NEW CONVEYANCE TAX INCREASE

REMINDER…. CONVEYANCE TAX INCREASE EFFECTIVE 7/1/11
The Connecticut General Assembly adjourned its 2011 Regular Session on Wednesday, June 8. The following material highlights a number of important pieces of legislation that were enacted in the session.

Conveyance Tax

• Public Act 6: Section 102 of this act increases the state's portion of the tax by ¼ of one percent. This increase will go into effect on July 1, 2011, and will be applicable to conveyances occurring on or after that date. The act was signed by the Governor on May 4, 2011.
• Residential property (and vacant land) will thus be taxed at ¾ of one percent (instead of ½ of one percent).
• Residential property that is conveyed for more than $800,000 (the so-called "mansion tax") will be taxed at ¾ of one percent up to that amount, and then at 1 and ¼ of one percent on the excess.
• Nonresidential property that is currently taxed at 1% will instead be taxed at 1 and ¼ of one percent.
• Conveyances to a financial institution of property on which mortgage payments have been delinquent for not less than six months will be taxed at ¾ of one percent, instead of ½ of one percent.
• Section 103 of the bill provides that the revenue attributable to the increase in the state tax rate shall be deposited by the Department of Revenue Services into a municipal revenue sharing account, with funds used for municipal grants.

Note: The legislature did not enact a bill that would have allowed municipalities to impose a "buyer's tax" on the conveyance of real property.

Foreclosures
House Bill 6351: This bill extends the sunset date of the foreclosure mediation program from July 1, 2012 to July 1, 2014. The bill also extends the program to include the owners of property occupied by a religious organization. Other changes made to the mediation program include new restrictions on the making of motions and new documentation requirements.

Other matters covered by the bill include the protections afforded to certain tenants of foreclosed homes; the registration requirements imposed on those who bring foreclosure actions and on those in whom title vests following a foreclosure action; and overtime requirements applicable to certain mortgage loan originators.

Recording Fees
Public Act 48: Section 134 of this act amends Conn. Gen. Stat. § 7-34a to make permanent the ten dollar surcharge on recordings that was first established in 2009. That surcharge was due to expire on July 1, 2011. Revenue raised by the surcharge is to be dedicated to the uses set forth in Conn. Gen. Stat. § 4-66aa, as amended by Section 133 of the bill. The act has not yet been signed by the Governor.

FIRST TIME HOME SELLER TIPS!

3 Tips for the First-Time Home Seller

  ^[1]RISMedia, June 14, 2011—Today’s buyer-take-all bonanza is a boon for fence-sitters and buyers with great credit and deep pockets. But sellers are steeling themselves to new realities that include paying (rather than making) money at the closing table, providing extras to sweeten the deal, and spending more time and cash making the home camera-ready.

For first-time sellers who have never been through the process before, it’s a different world. One where the value of the house isn’t measured in the profit made on the sale, but by the enjoyment the owners had from living in the home.

UPSIDE DOWN OWNERS

DAILY REAL ESTATE NEWS June 9, 2011

40% of underwater borrowers took cash out of homes CoreLogic: Owners with home equity loans more than twice as likely to be upside down By Inman News Inman News™ Share This Homeowners with home equity loans are more than twice as likely to be "underwater" as those who didn't take cash out of their homes, according to statistics compiled by real estate and loan data aggregator CoreLogic. CoreLogic estimates that at the end of March, 22.7 percent of homeowners with mortgages -- about 10.9 million borrowers -- owed more on their mortgage than their home was worth. That's down slightly from an estimated 11.1 million underwater borrowers at the end of December. Falling home prices can put borrowers who have little equity in their homes underwater. By allowing homeowners to convert equity they have in their homes into cash, home equity loans reduce the cushion borrowers have against price declines. CoreLogic said that 38 percent of borrowers with home equity loans were underwater at the end of March, compared with 18 percent of homeowners who had no home equity loan. More than 40 percent of all underwater homeowners (4.5 million) have home equity loans, CoreLogic said. As might be expected, CoreLogic found that the presence of a home equity loan also increased the amount of negative equity. Underwater homeowners who had taken out home equity loans owed $83,000 more than their home was worth, on average, compared with $52,000 for those who hadn't taken cash out of their home. Past studies have shown that the higher a borrower's combined loan-to-value ratio (CLTV), the more likely they are to stop making payments on their loan. In many cases, borrowers will opt for a "strategic default" -- not because they can't afford the monthly payments, but because they don't believe their home will regain its value anytime soon. CoreLogic found that borrowers with home equity loans were slightly more likely to default at "moderate" levels of negative equity, up to 115 percent CLTV. Beyond that point, the relationship reverses, and default rates were slightly higher among homeowners without home equity loans. Among all underwater borrowers nationwide, the average amount of negative equity was $65,000. In states with higher-cost housing, the average was considerably higher. In New York, underwater borrowers had an average of $129,000 in negative equity, followed by Massachusetts ($120,000), Connecticut ($111,000), Hawaii ($98,000), and California ($93,000). At the other end of the scale, underwater borrowers in Ohio had the lowest negative equity -- $31,000, on average -- followed by Indiana ($34,000), and Minnesota ($38,000). Nevada led all states in the proportion of underwater borrowers -- 63 percent of Silver State homeowners with mortgages owed more than their home was worth -- followed by Arizona (50 percent), Florida (46 percent), Michigan (36 percent), and California (31 percent). At the metro level, Las Vegas led the nation, with 66 percent of mortgaged properties underwater, followed by Stockton (56 percent), Phoenix and Modesto (55 percent), and Reno (54 percent). Metropolitan markets located outside of the five states with the highest negative equity shares include Greeley, Colo. (38 percent); Boise (36 percent); and Atlanta (35 percent).

INTEREST RATES MAKE IT A GREAT TIME TO BUY!

Mortgage rates ease again to new 2011 low

Demand for purchase loans up slightly from year ago
By Inman News

Rates on fixed-rate mortgages dropped slightly this week, hitting new lows for the year, Freddie Mac said in releasing the results of its latest Primary Mortgage Market Survey.
While lower rates often trigger applications for refinancing, purchase loan demand also picked up last week and was slightly stronger a year ago, a separate survey by the Mortgage Bankers Association showed.
Freddie Mac's survey showed rates on 30-year fixed-rate mortgage averaged 4.6 percent with an average 0.7 point for the week ending May 26, down from 4.61 percent last week and 4.84 percent a year ago.
Rates on 30-year fixed-rate mortgages hit an all-time low in Freddie Mac records dating to 1971 of 4.17 percent during the week ending Nov. 11, 2010, before climbing to a 2011 high of 5.05 percent in February.
Rates on 15-year fixed rate mortgages averaged 3.78 percent with an average 0.7 point, down from 3.8 percent last week and 4.21 percent a year ago. Rates on 15-year mortgages hit an all-time low in records dating back to 1991 of 3.57 percent in November.
For 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans, rates averaged 3.41 percent with an average 0.5 point, down from 3.48 percent last week and 3.97 percent a year ago. The 5-year ARM hit a low in records dating to 2005 of 3.25 percent in November.
Rates on 1-year Treasury-indexed ARM loans averaged 3.11 percent with an average 0.5 point, down from 3.15 percent last week and 3.95 percent a year ago.
Looking back a week, the MBA's weekly Mortgage Applications Survey showed applications for purchase loans climbed a seasonally adjusted 1.5 percent during the week ending May 20 compared to the week before. Purchase loan applications were up 3.1 percent from the same time a year ago.
Demand for refinancings was also up slightly, to the highest level since Dec. 10. Requests for refinancings accounted for 66.8 percent of all mortgage loan applications, the highest share since Jan. 28.
In a May 18 forecast MBA economists said they expect rates on 30-year fixed-rate mortgages to rise to an average of 5.5 percent during the final three months of this year, and continue a gradual rise to an average of 5.9 percent during the fourth quarter of 2012.

PAY ATTENTION TO YOUR NEIGHBORS!

TAKE ADVANTAGE OF NICE WEATHER FOR EXTERIOR REPAIRS

Now Is the Time to Get Your Home’s Exterior in Tip-top Condition

RISMEDIA, March 31, 2011—According to DIY shopping and support website Trades Supermarket, the improved spring weather means more than giving the lawn a trim for homeowners; it signifies the time to undertake necessary repair and maintenance checks, not only to make sure

ENERGY HOME LOANS

latimes.com/business/realestate/la-fi-harney-20110501,0,6800872.story

latimes.com

FHA and Fannie Mae offer loans for home energy improvements

The FHA's PowerSaver program allows eligible owners to borrow up to $25,000 at fixed rates for as long as 20 years to finance energy-conservation retrofits. Fannie Mae has an energy-improvement mortgage add-on program.

By Kenneth R. Harney
May 1, 2011
Reporting from Washington

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If you've been looking for a way to pay for energy improvements to your house, two little-publicized new mortgage programs could provide the cash you need.
Both the Federal Housing Administration and mortgage investor Fannie Mae recently have launched options in the energy conservation arena. Here's a quick overview, with some pros and cons:
The FHA's PowerSaver program allows eligible owners to borrow up to $25,000 at fixed rates between 5% and 7% for as long as 20 years to finance high-efficiency windows and doors, heating and ventilating systems, solar panels, geothermal systems, insulation and duct sealing, among other retrofits.
Although PowerSaver is officially a pilot program, Shaun Donovan, secretary of Housing and Urban Development, estimates that 30,000 such loans will be closed in the next two years. It eventually could become a major national program for residential energy upgrades, with total loans extending into the millions, he said.
One important element in the program is energy audits. Although they won't be mandatory, most participating lenders are expected to encourage owners to sign up for an energy efficiency analysis by a certified specialist. The audit should pinpoint where your house is leaky or otherwise inefficient in energy use, and should recommend the specific types of upgrades or additions that could help cut your bills and reduce greenhouse emissions.
The FHA will insure loans to cover the improvements up to the $25,000 maximum under the following guidelines:
•The house must be your principal residence, detached and single-family only. No rentals, no investor homes, no second homes.
•You'll need to demonstrate that you are a solid credit risk. Minimum FICO credit scores of 660 are required, plus your total household monthly debt-to-income ratio cannot exceed 45%.
•Houses with negative equity will not qualify. You'll need some level of equity in the property; there is no mandatory minimum stake, but the combined primary mortgage debt plus the PowerSaver second lien cannot exceed 100% of the appraised market value of the house. You could, for example, have a 10% equity position in a $200,000 home, and still qualify for up to $20,000 in a PowerSaver.
•Lenders are likely to take an extra hard look at all your income and asset documentation because, unlike other FHA-insured mortgages, PowerSaver will cover only 90% of the lender's loss or insurance claim in the event of a default.
Eighteen lenders around the country have signed up so far to participate, including giant Quicken Loans — a Top 10 national mortgage originator — and local players such as California-based Sun West Mortgage, Seattle's HomeStreet Bank, the Bank of Colorado, Stonegate Mortgage in the Midwest, Pennsylvania-based AFC First Financial Corp. and the University of Virginia Community Credit Union. A spokesman for Quicken Loans said the company hoped to offer PowerSaver in as many as 34 states during the pilot period.
Some pros and cons of PowerSaver: The biggest plus is its low fixed interest rate and long term — especially in comparison with most homeowners' alternative options such as bank home equity loans and lines of credit, which typically cost more and may have less favorable payback terms.
The main potential drawbacks center on the program permitting total household mortgage debt loads of up to 100% of market value. Some borrowers could encounter payment problems if they experience even slight income declines. If property values in the area decrease, the loans could put owners into negative equity territory.
Fannie Mae's "energy improvement" mortgage add-on program is significantly different from the FHA's. Rather than a separate loan to finance the energy retrofits, Fannie folds the cost of the improvements — capped at up to 10% of the estimated market value of the home following the energy-efficiency enhancements — into the mortgage amount itself.
In effect, Fannie's program, which is available through participating lenders nationwide, allows you to buy an existing house and improve its energy usage significantly with one mortgage at current market rates. Most single-family properties are eligible for the program, except for manufactured houses and cooperative units.
Be aware that Fannie requires an audit by a certified Home Energy Rating Systems expert upfront to justify the proposed modifications to the house as truly cost-efficient. The audit must be paid for by the borrower, but Fannie will credit an extra $250 through the lenders to partially defray this expense