Last week there was some very HUGE news in the mortgage industry with the U.S. Government bailing out both Fannie Mae & Freddie Mac as they were facing financial issues in today’s hurting mortgage industry.

Short Term - This was a must for the mortgage industry. If the government wouldn’t have stepped in and bailed out these two giants, what could have happened otherwise would have been catastrophic. High fives should be going around the house with this news. This is going to give our conforming industry back the stability it needs to continue funding loans and driving in new business. I wouldn’t be surprised if we see a drop in interest rates down to the 5.500% range and rally back and forth for some time because of this huge take over.

Folks, please also note that this is not the end of the mortgage crisis. All this is really going to do is allow us to still continue to move forward with the same crisis we were already facing in our mortgage and economic economy. Why is this good news then? Because if what could have happened if the government would not have bailed these giants out would of destroyed or us. Imagine for just a bit if the conforming lending had just the same if not worse restrictions on it as the jumbo loans do now. This could have and would of shut us down and caused worldwide effects.

So Short term, this is great news because we can continue to move forward. What we have to keep our eye on is the long term effects. There are still major companies in economic shambles and the government can’t help them all out. What will happen to these companies, and how will that continue to affect our economy?

Regards,

Fred D. Williams, Jr.
Mortgage Advisor
Mid Valley Financial Service
(559) 256-3645

Are you currently in the process of looking to purchase a home for the 1st time? Do you have clients that may be struggling to come up with the down payment to purchase a home? If so, you need to be aware of one of the many benefits that will take effect due to the H.R. 3221 Bill that was singed by President Bush on July 30, 2008.

Within the H.R. 3221 Bill there is a provision that allows first time home buyers to have up to $7,500 as a tax credit for purchasing a house. The max is $7,500 or 10% of the purchase price, which ever is less. So as long as you have a purchase price over $75,000 your tax credit will be $7,500. This $7,500 tax credit is looked at as a loan and will need to be paid back over a period of 5 years. The exciting part is it is less than $42 a day and it is interest free money.

There are income restrictions on this money if you are single or married. If you are single you will not qualify for the full $7,500 if you make more than $75,000 a year. If you are married your combined income can not exceed $150,000. If for any reason your income does exceed these amounts when filed, your tax credit will be reduced from the full possible amount of $7,500.

You will need to pay your tax credit back in full if you decide to rent out the property while you still owe on your tax credit. They only way to get out of not paying this money back is if your number expires and you were to pass way.

Take advantage of your tax credit today by getting a loan from a family member! If you can’t wait until tax time to get your tax credit Perhaps a family member would be willing to gift you a down payment for your purchase today (with possible interest) and pay them back in full once the tax credit is recieved at tax time. If this is a plan that they decide to go with, please make sure to talk to a CPA who has possibly filed there taxes in the past. If they are an individual that usually has to pay on there taxes, they better be prepared to not get the entire $7,500 tax credit or what ever is due to them (Uncle Sam gets his slice of the cake before anyone). So if you were to file your taxes in 08′ and it turns out that you owe $1,500 and you were also expecting a tax credit  of $7,500. Your amount due to you will drop to $6,000. 

So if you are going to borrow from a family member with the anticipation to pay back at tax time, be sure that you know where you stand with your CPA.

I hope that this has shed some light on the new tax credit that is coming our way from the H.R. 3221 bill. 

Regards,

Fred D. Williams, Jr
Mortgage Advisor
Mid Valley Financial Services

Senator Barack Obama visited Las Vegas today to discuss the hot topic in Las Vegas, Housing!   According to Obama’s campaign figures, Nevada’s foreclosure rate is three-and-a-half times the national average, and one in 44 households in Las Vegas is facing foreclosure.  I would say that is pretty accurate!

Obama currently supports a measure co-sponsored by Senator Chris Dodd and Representative Barney Frank that would permit some homeowners to negotiate with lenders to convert existing adjustable rate mortgages to new fixed rate mortgages in order to avoid foreclosure.  He is also in favor of changing the bankruptcy laws that favor the wealthy.

While in Las Vegas, Obama visited a family in North Las Vegas that is currently facing foreclosure.  After meeting with the family he gave a speech stating “if the government can bail out investment banks on Wall Street, then we can bail out Americans who are losing their homes!”  I am not sure how much the Government can actually do, but it would be great to see some type of attempt to ease the strain of  foreclosure in Las Vegas.  If we don’t do something, the Las Vegas Housing Market will continue to be flooded with bank owned homes!

Oil executives were summoned to the Senate today to discuss the rise in prices of oil.  The Oil Executives defended prices stating that prices are set based on supply and demand.  They stated that supply was tight and demand is up across the world causing prices to increase.

The Senate’s stance was that Americans were hurting in the pocket book as the average cost to fill up the gas tank is $60 and the big Oil Companies are generating record profits, $36 billion in just the first quarter of this year.

It’s ridiculous that these Oil Companies are generating these type of profits when the average person can barely afford to cover their monthly expenses as the price of gas, food and utilities keep rising!  When will the government step in and demand the Oil Companies make changes to drive down the cost of gas?  When will the government force Saudi Arabia to produce more oil?  Something needs to change and quickly, we just cannot afford to keep paying these prices for gasoline!