Yet Another Form Change for Residential Closings

The Consumer Financial Protection Bureau recently revealed two prototypes of mortgage disclosure forms. 

The two prototypes combine the federal Truth in Lending Act mortgage disclosure form with the Real Estate Settlement Procedures Act to remove redundant information and hopefully allow consumers to make decisions based on clear and concise language. It would seem that the Ficus Bank is a bit simpler and easier to read but a second form call the Pecan Bank form is also available for review.

Of course there was just a major change in RESPA 18 months ago when the RESPA settlement statement form was substantially revised. 

IRS Scrutinizes Gifts of Real Estate

The Internal Revenue Service has a low-profile but sweeping effort under way to use state deed records for evidence of omissions in reporting gifts of real estate to family members. 

New tax rules have made big gifts to family members popular this year, as Congress raised the limit on how much a person can give in a lifetime to $5 million without having to pay gift tax. Still, any time a gift to one person exceeds $13,000, the giver is supposed to let the agency know in a filing. 

The IRS is apparently underway with a coordinated effort to find people who haven't filed Form 709 to report U.S. gift and generation-skipping transfer taxes to the IRS. 

So far the following states that have handed over information on gift-like transactions:  Connecticut, Florida, Hawaii, Nebraska, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia, Washington and Wisconsin. 

Please be aware that there is no special exception to the rules when making a transfer to a family member and if you are making a gift of property valued at more than $13,000, a gift-tax return must be filed.

Standards Proposed Under Dodd-Frank

As we all now know lenders operated pretty willy nilly during the housing boom.  Borrowers were encouraged to take out loans that had no realistic ability to be paid back.

The Dodd-Frank financial overhaul passed last year aims to prevent these practices from coming back, mandating that lenders ensure that all borrowers have the ability to pay back their home loans.

The Federal Reserve on Tuesday proposed a set of minimum standards for home lending, creating an “ability-to-repay” requirement for most home loans, as part of an effort to make sure that U.S. lenders don’t return to the shady practices of the housing market boom. Click on the highlights for more information.

Under the Dodd-Frank Act Lenders would be able to meet the standard by verifying the consumer’s income or assets or making a “qualified mortgage” that requires the lender to calculate the maximum interest payment in the first five years.  Loans that meet that standard would have protections against lawsuits and would have restrictions on fees and would not allow the principal balance to grow.

The Fed is seeking comments on the proposal by July 22^nd.

Eight Ways to Kill the GSES

Eight bills designed to deflate the power of Fannie Mae and Freddie Mac passed the Capital Markets and Government Sponsored Enterprises Subcommittee last week.

Cumulatively, the legislation would curb excessive compensation for Fannie and Freddie executives, end affordable housing goals, increase guarantee fee requirements and end new business activity at the GSES.

The bills were proposed by Republican lawmakers who desire a quick shift to a mortgage market supported mostly by the private sector. The government had to bail out Fannie and Freddie three years ago and has since injected $150 billion into the GSES. 

Homebuyer Tax Credit Approved by Senate

On Wednesday, the Senate approved more time for homebuyers seeking to claim a federal tax credit. The Home Buyer Credit can provide up to $8,000 for some first time home buyers and up to $6,500 for certain current homeowners.   Many of the qualifying home buyers were not be able to meet the June 30 closing deadline because of the surge in loan volume and delays related to home appraisals and short sales.

The homebuyer measure would help only those that entered into binding contracts before April 30. It would give such homebuyers until Sept. 30 to close the sale. Under current law, they would have had to have closed by June 30th to be eligible for tax credits.

The measure passed the Senate by unanimous voice vote.  President Barack Obama is expected to sign the homebuyer measure, which the House passed earlier this week.