Borrowers Face Greater Scrutiny from Lenders

Lenders have a lot of questions for potential borrowers and they want detailed documentation when processing a mortgage application. Even applicants with stellar credit should expect extensive scrutiny when applying for a mortgage today, The New York Times reports. 

Questions over divorces, gaps in employment, and pending lawsuits are all fair game. For borrowers whose incomes rely heavily on bonuses and commissions, they may have to verify the history of that income over time — and tax returns, W2s, and pay stubs may not suffice.  

For borrowers who are on disability, they may have to prove that they are indeed entitled to receive aid for their disability and show the payout over the long term.

Any large, irregular deposit in the borrower’s bank account will also need to be accounted for. 

Borrowers who are counting alimony and child support payments as income are now required to show a year’s worth of canceled checks, according to new underwriting rules by the Consumer Financial Protection Bureau.

The increase in probing and documentation is all aimed at making sure the borrower has the ability to repay the loan. 

Source: “For Borrowers, Many Questions,” The New York Times (Aug. 22, 2013)

Lending Gets Even Tighter for Borrowers

The average FICO score for first-lien loans reached 750 in October, a rise from 741 in August, according to Ellie Mae, an analysis that encompasses about 20 percent of all loan applications in the U.S. Meanwhile, the average FICO score on applications that were denied by lenders was 706. That is up from 700 compared to year ago levels and 697 in September 2011. Last week, Federal Reserve Chairman Ben Bernanke said that tighter lending conditions are contributing to a housing slowdown. He said that some tightening in mortgage lending was necessary following the housing crisis. But, he added, “it seems at this point the pendulum has swung too far the other way, and that overly tight lending standards may now be preventing creditworthy borrowers from buying homes." Source: “Average FICO Score Getting higher for Approved Mortgages,” HousingWire (Nov. 19. 2012)

The Market is Competitive for Home Buyers

More home buyers are finding they’re losing their power position in the real estate market and that when they submit an offer for a home, they are not alone in the bidding. In fact, buyers who submit low offers may not even get a courtesy of a callback nowadays. Money Magazine recently offered potential buyers the following tips if they want to get the winning bid on a home: Get pre-approved, not prequalified: Pre-approval for a loan based on a buyer's credit, income, and assets is viewed as better than getting pre-qualified, which is just an estimate of how much that buyer may be able to borrow. Find an experienced REALTOR®: Money Magazine advised home buyers to find a real estate professional who knows how to handle multiple-offer situations and can advise how much to offer and help buyers determine if they’re getting a home at a fair price. Watch the contingencies: “The best offer isn't always the one with the best price," says George Miller, a Sarasota, Fla., real estate agent. Buyers who put in too many contingencies with their offer may lose out. Source: “Winning in a Seller's Housing Market,” Money Magazine (Sept. 12, 2012)

Do You Really Need a Realtor?

Great Blog... By Alain Pinel Senior Vice President/Managing Officer Intero Real Estate Services, Inc. Every so often, when I feel like a sponge for professional knowledge or when I want to justify the hefty dues I have to pay to NAR -the National Association of Realtors-, I read the “Economists’ Outlook” blog. The other day, one caught my eye. The title and the content were not particularly new or earthshaking but I still read the piece twice. I guess I liked it. You’ll know why when I unveil the title. Here it is: “Home Buyers Use of an Agent in Transaction Has Risen For Past Decade”. Music to my ears. As a Realtor, I like being liked. There is nothing like recognition for a job well done. Sure it is self serving but it’s nice to see that home sellers are more aware today than ever before of the value of trusting a Realtor with the sale or the purchase of a home. You see, even a guy like me needs a pro. I have been around the block a few times, I bought and sold many homes for my own account and personal use, but when my money is concerned, I need an objective expert opinion and someone who can negotiate on my behalf. I need a Realtor. Buying or selling a home is highly emotional. You don’t want to be emotional and confused when you sign a listing or a purchase contract. It’s your money that we are talking about. It is your home. It’s where you and your family lived or will soon live. Buying or selling is also a very difficult task, judging by the number of attorneys who specialize in the discipline and make a good living at it. In the high end, using a pro is not an option: there is too much at stake, too much to win or to lose. Playing Russian roulette is not a game to play in a real estate transaction. According to the NAR “2011 Profile of Home Buyers and Sellers”, a record 89% of recent buyers purchased their home through a real estate agent or broker. On one hand, I am pleased to learn that the percentage is moving up; on the other, I honestly wonder who on earth are the 11% of buyers who did not get the message!... Promise me you will never do that again! In 2001, just a few years back, “only” 69% of the buyers bought through a Realtor. I guess those who did not learned their lesson quickly because, as we mentioned above, the percentage has gone up ever since, with the strange exception of 2009 when it dropped a few notches to 77% after 81% the year before. My take on this anomaly is that after a couple of lousy years when properties did not move and values went the other way, some home sellers blamed their agent and decided to go “For sale by owner.” That lasted only as long as a New England winter (about 6 months…). Actually, the NAR study suggests that only 4% of the 2011 buyers bought directly from the previous owners (It was 15% in 2001). The other 7% missing bought from a builder or a builder’s agent. When you look at the trend over the 10 year stretch of time, jumping from 69% to a record of 89%, you’ve got to feel good if you are a Realtor. At that tempo, if we are not careful, we may get well over 100% in another 10 years!... It is particularly comforting to note that many crystal ball readers, years ago, were predicting that Realtors would phase out as more and more knowledge about the business, about the inventory of homes, about values, about financing, about contracts…was dispensed online for the Public to read, learn and use. Obviously it did not happen that way; quite the opposite in fact. At a time when buyers and sellers know as much as they do, the more they know, the more they know ….. what they don’t know. That’s why Realtors are more relevant and essential than ever. Thank you.

Consigliere Files: RESPA and FEE SPLITTING

Consigliere Files: RESPA and FEE SPLITTING

Are Home Warranties A Good Deal?

When something malfunctions in your home, wouldn't it be great if you could pick up the phone, request a service call, pay a nominal service charge and have the problem fixed? In theory, this is how a home protection plan works.

A home protection plan--also know as a home warranty-is an insurance policy that insures homeowners against defects in the major systems of their home. Precisely what is covered will vary from one company to the next. Most policies cover the heating, plumbing and electrical systems as well as built-in appliances like the stove, dishwasher and garbage disposal. Some companies will cover movable appliances like the refrigerator, washer and dryer for an extra charge. And some policies even include roof coverage-if you pay an additional fee.

Policy terms are usually for one year and they are renewable. The annual cost of a policy varies but you might expect to pay about $250 for a moderate-size home. Protection plans are available for both single-family residences and condominiums.

Home protection plans are popular in the home sale industry because they provide a relatively inexpensive way to take care of home defects that develop soon after the home sale closes. For example, let's say the water heater quits working the day after closing. Depending on the terms of the purchase agreement, the seller may be responsible for replacing the water heater. A new hot water heater can cost several hundred dollars. However, if there is a home protection plan in place at closing, the hot water heater will probably be replaced for the nominal cost of a service charge. Home warranty service charges vary but they are often in the range of $45-$55 per call.

Some sellers offer to pay for a home protection plan to cover the home for the buyer for one year. If problems arise during that year, the buyers simply call the warranty company and pay the service charge. The warranty company pays for the repair or replacement.

FIRST-TIME TIP: Be sure to read the policy carefully because there are exclusions from coverage. For example, pre-existing conditions are not usually covered. So if the furnace hasn't worked properly for years, it probably won't be covered by the buyer's home protection plan. Also, there are limitations on coverage. For instance, some policies offer roof and septic system coverage, but only up to $1,000 of work.

Seller coverage is also available to cover the home during the listing and sale period. Seller coverage works the same as buyer coverage except that there are usually more limitations on the coverage. For example, the furnace is usually covered under both buyer and seller coverage. But, the amount of coverage offered under seller coverage is often less than the amount that's available to the buyer if the furnace breaks down after closing.

One seller who had signed up for seller coverage was able to have some of the defects that were discovered during the buyer's inspections fixed by the home protection plan company for the cost of a service charge. This was a great deal for the seller because it saved him money and he didn't have to pay the policy premium until closing. Seller coverage is usually charged by the day. The cost varies, but it can run about 75 to 95 cents a day.

THE CLOSING: If the seller of a home you're buying does not offer to pay for a home protection plan, you can pay for one. Be sure to order it before the closing date.
There are a few companies that will allow you to purchase a home warranty at any time.

Hot Wheels for Kids-Intero Saratoga May 14, 2011

Join us for some fun, tunes, food, hot rods, and making a difference in the lives of Children. Mark your calendars!

Hot Wheels for Kids-Intero Saratoga May 14, 2011

The Block

The Block

Increase Your Home's Value

It is no secret. 2010 was a hard year for home values. While you cannot
protect yourself against market corrections, you can take small steps to help
increase your home's value and make it more marketable. The following tips
are meant to inspire and motivate you to treat your home like the investment it
was meant to be.
1. Make Repairs: Homes require regular maintenance and repairs are a
necessary component of home ownership. Procrastination gets you nowhere
when it comes to home value. Stay on top of repairs as they are needed. And
be sure to address large projects before placing your home on the market. For
example, roofs are expensive to replace or repair. Many buyers will pass up
your otherwise wonderful home when faced with roof issues.
2. Curb Appeal: Curb appeal is about first impressions. It is also about
neighborhood values. Drive down a street lined with manicured lawns and well maintained
homes and the values are sure to reflect the care their owners take.
On the other hand, streets with overgrown trees, junky yards, and chipped and
faded paint are fighting an uphill battle in the values game.
3. Community Involvement: The classic quote from Chinese philosopher
Lao-tzu says, "A journey of 1,000 miles begins with a single step." This is
especially true for improving the health and wealth of a community. Change
starts with yourself. By becoming an active member of your community, you
can inspire the change you desire. Family, friends, and neighbors will follow
your lead of civic duty. How can you get involved? Run for city council, join the
PTA, volunteer, and help organize fund raisers and events that inspire
community togetherness.
4. Updated Kitchen: Kitchens are a real selling point. Outdated cabinets,
counters, and appliances will stick out like a sore thumb to buyers. Be sure,
however, that you research your comparables before beginning a remodel. You
do not want to price yourself out of the running. This means if you love granite
and travertine, but other homes in your area are selling with laminate, you will
probably not be able to ask for a drastically higher price that covers the price of
the granite.
5. Updated Bath: Bathrooms also hold much of a home's value. New lowflush
toilets cost as little as $100. And tubs and showers can be easily replaced
or resurfaced. Be sure, above all else, that your bathrooms are clean for
showings.
6. Energy Savers: Buyers are looking for homes that are energy efficient.
Low-flush toilets, solar panels, water filtration systems, and insulated windows
are all inexpensive fixes for energy zappers.
Consider these simple tips and decide for yourself what may help your home retain its value.

What the New Budget Proposal Means for Home Buyers

Written By Gino Blefari
President & CEO
Intero Real Estate Services, Inc.

The Obama Administration's new budget proposal came out last week. The one loud message I took away for would-be home buyers? Loans are cheaper today than they're likely to be in the future.

That means if you're thinking of buying a home this year or in the near future, now is the time to get going.

A lot of the proposed changes have to do with the future of Fannie Mae and Freddic Mac – the two mortgage finance giants that are backed by the government to keep a steady flow of funds available for the nation's home buyers. While their fate is still being worked out, there are some related changes that could go into effect this fall that would impact home buyers. They are:

1. The maximum size of mortgages backed by Fannie and Freddie will be smaller come October. Currently, the limit in high-cost areas like San Francisco is $729,750 for a single-family home. That amount will drop 14% to $635,500 when the current limits expire. What this means is that a substantial number of homes in San Francisco county, for example, (10%, according to the California Association of Realtors) will become ineligible for financing backed by the two finance companies.

2. Bigger down payments are on the horizon. We discussed some of the other measures on the table a few weeks back that are outside of any Fannie/Freddie discussions. But now, in the government's attempts to shrink Fannie and Freddie, some new proposals for the mortgages backed by these companies would mean that borrowers would face a requirement of 10% down with mortgage insurance – up from 5%. Not a lot of details are available about any of these proposals as of today, but we're expected to know more by April.

3. Fees, fees fees. The Federal Housing Administration in November could begin raising annual mortgage insurance premium fees by 0.25% for all borrowers, according to the proposals. Basically, that means an extra $250 per $100,000 of loan per year.

As I've noted before, this is the year of big changes in housing regulation – many of which are aimed at protecting consumers and the American public from another collapse in mortgage finance. However, the consequence is looking more and more like higher costs to borrowers. So if you're going to buy, you might want to speed up your decisions before a lot of these things start to take effect.

The Homeowner Tax Credit– What It Is and Where It Is Headed

The Taxpayer Relief Act was a huge break for sellers of real estate back in 1997. Basically, Congress changed the tax laws so that a homeowner could exempt $250,000 in gains from the sale of the owner’s primary residence. This had outstanding tax benefits for sellers over the last ten years as properties seemed to exponentially increase in value and homeowners routinely sold homes for a profit. In fact, prior to the Taxpayer Relief Act of 1997, homeowners had little incentive to move out of their home into a smaller place because it would cost them too much money in capital gains tax.

However, the President and Congress have recently began hinting that they might roll back or repeal some of the tax benefits within The Taxpayer Relief Act of 1997. This talk stays somewhat under the radar because, presently, people are not routinely selling their homes for a profit. But my question is: “What happens when the market ticks up and this benefit is repealed or rolled back?” How will that affect our business?

The Taxpayer Relief Act
The rules are pretty simple and any good realtor should know them well. Essentially, a homeowner can sell a “primary residence” and keep the first $250,000 of profit tax free. If the homeowners are married and filing a joint tax return, the couple can keep the first $500,000 of profit tax free.

In order to be deemed a “primary residence” the home must 1) have been lived in by the seller for at least two of the last five years, 2) the seller and his/her spouse must not have collected this tax benefit within the last two years on a different home sale, and 3) the property must be residential (commercial properties are not eligible for this tax exemption). The seller need not have lived in the home for two consecutive years. Also, as long as a seller has not sold a “primary home” and taken this tax benefit within the last two years, the tax exemption can be claimed over and over again.

The rules were made more lenient in 2004 for sellers who have been deployed by the military, have had a major change in health, have been forced to move for work, or can demonstrate insurmountable hardship. In these special circumstances, the sellers do not have to show that they lived in the primary residence for two of the last five years. However, they still cannot collect the benefit if they already have done so on a different sale within the last two years.

The Proposed Change
Most business attorneys are aware that the current capital gains tax that individuals and businesses pay on “personal property” sales will rise in 2011 because of a “sunset provision” that was placed in the Tax Increase Prevention and Reconciliation Act of 2006. This means that the Act terminates on its own on January 1, 2011, and without an additional act of Congress, individuals and businesses will have to pay higher taxes on profits that they earn for selling certain assets next year. Generally, real estate sales are not included in this capital gains tax increase. However, as the debate has heated up about whether to save the current “personal property” capital gains tax rate, the President and many in Congress have taken a firm stand that they want “fairness” in tax paying. This has lead to a discussion about revisiting the capital gains tax structure, including a tax increase on the profits that individuals earn when they sell their real estate holdings.

In his 2008 debates with Hilary Clinton, then Senator Obama proposed changing the entire capital gains tax structure back to where it was prior to The Taxpayer Relief Act of 1997. This would have numerous affects. Most notably, the homeowner tax benefit would be rolled back and virtually eliminated. Prior to 1997, sellers were only entitled to a $125,000 capital gains credit – and that was only if the seller was 55 years old or older at the time of sale.

Some on Capitol Hill have recently argued that the homeowner tax credit should be reduced from a $250,000 credit for one seller and a $500,000 credit for married sellers to a blanket $125,000 credit regardless of whether the couple files jointly or separately. The White House has not taken an official stand since Mr. Obama became President. However, some notable leaders in Congress, including Chairman of the House Financial Services Committee Barney Frank and Senate Majority Whip Richard Durbin (both voted against the Taxpayer Relief Act of 1997), have recently suggested that the homeowner tax credit of 1997 should be on the table along with all other capital gains.

By Chris Moles
Brokerage Counsel
Intero Real Estate, Inc.

Google Says Hello to Real Estate

Google is an economic force to be reckoned with here in the Bay Area – and especially in Silicon Valley. The Internet pioneer employs more than 20,000 people, and they would seem to be among the happiest employees on earth.

The company’s latest news to hit the streets: it has jumped into real estate.

This news, however, is probably not what you’d expect. Google did not release an all-encompassing super-powered Internet search experience for home listings. Rather, the Mountain View-based giant is creating an $86-million Low-Income Housing Tax Credit (LIHTC) fund that will subsidize the construction and operation of 480 affordable rental units in seven communities in the West and Midwest for seniors and low-income families.

Google must have realized that there is no shortage of ways to help in the real estate arena offline. The fund apparently is not the first effort – Google recently invested in two other low-income housing projects for seniors in the San Francisco Bay Area and Los Angeles County.

So far, none of the projects have been in Google’s backyard in Mountain View, but it’s not really Google picking and choosing where the money goes. For that, they rely on the fund manager.

It’s nice to see philanthropic efforts by major U.S. corporations hit home like this. Affordable housing indeed is a problem in many areas and may get worse if the economy continues to disappoint.

Google’s investment comes at a time when many developers of low-income housing projects face huge financial hurdles and lack of funds. It is unusual for a technology company to fund projects like this. This move shows how the investor base for affordable housing is expanding beyond traditional means like banks.

It will be really interesting to see whether other large companies follow suit. As I mentioned, there are certainly a lot of projects needing funding and affordable housing is a social issue that is easy to get behind.


By Gino Blefari
President & CEO
Intero Real Estate Services, Inc.

Eat at Willy

Eat at Willy’s & Give Hope to a Child!

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California expected to cancel tax on forgiven mortgage debts - Sacramento Business, Housing Market News | Sacramento Bee

California expected to cancel tax on forgiven mortgage debts - Sacramento Business, Housing Market News | Sacramento Bee

Posted using ShareThis

BELIEVE

If there’s one thing I’ve seen over and over again, it’s the cycle where housing soars, corrects, and then soars again.


In its low periods, like today, many, many people think real estate values will never come back. And certainly they’ll never go up again like they did in the past.


I don’t know about other parts of the country, but this is California where the American Dream thrives. I am eternally optimistic about California housing values, and most optimistic about values in the Bay Area.


So, I’ve collected some quotes from the past where people say real estate is dead. Reading them might allay some peoples’ concerns and put things into perspective. Enjoy:


“The prices of houses seem to have reached a plateau, and there is reasonable expectancy that prices will decline.” (Time, Dec. 1, 1947)

“Houses cost too much for the mass market. Today’s average price is around $8,000—out of reach for two-thirds of all buyers.” (Science Digest, April, 1948)

“If you bought your house since the War…you have made your deal at the top of the market… The days when you couldn’t lose on a home purchase are no longer with us.” (House Beautiful, Nov. 2, 1948)

“The goal of owning a home seems to be getting beyond the reach of more and more Americans. The typical new house today costs $28,000.” (Business Week, Sept. 4, 1969)

“Be suspicious of the ‘common wisdom’ that tells you to ‘Buy now…because continuing inflation will force home prices and rents higher and higher.’” (NEA Journal, Dec. 1970)

“The median price of a home today is approaching $50,000….Housing experts predict that in the future price rises won’t be that great.” (Nations Business, June, 1977)

“The era of easy profits in real estate may be drawing to a close.” (Money, Jan. 1981)

“In California… for example, it is not unusual to find families of average means buying $100,000 houses…. I’m confident prices have passed their peak.” (John Wesley English, The Coming Real Estate Crash, 1980)

“The golden-age of risk-free run-ups in home prices is gone.” (Money, March 1985)

“If you’re looking to buy, be careful. Rising home values are not a sure thing anymore.” (Miami Herald, Oct. 25, 1985)

“Most economists agree… [a home] will become little more than a roof and a tax deduction, certainly not the lucrative investment it was through much of the 1980s.” (Money, 1986)

“We’re starting to go back to the time when you bought a home not for its potential money-making abilities, but rather as a nesting spot.” (Los Angeles Times, Jan. 31, 1993)

“A home is where the bad investment is.” (San Francisco Examiner, November 17, 1996)

Things look grim right now, but go back and look at the dates on all these quotes? Anyone who followed the advice of these people would have missed out on one of the great real estate booms of all time.

What if you paid attention to the advice in quote #7? You’d have missed out on all that growth in the 1980’s.

What about quote #12? If you followed that advice, you’d have missed out on all the great years up until last year.

I could go on and on. If you’re a patient person, it’s been almost impossible not to get rich on California housing.

It happened before and it will happen again.

Don’t bet against California housing.

In the long run, it’s always been a great investment.

BY: Rick Soukoulis

Chairman and CEO

The Loan Source

408.578.8700

rsoukoulis@Interomortgage.com

Selling Short? Keep Track of Everything

Selling Short? Keep Track of Everything


By Gino Blefari
President and CEO
Intero Real Estate Services, Inc.


It’s that time of year again. The Winter Holidays are behind us, we’ve cheered a new Super Bowl champion and exchanged boxes of chocolates for Valentine’s Day. That can only mean one thing: Tax Season is upon us.


When it comes to your home, there is plenty of documentation of which you need to keep track when it comes time to file your annual return. For those of you filing “standard” income tax returns, this is all fairly clear and straightforward.


With the current real estate climate, however, there are scores situations, like having lost a home to foreclosure, or staring personal bankruptcy in the face, in which many never thought they’d find themselves. Situations like these can make filing taxes a bit trickier.


There’s one circumstance in particular on which I’d like to focus today:


Short sales.


If you’ve gone through the short sale process (where you can no longer afford the payments on your home, but your lender allows you to sell the home at loss, rather than go through with foreclosure), then you know it’s long, it’s arduous, and it’s one in which things have the potential to be very murky.


When completing the reams and reams of paperwork required by your lender to complete the short sale process, it’s likely that you signed a promissory note, or other like document, granting the lender the right to take action against you to collect the deficient amount. This is pretty standard. It’s possible, though, that you also got a copy of a document with the heading 1099-C, which the lender has filed with the IRS, indicating that the unpaid portion of the loan has been canceled. This is a trigger for the IRS to assess taxes against the forgiven debt.


Wait. What?


“How is that possible?” you might ask. Good question. It doesn’t stand to reason that a lender can pursue you for unpaid debt and that the IRS can assess taxes, as well. Logic would dictate that one or the other is reasonable, but not both.


Keep copies of everything having to do with anything related to the transaction.


If you signed paperwork indicating that the lender can take collection action against you, but you’ve also received a 1099-C for the uncollected debt, you’ll have plenty of documented proof to show the IRS that you don’t owe taxes on that amount. Similarly, if there is nothing in your sale paperwork that gives the bank the right to collect the debt, nor is there any other reference to it, the 1099-C will serve as evidence should the bank, at some point, decide to take action against you.


They can’t have it both ways.


I’m not a tax professional. I’m not certified to give that sort of advice. But I can advise you to seek the counsel of a tax professional, so that negotiating the maze of tax ramifications that come with a short sale is made somewhat easier



By Gino Blefari
President and CEO
Intero Real Estate Services, Inc.


It’s that time of year again. The Winter Holidays are behind us, we’ve cheered a new Super Bowl champion and exchanged boxes of chocolates for Valentine’s Day. That can only mean one thing: Tax Season is upon us.


When it comes to your home, there is plenty of documentation of which you need to keep track when it comes time to file your annual return. For those of you filing “standard” income tax returns, this is all fairly clear and straightforward.


With the current real estate climate, however, there are scores situations, like having lost a home to foreclosure, or staring personal bankruptcy in the face, in which many never thought they’d find themselves. Situations like these can make filing taxes a bit trickier.


There’s one circumstance in particular on which I’d like to focus today:


Short sales.


If you’ve gone through the short sale process (where you can no longer afford the payments on your home, but your lender allows you to sell the home at loss, rather than go through with foreclosure), then you know it’s long, it’s arduous, and it’s one in which things have the potential to be very murky.


When completing the reams and reams of paperwork required by your lender to complete the short sale process, it’s likely that you signed a promissory note, or other like document, granting the lender the right to take action against you to collect the deficient amount. This is pretty standard. It’s possible, though, that you also got a copy of a document with the heading 1099-C, which the lender has filed with the IRS, indicating that the unpaid portion of the loan has been canceled. This is a trigger for the IRS to assess taxes against the forgiven debt.


Wait. What?


“How is that possible?” you might ask. Good question. It doesn’t stand to reason that a lender can pursue you for unpaid debt and that the IRS can assess taxes, as well. Logic would dictate that one or the other is reasonable, but not both.


Keep copies of everything having to do with anything related to the transaction.


If you signed paperwork indicating that the lender can take collection action against you, but you’ve also received a 1099-C for the uncollected debt, you’ll have plenty of documented proof to show the IRS that you don’t owe taxes on that amount. Similarly, if there is nothing in your sale paperwork that gives the bank the right to collect the debt, nor is there any other reference to it, the 1099-C will serve as evidence should the bank, at some point, decide to take action against you.


They can’t have it both ways.


I’m not a tax professional. I’m not certified to give that sort of advice. But I can advise you to seek the counsel of a tax professional, so that negotiating the maze of tax ramifications that come with a short sale is made somewhat easier

The (Not Just) First-Time Homebuyer Tax Credit

The (Not Just) First-Time Homebuyer Tax Credit, Expanded & Explained


By Gino Blefari
President and CEO, Intero Real Estate Services

After much speculation by the general populace (and the real estate industry) and much consternation by Congress, the much-anticipated extension of the First-Time Homebuyer Tax Credit has been passed.

Passed, not to mention greatly expanded.

Whether you’re in favor of or opposed to the credit, it’s now been made available to a host of Americans not included in the initial offering, so how can you take advantage of it? Let’s break it down, shall we?



The original tax credit, which was a part of the economic stimulus package put into effect in February 2009, was made available to first-time homebuyers (people who hadn’t owned a home for three or more years) and applied to home purchases that closed on or before November 30, 2009. With the passage of the expansion bill into law, that credit has been extended to purchases made by May 1, 2010 and that are closed prior to July 1, 2010 (that means escrow is closed, all papers signed and keys are in-hand on or before June 30th).

For first-time homebuyers, the credit amount, as it was in the original plan, remains at 10% of the purchase price, up to a maximum credit of $8,000. Originally, to be eligible for the credit, single (not married) purchasers could have an adjusted gross income (AGI) of no more than $75,000/year; married couples with an AGI of $150,000 or less were eligible. Under the new plan, singles with an AGI of up to $125,000 and married couples with an AGI of up to $225,000 are eligible.

For those of you who had previously been ineligible to claim the credit at all because you already owned a home, there may be good news for you. Under the new plan, homeowners who have lived in their homes for 5 consecutive years of the past 8 years are eligible to receive a credit toward a new home purchase. Meant to give a boost to “move-up” buyers, this credit amount can be 10% of the purchase price, up to $6,500. The income caps referenced above are the same.

If you’re a member of the Armed Services and were/will be deployed outside the United States for at least 90 days between December 31, 2008 - May 1, 2010, you may claim the credit until May 1, 2011 (with settlement all wrapped up before July 1, 2011).

One peculiarity of which it’s important to take note: even if you purchase a new home in 2010, you can claim the credit on your 2009 tax return. If you file for an extension of time to file your income taxes, or if you amend your already-filed 2009 tax return, you may include the tax credit (this would put the cash in your pocket much sooner than if you were to claim the credit on your 2010 tax return). Be sure, however, to take heed of the income limitations, as they apply to the year in which you claim the credit.

Finally, it’s important that you understand that if the purchase price of the home exceeds $800,000, no tax credit may be claimed, regardless of your income levels. The credit only applies to primary residences. Investment properties or vacation homes don’t qualify.

Whether the expansion and extension of this credit is the shot in the arm that the US Economy needs remains to be seen, but it’s here, it’s ready and, if you’re planning on purchasing a new home, you should most certainly take advantage of it. Talk to your Intero agent or consult your financial advisor to discuss how this affects YOU.

CONGRESS PASSES HOMEBUYER TAX CREDIT

Here's the latest intelligence from Real Estate Economy Watch.

Special Report

CONGRESS PASSES HOMEBUYER TAX CREDIT


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The House of Representatives voted overwhelmingly this afternoon to pass legislation containing an extension and expansion of the homebuyer tax credit, completing Congressional action and sending the tax credit to President Obama for his signature, possibly as early as tomorrow.
The $8,000 homebuyer tax credit for first-time buyers, due to expire in 25 days, will be extended through April 30 of next year and buyers will have an additional two months, until the end of June, to close. First-time buyers who are in process of making a purchase will no longer need to worry about qualifying for the $8,000 credit if they close after the November 30 deadline. The new legislation increases the income limit for couples with income up to $225,000, a nearly $55,000 increase above the level in existing law.

For the first time, the new legislation makes buyers who already own a home eligible for a credit. A $6,500 maximum credit will be available to existing homeowners who have lived in their current residence for five of the prior eight years. The legislation limits eligibility for the existing homeowner credit to homes worth $800,000 or less.


Read the full story at http://www.realestateeconomywatch.com/

Home Maintenance Tips

It's Fall: Time to Prepare Your Home for Winter

Fall maintenance is important because it helps make homes more energy efficient during the winter months, and will safeguard homes against potential seasonal 'disasters' such as leaking roofs or home fires caused by neglected chimneys. Here are ten tips to a safer, warmer winter.

TIP #1 -- Check the heating system. Check the filter, pilot light and burners in a system fueled by gas or oil. Fireplaces, boilers, water heaters, space heaters and wood burning stoves should also be serviced every year. Have the specialist inspecting your unit show you how to change the filter and then you should change it at least once every 2 months. Clean ducts in the heating system. Clean and vacuum dust from vents, baseboard heaters and cold air returns. Dust build-up in ducts is a major cause of indoor pollutants. Ducts should be professionally cleaned about every three years.

TIP #2 -- Have the chimney inspected by a qualified chimney professional. Chimneys should be checked and cleaned, if necessary, on an annual basis. If you are using a wood stove this season, be sure that the stovepipe was installed correctly according to the manufacturer's recommendations and local codes. If there is any doubt, a building inspector or fire official can determine whether the system is properly installed. If you have a chimney that will not be used, consider having it sealed shut.

TIP #3 -- Test fire alarms, smoke detectors and carbon monoxide detectors, and vacuum out the dust. Batteries should be checked every six months to ensure that they're working.

TIP #4 -- Remove excess leaves and damaged branches from trees surrounding the house. Dead branches have the potential to break and fall, ruining roofs, decks, or vehicles and the possibly causing injuries to people.

TIP #5 -- Maintain gutters. Remove all debris that can slow or impede the ability of water to drain effectively from the roof. Trapped water can be destructive not only to the gutters themselves but to the adjoining roof as well. Make sure gutter water drains away from your home.

TIP #6 -- Inspect the roof. Look for damaged or loose shingles, gaps in the flashing at joints with siding, vents and flues, as well as damaged mortar around the chimney.

TIP #7 -- Inspect exterior walls, doors and windows. Check walls and window sills for damage such as cracks, gaps, loose or crumbling mortar, along with splitting and decaying wood. Caulk exterior joints around windows and doors, which helps keep the home weather tight and lower heating bills. Check windows and doors to make sure locks work properly and that they are in good condition. Clean tracks and lubricate hinges. Repair or replace any cracked windows.

TIP #8 -- Maintain steps and handrails. Repair broken steps and secure loose banisters and handrails. Broken steps can cause a dangerous fall. Similarly, a person slipping will grab a handrail for support.

TIP #9 -- Inspect the attic and basement or crawlspace. Insulate voids in the attic - the entire attic floor above a living space should be insulated with at least six inches of insulation, except around electrical fixtures such as recessed lights that aren't rated for contact with insulation. Damp basements and crawl spaces can become mold and mildew problems. Watch for leaks from your water heater, plumbing system and seeping rain water from the roof. Locate and maintain a clear access to your main water shut off valve. If you have a sump pump, test, clean and lubricate it.

TIP #10 -- Shut down sprinkler systems and outside faucets. Homeowners can shut down outside faucets, however weatherizing the underground sprinkler system is best performed by industry professionals who will flush the system before the cold sets in, preventing cracked pipes.

Excerpted from http://rentonwa.gov/

Building Your House: Inspirational Story

An elderly carpenter was ready to retire. He told his employer-contractor of his plans to leave the house building business to live a more leisurely life with his wife and enjoy his extended family. He would miss the paycheck each week, but he wanted to retire. They could get by.
The contractor was sorry to see his good worker go and asked if he could build just one more house as a personal favor. The carpenter said yes, but over time it was easy to see that his heart was not in his work. He resorted to shoddy workmanship and used inferior materials. It was an unfortunate way to end a dedicated career.
When the carpenter finished his work, his employer came to inspect the house. Then he handed the front door key to the carpenter and said, “This is your house… my gift to you.”
The carpenter was shocked!
What a shame! If he had only known he was building his own house, he would have done it all so differently.
So it is with us. We build our lives, a day at a time, often putting less than our best into the building. Then, with a shock, we realize we have to live in the house we have built. If we could do it over, we would do it much differently.
But, you cannot go back. You are the carpenter, and every day you hammer a nail, place a board, or erect a wall. Someone once said, “life is a do it yourself project.” Your attitude and the choices you make today, help build the “house” you will live in tomorrow. Therefore, Build Wisely.