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Government Regulations

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New Good Faith Estimate (GFE) rules in effect

Despite all the bad economic news of late, some good has come from the recent fiscal crisis that has affected U.S. consumers. Recent guidelines coming out of Washington have changed the way loan originators disclose closing costs for homebuyers. The objective is to level the playing field for all loan originators and make it easier for homebuyers to compare programs. Under the new guidelines, all fees paid to the lender are to be consolidated on one line. Those include processing fees, origination fees, etc. Those fees cannot be changed without a material change to the loan requested. Some lenders suggest that estimates for fees from government recording charges and third-party settlement providers should be itemized. The lender is held to a tolerance of 10% in the accuracy of these estimates. If the charges exceed the 10% limit, the lender is responsible for making up the difference.For the average consumer, these changes should make it less intimidating when it comes time to sign off on your loan package. For more information, we suggest contacting Thomas J. Liolos, Homestead Financial Services at 830-4215 (liolos@homesteadfinancial.net) or any reputable lender.

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Mortgage relief available

We have encountered many homeowners who are having trouble keeping up with their mortgages. Little know that help is available through the federal government.

The Home Affordable Refinance Program is available to 4 million to 5 million homeowners who have a solid payment history on an existing Fannie Mae or Freddie Mac mortgage. Ordinarily, these borrowers would be unable to refinance because their homes have lost value.

Under the Home Affordable Refinance Program, many will now be eligible to refinance their loan to take advantage of lower mortgage rates or to refinance an adjustable rate mortgage (ARM) into a fixed-rate loan.

The Home Affordable Modification Program will help another 3 million to 4 million at-risk homeowners avoid foreclosure by reducing monthly mortgage payments. Working with the banking and credit union regulators, the FHA, the VA, the USDA and the Federal Housing Finance Agency, the Treasury Department has set guidelines that are expected to become industry standards in obtaining affordable mortgage modifications.

For more information, visit FinancialStability.gov.

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The Extended Home Buyer Tax Credit 2009/2010

Many have asked, what are the details behind the tax credit and how late can I buy a house and still apply? Here are the details: In order to qualify, a contract must be signed by April 30, 2010. Once underway, purchasers will have until June 30, 2010 to close.

How much is available?

First-Time Home Buyers can qualify for up to $8,000. A First-Time Home Buyer is considered a purchaser and/or spouse that has not owned a residence in the past 3 years. Current home owners can qualify for up to $6,500 if they have used the home being sold as a principal residence for 5 consecutive years within the last 8. Other points to know:

The credit is technically 10% of the value of your home, or $8000 -- whichever is less. The credit does NOT need to be repaid if you continue to use the home as your primary residence for at least 3 years. The credit is only awarded on homes purchased for $800,000 or less. Single buyers with incomes up to $125,000 and couples with incomes up to $225,000 may receive the maximum credit. These limits have changed from the previous Tax Credit. How to redeem the credit:

The credit should be redeemed via IRS form 5405 in your 2010 tax return. You may also amend your 2009 taxes using form 1040X to receive the tax credit immediately and put that money into your home. If you have more questions or want to start taking advantage of this incentive, contact us today.

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FHA Mortgage Restrictions Tightened

The Federal Housing Administration, in an effort to shore up weakening finances, recently announced it will make it harder to get government-backed mortgages.

The FHA, which insured nearly 1/3 of new mortgages last year, will hike the premium it charges for mortgage insurance and increase the downpayment for purchasers with weaker credit scores. It will also reduce the amount of seller concessions available, down to 3 percent from the current 6 percent limit, for closing costs.

In addition, the FHA will require homebuyers to have a minimum credit score of 580 to qualify for the agency’s 3.5% downpayment program. Prospective borrowers with lower credit scores will have to pay up to 10%.

The agency also announced it will tighten restrictions on lenders offering FHA mortgages by increasing monitoring for compliance of agency standards.

Banks are more willing to make FHA loans since they come with federal guarantees to cover losses if a borrower defaults. As a result, during the recent fiscal crisis, FHA loans exploded in popularity. The agency guaranteed more than $360 billion in single-family mortgages for fiscal 2009, up more than four times the volume from the same period in 2007.

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