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RE/MAX Affluent Realty BLOG
From Tears of Sadness to Tears of Joy
By Marcus Davilla
After living in their home for 30 + years, on August 18th, 2009 Georgia Mae and Elphaus Pordia, with tears streaming down their faces, witnessed their 100 year old home being bull-dozed to the ground. The Pordias home had been plagued with problems for quite some time. Mr. Pordia explained, Our major problem was the foundation. The house was so unleveled that it had shifted throughout the years and caused huge cracks and holes. It would get so cold on the inside. We called to see how much it would cost to get the house leveled and one estimate was $8,000 and others wouldnt even touch it. City Council member Wilbert Austin, an old friend of 40 years, advised them to look into City programs. I remember yall helping out another friend of ours with a new house, so I figured Id check into it, said Mr. Pordia.
In July, Georgia and Elphaus Pordia began their journey to a new home through the City of Wacos Rehab/Reconstruct program. This program enables homeowners to demolish their existing homes that are in need of excessive repairs and have a new home built in its place. This can seem like a long process at times, but very worth the wait. Some homes are more challenging than others when faced with reconstruction, as was the case with the Pordias. The first major delay came when the property needed a variance. A variance is required when zoning setbacks cannot be met. The Pordias went before the Board of Adjustments and a variance was granted because of the odd shape of the lot. Just when things appeared on track again, the scheduled closing would have to be postponed due to a survey omission error. The survey was amended and recorded a second time and two weeks later, the closing date was finalized. A family less determined may have just thrown up their hands and given up on the process. However, with diligence and hard work from all involved, the dream of a new home is finally being realized. The old home has now been demolished and foundation work on the new home has begun. The completion of the new home is set for mid-December. Quoting Mr. Pordia, Every night I went to bed wondering if the whole wall was going to fall down, but there was nothing else I could do. Now we just want to live out the rest of our lives in warmth and comfort. Mrs. Pordia commented, Yall are making my dreams come true. Yall have really lifted us up. We really appreciate everything the City has done. Come December, we hope the next time we see their tears, they will be tears of joy for their new home. Thanks to City funded programs, and the hard work and persistence of members of our community, dreams really do come true.
Source: http://www.waco-texas.com/city_depts/housingservices/newsletter-tears.html
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Special New Construction Loan Program The Special New Construction Loan Program is the new program the City of Waco has implemented to assist potential homeowners with down payment and closing cost assistance. ELIGIBILITY - Property must be owner occupied.
- Permanent financing may be FHA, conventional or an in-house loan (take-out letter from lender)
- Income not to exceed 80% of the median income for Waco by family size
- New construction only
- Loan applicants must meet all City of Waco, Housing and Urban Development (HUD) regulations and policy guidelines
- Borrower must invest $500.00 of their own funds-no gift funds allowed for this investment
- 80% or less of median income by family size.
- Properties must meet all city codes International Property Management Code (IPMC)
- Disclosure package is to be completed
- Rates/Terms for first lender is not to be predatory in nature. (Excessive rates, unusual terms, and excessive fees)
- This program can be used with any other City of Waco program except the Applegrove, Pecan Valley and Forrest Grove Areas, which have Special Financing in place.
ELIGIBLE PROPERTIES - Property must be within the City limits of Waco
- Single family dwellings, Town Homes, Condominiums, and Cooperative Units
- New Construction only
LOAN TERMS - Loan Limit: $10,000.00
- Term: the term will comply with HUDs minimum affordability period based upon the total HOME funds used on the project.
- Rate: 0%
- Loan-to-Value: Not to exceed 120% of the lower of cost or appraisal
*As long as the borrower resides in the home as the principal residence the entire 10year period of time.
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New/Acquisition Loan Program Click here for: Loan Application  | If you'd like to buy a home for your family but may need a little assistance, then the City of Waco's New/Acquisition Loan Program may be able to help you reach that goal. If you qualify as low to moderate income (80 % or less of the median income for the City of Waco) and want to live in the City Limits of Waco, we may be able to assist you. This program is open to both those interested in building a new home or purchasing an existing home. Requirements - Property must be owner occupied.
- Property must be within the City Limits of Waco.
- Borrower must qualify for the first lien mortgage.
- The Maximum loan amount: Not to exceed $15,000 including closing costs (based on total monthly income)
- Rate: Not to exceed 0%
- Maximum mortgage term: Not to exceed 30 years.
- Homebuyer is required to make a $500 investment in the purchase.
- Comply with all HUD and City codes.
| Note: For anyone looking to purchase a home that was built prior to 1978 using the City of Waco New/Acquisition Loan, the home will have to pass a visual inspection for lead based paint. In the visual inspection they will look for cracking, chipping or deteriorated paint. If it passes the visual inspection nothing further will have to be done. If it does not pass the visual inspection, the problem will have to be corrected with someone who is an approved lead worker and will have to pass clearance prior to any federal assistance. For more information on lead based paint, click here: Lead Based Paint Issues
Source: http://www.waco-texas.com/city_depts/housingservices/homeloan.htm
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Tax Abatement Program To provide affordable housing the City of Waco and City Council have joined together and approved the Tax Abatement Program for future homeowners who intend to build a home, buy a home, or make repairs to their existing home, and to occupy the property as their primary residence. This blog does not contain all the terms of Tax Abatement Requirements: - Must own property&occupy the property as his/her primary residence or sell to a person who will occupy property as his/her primary residence
- Property cannot be tax delinquent
- New constructed homes must sell (arms length) or appraise for minimum of $90,000
Property must be located in the designated reinvestment zone - Property may only be used for single-family residences duplexes/apts. and other multi-family don't qualify
- Applicant cannot have any City liens filed against any property owned by applicant
- Abatement only for residential improvements&property's base year value cannot exceed $200,000
- Property must conform to city's zoning ordinance, fully meet neighborhood compatibly design standards along and be inspected by city at completion of improvements for full compliance with costs & design criteria
- Property has not received tax abatement before & council must approve assignment of any tax abatement
- Applicant has 1 yr. to complete terms of agreement
- Applicant must apply, obtain approval from City Council and execute Tax Abatement agreement before any building permits are issued for the subject property and before any improvements are made to the subject property.
Preliminary Steps: - $150.00 non-refundable application fee & property must be located in the RZ
- Applicant will provide survey map showing the precise location of property & complete legal description
- All information on application will be reviewed and additional information may be required
- Application reviewed by City staff
Consideration of application: - Must be approved by Waco City Council.
Certification/Review: - On or before 12/31 of the year, which establishes the Base Year Value for the agreement, the owner will submit a current MCAD statement that provides an appraisal valuation of the property. After construction is complete, owner will provide satisfactory written evidence of actual costs & value of improvements along with a current MCAD appraisal (when available).
Other Requirements: - No Income Cap
- General Fund
Newly constructed homes must either sell or appraise for $90,000 & rehabilitated homes must certify a minimum of $30,000 actual costs for the improvements. - Property owner must certify annually in writing that it is in compliance with the agreement.
- City will inspect property after completion of construction & ensure it meets all requirements and then inform MCAD as to whether property meets the abatement requirements
Source: http://www.waco-texas.com/city_depts/housingservices/abatement.htm
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| | | | |  | Loan Disclosure Rules to Change | The National Association of Realtors has released an overview memo outlining mortgage disclosure-requirement changes that go into effect July 30. Here is the NAR document: Lenders will be subject to new disclosure requirements for mortgage loans under the Federal Reserve Board Truth in Lending Regulation (Reg Z). The new requirements apply to loan applications filed on or after July 30, 2009 (about two months earlier than originally planned). The new rules are complex and compliance will be a challenge for lenders. REALTORS® will want to learn the basics so they can advise clients of potential delays and the new procedures. Key highlights of the changes: The new requirements apply to all mortgages secured by a borrowers home, including primary and second homes and refinancings. Investor loans continue to be exempt. Lenders must give good faith estimates of mortgage loan costs within 3 business days after the consumer applies for a loan (early disclosure). The lender may not collect any fees before the disclosure is provided, except for a reasonable fee for obtaining a credit report. The closing may not take place until expiration of a 7 day waiting period after the consumer receives the early disclosure. Consumers may shorten or waive the 3-day and/or 7-day waiting periods for a bona fide personal financial emergency, but only after receiving an accurate TILA disclosure. In the final rules preamble, the Fed stated that it believes waivers should not be used routinely to expedite consummation for reasons of convenience. The Fed decided not to insulate lenders from liability even where a consumer modifies or waives the waiting periods. If the annual percentage rate (APR) changes by more than 0.125 percent, the lender must provide a corrected disclosure to the borrower and wait an additional 3 business days before closing the loan. The APR includes not only the interest rate on the loan but
certain other costs related to settlement, so it will be important for any fees that affect the APR to be as accurate as possible, as early as possible, to minimize the need for a corrected TILA disclosure. | |
SOURCE: RE/MAX INTERNATIONAL
Resources:
Federal Reserve Board Final Rule and Staff Commentary (Federal Register, May 19, 2009)
Mortgage Bankers Association Summary of New Requirements
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E-mail your comments to RE/MAX Email. Please include your full name, city and state or province. Comments, slightly edited for length, flow and punctuation, will appear below.
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Source: www.IRS.gov
Overview First-time homebuyers may be able to take advantage of a tax credit for homes purchased in 2008 or 2009. The credit: -
Applies to purchases that close after April 8, 2008, and before Dec. 1, 2009. -
Applies only to homes used as a taxpayer's principal residence. -
Reduces a taxpayer's tax bill or increases his or her refund, dollar for dollar. -
Is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed. The credit is claimed using Form 5405. For 2008 Home Purchases The Housing and Economic Recovery Act of 2008 established a tax credit for first-time homebuyers that can be worth up to $7,500. For homes purchased in 2008, the credit is similar to a no-interest loan and must be repaid in 15 equal, annual installments beginning with the 2010 income tax year. For 2009 Home Purchases The American Recovery and Reinvestment Act of 2009 expanded the first-time homebuyer credit by increasing the credit amount to $8,000 for purchases made in 2009 before Dec. 1. For home purchased in 2009, the credit does not have to be paid back unless the home ceases to be the taxpayer's main residence within a three-year period following the purchase. First-time homebuyers who purchase a home in 2009 can claim the credit on either a 2008 tax return. If the closing occurs after April 15, 2009, a taxpayer can still claim it on a 2008 tax return by requesting an extension of time to file or by filing an amended return.
Comment on this story
E-mail your comments to RE/MAX Email. Please include your full name, city and state or province. Comments, slightly edited for length, flow and punctuation, will appear below.
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Great News concerning the First-Time HomeBuyer Tax Credit!
(this is a long blog, but still good news!)
New policy allows the use a bridge loan (aka Tax Credit Advance) to help with the DownPayment for a home purchase. There are several important qualifications and stipulations, they are provided below. Any Questions, contact a RE/MAX agent!
FHA loans usually provide lower interest rates and require only 3.5% downpayment (at time of Blog).
--excerpts are included here below--
TO: ALL APPROVED MORTGAGEES SUBJECT:
SUBJECT: Using First-Time Homebuyer Tax Credits
The American Recovery and Reinvestment Act of 2009 (Recovery Act) provides for as much as an $8000 tax credit to qualified first-time homebuyers. FHA supports this important initiative to promote homeownership. This mortgagee letter provides:
1) Basic information on the first-time homebuyer credit obtained from the Internal Revenue Service (IRS) website.
2) Complete information on how the first time homebuyer tax credit works, including the eligibility requirements for the tax credit, the amount of the tax credit that a first-time homebuyer may be eligible to receive, and how a homebuyer may claim the tax credit is available on the IRS website at http://www.irs.gov/newsroom/article/0,,id=204671,00.html?portlet7.
Guidance on how FHA-approved mortgagees and FHA-approved nonprofit organizations as well as Federal, state, and local government agencies or instrumentalities may assist homebuyers that are eligible for the tax credit.
I. Pursuant to 31 U.S.C. 3727 and 26 U.S.C. 6402, a refund of the first-time homebuyer credit will be made by the IRS only to the taxpayer, not to a third party. In other words, any refund issued in response to a claim for this credit cannot be assigned by a taxpayer to a third party.
Explanation: the program is designed to prevent the tax payer from using this credit as a downpayment. The credit (minus any outstanding taxes owed) will only be sent in their name only to be used however the tax payer wills, not to be obligated for debt reduction.
II. FHA Tax Credit Guidance Secondary Financing Consistent with existing FHA policy, FHA will permit entities covered by Section 528 of the National Housing Act to use the current authority to offer tax credit advances with second liens in a manner consistent with the requirements in 12 U.S.C. 1709(b)(9). Eligible government agencies and instrumentalities of government are described in handbook HUD-4155.1 5.C3 and 5.C4.
Explantion: a Tax credit advance is a loan borrowed on the asset (in this case, the home to be purchased - called a 'second lien'). A lien is a right to reclaim the asset in case of default (not paying what is owed in a timely fashion). See below for more conditions/protections on the tax payer and the mortgage broker.
Conditions of the Tax Credit Advance
1 The tax credit advance, when combined with the FHA-insured first mortgage may not result in cash back to the borrower.
2 The second lien may not exceed the total amount needed for the down payment, closing costs, and prepaid expenses.
3 Secondary financing may be soft (silent) or require a monthly repayment.
4 If payments are required, they must be included within the qualifying ratios and, when combined with the first mortgage, cannot exceed the borrowers reasonable ability to pay.
5 Payments must be deferred for at least 36 months to not be included in the qualifying ratios.
6 If the tax credit advance loan has a short term for repayment, it must also provide that if the borrower fails to repay by the designated deadline, principal and interest payments begin automatically or the loan converts to a soft second.
7 The secondary financing may not require a balloon payment before ten years. Purchase of Tax Credit FHA-approved mortgagees and FHA-approved nonprofit organizations as well as Federal, state, and local governmental agencies and instrumentalities thereof may purchase the tax credit anticipated by the homebuyer. Conditions:
8 The proceeds of the sale of the tax credit may not exceed the anticipated tax credit due the homebuyer based on the computations of form IRS 5405;
9 The borrower must submit a signed certification that the tax credit is not subject to offset due to other indebtedness.
10 A copy of the borrowers tax refund and/or the IRS 5405 must be collected and retained in the FHA case binder.
11 Any costs attendant to the purchase of the tax credit are to be nominal and discounting the anticipated credit to cover the costs and expenses of the transaction must be reasonable and disclosed to the homebuyer. In FHAs view, fees and costs that total more than 2.5% of the anticipated credit are considered excessive. (Example: $6000 to be refunded, with all fees and costs discounted, borrower should receive not less than $5850.00 for sale of tax credit.)
12 Pursuant to 12 U.S.C. 1709(b)(9), the homebuyers downpayment required for eligibility for FHA insurance may not consist of any funds (including funds derived from a sale of the homebuyer tax credit) provided by the mortgagee, the seller, or any other person or entity that financially benefits from the transaction (or by any third party or entity that is reimbursed, directly or indirectly, by the financially benefiting person or entity).
13- Accordingly, the proceeds of the sale of the tax credit to FHA approved mortgagees, the seller, or any other person or entity that financially benefits from the transaction (or any third party or entity that is reimbursed, directly or indirectly, by the financing benefiting person or entity), may not be used to meet the 3.5% minimum downpayment, but may be used as additional downpayment, buying down of interest rate, or other closing costs.
14- FHA expects that entities purchasing tax credit assets will employ appropriate due diligence measures including, but not limited to:
a File form 5405 First-Time Homebuyer Credit.
b Contact the borrowers employer and review pay stubs to confirm there are no outstanding garnishments.
c Review the homebuyers credit report to ensure there are no unpaid student loans, or other obligations that could be offset against the credit.
d Validate that all of the eligibility requirements for the tax credit are fulfilled
e Review previous tax returns and IRS tax assessment letters, if any, to determine that the borrower does not have unsettled obligations to the IRS
FHA will monitor the purchase of tax credit transactions closely. Charging of excessive fees or costs in the purchase of the tax credit or increasing other fees or charges in the transaction without FHA approval may result in referral to the Mortgagee Review Board, and particularly with respect to entities that are not FHA-approved mortgagees, referral to the Federal Trade Commission, or referral to the appropriate State Attorney General office, as may be applicable.
If you have any questions regarding this mortgagee letter, please call FHAs Resource Center at 1-800-CALL-FHA (1-800-225-5342). Persons with hearing or speech impairments may access this number via TDD/TTY by calling 1-877-TDD-2HUD (1-877-833-2483).
Sincerely,
Brian D. Montgomery Assistant Secretary for Housing- Federal Housing Commissioner
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Great News concerning the First-Time HomeBuyer Tax Credit!
(this is a long blog, but still good news!)
New policy allows the use a bridge loan (aka Tax Credit Advance) to help with the DownPayment for a home purchase. There are several important qualifications and stipulations, they are provided below. Any Questions, contact a RE/MAX agent!
FHA loans usually provide lower interest rates and require only 3.5% downpayment (at time of Blog).
--excerpts are included here below--
TO: ALL APPROVED MORTGAGEES SUBJECT:
SUBJECT: Using First-Time Homebuyer Tax Credits
The American Recovery and Reinvestment Act of 2009 (Recovery Act) provides for as much as an $8000 tax credit to qualified first-time homebuyers. FHA supports this important initiative to promote homeownership. This mortgagee letter provides:
1) Basic information on the first-time homebuyer credit obtained from the Internal Revenue Service (IRS) website.
2) Complete information on how the first time homebuyer tax credit works, including the eligibility requirements for the tax credit, the amount of the tax credit that a first-time homebuyer may be eligible to receive, and how a homebuyer may claim the tax credit is available on the IRS website at http://www.irs.gov/newsroom/article/0,,id=204671,00.html?portlet7.
Guidance on how FHA-approved mortgagees and FHA-approved nonprofit organizations as well as Federal, state, and local government agencies or instrumentalities may assist homebuyers that are eligible for the tax credit.
I. Pursuant to 31 U.S.C. 3727 and 26 U.S.C. 6402, a refund of the first-time homebuyer credit will be made by the IRS only to the taxpayer, not to a third party. In other words, any refund issued in response to a claim for this credit cannot be assigned by a taxpayer to a third party.
Explanation: the program is designed to prevent the tax payer from using this credit as a downpayment. The credit (minus any outstanding taxes owed) will only be sent in their name only to be used however the tax payer wills, not to be obligated for debt reduction.
II. FHA Tax Credit Guidance Secondary Financing Consistent with existing FHA policy, FHA will permit entities covered by Section 528 of the National Housing Act to use the current authority to offer tax credit advances with second liens in a manner consistent with the requirements in 12 U.S.C. 1709(b)(9). Eligible government agencies and instrumentalities of government are described in handbook HUD-4155.1 5.C3 and 5.C4.
Explantion: a Tax credit advance is a loan borrowed on the asset (in this case, the home to be purchased - called a 'second lien'). A lien is a right to reclaim the asset in case of default (not paying what is owed in a timely fashion). See below for more conditions/protections on the tax payer and the mortgage broker.
Conditions of the Tax Credit Advance
1 The tax credit advance, when combined with the FHA-insured first mortgage may not result in cash back to the borrower.
2 The second lien may not exceed the total amount needed for the down payment, closing costs, and prepaid expenses.
3 Secondary financing may be soft (silent) or require a monthly repayment.
4 If payments are required, they must be included within the qualifying ratios and, when combined with the first mortgage, cannot exceed the borrowers reasonable ability to pay.
5 Payments must be deferred for at least 36 months to not be included in the qualifying ratios.
6 If the tax credit advance loan has a short term for repayment, it must also provide that if the borrower fails to repay by the designated deadline, principal and interest payments begin automatically or the loan converts to a soft second.
7 The secondary financing may not require a balloon payment before ten years. Purchase of Tax Credit FHA-approved mortgagees and FHA-approved nonprofit organizations as well as Federal, state, and local governmental agencies and instrumentalities thereof may purchase the tax credit anticipated by the homebuyer. Conditions:
8 The proceeds of the sale of the tax credit may not exceed the anticipated tax credit due the homebuyer based on the computations of form IRS 5405;
9 The borrower must submit a signed certification that the tax credit is not subject to offset due to other indebtedness.
10 A copy of the borrowers tax refund and/or the IRS 5405 must be collected and retained in the FHA case binder.
11 Any costs attendant to the purchase of the tax credit are to be nominal and discounting the anticipated credit to cover the costs and expenses of the transaction must be reasonable and disclosed to the homebuyer. In FHAs view, fees and costs that total more than 2.5% of the anticipated credit are considered excessive. (Example: $6000 to be refunded, with all fees and costs discounted, borrower should receive not less than $5850.00 for sale of tax credit.)
12 Pursuant to 12 U.S.C. 1709(b)(9), the homebuyers downpayment required for eligibility for FHA insurance may not consist of any funds (including funds derived from a sale of the homebuyer tax credit) provided by the mortgagee, the seller, or any other person or entity that financially benefits from the transaction (or by any third party or entity that is reimbursed, directly or indirectly, by the financially benefiting person or entity).
13- Accordingly, the proceeds of the sale of the tax credit to FHA approved mortgagees, the seller, or any other person or entity that financially benefits from the transaction (or any third party or entity that is reimbursed, directly or indirectly, by the financing benefiting person or entity), may not be used to meet the 3.5% minimum downpayment, but may be used as additional downpayment, buying down of interest rate, or other closing costs.
14- FHA expects that entities purchasing tax credit assets will employ appropriate due diligence measures including, but not limited to:
a File form 5405 First-Time Homebuyer Credit.
b Contact the borrowers employer and review pay stubs to confirm there are no outstanding garnishments.
c Review the homebuyers credit report to ensure there are no unpaid student loans, or other obligations that could be offset against the credit.
d Validate that all of the eligibility requirements for the tax credit are fulfilled
e Review previous tax returns and IRS tax assessment letters, if any, to determine that the borrower does not have unsettled obligations to the IRS
FHA will monitor the purchase of tax credit transactions closely. Charging of excessive fees or costs in the purchase of the tax credit or increasing other fees or charges in the transaction without FHA approval may result in referral to the Mortgagee Review Board, and particularly with respect to entities that are not FHA-approved mortgagees, referral to the Federal Trade Commission, or referral to the appropriate State Attorney General office, as may be applicable.
If you have any questions regarding this mortgagee letter, please call FHAs Resource Center at 1-800-CALL-FHA (1-800-225-5342). Persons with hearing or speech impairments may access this number via TDD/TTY by calling 1-877-TDD-2HUD (1-877-833-2483).
Sincerely,
Brian D. Montgomery Assistant Secretary for Housing- Federal Housing Commissioner
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Presented by the Heart of Texas Builders Association
When: June 6th&7th and 13th & 14th
Saturday 11am to 5pm
Sunday 12 noon to 5pmA
presentation of an extraordinary collection of 17 beautiful new homes to suit every lifestyle. You'll see the latest and greatest in designs, luxuries finishes, home technology and modern amenities.
There will also be a Showcase Home at 7030 Bending Trail in Hidden Valley! You can call 776-8701 for ticket information.
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Office Phone (254) 776-8100
Equal Housing Opportunity