On the Record with Rob Henger, President of Henger Rast Mortgage
Sunday, November 23, 2008: Mortgage banking veteran Rob Henger, owner of Henger-Rast Mortgage in Cahaba Heights, says his business has largely avoided the subprime loans that led to the current financial crisis, but it couldn't avert the slowdown plaguing the real estate industry.
Henger is hopeful that the $700 billion economic bailout bill passed by Congress in late September will soon boost the economy. He shared his views of the Birmingham real estate environment and his thoughts on how long he thinks it will take to turn things around.
How tough of an environment is this for those trying to market mortgages and sell homes?
The numbers are similar to the market we saw in 2003. Due to these reductions in home sale numbers, the current trend in the real estate industry is one of purging the part-time or hobby Realtors and companies, and the stronger, more experienced ones will survive.
Birmingham residents should find confidence that these surviving Realtors and companies are highly qualified professionals that can best represent their clients' needs. This is a great time to buy a new home. If you make a family decision to investigate selling your existing home, you may find some disappointment in what your current home is worth and your equity is smaller than you may have thought.
However, there are many homes on the market that are significantly under-priced for the value. Hence, what you may perceive as low equity in your current home, you may pick up twofold in a good deal on a new home.
How have things changed for you as a mortgage banker now compared to a few years ago when the housing market was booming?
The credit criteria that we follow in 2008 significantly mirrors what we saw in 1998. This correction in our industry was a result of the greed of Wall Street mortgage-backed security traders that systematically lowered credit standards to inadequate levels from 1999 to 2006.
This easy financing significantly increased the numbers of possible home buyers and lowered the qualification for high-priced home purchases. Ultimately, the performance of these ill-underwritten loans began to come to the surface in 2006 by the bond rating agencies, and our industry has been working through corrective measures ever since.
Have you had to turn down a larger percentage of applicants than in the past?
Yes and no. The single biggest segment of home buyers that are finding difficulty are the self-employed that employ aggressive income and expense tax strategies. Those self-employed who under-report income to lower taxes are being hurt by that when it comes to getting loans.
... Today, we underwrite loans just like we did 10 years ago. If you have good credit, a small down payment, possibly as low as 3.5 percent, and documentable income, not much has changed for this borrower's ability to obtain a standard conventional or FHA mortgage.
Have you tightened lending standards?
Prior to the U.S. Treasury taking receivership of Fannie Mae and Freddie Mac, we were finding periodic tightening of lending standards that restricted the number of loans that were being approved due to possible liquidity issues. Now that the government has taken over these agencies, we are finding a repeal of some of the over corrections to underwriting standards.
Today's credit standards are getting back to realistic, common-sense levels that we saw for many years prior to Wall Street's meddling in our industry.
Birmingham has largely avoided many of the foreclosures taking place across the country, but numbers are up this year. Do you expect that trend to continue here and nationally?
Regretfully, we will see further increase to foreclosures as our industry corrects itself. New national estimates project foreclosures to exceed 2 million homes in 2009. It took Wall Street roughly six years to push the envelope beyond good business practices. I believe it will take half that time to weed through the corrections. The good news is we are two years into what I believe will be a three- to four-year correction.
Birmingham housing prices are off slightly but holding their own compared to other cities. Why is that?
Our city is not significantly driven by a single industry, natural resource or advantageous location. Therefore, Birmingham does not see the highs or the lows of other regions.
How has your company fared in the midst of this housing meltdown?
The liquidity crisis has impacted our ability to provide aggressively priced low mortgage rates on loans over $650,000. To fill this void in our business model, we were very fortunate to be granted our license to underwrite government insured mortgagees for the Federal Housing Administration. With the recent increase in the maximum FHA loan size to $271,050, our company managed to post a moderate profit for our fiscal year ending Oct. 31.
The bank bailout bill has failed to alleviate the credit crunch so far. What are your thoughts on that?
The unselfish answer: As a taxpayer, I am very supportive of the change in direction from the bad mortgage bailout to leveraged investments in publicly traded companies and banks. The public perception was our government was going to spend $700 billion to correct the sins of Wall Street.
Rather than spending taxpayer money, (Treasury Secretary Henry) Paulson has redirected his efforts to investing our tax dollars in what he believes are sound companies that will eventually recover and repay or provide significant investments returns on our tax dollars.
The selfish answer: As a mortgage banker, I would love to see a portion of these funds allocated to subsidize lending, to drive down interest rates, to stimulate home buying. This stimulus will bring back consumer confidence that our home is not only a shelter, but a great investment.
How do you relax away from work?
I love to spend quality time with my wife, Tiffany, 8-year-old daughter, Sophia, and 5-year-old son, Nick. Between work and family life, there is not much time left for personal relaxation.
I do not golf, but have a motocross motorcycle that I occasionally ride in the woods to get exercise and relieve tension.
Reprinted from the Birmingham News by ROY L. WILLIAMS - News staff writer
Thursday, December 4, 2008
Wednesday, November 12, 2008
New Alabama Tax Law: Nonresidents to withhold 3% for Certain Real Estate Transactions
The summary of this tax law is: In the past it was the sellers responsibility to report, now that has been changed so that it is now the BUYERS responsibility.
A new Alabama tax law requires real estate investors to withhold 3% of the sales price for the purpose of fulfilling capital gains tax requirements. The Act applies specifically to the sale of real property by sellers who are nonresidents of the State of Alabama. If the following conditions are met, the seller will be deemed to be a resident of Alabama and the 3% withholding requirement will not apply:
the seller must have filed income tax returns or certain extensions each of the two years preceding the sale; the seller must be in business in Alabama and continuing “substantially the same business in Alabama” after the sale, or have additional real property in the state at the time of closing that is of “equal or greater value than the withholding tax liability as measured by the 100 percent property tax assessment of such remaining property;” and the seller must report the sale on their current year Alabama income tax return and file accordingly.
Additional requirements should receive careful consideration to avoid penalties. For example, in some instances, failure to withhold and file the correct amount by the seller causes the buyer to be held liable.
There are some exemptions to this act as well
A new Alabama tax law requires real estate investors to withhold 3% of the sales price for the purpose of fulfilling capital gains tax requirements. The Act applies specifically to the sale of real property by sellers who are nonresidents of the State of Alabama. If the following conditions are met, the seller will be deemed to be a resident of Alabama and the 3% withholding requirement will not apply:
the seller must have filed income tax returns or certain extensions each of the two years preceding the sale; the seller must be in business in Alabama and continuing “substantially the same business in Alabama” after the sale, or have additional real property in the state at the time of closing that is of “equal or greater value than the withholding tax liability as measured by the 100 percent property tax assessment of such remaining property;” and the seller must report the sale on their current year Alabama income tax return and file accordingly.
Additional requirements should receive careful consideration to avoid penalties. For example, in some instances, failure to withhold and file the correct amount by the seller causes the buyer to be held liable.
There are some exemptions to this act as well
Friday, October 10, 2008
Report: Housing recovery possible in 2010 - What do you think?
I was reading the following story I came across:
By Inman News, Monday, October 6, 2008
Until the excess inventory of 950,000 single-family homes and condos sitting vacant in the United States has been depleted, no significant housing upturn is likely until 2010 at the earliest, according to a housing market analysis. In its latest issue of Research Notes, the National Multi Housing Council estimated there are approximately 825,000 excess vacant single-family homes and 125,000 excess vacant condos beyond normal vacancy levels in the United States. Add to that some 2 million in excess houses and condos that are occupied and on the market, and the housing market faces incredibly rough times over at least the next 14 months. To put these figures in perspective, the current excess inventory of 825,000 single-family homes is actually greater than an average year of production in the 1990s, which was 725,000 units per year. The excess inventory will continue to push prices lower, according to NMHC.
The question I have is: What do you think is the outlook within Calhoun County? Do you think the worse is over and things are getting better or will the seller market get worse?
I would be intrested in hearing comments.
By Inman News, Monday, October 6, 2008
Until the excess inventory of 950,000 single-family homes and condos sitting vacant in the United States has been depleted, no significant housing upturn is likely until 2010 at the earliest, according to a housing market analysis. In its latest issue of Research Notes, the National Multi Housing Council estimated there are approximately 825,000 excess vacant single-family homes and 125,000 excess vacant condos beyond normal vacancy levels in the United States. Add to that some 2 million in excess houses and condos that are occupied and on the market, and the housing market faces incredibly rough times over at least the next 14 months. To put these figures in perspective, the current excess inventory of 825,000 single-family homes is actually greater than an average year of production in the 1990s, which was 725,000 units per year. The excess inventory will continue to push prices lower, according to NMHC.
The question I have is: What do you think is the outlook within Calhoun County? Do you think the worse is over and things are getting better or will the seller market get worse?
I would be intrested in hearing comments.
Saturday, October 4, 2008
Thursday, October 2, 2008
Links to Calhoun County
I have compiled a list of site that would help someone that is relocationg to the calhoun county area. It consist of City, Education and Recreation links. I hope it helps.
Official City Websites
Official City Websites
City of Anniston
City of Oxford
City of Jacksonville
City of Piedmont
City of Weaver
Calhoun County Government Sites
Calhoun County: Very Helpful Site. You can access Tax Records for most properties.
Calhoun County Sheriff
Education Websites
Jacksonville State University
Gadsden State Community College (Ayers Campus)
Anniston City School System
Calhoun County Board of Educationconsists of the following schools: Alexandria, DeArmanville, Ohatchee, Pleasant Valley, Saks, Weaver, and White Plains
The Donoho School
Faith Christian School
Jacksonville City School System
Oxford City School System
Piedmont City School System
Sacred Heart of Jesus Catholic School
Recreational Sites
Silver Lakes Golf Course
Anniston Museum of Natural History
Janney Furnace Memorial Park
The Chief Ladiga Trail - A Rails-to-Trails Project
Calhoun County Sports Hall of Fame
Local Agencies
Calhoun County Chamber of Commerce
Anniston Water Works and Sewer Board
Calhoun County 911
Alabama Cooperative Extension Service, Calhoun County Office
Joint Powers Authority (JPA) at McClellan
Public Library of Anniston and Calhoun County
Calhoun County Retired & Senior Volunteer Program (RSVP)
Wednesday, September 24, 2008
$7500 First Time Home Buyers Tax Credit Explained
The Housing Bill (H.R. 3221) signed into law by President Bush in July offers first time home buyers a tax credit equal to 10% of the cost of their home up to $7500. This tax credit is available to first time home buyers who purchase a home in the United States as their principal residence on or after April 9, 2008 and before July 1, 2009.
To qualify as a first time home buyer, the buyer cannot have owned an interest in a principal residence in the past three years from the date of the qualifying purchase.
To qualify for the full amount of the tax credit the buyer must earn no more than $75,000 if filing as Single or Head of Household. If filing a Joint return, the buyers may have income of no more than $150,000. There is a phase out of the credit if reported income is more than $75,000. Consult with a tax advisor to see how much of the tax credit your buyer could qualify to receive.
The tax credit allows the buyer to deduct the credit from the total tax liability for the year in which the credit is taken. So, if the total tax liability is $8,000 for 2008 and the buyer qualify’s for the full $7500 first time home buyers tax credit, deduct the $7500 from the tax bill and the buyer only pays $500. Also, the tax credit is "refundable". This means that if the total tax liability for 2008 is $4000 and the buyer qualify’s for the full $7500 first time home buyers tax credit, the credit would be used to pay the $4000 tax bill and the buyer would receive a tax refund check from the IRS for the $3500 difference. Consult with a tax advisor to see how the tax credit would impact the buyer’s tax return.
This tax credit must be repaid. However, the repayment period is 15 years unless the home is resold before the end of that period and there is no interest on the amount of the credit that is received. Repayment of the credit begins two years after the credit is claimed and is repaid in increments of 6.67% per year of the credit amount. Consult with a tax advisor to learn how the tax credit repayment plan works.
Essentially, the tax credit is a 15 year interest free loan from the government. Since money today is worth more than an equal amount of money in the future, the tax credit it is a fantastic opportunity that a buyer can’t afford to miss. Any money used to pay a tax bill and any refundable portion of the tax credit that is received can be invested to earn interest. Any interest earned is kept by the borrower after the principal has been repaid. Consult with a tax advisor or financial planner to understand how the tax credit can earn money.
To qualify as a first time home buyer, the buyer cannot have owned an interest in a principal residence in the past three years from the date of the qualifying purchase.
To qualify for the full amount of the tax credit the buyer must earn no more than $75,000 if filing as Single or Head of Household. If filing a Joint return, the buyers may have income of no more than $150,000. There is a phase out of the credit if reported income is more than $75,000. Consult with a tax advisor to see how much of the tax credit your buyer could qualify to receive.
The tax credit allows the buyer to deduct the credit from the total tax liability for the year in which the credit is taken. So, if the total tax liability is $8,000 for 2008 and the buyer qualify’s for the full $7500 first time home buyers tax credit, deduct the $7500 from the tax bill and the buyer only pays $500. Also, the tax credit is "refundable". This means that if the total tax liability for 2008 is $4000 and the buyer qualify’s for the full $7500 first time home buyers tax credit, the credit would be used to pay the $4000 tax bill and the buyer would receive a tax refund check from the IRS for the $3500 difference. Consult with a tax advisor to see how the tax credit would impact the buyer’s tax return.
This tax credit must be repaid. However, the repayment period is 15 years unless the home is resold before the end of that period and there is no interest on the amount of the credit that is received. Repayment of the credit begins two years after the credit is claimed and is repaid in increments of 6.67% per year of the credit amount. Consult with a tax advisor to learn how the tax credit repayment plan works.
Essentially, the tax credit is a 15 year interest free loan from the government. Since money today is worth more than an equal amount of money in the future, the tax credit it is a fantastic opportunity that a buyer can’t afford to miss. Any money used to pay a tax bill and any refundable portion of the tax credit that is received can be invested to earn interest. Any interest earned is kept by the borrower after the principal has been repaid. Consult with a tax advisor or financial planner to understand how the tax credit can earn money.
Calhoun County Tax Records
It will be at least another month before the Birmingham MLS integrates the Calhoun County Tax records into the MLS. In the meantime you can look up individual tax records at: http://gis.calhouncounty.org/
Tuesday, September 23, 2008
Introduction To Calhoun County Real Estate
This is my first post to this blog. My intent for this blog is to discuss the real estate market in Calhoun County Alabama. I will not limit myself to only the real estate market but to many other items that would be of interest to people living in this part of the state.
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