Increase in Guarantee Fees

Fannie Mae and Freddie Mac, the government-sponsored enterprises that purchase mortgages from lenders in order to create mortgage-backed securities, have announced that they will be increasing their guarantee fees next year to attract more private investment in the housing market.

Guarantee fees charged by Fannie Mae and Freddie Mac are fees that meant to help cover the issuer of the loan's expenses and reduce the risk of loss or default.

The new guarantee fees will be comparable to that of private investment houses.  The new fees will be implemented to encourage the private entities to invest the in housing market.

According to Edward J. DeMarco acting Director of the FHFA (Federal Housing Finance Agency), said that "The guarantee fees" charged would be increased to lessen the companies' long-term exposure to risks.  As Freddie Mae and Freddie Mac are backed by the tax payers, he said that the proposal would result to protecting the taxpayers from losing more money.  Fannie and Freddie have so far cost the taxpayers more than $140 billion in bailout money.  

In a CNBC report, according to the President's budget plan the increase in guarantee fees would produce $28 billion savings in over ten years.

However, some experts are worried that the increase in guarantee fees may hinder the possible recovery in the housing market which has suffered from falling prices since the credit crisis of 2008.  

If you need more information about guarantee fees, please don't hesitate to call or e-mail me.

The Plan for New Mortgage Relief Program

In the latest President's job speech, he briefly mentioned his plans on the housing market. Obama said that, "We're going to work with federal housing agencies to help  more people refinance their mortgages at interest rates that are now near 4%,” according to Bloomberg report.

Edward DeMarco, acting Director of Federal Housing Finance Agency or FHFA, which regulates Fannie Mae and Frediie Mac, said he is working with the administration on how to implement a mortgage relief program.

The refinancing plan would allow certain borrowers to refinance loans that are backed by government owned Fannie Mae and Freddie Mac or the Federal Housing Administration.

The idea is to help struggling borrowers refinance at current low interest rates, which would cut their monthly payments and free up cash for spending. The hope is that with cash available for spending, it will boost business activity. The current average mortgage rate on a 30-year fixed loan is 4.16%, while the 15-year fixed loan is at 3.37%.  

According to Bloomberg source, FHFA officials met with mortgage industry executives to discuss possible changes to Home Affordable Refinancing Plan or HARP last Friday, September 9.  No details were revealed as to what was the outcome of that meeting.

Two years ago, the Obama administration set up a program called the Home Affordable Refinancing Plan or HARP which provides access to low-cost refinancing for responsible homeowners suffering from falling home prices. Also, Home Affordable Modification Program or HAMP has permanently reduced monthly payments for fewer than one million home owners. Both programs still remain open.

There are no clear guidelines on how the new mortgage plan will be carried out or when it will be carried out.  But according to Senator Barbara Boxer, the new mortgage plan would provide a "dual benefit" to the home owners, Fannie Mae and Freddie Mac. Since fewer borrowers would fall delinquent while providing a boost to the economy.

If you want more information about the new mortgage plan, you may check out http://www.msnbc.msn.com/id/44340713/ns/business-real_estate/ for more details.

Permanent Fund Dividend.... Here I Come!!!

EVERYBODY is excited! It’s what everybody is talking about! HOW TO SPEND their UPCOMING PERMANENT FUND DIVIDEND CHECK! What do you plan to do with your $1281.00 check you will receive this October?  Some people are thinking about buying a new big flat screen TV or a new gadget, maybe even a vacation for the family.

In 1976, the State of Alaska voters pass a constitutional amendment to establish the Permanent Fund. The fund originates from surplus revenues gained from the development of Alaska's oil and gas reserves. It would invest at least 25% of proceeds from some mineral  (such as oil and gas) sales or royalties. The fund pays out an annual dividend to each Alaskan resident (must be a resident for at least 12 months) with the interest that it earns. The fund also invests in a wide variety of asset classes, including domestic stocks, US bonds, global bonds, real estate and private equity.

The PFD pay-out comes in or near October of each year. This year, the dividend is set for distribution on the 6^th of October 2011.  Here is a list of the annual individual pay-out in the past.

Year	Dividend Pay-out
2010	$1281.00
2009	$1305.00
2008	2069.5 + 1200 Alaska Resource Rebate
2007	1654.00
2006	1106.96
2005	845.76
2004	919.84
2003	845.76
2002	919.84
2001	1107.56

If you want to know the more about the dividend computation, you may click on http://www.pfd.state.ak.us/forms/2010Forms/2010DividendCalculation.pdf  for more details.

If you want to apply for a PFD, simply follow the steps below:

 -  Complete an online application at www.pfd.alaska.gov OR

 -  Complete a paper application AND an Adult Supplemental Schedule and submit them by March 1^st

-   Submit an original certified birth certificate, original passport, or naturalization papers. (photocopies or hospital certificates will not be accepted).

You can access your information at www.pfd.alaska.gov to check if you are eligible to receive an annual pay-out or dividend. It is important to check your current information, because sometimes eligibility changes.

Still unsure on how you will spend your PFD check? If you want to look further ahead and think about the future, combine a whole family’s dividends and you will be able to purchase something that will last longer  – like a down payment on a house in today’s market!!  Alaska Housing has first-homebuyer loans and if you add the dividends you will receive, you can buy a good home. And with low mortgage rates, buying your dream home is affordable than ever. If you want to take advantage of the current housing market, please don’t hesitate to contact me.