FHA Program Adjustments to Support Refinancings for Underwater Idaho Homeowners

March 31, 2010

Posted by Dean Tucker of Waterstone Mortgage – Prime Equity Group in Boise Idaho

The Administration announced adjustments to Federal Housing Administration (FHA) programs that will permit lenders to provide additional refinancing options to homeowners who owe more than their home is worth because of large falls in home prices in their local markets. These adjustments will provide more opportunities for qualifying mortgage loans to be responsibly restructured and refinanced into FHA loans as long as the borrower is current on the mortgage and the lender reduces the amount owed on the original loan by at least 10 percent. This option should be available by the fall.

 The new FHA loan must have a balance less than the current value of the home, and total mortgage debt for the borrower after the refinancing, including both first and any other mortgages, cannot be greater than 115 percent of the current value of the home – giving homeowners a path to regain equity in their homes and an affordable monthly payment. This refinancing will help homeowners by setting monthly payments at affordable levels and decreasing the mortgage burden for families owing significantly more than their homes are worth. Keeping more responsible families in their homes should support the continued recovery of the housing market.

FHA Refinance Option 

1)    FHA Refinance Option for Underwater Loans –Encouraging Responsible Restructuring and Refinancing.

  • Voluntary option encourages lenders and borrowers to work together, when appropriate, to restructure underwater mortgages. Because it is voluntary for lenders, not all underwater borrowers who meet criteria below will receive an FHA refinance loan.
  • Enables refinancing into more sustainable loans that are no higher compared to the value of the home than the standard FHA refinance loan (97.75 percent).
  • Lenders write down principal of the original first mortgage at least 10 percent to reduce the debt burden on borrowers, though we expect the average principal write-down to be significantly more than that.
  • Enables refinancing to a reduced monthly payment at current low interest rates to facilitate affordable homeownership.
  • Homeowner Eligibility

               i)       Homeowners must be current on their existing mortgage. They must occupy the home as their primary residence, fully document their income and have a qualifying credit score.

              ii)     As with any loan forgiveness, this short refinancing should be reflected as a negative feature on a borrower’s credit score.

              iii)   Option is available to homeowners with mortgages not currently insured by the FHA.

2)    Incentives for Principal Write-downs on Second Liens

  • All mortgage debt including second liens must be written down to a maximum of 115 percent of the current value of the home to qualify for the refinance.

3)    Transparency on Impact of These Refinancings

  • FHA will publish data on number of loans, average percentage written down and quantity of principal reduced quarterly.

4)    TARP Funded Support to Expand Impact of Refinance Option

  • TARP funds will be made available up to a total of $14 billion to provide incentives to support writedowns of second liens and encourage participation by servicers, and to provide additional coverage for a share of potential losses on these loans.

The following information provides a brief overview of the key features of the refinance option. Detailed guidelines will be announced by FHA Mortgagee Letter.

1)    FHA Refinance Option for Underwater Homeowners – Encouraging Responsible Refinancings

  • Voluntary option for lenders and borrowers
  • Encourages lenders and borrowers to work together, when appropriate, to restructure debts

              i)       Qualifying first lien mortgage loans must have a minimum write-down of at least 10 percent and total mortgage loan to value on the home can be no greater than 115 percent after the refinancing

  • Eligible underwater loans are refinanced into new FHA loans on FHA terms for full documentation, income ratios, and complete underwriting
  • Terms of FHA refinancing:

              i)       FHA loan will be equal to no more than 97.75 percent of the value of the home

              ii)     Combined mortgage debt must be written down to a maximum of 115 percent of the current value of the home

              iii)   Standard FHA mortgage insurance premium structure will apply

  • Mandatory principal write-down as part of refinance

              i)       Minimum write-down by lender of 10 percent of the unpaid balance of the original loan

  • Affordable monthly mortgage payments to facilitate affordable homeownership

              i)       New monthly mortgage payment at current low FHA interest rate

              ii)     Total monthly mortgage payment, including for second mortgage, will not be greater than approximately 31 percent of income, and total debt service including all forms of household debt will not be greater than approximately 50 percent except for some borrowers with especially strong credit histories

  • Existing lenders can retain second mortgages on the property, but only up to a combined 115 percent of the current value of the home

              i)       If there is an existing mortgage that is not extinguished, holders must agree to resubordinate and write off any amount over 115 percent of the current value of the home

              ii)     The existing first mortgage is refinanced into a fully documented FHA insured mortgage at no greater than 97.75 percent of the value of the home

  • Homeowner Eligibility

              i)       Homeowners must be current on their existing mortgage payment

              ii)     Homeowner must occupy the home as their primary residence and fully document their income

              iii)   Homeowners must qualify under standard FHA underwriting guidelines

              iv)   Homeowners must have a FICO credit score of at least 500

              v)     Existing lenders/investors holding the first lien must agree to the principal write-down requirement. Thus, not all homeowners who meet above criteria will receive an FHA refinanced loan

              vi)   As with any loan forgiveness, the short refinancing should be reflected on borrowers’ credit score

  • Performance of these refinanced loans will not count against lenders for their Credit Watch scores, if the above parameters are met

2)    Incentives for Principal Write-downs on Second Liens

  • Incentives for immediate write-down of underwater second liens by lenders will be offered to encourage write-downs in connection with the FHA refinance.
  • An extinguishment schedule will be implemented based on the below taking into account the likely distribution of the second lien lenders that will agree to immediate write-downs

Table: Extinguishment Price Schedule: Per Dollar of Unpaid Principal

  Second Lien CLTV Range 
Combined LTV 105 to 115 115 to 140 > 140
Projected Schedule 0.21 0.15 0.10

 

3)    Transparency on Impact of These Refinancings

  • FHA will publish data on numbers of loans refinanced in this way including average percentage written down and quantity of principal reduced quarterly 

4)    4. Up to a total of $14 billion in TARP funds to expand impact of refinance option

  • TARP funds will be made available for incentives to support write-downs of second liens and encourage participation by servicers as well as the provision of coverage for some share of potential losses on loans. Total support provided through these three mechanisms will not exceed $14 billion
  • TARP funds will be used to provide coverage for a share of losses on loans up to a specified amount. The FHA will provide remaining loss coverage up to the maximum insurance coverage. Thus, the new lender will have a loan that is backed by the United States for up to 97.75 percent of the home value, as with other FHA refinance loans
  • TARP will purchase a letter of credit that will provide this loss coverage

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FHA Proposes Loosening its Flipping Rules

January 20, 2010

By Dean Tucker, Waterstone Mortgage – Prime Equity Group in Boise Idaho

It appears that starting February 1st, 2010, HUD / FHA is going to loosen their guidelines pertaining to property flips.

THIS IS HUGE!!! According to HUD’s Shaun Donovan, some of the restrictions will be temporarily lifted beginning February 1st to further promote home sales. Here are some basic guidelines we have been able to research:

  • The transaction must be “Arms Length”.
  • The seller MUST hold title to the property at the time of the sale.
  • There shall be no pattern or previous property flipping in the past 12 months.
  • The property must be marketed openly and freely (i.e. MLS).
  • If the home being “flipped” has a new sales price that is 20% + greater than the previous purchase price, then the seller must document any repairs and rehabilitation performed on the home and/or a 2nd appraisal will be needed and requested. (In these cases it should be expected that a home inspection will be required as well. Currently, FHA does not require home inspections OR termite / WDO inspections unless the contract calls for them. FHA only recommends the buyer order these services.)

Waterstone Mortgage Corporation is a true Mortgage Bankers, we underwrite and fund loans for over 30 of the top mortgage lenders in the country, the “Who’s Who” in mortgage lending. Our parent company, Waterstone  Bank, is $1.9 Billion strong.

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FHA Announces Major Changes, Effective Immediately

January 20, 2010

By Dean Tucker, Waterstone Mortgage – Prime Equity Group in Boise idaho

This morning the FHA announced a series of changes designed to protect the federal agency that has emerged as the cornerstone of the mortgage market as the housing sector wobbles toward recovery. 

Consumers, Lenders and Realtors may find some of these new rules painful — but necessary.  With FHA hovering around 40% of all new loan originations, even these small changes have a major impact on the continued health of the housing market.

Mortgage insurance premium (MIP) will be increased to build up capital reserves and bring back private lending.

  • The first step will be to raise the up-front MIP from 1.75% to 2.25% and request legislative authority to increase the maximum annual (paid monthly) MIP that the FHA can charge.
  • If this authority is granted, then the second step will be to shift some of the premium increase from the up-front MIP to the annual MIP.
  • This shift will allow for the capital reserves to increase with less impact to the consumer, because the annual MIP is paid over the life of the loan instead of at the time of closing
  • The initial up-front increase is included in a Mortgagee Letter to be released tomorrow, January 21st, and will go into effect in the spring.

Update the combination of FICO scores and down payments for new borrowers.

  • New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA’s 3.5% down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10%.
  • This allows the FHA to better balance its risk and continue to provide access for those borrowers who have historically performed well.
  • This change will be posted in the Federal Register in February and, after a notice and comment period, would go into effect in the early summer.

Reduce allowable seller concessions from 6% to 3%

  • The current level exposes the FHA to excess risk by creating incentives to inflate appraised value. This change will bring FHA into conformity with industry standards on seller concessions.
  • This change will be posted in the Federal Register in February, and after a notice and comment period, would go into effect in the early summer.

Waterstone Mortgage Corporation is a true Mortgage Bankers, we underwrite and fund loans for over 30 of the top mortgage lenders in the country, the “Who’s Who” in mortgage lending. Our parent company, Waterstone  Bank, is $1.9 Billion strong.

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New rules at FHA could change the way first time home buyers in Boise Idaho purchase homes.

January 19, 2010

David Stevens bought his first home almost 25 years ago, paying just 3% down with a loan backed by the Federal Housing Administration. “I had no money in the bank,” he says. “If it weren’t for the FHA, I wouldn’t have gotten that home.”

Now, as FHA commissioner, Mr. Stevens has to decide how many others to let through that door. Souring FHA-insured mortgages are threatening the agency’s finances. Congress is pressuring him to tighten the easy-money standards that once helped people like him, and he is expected to announce revisions as early as this week.

But raising the credit bar could have a dangerous side effect. In many of the nation’s hardest-hit housing markets, the FHA backs around half of all new home loans. If the agency pulls back too quickly, the nascent housing recovery could fizzle, endangering the economy.

The dilemma puts the 52-year-old former mortgage banker squarely in the middle of the debate over how much the government should do to prop up the housing market, and how much risk taxpayers should take on to do it.

“How big a role do we need to play to keep the housing system functioning?” says Mr. Stevens, referring to the FHA. “Overcorrecting in either direction would be a terrible thing to do right now.”

Mr. Stevens is finalizing possible revisions to credit standards. Options include raising the minimum down payment, establishing a minimum credit score, increasing the amount that borrowers have to pay for mortgage insurance, and reducing the amount of money sellers can kick in for closing costs.

The FHA, created in 1934 to heal the U.S. housing market during the Great Depression, traditionally has helped first-time home buyers and underserved segments of the market. It doesn’t lend money to home buyers, but insures lenders against default on loans that meet FHA criteria, collecting fees for that backing. For decades, thanks to a stable housing market, it turned a profit for taxpayers.

When the housing market was booming, subprime lenders drew away many of the borrowers who traditionally used FHA-backed loans by offering even more favorable terms. Unlike the FHA, subprime lenders didn’t require borrowers to document their incomes. The FHA saw its share of the mortgage market fall to 2% in 2006.

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Taming the Wild West of FHA Lending

January 14, 2010

Some lenders fault the Department of Housing and Urban Development‘s plan to strengthen the Federal Housing Administration for — of all things — reducing regulation.

Waterstone Mortgage has a networth the exceeds the highest requirement as proposed by HUD.

HUD Secretary Shawn Donovan‘s road map, laid out in congressional testimony last month, was widely viewed as an attempt to raise the bar for companies to do business with FHA. Lenders’ net-worth requirements would rise, for example.

But critics of the proposal say HUD’s attempt to shift responsibility for supervising mortgage brokers from the department to FHA-approved lenders would eventually have the effect of lowering market standards. These lenders are urging HUD to keep its current requirement that brokers of FHA loans maintain a minimum net worth and provide the government with audited financial statements, just as lenders do.

Forcing lenders to monitor brokers without maintaining certain standards would result in a “race to the bottom,” said John Johnson, the president and chief executive of MortgageAmerica Inc., a Birmingham, Ala., lender.

Some lenders would ultimately give up standards to increase production, forcing others to do the same to compete, and repeating the cycle that helped to inflate the last housing bubble, he said.

“There should still be some standards to participate in FHA,” Johnson said. “Unless FHA revises the rule to include audited financials, then that will be the end of them because I can’t require them if the competition doesn’t.”

Similarly, Kevin Marconi, the chief operating officer at United Fidelity Funding, a wholesale and retail lender in Kansas City, Mo., said that rather than scrapping the net-worth minimum for brokers — as HUD has proposed doing — it should raise that requirement from the current $63,000 to somewhere between $100,000 and $150,000.

That would “weed out a lot of fly-by-night broker shops,” Marconi said.

Weeding out the chaff — among lenders and brokers — is certainly one of HUD’s goals.

Since the subprime market imploded in 2007, the FHA, once a mortgage industry backwater, has seen its volume explode.

FHA loans are pretty much the only product lenders can offer most borrowers who have little money for a down payment (unless they qualify for the government’s loan programs for veterans or rural residents).

FHA lending now accounts for 30% of all residential mortgages written, up from 3% in 2006, said Brian Chappelle, a partner at Potomac Partners, a Washington consulting firm.

Higher volume and share has come with higher defaults and losses. According to the Mortgage Bankers Association, 8.67% of FHA loans were 90 days overdue or in foreclosure at the end of the third quarter, up from 5.66% three years earlier. In November, a long-awaited audit showed that in the fiscal year that ended Sept. 30, the FHA’s capital reserve ratio had fallen to 0.53%, well below the congressionally mandated minimum of 2%.

The FHA now says it attracted companies with questionable practices during the growth spurt.

“The mortgage industry is coming out of an unprecedented period where unscrupulous players and institutions without capital, virtually anybody could put out a shingle and call themselves a mortgage lender,” Dave Stevens, the FHA’s commissioner, said in an interview in December.

The agency has stepped up enforcement actions against FHA lenders, including two that collapsed last year, Taylor, Bean & Whitaker Mortgage Corp. and Ideal Mortgage Bankers Ltd., better known as Lend America.

Opponents and supporters of HUD’s proposed rule agree on one thing: It would make the government mortgage market look more like the conventional one, as large bank-owned lenders gained share.

“HUD wants the bigger, more sophisticated, better-capitalized players out there,” said Paul T. Bossidy, the president and CEO of Clayton Holdings LLC, a Shelton, Conn., company that provides underwriting, due diligence and other services to lenders. The agency is looking for companies with the resources to invest in training and technology, he said.

As a wholly-owned subsidiary of a mid-sized depository Bank, Waterstone Mortgage is a fully approved HUD-FHA Lender. Our networth exceeds the higher $2.5M that HUD is proposing. The raised requirements are an excellent way to improve loan quality and help strengthen HUDs balance sheet. — Dean Tucker

Many small lenders said the proposed hike to their minimum net worth would put them out of business. HUD wants to raise the requirement from $250,000 to $2.5 million over three years. That would disqualify 70% of the FHA’s current roster of lenders (assuming none of them raised their net worth in the meantime).

“Big banks have a lot of expenses and no need to be competitive,” said Jeff Lewis, the chairman of Generation Mortgage Co., an Atlanta lender. “But there’s a mind-set right now in Washington that the best way to protect consumers is to restrict competition.”

Yet even some of the largest lenders want HUD to let brokers continue closing loans in their own name and maintain case numbers, to help the Goliaths manage their own risk.

For example, many lenders said they rely on the FHA’s Neighborhood Watch Web site to monitor and compare the default ratios of brokers.

“If HUD stopped providing compare ratios for correspondents, it is quite possible that loan quality would suffer,” Rick Aneshansel, the chief financial officer at U.S. Bank Home Mortgage, a unit of U.S. Bancorp, wrote in a comment letter — one of about 250 HUD has received since it issued the proposed rule in November.

David Moskowitz, deputy general counsel at Wells Fargo & Co., recommended in a comment letter that HUD maintain a recertification program for brokerages that includes background checks of key officers and directors and an assurance that brokers are not on any previous list of debarment.

Other changes to the FHA are coming quickly this year as well. Donovan has indicated that HUD may try to raise the current cap on annual mortgage insurance premiums, which would require congressional approval.

Policymakers also are considering increasing the minimum down payment for FHA borrowers and adopting a minimum FICO score for the first time.

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Some Federal Reserve Policymakers Conflicted

January 12, 2010

Some Federal Reserve policymakers last month were conflicted over whether to expand or cut back a program intended to drive down mortgage rates and bolster the housing market, according to a document released Wednesday.

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Minutes of the Fed’s closed-door meeting on Dec. 15-16 revealed that a “few members” thought that the Fed’s $1.25trillion program to buy mortgage securities from Fannie Mae and Freddie Mac might need to be expanded and extended beyond its current end date of March 31. Such an additional dose of stimulus would be especially needed if the economic recovery were to weaken, they argued.

However, one member thought the program could be “scaled back” given the improvement in economic and financial conditions.

The debate over the future of the program comes amid uncertainties about the vigor of the budding economic recovery.

At the December meeting, Fed policymakers decided not to make any changes to the program. At their September meeting, they opted to slow the pace of the purchases, wrapping them up by the end of March, rather than the end of 2009.

The minutes don’t identify speakers by name but seeks to provide a more detailed account of the Fed’s private discussions.

Some Fed officials remained concerned about the economy’s ability to mount a self-sustaining recovery once government supports are removed. To that end, those officials worried that improvements seen in the housing market might be “undercut” this year as the Fed’s mortgage-buying program winds down, the government’s home buyer tax credits expire at the end of April and home foreclosures grow.

Getting the housing market back on firm footing is a key ingredient to a lasting recovery. The collapse of the housing market, which dragged down home prices with it, was the catalyst for the longest and worst recession to hit the country since the 1930s.

“Generally the outlook was for gains in housing activity to continue. However, some participants still viewed the improved outlook as quite tentative and again pointed to potential sources of softness,” the minutes said.

To nurture the recovery, the Fed at the December meeting kept its key bank lending rate at a record low near zero and pledged to hold it there for an “extended period.” The goal: low interest rates will entice people and businesses to boost spending, which will fuel economic growth.

RATES REMAIN NEAR ZERO: Fed left rates unchanged at Dec. meeting

Economists said the Fed is all but certain to leave rates at record lows at its next meeting on Jan. 26-27 and probably for a good chunk of this year.

“Overall, there is nothing here to suggest that interest rates will rise for quite some time,” Paul Ashworth, economist at Capital Economics., said of the Fed minutes. Ashworth is among the economists predicting economic growth will slow in the second half of this year as President Barack Obama’s $787 billion stimulus package of tax cuts and increased government spending fades.

Most Fed officials don’t currently see inflation as a problem because companies have “little ability to raise their prices” in the fragile economic environment. But they had mixed views about inflation risks.

Some noted that rising prices of oil and other commodities could boost inflation pressures down the road. Others thought investors’ expectations of inflation could edge up because of large federal government budget deficits and vast sums of money the Fed pumped into the economy to fight the financial crisis.

However, others predicted that the sluggish recovery and “slack” in the economy — meaning factories operating well below capacity and the weak labor market — would keep inflation under wraps.

At the December meeting, Fed staff gave several presentations on research into “inflation dynamics.”

The biggest challenge facing Fed Chairman Ben Bernanke and his colleagues is to decide when to start boosting interest rates. Moving too soon could short-circuit the recovery. Waiting too long could unleash inflation.

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FHA Head Praises Realtor Role in Recovery

December 10, 2009

Realtors® are the face of the housing market, the focal point of information, involvement and inventory, and the Federal Housing Administration is committed to help them be successful, FHA Housing Commissioner Dave Stevens told more than 1,000 Realtors® at a gathering here today.
“You help to stabilize the community, and without homeownership, there can be no stability in communities,” Stevens said. “Together, we must never let overexuberance overtake the housing market again, and interrupt the housing market and the lives of untold millions of Americans. Our goal must be nothing less than to craft a solid, sustainable housing market, a market with a secure foundation for the future.”
Stevens said he and Shaun Donovan, secretary of the Housing and Urban Development, recognize that the National Association of Realtors has been at the forefront of efforts to address the housing crisis, and he has met with NAR on several occasions to consider their concerns. FHA has taken direct action on a number of those concerns.
Stevens announced that effective Monday, Nov. 16, FHA will no longer require a second appraisal on high-balance loans for properties in declining markets. “We did not find our previous policy to be particularly helpful and were very concerned about the additional burden on lenders and consumers,” Stevens said. He noted the policy change will bring industry alignment, streamline loan processing and reduce costs to consumers.

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Existing Home Sales in U.S. Jump to Two-Year High

August 21, 2009

Home loan and morgage refinance news from Waterstone – Prime Equity Group in Boise Idaho
Home Loan Boise

Existing Home Sales in U.S. Jump to Two-Year High

Aug. 21 (Bloomberg) — Sales of existing U.S. homes jumped more than forecast in July to the highest level in almost two years, signaling the housing crisis that crippled the world’s largest economy is easing.

Purchases climbed 7.2 percent to a 5.24 million annual rate, the most since August 2007, the National Association of Realtors said today in Washington. The gain was the biggest since records began in 1999. The median price fell 15 percent.

Residential properties stand in Las Vegas

Foreclosure-driven declines in prices, government credits for first-time buyers and near-record-low borrowing costs may keep stoking demand, helping the economy recover from the worst recession since the 1930s. At the same time, more Americans will probably lose their homes as companies cut payrolls, indicating a rebound will be slow to take hold.

“More and more buyers are becoming convinced that there is not a lot of downside left in the housing market,” said Ellen Zentner, a senior economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “We can count on housing no longer being a drag. The economic recovery is on track.”

Stocks jumped and Treasury securities dropped after the report added to evidence the housing market was turning. The Standard & Poor’s 500 index rose 1.6 percent to 1,023.26 at 11:26 a.m. in New York. The S&P builder supercomposite was up 4.4 percent. The yield on the 10-year note jumped to 3.53 percent from 3.43 percent late yesterday.

Exceeds Forecast

Existing home sales were forecast to rise to a 5 million annual rate, according to the median forecast of 64 economists in a Bloomberg News survey. Estimates ranged from 4.8 million to 5.25 million. June’s pace was unrevised at 4.89 million.

Sales had reached a 4.49 million pace in January, their lowest level since comparable records began in 1999.
Purchases of existing homes increased 5 percent compared with a year earlier. The median price dropped to $178,400 from the $210,100 in July 2008.
“We are bouncing back,” Lawrence Yun, the NAR’s chief economist, said in a press conference. Even so, “we still need to wait until year-end before we see price stabilization.”

The number of previously owned unsold homes on the market jumped 7.3 percent to 4.09 million in July, a “notable” increase that exceeded the historical average for the month, according Yun. Sellers who were waiting for the market to turn may now be putting their houses up for sale, he said.

At the current sales pace, it would take 9.4 months to sell those houses, the same as in June. A seven months’ supply is usually consistent with stabilization in prices, Yun said last month.

Distressed Sales

The share of homes sold as foreclosures or otherwise distressed properties held at 31 percent in July, he said.

Today’s report showed sales of existing single-family homes increased 6.5 percent to an annual rate of 4.61 million. Sales of condominiums and co-operatives climbed 13 percent to a 630,000 rate.

Purchases increased in three of four regions, led by a 13 percent jump in the Northeast.

The figures are compiled from contract closings and may reflect purchases agreed upon weeks or months earlier. Many economists consider new-home sales, recorded when a contract is signed, a more timely barometer of the market.

The Commerce Department may report next week that purchases of new houses rose in July to the highest level since November, according to the Bloomberg survey.

Cutting Costs

Home Depot Inc., the largest home-improvement retailer, is among businesses cutting costs to ride out the housing recession. The Atlanta-based company reported second-quarter profit that fell less than analysts estimated and raised its annual earnings forecast after trimming expenses, even as it projected a sales decline for the year.
“Performance across most of our regions is better,” Chief Executive Officer Frank Blake said on a conference call with analysts on Aug. 18. “But caution is still appropriate,” and “we remain concerned by the high level of foreclosure activity,” he said.
About $3.4 trillion worth of houses are at risk of default because the owners owe more than the property is worth, Santa Ana, California-based First American CoreLogic said last week. By putting more homes on the market, foreclosures are keeping inventory higher than levels consistent with stable prices.

Obama administration efforts to revive housing include an $8,000 federal tax credit for first-time buyers who complete the transaction before Dec. 1. The government also is offering lenders incentives to modify the terms of delinquent mortgages, and the Federal Reserve is buying mortgage-backed securities to help reduce borrowing costs.

The first-time buyers accounted for about 30 percent of sales last month and the government’s credit is having a “significant impact,” the NAR’s Yun said.

To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

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