FHFA: First home-price increase in a year

U.S. home prices rose a seasonally adjusted 1.7 percent from December to January, driven by a disproportionate number of sales in strong markets, according to a home-price index that tracks repeat sales of homes purchased with mortgages purchased or guaranteed by Fannie Mae and Freddie Mac.

The Federal Housing Finance Agency's monthly House Price Index showed U.S. home prices down 6.3 percent from a year ago and 9.6 percent below their April 2007 peak.

Because the index does not include mortgages too large or risky for Fannie and Freddie, it can understate both price increases and price declines.

FHFA said the unexpected increase in the index from December to January -- the first in a year -- was largely explained by changes in the geographic mix of sales, with stronger markets seeing a disproportionate share of transactions. Adjusting for that effect, home prices would still have crept up in January, but the change "would have been far less dramatic," FHFA said in a press release.

Sales volumes were low during January, adding to the imprecision of the index, and FHFA warned that it could be subject to "significant" revision. A previously reported 0.1 percent increase in the index in December has been revised to a 0.2 percent decline.

All but one of nine Census divisions saw price gains between December 2008 and January 2009. The East North Central Division saw a 3.9 percent gain, followed by the South Atlantic (3.6 percent), New England (2 percent), Middle Atlantic (1.5 percent), West North Central (1 percent), Mountain (0.8 percent) and East South Central (0.6 percent). The index was unchanged in the West South Central Division, while prices were down 0.9 percent in the Pacific Census division.

Looking back a year, all nine Census divisions have seen price declines. The Pacific Census Division has seen the largest price drop (-21.1 percent), followed by the Mountain (-9.2 percent), South Atlantic (-8.3 percent), Middle Atlantic (-3.6 percent); New England (-2.4 percent), East North Central and East South Central (both -1.4 percent), West North Central (-1.1 percent) and West South Central (-0.4 percent).

-By Inman News

2009 Homebuyer Tax Credit

The homebuyer tax credit is one of 10 key provisions of the American Recovery and Reinvestment Act signed by President Obama into law on Feb. 17, 2009.

The bill provides for a $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. The credit does not require repayment. Most of the mechanics of the credit will be the same as under the 2008 rules: the credit will be claimed on a tax return to reduce the purchaser's income tax liability. If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.

Home Refinance and Loan Modification Plan

On March 4, 2009, the Obama Administration released detailed guidelines for homeowners to help them determine if they qualify for the Administration’s new Making Home Affordable plan. This is a follow up to the Administration’s announcement on February 18 outlining their plan to stem the current tide of foreclosures and stabilize the nation’s housing markets.

The plan has two primary goals:

1.To help homeowners in existing Fannie Mae or Freddie Mac loans that are current on their mortgage payments to refinance and take advantage of today’s lower interest rates. Many of these homeowners are unable to refinance because of lost appreciation in their homes due to the continuing decline in home prices. These homeowners still have equity in their home, just not the necessary 20% to get a refinance. Under the Administration’s plan, Fannie and Freddie will be allowed to refinance qualified homeowners up to a 105 percent loan-to-value of the current value of the home.

2. To help homeowners who are at risk of foreclosure.The Administration is offering loan servicers and investors government assistance to help offset the cost of modifying qualified homeowners into affordable mortgages that will allow them to keep their homes. This may be done by reducing the mortgage interest rate, extending the term of the loan, principal forbearance, and/or principal cramdown. This program is voluntary and the servicers must agree to contracts with the Treasury to participate.

In addition, the Government warns homeowners to beware of foreclosure rescue scams:

- There should never be a fee charged for information or assistance regarding the Making Home Affordable Program.

- Beware of anyone who says they can "save" your home if you sign or transfer over the deed to your home. Do not sign over the deed to your property to any organization or individual unless you are working directly with your mortgage company to forgive your debt.

- Never make your mortgage payment to anyone other than your mortgage company without their approval.