100,000 New App's in a Week?!?

7.3% Weekly Increase

How's that possible, given that the total number of iPhone "app's" (applications) is (only) 250,000 or so?

That's the number of new mortgage applications last week -- the first time the weekly number has gone up in a month.

According to the Mortgage Bankers Association, that represents a 7.3% increase over the previous week.

If you do the math -- and I did, with assistance from Edina Mortgage's Steve Mohabir -- that works out to about 100,000 new mortgage applications nationally.

Biggest Source of Housing Fraud?

Extending Buyers a Helping Hand (& Leg & Arm)

(One more) pop quiz: what's the biggest source of fraud in today's housing market?

A. Inflated appraisals
B. Seller downpayment "gifts" to their Buyers
C. Borrowers falsifying data -- including income --on their mortgage applications
D. Shaky mortgages bundled into securitized debt and re-sold to investors

Answer: B.

Think of it as "seller-paid points on steroids."

Paying points -- the Seller contributing up to 3% towards the Buyer's closing costs -- is a common feature of today's buyer's market; as long as the lender knows about it, it's perfectly legitimate.

Unfortunately, it appears that many home Buyers need more help than that -- and at least some Sellers, eager to consummate a transaction, are obliging.

The catch is that lenders forbade such "gifts," for a couple reasons: notwithstanding appearances, such Buyers have little or no "skin" in the game; Seller gifts can mask Buyer credit risks; and such gifts effectively inflate the value of the home being sold, which serves as the bank's collateral if the Buyer defaults.

To crack down on the practice, lenders are stepping up their documentation requirements, big-time.

Thanks to Steve Mohabir, City Lakes' resident mortgage expert, for providing background on this post.

Tax Credit Extension/Expansion

(Almost) Done Deal!

The Senate passed the bill 98-0 yesterday; the House followed suit today.

President to sign tonight/tomorrow.

Highlights per Steve Mohabir, City Lakes' in-house loan officer:

One provision will continue for five months a popular $8,000 credit for many first-time home buyers, which was to expire Nov. 30, and create a $6,500 credit for some homeowners who want to buy a new residence.

The move-up provision looks like if you have owned and lived in a residence 5 of the last 8 years and buy a new place, it looks like the $6,500 would apply. Other than that same as before with higher income limits for the 1st time home buyer.

Bottom line: this will be a big booster shot for the 2010 housing market, especially move-up Buyers.

Home Buyer Tax Credit: What's Next?

Post-Nov. 30 Tax Credit: More Targeted

The following is from Edina Mortgage's Steve Mohabir, City Lakes' excellent, in-house loan officer:

Good morning Lakers,

http://www.bloomberg.com/apps/news?pid=email_en&sid=ayS36Cg5hu5w

There has been some encouraging news on the extension of the $8000 tax credit. However, it is NOT a done deal, as it still must be reconciled between the House and Senate and then voted on for final approval.

It is not only looking good for the extension, but there are some additional enhancements to the credit in the works as well. Yesterday, the Senate reached an agreement to extend the $8000 tax credit for first-time home buyers. They also added a $6,500 tax credit for other primary home purchasers, meaning that it is not just limited to first time home buyers.

They also raised the qualifying income limits in a very meaningful way – singles were increased from $75,000 to $125,000, and joint taxpayers from $150,000 to $250,000. Buyers must have executed purchase agreements in hand by April 30th, and then will have until June 30th to close.

More details are likely to come, and changes could be made as reconciliation and voting takes place.

Please feel free to call Steve (612-925-7755) directly for more info . . . .

Mpls Advantage Program -- Update

"Going, Going . . . Gone"

According to my office's in-house mortgage lender -- Steve Mohabir of Edina Mortgage -- the cupboard is almost bare at Minneapolis' loan program for first-time Buyers, called Minneapolis Advantage.

Specifically, only 4 loans are left out of 100 originally made available.

According to Mohabir, other municipal loan programs around the Twin Cities are facing similar issues. The result is, the burden is on borrowers not just to track currently available programs, but to monitor how well-funded they are.