What Would A Government Shutdown Mean For Housing?

The National Association of Realtors put out this summary - which tries to estimate the functions of various government programs in a Government Shut Down scenario. This is specifically written to discuss the impact to Real Estate programs and Housing. (Source: NAR)

What a Government Shutdown Means for REALTORS®

(April 5, 2011)

The current continuing resolution (CR) providing funding for government operations is set to expire on April 8, 2011. If legislation providing for funding is not signed into law to extend funding after April 8, the federal government could shut down. This means many, but not all, government programs, including some that impact federal housing and mortgage programs, could grind to a halt as early as April 9, 2011. While the true impact of a shutdown is unclear until it actually begins below is a synopsis of how federal housing programs will likely operate in the event of a shutdown. The Office of Management and Budget (OMB) requires each agency to have contingency plans in place and reportedly has instructed agencies to not provide specific information on impacted operations.

Federal Housing Administration

FHA cannot offer endorsements for any new loans in the Single Family Program and cannot make commitments in the Multi-family Program in the event of a shutdown. FHA will maintain operational activities including paying claims and collecting premiums. Management & Marketing (M&M) Contractors managing the REO portfolio can continue to operate.

VA Loan Guaranty Program

Lenders may continue to process and guaranty mortgages through the Loan Guaranty program in the event of a government shutdown.

Internal Revenue Service (IRS)

Should the federal government shut down, the IRS cannot process federal income tax returns or issue refunds (but it can deposit tax payments). Consumers who were expecting to use their tax returns as part of the down payment for a home purchase will temporarily not have access to these refunds.

Flood Insurance

The Federal Emergency Management Agency (FEMA) confirmed that the National Flood Insurance Program (NFIP) will not be impacted by a government shutdown.

Rural Housing Programs

For the US Department of Agriculture programs, essential personnel working during a shutdown do not include field office staff who typically issue conditional commitments, loan note guarantees, and modification approvals. Thus, lender will not receive approvals during the shutdown. If the lender has already received a conditional commitment from the Rural Development office, then the lender may proceed to close those loans during the shutdown. A conditional commitment, which is good for 90 days, is given to a lender once a USDA Underwriter approves the loan. If a commitment was already issued, the funds were already set aside and the lender may close the loan at its leisure. If Rural Development has not issued a conditional commitment, the lender must wait until funding legislation is enacted before closing a loan.

Government Sponsored Enterprises

Fannie Mae and Freddie Mac will continue operating normally, as will their regulator, the Federal Housing Finance Agency.

Treasury

No official word as of yet, but the Making Home Affordable program, including HAMP and HAFA, may not be affected as the program is funded through the Emergency Economic Stabilization Act which is mandatory spending not discretionary.

Background Information on Government Shutdown

HJ Res. 48 extends the Continuing Appropriations Act, 2011 (Public Law 112-6) to April 8, 2011. If another continuing resolution (CR) or budget is not signed into law, the federal government could shut down on April 9, 2011. This requires the furlough of non-emergency personnel and the curtailment of federal agency activities. Federal contractors cannot be paid. Programs funded by annual appropriations are directly impacted though programs funded by laws other than appropriations (such as Social Security) may also be impacted. The last government shutdown occurred during fiscal year (FY) 1996 and lasted 21 days, from December 16, 1995 through January 6, 1996.

The Antideficiency Act is the primary law preventing government activity when no budget or CR is enacted. The act, found in 31 U.S.C., prohibits:

• Making or authorizing an expenditure from, or creating or authorizing an obligation under, any appropriation or fund in excess of the amount available in the appropriation or fund unless authorized by law.
• Involving the government in any obligation to pay money before funds have been appropriated, unless otherwise allowed by law.

• Accepting voluntary services for the United States, or employing personal services not authorized by law, except in cases of emergency involving the safety of human life or the protection of property.

• Making obligations or expenditures in excess of an apportionment or reapportionment, or in excess of the amount permitted by agency regulations

Basically, the government may not make payments or commitments unless there is enough money in the bank. According to the US Office of Personnel Management, an agency must shut down activities not excepted by the US Office of Management and Budget (OMB) when it no longer has the funds to operate. OPM recommends that agencies 1) communicate with employees and representatives about a potential shutdown, 2) prepare draft furlough notices, and 3) determine which positions are excepted from the furlough according to OMB guidance.

Federal agencies have been required to complete contingency plans since 1980. OMB has three different bulletins that agencies may reference in the development of their shutdown plans. Plans must include, among other things, estimated time to complete a shutdown and the number of employees to be excepted. The President, Members of Congress, presidential appointees, certain legislative branch employees, and federal excepted employees are not subject to the furlough.

Sources

House Resolution 3082, “An Act making appropriations for military construction, the Department of Veterans Affairs, and related agencies for the fiscal year ending September 30, 2010, and for other purposes.” http://www.gpo.gov/fdsys/pkg/BILLS-111hr3082eas2/pdf/BILLS-111hr3082eas2.pdf

Antideficiency Act Background. US Government Accountability Office. http://gao.gov/ada/antideficiency.htm

Guidance and Information on Furloughs. US Office of Personnel Management. http://www.opm.gov/furlough/furlough.asp

Tax Tips For New Homeowners

With tax time just around the corner, it's a great time to look back at your year and evaluate any changes in your tax situation. For anyone who purchased a home in 2010, the changes could be welcome ones!

Nothing is more valuable at tax time than a trusted accountant, and everyone's tax situation is unique, so please do not take any of the information here as direct advice - but here are a few things to consider if you purchased a home in 2010...

1. One word: Interest. This might become your favorite word during tax season! All that interest you pay on your mortgage just might pay you back in the form of a welcome tax deduction.

2. If you purchased a home in 2010, you may be able to write off your closing costs! These typically qualify as deductible expenses (even if the Seller paid them on your behalf!)

3. For Investors: Remember to track the repairs and maintenance expenses on your property, as these costs will typically qualify as deductions for investment properties. This includes HOA fees in many cases if your investment property has association dues!

4. For Non-Investors: It's still important to track your expenses... even for your primary residence. Any permanent improvement to the property could mean tax breaks down the road (when you eventually sell your property and you are determining your tax basis). Just think how happy you will be when that day comes... and use it as a reminder to keep good records NOW!

Always consult with a CPA for tax-related questions.

Rebates for Denver Homeowners!

Planning some home improvements that will make your home more efficient? Installing a low-flush toilet? How about a rain sensor on your new sprinkler system this spring? If so, you may have a rebate in your future! Denver Water is accepting applications for rebates for a number of products (both indoor and outdoor) in 2011.

Keep in mind, you must provide receipts, and you must submit no more than 90 days following your purchase. You can find more details on which consumer products qualify for the rebates, as well as the formal application at the Denver Water website Click Here.

Renting vs. Buying

Real Estate Website, Trulia.com just published a great study on the affordability of renting vs. buying in various cities across the U.S. Denver, so you know, is ranked as 'affordable to buy'. Click on the link below to link to their interactive map - showing the results of all the major cities they studied!

For your own Rent Vs. Buy Analysis, check out our Rent Vs. Buy Calculator HERE!

Wondering What To Expect With Mortgages in 2011? Read On...

Mortgage Updates for 2011 Leading financial experts suggest that borrowers should apply for a new mortgage loan, or refinance their home loan when the time is right for their individual needs, rather than attempt to time the market. While risk takers may be enthusiastic about waiting until the last minute to lock in a low mortgage interest rate, most homeowners and homebuyers prefer to observe general mortgage market trends and focus more intently on their own finances. Predicting a specific mortgage rate for a particular time is pretty nearly impossible, but real estate market observers have identified a few trends that they anticipate will impact the mortgage market in 2011:

1. Mortgage rates will slowly rise throughout the year.
The Mortgage Bankers Association (MBA) anticipates that rates will rise slightly in 2011, hovering around 5% and increasing to about 6% in 2012. While any increase in mortgage rates is unwelcome to homeowners who want to refinance or to buyers, a 5% mortgage rate is still historically in the low range of interest rates.

2. Mortgage applications for a home purchase will become a greater part of the market.
The MBA predicts that stabilizing home prices and modest increases in home sales will increase the number of applications for a mortgage for a home purchase.

3. Jumbo loan mortgages will be more attractive. In 2009 and earlier in 2010, mortgage rates for jumbo loans (loans over $417,000 in most housing markets and above $729,750 in high-cost housing markets) were far higher than mortgage rates for conforming loans. The higher rates prevented homeowners from refinancing and kept some purchasers out of the market for more expensive homes. In the Q4 of 2010, mortgage rates on jumbo loans decreased, which will likely spur refinancing applications and purchase applications for the high-end housing market.

FYI: Bank of Commerce Mortgage offers 30 year fixed rate loans with:

• 20% down (80% loan to value) for loan amounts to $1 million
• 25% down (75% loan to value) for loan amounts to $1.5 million
• 30% down (70% loan to value) for loan amounts to $2 million.

4. The down payment requirements for conventional financing will be loosening up in the near future. FHA needs some breathing room and we anticipate PMI companies will allow a 97% loan to value (3% down payment) again for well-qualified buyers.

5. Requirements on gifts for down payments are changing. On loan amounts above $417,000 buyers will now be required to contribute a minimum of 5%, the remaining down payment can come from a gift. If the loan amount is under $417,000 the old rules still apply allowing a buyer to receive a gift for 100% of the down payment and contribute nothing with a minimum 20% down payment.

The Bottom Line While these general mortgage trends may impact the real estate market overall, each homeowner or buyer considering applying for a mortgage should meet with a lender to determine the cost and availability of a loan that meets his or her needs.

Calvin Cox

303-544-0600

calvin@bankofcommercemortgage.com Published with permission from Bank Of Commerce

Denver Home Sales in 2010... Volume Down While Prices Increased

Denver Post Reports Uplifting Facts on Denver Real Estate Values

Contrary to what the media may have you thinking... here is an uplifting report about values in Denver. Not only have home values increased (despite volume dropping), but CONDO prices seem to have stayed more stable than would have been apparent this year.

Read the Full Article on the Denver Post Site Here:

READ DENVER POST ARTICLE HERE

Christmas Tree Disposal in Denver - Starts TODAY!

Don't trash that Christmas tree after the holidays

Recycle your tree with Denver Recycles!

Your Christmas tree gave you so much joy during the holidays, now give it a second life and recycle it with Denver Recycles’ Treecycle program. Denver Public Works Solid Waste Management will be collecting Christmas trees for recycling starting Monday, January 3rd. All Denver residents whose trash is collected by Denver Public Works Solid Waste Management may participate.

Favorite Homes of 2010

Reflecting back on 2010, there are so many Clients to thank for a wonderfully successful and rewarding year... to each and every one of you - thank you for your business! Here is a look back on the year, along with highlights from some of the many Buyers & Sellers I had the pleasure of working with...

Favorite Buyer Sale

Buyer, Kristi - Sloans Lake
This purchase was a long time in the making. Kristi had seen this duplex several times, and though it had everything she wanted (and more!), there were some challenges holding her back... a funky lot line, shared garage and party wall problems. Working together with the Seller, we were able to overcome all of these issues and she ended up with a WONDERFUL new home in a promising investment area. Congratulations, and thanks for your business and your creative, problem-solving approach!

Favorite Seller Sale

Seller, Chris - Littleton
Not only was Chris an absolute pleasure to work with - but he was also amazing to work with during a very difficult market! Despite doing EVERYTHING right, Chris had a long road to the closing table. This home was in perfect condition, staged, and just happened to be in an area that was hit pretty hard with distressed properties. Chris hung in there with me, and we were able to get him closed just in time for him to close on the home of his dreams - a new Loft in the heart of Downtown. Thanks for sticking with me, and for having such a positive attitude. Congratulations on your Sale!

Best 'Fit-For-The-Client' Deal

Buyer, Brent - Highlands

Talk about being patient! Brent must have looked at 100 homes in this area, and had several opportunities that just didn't go his way. Rather than giving up, he continued to believe that the right home was out there - and all his waiting led him to this beautiful single family home in a newer part of Highlands! He found a wonderful new home that fit his needs, he made no sacrifice on location, and we wish him many happy years in his new home. Congratulations, and thanks for sticking with your home search through thick and thin!

Favorite Investor Purchase

Buyer, Russell - Wheat Ridge
Now here is a Buyer with some vision! Russell had big renovation plans, and searched on and off for many months (and in many different areas). He finally decided on a charming mid-century brick home just outside of the popular Highlands neighborhood - and one that had some fantastic potential! I know it is still a work in progress, but first on his list were landscaping/curb appeal as well as a major kitchen remodel. Can't wait to see the 'after'!! Congratulations, Russell - and best wishes!

Most Charming Home

Buyers, Tara & Levi - Highlands
This purchase was a true Highlands Gem! Located in the 'Harkness Heights' neighborhood, this bungalow oozes charm from the moment you walk in the door. The perfect mix of original details and modern amenities, this home is a poster child for why Buyers fall in love with NW Denver. From the private yard to the sunken kitchen... the media room to the master suite... the hardwood floor detailing to the exposed brick - this home would leave any visitor envious. It was truly a pleasure working with each of you - and congratulations on your new place!

Favorite First Time Home Buyer Purchase

Buyers Devin & Rachel - NW Denver
Now what first time home buyer wouldn't be thrilled with this as their first kitchen?!? Devin & Rachel landed this adorable 1/2 duplex in Highlands, and it is completely remodeled (literally from top-to-bottom, or new-roof to finished basement). Working with First Time Home Buyers is so fun and rewarding - and this was the perfect example. These Buyers looked at this home and had the keys in their hands just about a month after beginning their search. Congratulations on your first home, and may 2011 bring you many blessings!!

Favorite Suburban Home Purchase

Buyers, Joe & Peggy - Old Littleton

This for-sale-by-owner home came with some wonderful features... including a huge park-like backyard, a totally remodeled kitchen, and a location near the heart of Old Littleton! Joe & Peggy were also on the receiving end of some nice repairs as a part of their inspection negotiation... which was a wonderful bonus! We thank you so much for your business, and hope you are enjoying all the space you have in your new suburban home!

Favorite Closing

Buyers, Zack & Monica - Edgewater
This home in Edgewater provided quite the education on Flood Insurance, and there were times when we weren't sure this deal would close! After learning more than they ever wanted to know the subject (and after we successfully removed the home from FEMA's flood map!) Zack & Monica and their adorable family are the proud new owners of this totally renovated home. They secured an amazing price, too - by sticking to their guns during a grueling negotiation. They are now the lucky owners of a beautiful home in a family friendly neighborhood - walking distance to many shops & restaurants. Congratulations on a successful closing, and thanks for your business!

With so many wonderful clients, it was hard to stop here, but to those of you who I didn't mention, know that I am truly thankful for the opportunity to help you in 2010 - and I hope to work with you all again in the future! Congratulations on your 'piece' of Denver Real Estate, and Happy New Year!

Calling All Denver Real Estate Investors...

Real estate investing has become a popular interest - and for some, it's a full time job! If you are considering adding some real estate to your investment portfolio, you may have an endless list of questions to consider. What is a cap-rate? What is a good cap-rate in MY area? What kind of cash-on-cash return is possible? What should I be looking for as I consider whether a property will 'cash flow' or not? Even once you identify an opportunity (and that is half the battle!), there are questions like 'how do I decide whether to use a property management company or do-it-myself?' Where can I get advice on leases, and should I consider incorporating my business? It can quickly become overwhelming...

Getting into the game of real estate investing can be extremely rewarding, but this is a time when your research will reward you - BIG time. We have a number of books, websites and resources for investors (helpful for everyone from those just starting out - to those who are looking for some advanced help with their investment decisions).

CONTACT US, and request a copy of our Investor E-Pack for additional information & we will be happy to help you get started (or continue down the investment path)!

In the meantime, if you'd like to browse some income properties in the Denver area, consider using Loopnet.com. This internet resource is an amazing source for leads, and your Realtor can follow up on properties that you'd like more information about.