FHA Down Payment Requirement Could Increase to 5%

Now may be the time if you are planning to buy a home and take advantage of the low 3.5% downpayment required for an FHA mortgage.

In 2008, the FHA mortgage minimum down payment was raised to 3.5% from 3%, as part of the Housing and Economic Recovery Act and now lawmakers may be trying to raise it again.

On October 1, Rep. Scott Garrett (R-NJ) introduced a bill, the ‘FHA Taxpayer Protection Act of 2009’, that if passed, would increase the minimum down payment requirement for FHA loans to 5%.

Recent news has trumpeted the increasing default rates of not only mortgages but specifically of FHA mortgages. With the share of mortgages that are FHA on a sharp increase, there is concern that FHA reserves (that cover defaults) may decline to below minimum levels. Even if the minimum downpayment does not rise, there will likely be a tightening of FHA lending guidelines.

Stay tuned y'all!

Property Tax Increases

Summary

As the Limited Market Value (LMV) for tax purposes phases out this year, property taxes may rise for some homeowners.

Background

With property values appreciating rapidly in the late 1990's thru the early 2000's, in 1993 the Minnesota state legislature established a limitation on annual increases in the market values of farm, residential, and seasonal recreational residential property, effective for taxes payable 1994 which was then extended thru 2001.

Assessed values that are shown on our Minnesota county property tax statements are one or often two years behind -- the value that shows on your 2009 statement was likely established in 2007.

This is important to know as the 2001 legislature introduced a “phase-out” plan which gradually raised the allowed annual increases in values until assessment year 2007 when all property will be at full estimated market value.

For taxes payable in 2009 the increase is limited to the greater of +15% of the previous LMV, or 50% of the difference between last year's LMV and this year's estimated market value (emv = "true" market value) and in 2010, there is no limit.

Depending on each home or parcel's market value trend, the EMV's may go up or may not see much of a change as the LMV is phased out this year.

Your Property Your Tax Amount

Finally, realize that in simple terms, the following determines property tax amount:

Property Tax = EMV x "Mill Rate"

So if the EMV goes down (as in the case of a declining market value home), if the mill rate goes up, the property taxes will remain unchanged or could even go up. Property taxes are based on the municipality's budget. The local government determines how much $$$ they need to balance the budget and then adjust the mill rates to produce the necessary property taxes to balance the budget. I know, it seems like reverse math but that's essentially how it works.

For more on how to appeal your property taxes:

http://bit.ly/PropertyTaxAppeal

2009 Trees for Toys Event

I'm proud to be associated with Edina Realty. We endeavor to always give back and be good stewards in our community through the Edina Foundation, Habitat for Humanity, Toys for Tots, Bob's Sleep out, and other events such as the Dress for Success that we are starting in January to assist women with obtaining business attire as they start looking for careers.

The picture is my Maple Grove Edina Realty's toys collected for families who can't afford gifts for their children. These gifts are distributed thru KARE 11 and the Toys for Tots program.

The Edina Realty Foundation offers financial support to organizations that provide housing and related services to homeless families in the markets we serve. Since its inception in 1996, the Edina Realty Foundation has raised more than $5 million to help meet the needs of the homeless.

It's truly better to give than to receive.

ENERGY ASSISTANCE

Although this season has spared us extreme temps and bitter winds, many of us still have concerns about the utility bills we will face this winter.

The State of Minnesota has received a variety of funds available to help families pay their energy bills, improve weatherization in their homes, or get funding for emergency repairs. A great new one-stop website for getting information on these programs is www.staywarm.mn.gov. In the spirit of the upcoming holiday season, the site not only gives information for getting help, but also for helping others in need.

Another important piece of information this time of year is the Cold Weather Rule (CWR). If you have trouble paying your heating bill, you must let the utility company know. Unless you take steps under the Cold Weather Rule to protect yourself, your heat and utilities can be shut off. This is true for all residential customers, including senior citizens and families with young children.

The Cold Weather Rule is in effect from October 15 through April 15 each year, and once protections are attained natural gas and electric utilities must follow consumer protections of the rule. If you need electricity to keep your heat on, you may apply for the CWR with your electric company. Under the CWR, you must make and keep a payment plan with your utility. The payments don't have to be the same amount each month. You can also get reconnected if your heat is already shut off.

Contact your utility company if you need to set up a Cold Weather Rule payment plan. You can find more information about this law at the Public Utilities Commission’s website:
www.puc.state.mn.us/PUC/consumers/shut-off-protection/index.html or call the Energy Assistance Hotline 1-800-657-3710 or First Call for Help at 211.

Reprinted from Senator Warren Limmer's November Newsletter

"Mortgage-Assistance" Schemes

Increasing numbers of Americans are falling behind on their mortgage payments and there are a growing number of "mortgage relief" companies and organizations to "help". Some of these are reputable but some are solely created to help separate already troubled homeowners from their money.

How do you spot a scam? Some of the signs to look for:
1. They say they are tied to the federal government - verify this because most are NOT
2. 100% guaranteed fix of mortgage problems - how can they guarantee a fix???
3. Most charge an up-front fee from a few hundred to a few thousand $$$
4. Some ask you to pay them your mortgage payment - DON'T!
5. Pressure to sign documents, agreements or contracts quickly
6. Being asked to sign your deed over to the organization/person

If you or anyone you know is concerned about losing their home to foreclosure, encourage them to use the resources that the federal government and HUD have made available. The Feds just kicked off a push (11/30/2009) to "encourage" banks to make permanent loan modifications for troubled homeowners. They have made $$$ available to pay the banks to make these and foreclosure often costs the banks $50K or more per foreclosure.

See the following links for more info & assistance:
www.MakingHomeAffordable.gov & the Homeowner’s HOPETM Hotline (888-995-HOPE)
http://bit.ly/30Nov2009ForeclosureProgramUpdate
http://bit.ly/ForeclosureAttorneys
http://bit.ly/MN_Atty_General