On December 23rd Congress passed and the President signed the extension of the payroll tax cut law. Included in that bill was an amendment that, for the first time, will divert funds from Freddie Mac and Fannie Mae to pay for general government expenditures. This action will increase the roll of the Federal Housing Administration (FHA) in the mortgage market. FHA reserves are at historic lows.
At the same time Congress closed the tax break on private mortgage insurance for borrowers with low down payments, the tax break expired on December 31st. Elimination of the tax deduction raises the cost of private mortage insurance (PMI) making FHA insurance a more attractive alternative.
The FHA has paid out $37 billion in claims related to bad mortgages over the past three year.
Realtors® are an excellent resource for finding home financing for buyers. They know which lenders are offering which products and most importantly which lenders are able to close the loan. Far too many lenders are happily taking applications (and collecting fees) but do not seem to be able to close the deal.
Visit www.excelrealtorsny.com for some questions buyers and sellers should be asking before starting the process. Making an offer or accepting an offer with a pre-qualification that is unlikely to close benefits no one.

