Real Estate Headlines 9-14-12

Author profile image

Sens. Boxer and Menendez revive bill to help more homeowners refinance

California Senator Barbara Boxer and New Jersey Senator Robert Menendez this week reintroduced a measure that would allow millions of homeowners to more easily refinance their mortgages at lower rates.

First introduced in May, “The Responsible Homeowner Refinancing Act of 2012″ would streamline and align the refinance processes of Fannie Mae and Freddie Mac and make it easier for homeowners who are current on their mortgage payments but who have been previously unable to refinance to finally take advantage of record low interest rates.

The proposed legislation would extend streamlined refinancings; waive loan-to-value ratios for existing, well-performing loans to participate in the streamline program; make refinancings more affordable by eliminating up-front fees and appraisal costs; and improve competition for lenders looking to compete with the existing mortgage servicer.


Tax relief on forgiven debt set to expire Dec. 31, 2012

Unless Congress and the California State legislature take action, a break for mortgage principal forgiven in loan modifications or short sales will expire at year’s end.

The mortgage debt forgiveness issue is only one of approximately 60 expiring tax provisions that Congress appears unable to extend prior to its recess for the November elections.  Congress is pushing the extension of any expiring tax provision to the lame duck session, along with any increase in the debt ceiling, and any serious attempts to prevent the mandatory budget cuts agreed to during last year’s debt ceiling deal.

California’s tax treatment of mortgage debt relief income generally aligns with federal law, and both the California and federal laws are set to expire at the end of 2012. For debt forgiven on a loan secured by a “qualified principal residence,” borrowers are exempt from both federal and state income tax consequences, but only until Dec. 31, 2012.  The existing federal exemption is for indebtedness up to $2 million, whereas the new California exemption is for indebtedness up to $800,000 and forgiven debt up to $500,000.

“Qualified principal residence” indebtedness is defined as debt incurred in acquiring, constructing, or substantially improving a principal residence.  It includes both first and second trust deeds.  It also includes a refinance loan to the extent the funds were used to pay off a previous loan that would have qualified.

However, these tax breaks apply only to debts discharged from 2009 through 2012. It may be that Congress will take action to extend the federal exemption before year-end, but we will have to wait and see. If the federal law is extended, it is likely that California would follow in due course, as in the past, but it is not guaranteed.  The last time the federal tax exemption was extended, California did not conform its tax law until well into the next year.

Sellers who have transactions closing after Dec. 31, 2012, need to speak to their own legal counsel or tax advisors about the impact of the expiration of these laws and their potential tax liabilities, including the applicability of other exemptions from debt relief income tax.


House passes bill to strengthen FHA

The House passed a measure this week that would preserve the solvency of the Federal Housing Administration (FHA).

The measure would establish a minimum annual premium rate paid for mortgage insurance, and bar unscrupulous lenders from the program and require those who commit fraud to repay the FHA.  Sponsored by Illinois Rep. Judy Biggert, the bill sets the minimum rate at 0.55 percent of the mortgage balance and gives the housing secretary discretion to raise that to 2.05 percent.

The FHA insures more than $1 trillion worth of mortgages on more than 7 million loans.


Nearly one out of five homeowners underwater

Close to 18% of U.S. homeowners who are current on their mortgage payments are classified as underwater, setting the stage for additional defaults if home prices fall deeper, Lender Processing Services (LPS) said in its July Mortgage Monitor Report.

The mortgage technology firm said mortgage delinquencies are down 30% from the peak established in January 2010.  LPS said there is a direct link between negative equity and new problem home loans, and risks remain if home prices decline.

“As negative equity increases, we see corresponding increases in the number of new problem loans,” LPS said Monday. “In Nevada and Florida, two of the states with the highest percentage of underwater borrowers, more than 3% of borrowers who were up to date on their payments are 60 or more days delinquent six months later. This suggests that further home price declines – should they occur – could jeopardize recent improvements.”

The report does show improvements in loan delinquencies with the U.S. loan delinquency rate falling to 7.03% in July, a 1.6% drop from June.  The foreclosure pre-sale inventory rate also edged down 0.2% month-over-month,hitting 4.08% in July.

States with the most non-current loans include Florida, Mississippi, Nevada, New Jersey and Illinois. Meanwhile, those with the lowest percent of non-current loans include Montana, Alaska, Wyoming, North Dakota and South Dakota.


Number of improving U.S. housing markets grows in September

The number of improving housing markets across the country rose to 99 in September, according to the National Association of Home Builders (NAHB)/First American Improving Markets Index (IMI), released this week.  This is up from 80 metros that were listed as improving in August and includes representatives from 33 states as well as the District of Columbia.

The index identifies metropolitan areas that have shown improvement from their respective troughs in housing permits, employment and house prices for at least six consecutive months. Markets added to the list in September include such geographically diverse locations as Tucson, Ariz.; Jacksonville, Fla.; Springfield, Ill.; Greenville, N.C.; and Bend, Ore.   The number of improving housing markets grew by 19 in September as 68 metros retained their spots, 31 new metros were added, and 12 dropped off the list, the NAHB said.

“This solid growth is an encouraging sign that housing continues on a slow but steady recovery path that is gradually advancing from one local market to the next.  More metros across the country are experiencing a sustained uptick in house prices, employment and new building activity as rising consumer confidence in local market conditions pushes more people to consider a new-home purchase,” said NAHB Chief Economist David Crowe. “That said, overly tight lending conditions for builders and buyers continue to slow this process considerably.”

Category : Blog

About Us

Since 1970 Rinetti & Co. Realtors has been selling residential and commercial real estate throughout the greater East Bay. We are boutique real estate company with a single focus, exceptional customer service from start to finish. Rinetti & Co. Realtors has the experience and practical knowledge to adapt to changing market conditions while providing our clients expert advise when buying or selling a home. If you’re considering making a move please contact us and see the difference Rinetti & Co. Realtors can make for you.


The only realtors in San Leandro...You will not meet two finer or more ethical realtors. The best! - Gary S.

Rinetti & Co. turned out to be the perfect place for me to do business...I would not hesitate to recommend their services to anyone buying or selling property. - Mary K.

...As I am sure you are aware, a house is stucco, wood and nails, but a home is where a lifetime of memories are created. Our mother was very proud of her home, it meant so much to her.

- Trent B.

...Thanks for your patience, guidance & professionalism, you made this experience a great one that we will never forget...We can’t thank you enough, thanks a bunch!!! - Rocio R.

If anyone in the East Bay is looking to buy or sell a home, please consider my friends and agents Tianne Rinetti-Vittoria and Perry Vittoria! They helped us buy our house and did an amazing job! They go above and beyond.”

- Chris S.

San Leandro Office
1103 MacArthur Boulevard
San Leandro, CA 94577

(510) 568-6171

Pleasanton Office
6754 Bernal Avenue, Suite 740-176
Pleasanton, CA 94566
(925) 364-5013

Email Us

CA BRE Lic. #01461822

Send to Friend

Email Agent