As the April 30 deadline looms for the first-time homebuyer tax credit, mortgage brokers and bankers have noticed an especially high level of activity.
“It”™s a great program and we”™re right smack-dab in the middle of the spring selling season, so we”™re anticipating a very busy month,” said Bill Mullin, president of NE Moves Mortgage, which operates offices within Coldwell Banker Residential Brokerages throughout Fairfield County in Connecticut and New England.
After the announced tax extension that went into effect Nov. 6, 2009, Mullin noticed the race to purchase slowed.
“It either happened because, one, we were getting into a slower winter season or, two, because people breathed a sigh of relief and said, ”˜I can wait,”™” he said of a die-down in activity following the extension.
At TMC Equities Inc. in Pleasantville, Senior Vice President Tony Arcidiacono physically counted the number of new “purchase and refinance” client folders lining his desk.
There were about 30.
“You see people who have money who are trying to come in and buy up all the deals (foreclosure) and then you have the other people who are coming in hurting and who are consolidating and trying to lower their debt,” he said.
Some banks like Cherry Hill, N.J.-based TD Bank N.A., which operates branches from Maine to Florida, are running promotions to drum up business the last month the tax credit is available.
The bank just announced it will fund up to $250,000 of an existing or new client purchase.
“We”™ve been seeing robust activity for the last 12 to 18 months,” said Michael Copley, senior vice president of retail lending at TD Bank. “With interest rates being as low as they are, we”™ve had a fair amount of refinance activity. But, over the last six months, refis have waned and purchase money is making up the difference.”
Copley said between refinances and new purchases, it”™s about a “50-50 split” and that since the inception of the mortgage sweepstakes, “application volume has almost doubled.”
Arcidiacono reiterated that “banks are giving” despite circulating tales of superhuman mortgage qualifications.
In the family business since 1987, Arcidiacono has noted a shift back to the original ways and means of underwriting.
“Even though people think, ”˜oh, they”™re getting really tough,”™ they only went back to the old rules, which is what worked,” he said. “If my borrower makes $300,000 a year and sent me three pages of his 60-page tax return, they want the entire 60 pages.”
Mullin, too, notices a more “traditional underwriting” process, but that “qualified buyers will absolutely get a loan.”
Interest rates, Mullin said, may be slightly higher when the federal government stops funding mortgage-backed securities, but Copley does not believe it will be a “doomsday scenario.”
“It could be an eighth to a quarter of a point,” he said. “That”™s the prevailing thought. Everybody has a prognostication. As the government backs out, the private sector could possibly get back in the game.”
“The market and economy seem to be healing,” Mullin said. “But again, these are tremendously attractive rates. I did a 30-year fixed mortgage at 19.1 percent in the 1980s. In many ways, this is the absolute best time to buy. There are attractive rates, there”™s the tax credit and a good selection of properties out there.”
