FHA Adds Down-Payment Options to Housing Credit

By Dina ElBoghdady
Washington Post Staff Writer
Saturday, May 30, 2009

First-time home buyers can now use a federal tax credit worth up to $8,000 to help cover a down payment and other upfront costs if they are taking out a loan backed by the Federal Housing Administration.

The $8,000 tax credit was made available months ago as part of the Obama administration's effort to motivate would-be buyers and jump-start the housing market.

But home buyers cannot claim the tax credit until they close on their homes, and then they must wait for weeks, possibly months, after filing their tax returns to receive the money.

To help buyers who need the cash upfront, FHA is allowing private lenders, state housing agencies and some nonprofit groups to offer loans secured by the tax credit.

The Department of Housing and Urban Development, which includes FHA, estimates that this tax credit advance will enable tens of thousands of families to buy homes.

"What we're doing today will not only help these families to purchase their first home but will present an enormous benefit for communities struggling to deal with an oversupply of housing," said HUD Secretary Shaun Donovan, who unveiled the details yesterday at a National Association of Home Builders conference in Washington.

The tax credit is available only for purchases made this year before Dec. 1. Eligibility is limited to people who have not owned a home in the previous three years. Those buyers may be able to collect up to $8,000, depending on their incomes.

Under HUD's plan, buyers cannot use the tax credit advance to pay the 3.5 percent down payment FHA mortgages require if they get the advance from a private lender. They can use it to add to that down payment or help defray closing costs.

It is unclear how many private lenders will participate in the program.

But buyers who turn to housing agencies can put the tax credit advance toward the 3.5 percent down payment as well as other purchasing costs, HUD officials said. Currently, Colorado , Delaware , Idaho , Kentucky , Missouri , New Jersey , New Mexico , Ohio , Pennsylvania and Tennessee have similar programs.

Although buyers can only qualify for a tax credit once they close on a house, they can determine in advance how large a credit they will receive by providing tax documents to their lenders or local housing agencies, a senior HUD official said in a background briefing with reporters.

Foreclosures up again in Maryland

ROBBIE WHELAN

Daily Record Business Writer

May 12, 2009 10:12 PM


For the second month in a row, month-to-month foreclosure numbers have risen across the state. In the Baltimore-Towson metro area, a year-long skid in foreclosure filings, which have dropped by half since last April, has come to an end.

Numbers released by California-based firm RealtyTrac Inc. show that Maryland foreclosures in April 2009 jumped 8.4 percent compared to March 2009, but were down 40 percent compared to April 2008. The local monthly increase was more striking, at 27.86 percent, but still down 42 percent from a year ago.

The Baltimore-Towson metro area includes the city of Baltimore, as well as Baltimore, Anne Arundel, Carroll, Harford, Howard and Queen Anne´s counties.

The numbers reflect a general drop in foreclosure activity since the state passed emergency laws last spring that extended the foreclosure process by more than two months to allow for distressed homeowners to negotiate forbearance agreements with their lenders.

But Anirban Basu, a local economist and president and CEO Baltimore-based Sage Policy Group, said that the rising monthly statistics are a sign that the short-term benefits of state and federal anti-foreclosure measures are history, and that we should expect more foreclosures until the housing market bottoms out sometime in 2010.

The reason, he said, is the poor labor market. On Friday, the Bureau of Labor Statistics reported that Maryland has lost 59,700 jobs since March 2008, although between February and March of this year, the state actually gained about 4,000 jobs.

"Because labor growth is slower, we won´t see the housing market improve until 2010. We will probably not see a true bottom in the housing market until 2010," Basu said. "[Foreclosures are] down 40 percent. That is largely the result of public policy. It is not the result of an improved housing market. Since that time, job losses have accelerated, not decelerated. Delinquencies have accelerated, not decelerated."

Basu also predicted some growth beginning in the next few months, and that by the end of 2009, the U.S. economy as a whole would be expanding again. One promising sign, he said, is the stabilization of home prices in traditionally less volatile markets such as Montgomery County.

"It has become a national preoccupation among economists to look for green shoots," he added.

Massoud Ahmadi, the director of research of Maryland´s Department of Housing and Community Development, disagreed, saying that it´s too early to be worried about a renewed surge in foreclosures.

"One month doesn´t really represent a trend," he said. "And the foreclosure activity has been pretty 3; stable since, I would say, February of this year. We have seen small changes here and there. Having said that, we have seen a shift in the composition of foreclosure activity."

Ahmadi noted a slight increase in lender purchases, also known as Real Estate Owned properties, or REOs, in research reports. In April of last year, 72 percent of all foreclosure activity in Maryland was triggered by a notice of default, the more typical process, in which a borrower falls behind on payments, according to Ahmadi´s research. This year, it´s only 65 percent. By contrast, he added, REOs have risen from 7 percent to 18 percent of all foreclosure activity over the same period.

"The basic explanation for that is that the foreclosure properties are working their way through the system," he said. "Even though the real estate market has been on the upswing, it´s still weak. The market cannot absorb [foreclosed] properties. We´ve seen a sort of spike in the number of REO properties, because if over time they are not sold, that have to be absorbed by the lenders."

Countrywide, foreclosure trends have remained relatively consistent, with 75 percent of all foreclosure activity concentrated in the top 10 states with the highest filings numbers.

Most of these top 10 are Sunbelt states, led by Nevada, Florida, California and Arizona, or Midwestern states such as Ohio and Illinois, where high home prices were driven by a housing bubble during the real estate boom, or where manufacturing jobs have been shed in recent years. Maryland ranked 17th, with 3,613 filings in April.



---------------------------------------------------------------------------------------------------------- For Immediate Release:  April 8, 2009

Leggett Announces Additional Assistance to Up county Homeowners to Address Foreclosures

Outlines Funding to Purchase Foreclosed Properties In Germantown Area

            County Executive Isiah Leggett today announced that the County and the Maryland Department of Housing and Community Development would provide up to $450,000 to three non-profit organizations to provide foreclosure prevention counseling to homeowners in the county.  Leggett made his announcement at the Up county Regional Services Center, where counselors from the Housing Initiative Partnership (HIP) will be based.  HIP, along with Home Free USA and the Latino Economic Development Corporation (LEDC), are providing foreclosure prevention counseling services.  Leggett also announced that the County´s Department of Housing and Community Affairs will provide a loan of $2 million to AHC Inc. to acquire, renovate and re-sell foreclosed homes in the Germantown area (zip code 20874) to qualified low- and moderate-income households       

            "Foreclosures in the county are a big concern for me," said Leggett, "and we are working to address the problem on multiple fronts.  Counseling for homeowners to try and avoid foreclosures is extremely important, as is helping organizations such as AHC purchase foreclosed properties so neighborhoods remain stable."

            Since 2007, Montgomery County has seen more than 9,000 properties enter the foreclosure process.  Twelve hundred have been taken over by lending institutions.  Foreclosure "hot spots" include Germantown, Gaithersburg, Wheaton, Aspen Hill and Glenmont.        

            Currently, Housing Initiative Partnership is operating out of an office in the Up county Regional Center. Home Free USA has an office provided with support from the City of Gaithersburg.  Counselors for the Latino Economic Development Corporation work in Wheaton.  The additional funding will increase the total number of counselors to eight, up from the four that are currently available.

            The homes acquired will be lender-owned, two- or three-bedroom town homes and single-family homes in need of modest renovation that are good candidates for resale.  The renovations will include energy efficiency and weatherization improvements.    AHC estimates that approximately 18 homes can be acquired, renovated and resold as affordable dwellings in a two-year period.  The $2 million loan will come from the County´s Housing Initiative Fund. 

             AHC is an Arlington, Virginia-based private, not-for-profit developer of affordable housing throughout the mid-Atlantic region.  During the past 32 years, AHC has participated in the creation or preservation of more than 5,000 units of affordable and mixed-use housing in the Washington metropolitan area, including the development

and/or financing of more than 1,000 affordable single-family residences.

            "AHC has been creating affordable homeownership opportunities for over three decades," said Walter D. Webdale, AHC CEO.  "We are delighted to partner with the Department of Housing and Community Affairs on this initiative which will preserve and strengthen communities by converting foreclosed assets to affordable home ownership opportunities for low- and moderate-income households in Montgomery County."