For those of you who have ever bought a home, you know how daunting a HUD-1 statement is to understand.  The itemized list of services and fees that are charged to the borrower by the lender or broker are divided up into thirteen sections with numerous subsections.  With so many numbers and so little explanation of each charge, consumers may be left confused or uninformed about their home loan.

Consumers have also been faces with predatory lending practices in the past.  Certain lender “Good Faith Estimates” (GFE's) turn into nothing but sales pitches for a consumer to choose a particular loan product.  In the eleventh hour, a GFE with $2,000 of closing costs turns into $3,500.  The current layout of the HUD-1 leaves consumers unprotected from closing cost shocks or intentional low-balling of fees from lenders. 

The transparency between the consumer and lender will become much clearer starting January 1, 2010.  The Department of Housing and Urban Development is adopting new federal legislation that will affect real estate and mortgage transactions nationwide.  The changes will ultimately help consumers compare loan products between lenders, improve disclosure of closing costs, and help consumers truly understand the terms of their mortgage. 

One of the differences will be the use of a standard HUD-1 (settlement statement) nationwide that will include a consumer-friendly version of the good faith estimate.  The GFE will be received within three days of applying for a home mortgage and will outline the charges of the loan into three broad categories:

1.    Fees that cannot increase at settlement.

2.    Fee estimates that can increase up to 10% at settlement.

3.    Fees that can change without limit.  These fees can change because lenders have no control over them or because they are difficult to predict weeks in advance.     

 
The goal of the new HUD-1 settlement statement and good faith estimates are designed to educate the consumer on the loan products they are receiving.  Click on the links below to view examples of the new forms.  You can also visit the Mortgage Daily article or HUD's website addressing the changes.

If you are a regular commuter to Tysons Corner, then you know all to well about the construction of the Dulles Metro Rail.  What you might not realize is that the construction you see on the streets is only part of the construction project as a whole.  Beneath the ground work crews are working around the clock to mine a 2,400 foot tunnel from Route 123 to Route 7.  To ensure the safety of the mining project, crews are using sensor technology to monitor the tunnel's progression and the road above for any movements. 

To read more about the continuing construction of the Dulles Metro Rail, visit the projects website at www.dullesmetro.com.  There you can read the November newsletter (click image below) that explains more about the tunneling project, traffic pattern changes, station construction and other related topics.

Realtors® have banned together with home builders in the past few months in an effort to extend the $8,000 tax credit to first-time home buyers. Their numerous campaigns and lobbying efforts seem to have finally paid off. The Senate voted last night to discontinue debate over the the extension AND expansion the $8,000 tax credit.  It is believed that this vote will lead to legislation being placed on Obama's desk by weeks end. 

The new bill has many additions that will open the door to a bigger pool of buyers. While the $8,000 tax credit will remain in effect for first-time home buyers, the bill will add a new $6,500 tax credit for some existing home owners. The reduced tax credit will be available to home owners who have lived in their current residence for five consecutive years out of the last eight years. The income restrictions will also be lifted from $75,000 to $125,000 for single taxpayers and from $150,000 to $250,000 for joint taxpayers. The proposal states that home buyers must have a ratified contract by April 30th, but home buyers have until June 30th to complete settlement.

This has been great news for the National Association of Realtors® who have seen the tax credit help the real estate market to surge in 2009.  With the added provisions and extension, Realtors® along with home builders are optimistic about the remainder of 2009 and the beginning of 2010.

The real estate market is waiting in anticipation for the law makers to decide to extend or not to extend the $8,000 first time home buyers’ tax credit.  As of this Monday, the House of Representatives voted on a bill that would extend the tax credit to military personnel who have served more than 90 days overseas within the 2009 calendar year.  The bill must now be passed to the Senate for a vote where it is believed to pass without problem.  The question now is if the law makers will extend and expand the credit to everyone else.  Currently Congress has drafted more than 20 bills that address the extension as well as the expansion of the tax credit.  Some bills have lifted the “first-time home buyer” phrase and instead offered the tax credit to all but the wealthiest Americans.  Other bills have expanded the credit from $8,000 to $15,000 and extend the deadline 6 or 12 months.   While the specifics of a final bill are unclear, it seems very plausible that an extension or expansion for all U.S. residence will get a ruling very soon.

Those in favor of the extension and expansion believe the tax credit will continue to help stabilize our housing market by allowing certain home buyers to enter the market whom otherwise without the credit would not.  Political analyst Paul Begala predicts the extension will occur in part due to the feelings of the American people.  Many Americans have watched in frustration while large corporations received large sums government bailout money, yet the average American has not seen a penny. 

Mark Zandi, chief economist of MoodysEconomy.com, believes that the extension of the tax credit would benefit the market.  Forecast show that foreclosures are expected to rise next year due to unemployment numbers.  Zandi believes the tax credit will help mute the decline in foreclosures.  

"The most fundamental argument for the credit is that nothing works in the economy if housing is falling -- it hurts household wealth and credit becomes tight," Zandi said. "[The credit] is a good insurance policy. It's vital to stem the housing price declines."

Those who are opposed to the extension and expansion of the tax credit believe the credit is a waste of government money.  Currently, the tax credit has only enticed 15% of all home buyers into the market.  The remaining 85% of buyers would have bought a house with or without the tax credit.  Opponents also believe that an extension would only temporarily boost home prices and potentially set up those using the credit for a fall.  Once the credit eventually expires, home prices are likely to fall and interest rates will creep higher. 

While there are those on both sides of the fence, the ultimate goal is to help stabilize our countries housing market.  Keep your eye on the housing news because we should be seeing a ruling on this subject very soon.