House and Senate have reached agreement & seller participation in downpayment assistance loans is being terminated as of 10-1-2008

· The House and Senate have reached agreement on the omnibus Housing bill

· Seller participation in downpayment assistance loans is being terminated. Must have obtained credit approval prior to October 1^st.

· Risk-based pricing moratorium is effective October 1^st

· No changes to FHA broker eligibility requirements

· House is expected to begin debate and possibly vote on Wednesday (July 23^rd) on the final version of the omnibus housing bill

· The Senate could vote as early as Friday on the final bill with the President signing shortly thereafter (possibly early next week)

Below is the link to the complete bill. The FHA provisions start on page 477.

http://www.rules.house.gov/110/text/110_hr3221.pdf

We will keep you apprised as the bill moves toward enactment.

I. Housing Legislation

The House and Senate completed their negotiations on the omnibus housing bill.

The major provisions of the omnibus housing bill are:

a. FHA Modernization

b. FHA Rescue (Foreclosure relief)

c. GSE Reform

d. Tax provisions (Maximum tax credit was lowered to $7,500 for first-time homebuyers.)

e. Secure and Fair Enforcement for Mortgage Licensing Act of 2008 or "S.A.F.E. Mortgage Licensing Act of 2008

1. Establishment of nationwide mortgage licensing system for loan originators

II. FHA Provisions

Barring a totally unforeseen circumstance, below are the expected final provisions of the FHA portion of the bill.

Ø Mortgage limits

· FHA base limit ("floor") is increased from 48% to 65% of GSE limit ($271,050)

· Maximum loan amount in high cost areas is increased to 150% of the current GSE base limit ($417,000). The new limit for FHA, Fannie and Freddie will be $625,000. VA should have equivalent guaranty ($156,250)

· The factor for calculating increases is 115%

Impact:

As we reported in our last update, an area w/ a median sales price of $500,000 currently has a maximum loan amount of $625,000. Using the 115% factor, the maximum loan amount would drop to $575,000 ($500,000 x 115%) when the Stimulus bill expires at the end of the year. For areas w/ medians at $400,000, the FHA and GSE maximum limit would decline from $500,000 to $460,000 after the Stimulus bill expires in December. (For areas w/ $300,000 medians, the limit would drop from $375,000 to $360,000 and so on.)

Ø Cash investment requirement

· The minimum cash investment is 3.5%. It will, at least, be a simpler calculation eliminating the state closing cost variation.

· Gifts will be permitted from family members, unions, and state and local bond programs,etc). Seller funded downpayment programs are discussed below.

Ø Seller funded downpayment assistance programs

· Any downpayment assistance programs involving sellers or other interested third parties will be terminated on October 1, 2008

o Borrowers must be approved on or before September 30^th.

Ø Risk-based pricing moratorium

· Risk-based pricing moratorium for one year will be implemented on October 1st.

· HUD asked for time to prepare new instructions and to modify its systems

· Legislation does permit FHA to raise upfront premiums up to 3%.

1st time homebuyers can get added assitance when working with OHFA and HUD

The Ohio Housing Finance Agency announced that a new incentive from the U.S. Department of Housing and Urban Development and the Federal Housing Administration will allow qualifying Ohioans to purchase HUD-owned homes with a $100 down payment. In addition, buyers will have the opportunity to obtain an FHA mortgage through OHFA, and receive a $2,500 sales allowance that they can put toward home repairs, closing costs or their mortgages.One of OHFA's most popular programs is its First-Time Homebuyer Program, which offers purchasers conventional loans or FHA, VA and USDA-RD government loans with competitive interest rates. (Income and property limits may apply) A First-Time Homebuyer is defined by OHFA as homebuyers who not had an ownership interest in they primary residence for the past three years. This program is also available to any owner occupant homeowner who purchases in a target area. The 30 yr fixed rate program offers down-payment assistance with the option of a second mortgage in an amount up to 4 percent of a home's purchase price, or a grant in an amount equal to 3 percent of a home's purchase price.First-time home buyers who are "Ohio Heroes" - active military personnel, military veterans, firefighters, emergency medical technicians, paramedics, health-care workers, police officers or teachers - can receive a 30-year fixed-rate mortgage at a quarter of a percent less than OHFA's rate for the First-Time "The current interest rate on a mortgage through the First-Time Homebuyer Program, with no down payment assistance, is 6.125 percent.

OHFA works with over 200 lenders including The Arlington Bank. If you have any questions regarding this program, target areas, income or property limits please contact Brent Diebert at: BrentDiebert@ArlingtonBank.com

Operate as an LLC, IRS changes extension policies for some

Some business owners will have one fewer month to file their federal tax returns under a new rule implemented by the Internal Revenue Service.
The IRS says the change will reduce the length of extensions for individual filers who report income from partnerships to five months from six. It says the move will ease the burden on taxpayers who must report information from Schedule K-1 and similar documents on their individual tax returns.
The previous extension date often forced businesses and individuals to file on the same day, Oct. 15.
Coinciding filing dates creates a burden for individual taxpayers who rely on the information from Schedule K-1 and other statements to prepare and file their personal tax returns in a timely manner, the IRS says.
The change affects extension requests for tax returns due on or after Jan. 1. It applies to businesses that file the following returns and forms that have a tax year ending on or after Sept. 30:
Form 1065, U.S. Return of Partnership Income;
Form 1041, U.S. Income Tax Return for Estates & Trusts; and
Form 8804, Annual Return for Partnership Withholding Tax (Section 1446).