,500 depending upon which group you fall in? What would you do with that extra money when it came to you?

http://www.federalhousingtaxcredit.com

$8,000 Homebuyers Tax Credit Extended

$8,000 homebuyers tax credit extended

President Obama reups popular tax credit through June 2010 and expands it to include people with higher incomes and some who want to trade up into new homes.
By Les Christie, CNNMoney.com staff writer
November 6, 2009: 3:18 PM ET
NEW YORK (CNNMoney.com) -- President Obama signed an extension and expansion of the first-time homebuyers tax credit on Friday.
The $8,000 credit was scheduled to lapse on Dec. 1 but will now be in effect through the end of June. Homebuyers must sign a contract before April 30 and close by June 30. The income limits were also raised: Single buyers can now earn up to $125,000 and still get the full credit while a married couple can earn $225,000.
The bill also made more homeowners eligible to claim the credit on their taxes. First-time buyers -- those who have not owned a home in the past three years -- still qualify for an $8,000 rebate. But now people who want to trade up can also qualify. Those who have owned and occupied a residence for at least five years out of the past eight can claim a $6,500 tax credit if they close on a purchase by the end of June.
"The new version of the tax credit has the potential to stimulate the housing market even more than the old version due to the fact that more people will qualify under the new rules," said Gibran Nicholas, chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers.
Who qualifies?
Nicholas provided four scenarios illustrating how the tax credit rules for existing homebuyers will apply:
• Harry owned a home in 2001 and 2002 but sold it to relocate for a job. He would qualify for the $8,000 first-time-buyer credit because he has not owned a home in the past three years.
• Sue purchased a home in 2004 and has lived there since. If she decides to buy a new home, she would qualify for the $6,500 tax credit because she has lived in the same residence for five consecutive years in the past eight.
• Jane purchased her home in 2002, lived there for five consecutive years before she rented it out in 2007. She would qualify because she was an owner/occupier for at least five consecutive years in the past eight.
• Mark purchased a home in 2006 and lived there for the past three years. He would not qualify because he is neither a first-time homebuyer nor someone who lived in the same primary residence for five consecutive years out of the past eight.
How it helps the economy
Legislators and industry experts expect that the credit will encourage buyers such as Jane and Sue to move up their purchase plans.
"This bill will shift demand from the second half of 2010 into the first half," said Pat Newport, a real estate analyst with IHS Global Research. "As a result, home sales and prices will get a boost in the first half of 2010, with payback in the second."
That's not a bad thing, according to Bill Kilmer, vice president of advocacy for the National Association of Home Builders. It's important to stabilize real estate markets quickly to help bring the economy out of its tailspin.
The original $8,000 tax credit appears to have helped accomplish that goal: Home prices have inched up the past few months, according to the S&P/Case-Shiller Home Price Index.
Would it have happened anyway?
But critics still see the program as being ineffectual because it rewards buyers who would have purchased a home anyway. Newport estimates that fewer than 400,000 of the 2 million who have claimed the original credit made their purchases solely because of the tax advantages.
Furthermore, buyers do not, in reality, receive the entire benefit. "The credit helped prices stabilize," said Newport. "So the credit has been split between seller and buyer. The sellers are getting higher prices and buyers paying more than they would have without it."
The housing industry, however, is pleased with the extension, although the credit has not been quite as effective as they hoped.
The industry thought the credit would provide a ripple effect, with sales to first timers triggering as many three additional "move-up" sales.
That did not happen, according to Lawrence Yun, NAR's chief economist.
"It did not have the chain reaction impact it was supposed to," he said. "Instead, many first-timers turned to vacant, foreclosed or other distressed properties the sellers of which were unlikely to be move-up buyers."
So, the tax credit helped prop up the low end of the market without having much impact on the rest of the spectrum. Expanding the benefit to existing homeowners should boost those segments. That should produce additional benefits, according to Yun.
"Preventing further price decline or even nudging prices up a bit stabilizes housing wealth, which makes homeowners more comfortable in their spending," said Yun. "They're more likely to go out to the stores or buy a new car. That provides a boost to the overall economy."

Hot off the AP Wire - Tax Credit Making its way...

By JIM ABRAMS, Associated Press Writer Jim Abrams, Associated Press Writer – 15 mins ago

WASHINGTON – Congress took further steps to right the staggering economy by expanding a popular tax credit for homebuyers and extending unemployment checks for the growing legions of people running out of benefits with few job prospects.
The White House said the legislation builds on its efforts to spur job creation and President Barack Obama would sign it into law Friday morning.
The House passed the bill on a 403-12 vote Thursday, a day after the Senate ended a monthlong stalemate with a 98-0 vote. With some 7,000 people exhausting unemployment benefits every day and the $8,000 tax credit for first-time homebuyers set to expire at the end of November, there was a sense of urgency in getting it to Obama's desk.
The $24 billion package also contains tax credits aimed at struggling businesses.
The IRS says some 1.4 million people applied for the homebuyers credit through August, helping enliven the moribund housing market. The legislation would extend the program through June of next year, as long as the buyer signs a contract by the end of April. It also offers a $6,500 tax credit to those who have lived in their current residence at least five years.
The measure doubles the income ceiling for eligible individuals to $125,000. Homes must cost less than $800,000 to qualify.
The nearly 2 million who have exhausted their unemployment benefits or face termination of benefits, usually about $300 a week, before the end of the year would receive 14 weeks of additional benefits under the bill. The unemployed in those states where the jobless rate tops 8.5 percent would get six weeks on top of that.
House Majority Leader Steny Hoyer said the bill would also help the economy because the unemployed quickly spend their checks on living necessities. "We help people in very bad straits and we help our economy and help us all."
All but 12 Republicans voted for the bill, although several took the opportunity to swipe at the Obama administration's efforts to produce new jobs. "Make no mistake, the unemployment benefits are no substitute for a good job,"said Rep. Kevin Brady, R-Texas.
The extension would be the fourth since June of last year and the first since the $787 billion stimulus package was enacted last February. The unemployed in the hardest-hit states could, once the bill becomes law, receive a maximum of 99 weeks of benefits, well above the previous record of 65 weeks in the 1970s.
Lawmakers said aggressive measures are needed because the unemployment rate, now at 9.8 percent, is expected to hover around 10 percent into next year and more than one-third of the 15 million unemployed have been looking for work for at least six months, a record.
The nation has lost 8 million jobs since the "great recession" began at the end of 2007, said Rep. Jim McDermott, D-Wash., a chief sponsor of the legislation. Even with the recession winding down, "we know it will take considerable time to restore those lost jobs."
"A stunning 600,000 workers ran out of jobless benefits in the past two months alone, and thousands more are projected to by the end of the year," said Christine Owens, executive director of the National Employment Law Project. "Workers need this extension, the economy needs this extension."
The bill only applies to those running out of benefits before the end of the year, and McDermott reminded his colleagues that Congress may have to revisit the issue before it adjourns for the year.
The bill would also allow businesses that have incurred losses in 2008 and 2009 to seek refunds for taxes paid on profits over the past five years.
The two tax credits, each costing more than $10 billion over 10 years, are paid for by delaying enactment of a law giving international companies more leeway in how they allocate interest expenses between U.S. and foreign sources in determining tax liabilities.
The $2.4 billion cost of extending unemployment benefits is offset by extending through June 2011 the federal unemployment tax that employers pay for each employee.
The three measures would add $43 billion to the 2010 deficit and then be repaid over time.

How to Purchase a Home with a FHA Loan with Almost Zero Down

For a limited time, up to 99.5 % financing is being offered to increase home ownership opportunities to individuals and families in California. You can purchase a home with a FHA Loan for as little as .5% down payment. Yes! That’s right! As little as a 1/2% down payment.


Call our office at (916) 960-5900 to learn more about the details of this program.


CHF has negotiated with FHA to allow a second mortgage to cover 3% of the 3.5% required down payment by using the CHF Access down payment assistance loan.

Eligibility Guidelines:
Not Limited to just first time home buyers.
3% 2nd loan can be used for down payment or to pay closing costs.
FICO under 600 ok on case by case basis.
No Sales price limits.
No minimum borrower contribution.
No pre-pay penalties.
Gift funds are allowed from family members.
Seller contributions allowed, up to 6%.
Income limits are 120% of HUD AMI.
2nd loan (CHF Access) is 15 year fixed @ 8.5%.
No recapture tax / penalty if home is sold later on.

Call (916) 960-5900 to learn how you can qualify for this program.

Important FHA Update (Realtors this is for you)

Just an FYI….some helpful information to share with your realtors….they need to start doing the Amendatory Clause with the purchase agreement. (same date)


An amendatory clause must be included in the sales contract when the borrower has not been informed of the appraised value by receiving a copy of Form HUD-92800.5B, Conditional Commitment/DE Statement of Appraised Value or VA-CRV before signing the sales contract. The Amendatory clause must contain the following language:

''It is expressly agreed that notwithstanding any other provisions of this contract, the purchaser shall not be obligated to complete the purchase of the property described herein or to incur any penalty by forfeiture of earnest money deposits or otherwise unless the purchaser has been given in accordance with HUD/FHA or VA requirements a written statement by the Federal Housing Commissioner, Department of Veterans Affairs, or a Direct Endorsement lender setting forth the appraised value of the property of not less than $_________. The purchaser shall have the privilege and option of proceeding with consummation of the contract without regard to the amount of the appraised valuation. The appraised valuation is arrived at to determine the maximum mortgage the Department of Housing and Urban Development will insure. HUD does not warrant the value or the condition of the property. The purchaser should satisfy himself/herself that the price and condition of the property are acceptable.''

The actual dollar amount to be inserted in the amendatory clause is the sales price stated in the contract. If the borrower and seller agree to adjust the sales price in response to an appraised value that is less than the sales price, a new amendatory clause is not required. However, the loan application package must include the original sales contract with the same price as shown on the amendatory clause, along with the revised or amended sales contract. The Amendatory Clause is not required on HUD REO sales, sales where the seller is Fannie Mae, Freddie Mac, the Department of Veterans Affairs, Rural Housing Services, other Federal, State and local government agencies, mortgagees disposing of REO assets, or sellers at foreclosure sales and those sales where the borrower will not be an owner-occupant (e.g., sales to nonprofit agencies).

UCM approved with the "Fastest FHA Lender in the Country"

Important Announcement...

United Commonwealth Mortgage, Inc is now approved to do business with the fastest FHA wholesale lender in the country, United Wholesale Mortgage, located in Birmingham, Michigan.

"We are unparalleled in our knowledge of FHA products—streamlines and buydowns are always expanding our conventional product line. Our talented team has years of experience with an impressive background in both the wholesale and retail markets. We walk through the loan to determine viable solutions to get loans closed. Our Sales and Operations staff works closely together in teams to provide you with the quickest possible response time. Underwriters are available to you anytime during the day for your questions; provide an old fashioned common sense approach to loans and manual underwriting where needed. Our continued success and growth has brought about expansion which is a direct result of our positive teamwork and dedication to exceptional service." United Wholesale Mortgage Account Executive Mike Nicholson

The addition of this FHA lending source will allow United Commonwealth Mortgage, Inc to maintain its competitive advantage by offering the best rates and the fastest closing times.

"Since the majority of every loan we fund is a purchase, we understand the urgency of closing on time and we are committed to making that happen 100% of the time." says the President of United Commonwealth.

If you need your FHA loans closed fast and on time, we are the local source for you.

Great News for First Time Buyers...

Great News from Washington - Tax Credit Extended!

Senators agree to extend homebuyer tax credit By STEPHEN OHLEMACHER (AP) – 25 minutes ago WASHINGTON — Senators agreed Wednesday to extend a popular tax credit for first-time homebuyers and to offer a reduced credit to some repeat buyers. The tax credit provides up to $8,000 to first-time homebuyers but is set to expire at the end of November. The Commerce Department said Wednesday that new homes sales fell 3.6 percent in September, and some industry representatives blamed uncertainty about the tax credit. Senators agreed to extend the existing tax credit for first-time homebuyers while offering a reduced credit of up to $6,500 to repeat buyers who have owned their current homes for at least five years, said Regan Lachapelle, a spokeswoman for Senate Majority Leader Harry Reid, D-Nev. The tax credits would be available to homebuyers who sign sales agreements by the end of April. They would have until the end of June to close on their new homes, according to a summary of the legislation being circulated among lawmakers. Senators were still negotiating the expansion of a separate tax credit that lets money-losing businesses get refunds for taxes paid in previous years, providing them with an immediate source of cash. Senators in both political parties were hoping to add both tax provisions to a bill that would give people running out of unemployment insurance benefits up to 20 more weeks of federal aid. The Senate could vote on the overall bill as early as Thursday, but lawmakers were still haggling over several unrelated amendments Wednesday evening. Popular bills like the one to extend unemployment benefits often attract amendments that would have a difficult time passing on their own. Republicans were demanding that they be given a chance to offer amendments to restrict federal aid to the beleaguered community activist group ACORN and on requiring that people receiving unemployment insurance be processed through E-Verify, an Internet-based system that employers use to check on the immigration status of new hires. Majority Democrats have refused to add the amendments. If the Senate passes the bill, it would go to the House, which passed a similar bill extending unemployment benefits last month. House leaders have also said they support extending the tax credit for homebuyers. Sen. Chris Dodd, D-Conn., has been negotiating for several weeks with Sen. Johnny Isakson, R-Ga., to craft an extended tax credit for homebuyers that would pass the Senate. Lawmakers didn't release a cost estimate for extending the tax credit, though similar proposals were projected to cost about $10 billion. Industry representatives said uncertainty about the tax credit is hurting new home sales. September's decline was the first since March. It takes 45 days to 60 days to close on a house, making it unlikely a sale made today would be consummated by the end of November, said Lucien Salvant, spokesman for the National Association of Realtors. "Buyers right now have an incentive to hold off, not knowing whether the credit will be extended," Salvant said. About 1.4 million first-time homebuyers have qualified for the credit through August. The National Association of Realtors estimates that 350,000 of them would not have purchased their homes without the credit. The tax credit for money-losing businesses is a favorite among Republican lawmakers. Businesses could get tax refunds by using losses from 2008 and 2009 to offset taxable profits made in the previous five years. Under current law, they can only offset profits from the previous two years. The provision would help a variety of industries, including retailers, manufacturers and home builders, though it's expensive. "It's clearly a way to put cash in the hands of some major economic players," said Clint Stretch, a tax policy expert at Deloitte Tax. A similar proposal that was ultimately dropped from the economic stimulus package enacted in February would have cost nearly $20 billion over 10 years. Lawmakers are working to reduce the price tag. "Because everybody is so cash strapped, this is a good way to get refund when businesses need it for operating expenses," said Rachelle Bernstein, vice president and tax counsel for the National Retail Federation.