One of the more popular topics relating to housing lately is whether or not Congress will expand the federal tax credit for new home buyers.

Yesterday, executives from the The Mortgage Bankers Association testified before Congress that they needed to “shore up” the housing market and could do so by extending the new home buyer tax credit, extending loan limit increases, and a few other items that will help hopefully encourage lenders to lend more money.

According to an MBA press release:

MBA Chief Economist Jay Brinkmann testified that the housing market and the overall economy are “inextricably linked,” and that while in past recessions housing has driven the recovery, this time the housing market will only regain strength as part of an overall economic recovery.

“While our economy is showing signs of recovery, and a number of local housing markets appear to be reaching the bottom, our long-term recovery will be dependent on the creation of jobs,” Brinkmann said. “As we begin to see new employment opportunities, consumer confidence and spending will also return, and a new wave of home buyers will begin to absorb the oversupply of homes.”

One of the hot topics with many people who are considering buying a home is whether or not the 8000 tax credit will be extended – on that topic, here is what Mr. Brinkman had to say:

Brinkmann emphasized that the Internal Revenue Service reported that more than 1.4 million taxpayers have benefited from the first-time home buyer tax credit enacted by Congress as part of the Housing and Economic Recovery Act of 2008, but set to expire Nov. 30.

MBA supports extending eligibility to all primary residence home buyers; increasing the tax credit to up to 10 percent of the home purchase price up to a maximum of $15,000; requiring the tax credit to be repaid in certain instances , such as when a residence is sold within three years; and allow taxpayers to claim and receive the tax credit immediately and facilitate the IRS sending funds claimed by the taxpayer directly to the settlement agent for use in the purchase mortgage transaction.

While it isn’t official yet, one thing is certain – there will be plenty of discussion as to whether or not the new home buyer tax credit will be extended – and possibly expanded.

One of the hottest, most-talked-about mortgage programs here in Arizona is a program called the Neighborhood Stabilization Program.

The reason that this program is so popular here in Arizona is because there are many, many, many properties that are currently bank-owned and people are starting to buy these properties – either as an investment or as a primary residence.

And for people who are considering buying a bank-owned property in Arizona and living in the property, there is currently a fairly large pile of government grant money that is available to them.

Grant as in “free money”.

Now, Arizona is not the only state with the Neighborhood Stabilization Program funds available but because I live and work in Arizona, it is the state that I am most familiar with. There are many – and possibly all — states who have this program right now and here are some of the main ideas and concepts behind the program:

1. It is for people who are going to purchase a home that has been foreclosed on and is currently considered “bank-owned”.
2. To be eligible for NSP funds, you must plan on living in the home and occupying it as your primary residence.
3. How much money you can get in the form of a grant depends on how long you agree to live in the property as your primary residence.
4. The maximum amount of money that you can get is up to 22% of the purchase price of the property.
5. If you don’t live in the property for as long as you agreed to, the “grant” becomes a “loan” and is due and payable at 0% interest — meaning if you got $10,000, you will owe $10,000.
6. You cannot refinance or move, you must keep both the loan and the home or the “grant” converts into a “loan”.
7. You must attend a home buyers education course prior to receiving the grant.

Now, this list is not an exhaustive list – but it gives you a pretty good idea of what kinds of stipulations there are to the Neighborhood Stabilization Program. Also, each state has different rules, so you will want to check into the rules that apply to your specific state.

A great place to start about learning about whether or not you could qualify for a Neighborhood Stabilization Program grant is on HUD’s website for more information about the NSP program. Here is also a handy map of who to contact in your state about the Neighborhood Stabilization Program.

There is a new law coming soon that will make it tougher to get a loan closed in 30 days — not impossible — but tougher.

The new change that takes effect on July 30th has to do with the way that loan officers disclose  the TIL (Truth In Lending) disclosure.

The Truth-In-Lending form is a one page form that outlines the APR, Loan Amount, Interest Rate and other important loan terms and the way that the rules are going to be going forward, it will no doubt add more time and frustration to what is already a difficult process at best.

In my opinion, starting in August – loans will take “longer” to close – and it may be wise to be conservative when planning a time line – 45 days might be the new number to shoot for where 30 days was “reasonable” before. Timing will have to be perfect to get a purchase loan done in 30 days after this law takes effect.

Highlights of the new Truth-In-Lending law:

1. No upfront fees can be charged to the customer, except for a credit report charge until they have received the TIL. ( No more up front fees for those lenders who still charged an up front “commitment fee” or anything like it)
2. TIL must be disclosed to the buyer within 3 days of application.
3. Once they receive the TIL, then there is an additional 7 day waiting period before the loan can close.
4. Any changes to the loan that result in a change to the APR, you will need to get a new TIL disclosure and then there is another 7 day waiting period.

Generally speaking, the numbers in a loan transaction that frequently change and can impact the time line under the new law include: loan amount, fees such as title company charges, appraisal charges, etc.

So starting next week, it is more important then ever, that you work with an experienced and knowledgeable mortgage loan officer and know that there are new disclosure rules regarding the Truth In Lending disclosure process that will take some time to “get used to”.