Courtesy of REALTOR®Mag/National Association of REALTORS®
Daily Real Estate News | Tuesday, February 14, 2012
The National Association of REALTORS® has come out against parts of President Obama’s proposed budget for 2012 that would limit itemized deductions, including the mortgage interest deduction, for wealthier households.
“NAR firmly believes that the mortgage interest deduction is vital to the stability of the American housing market and economy,” 2012 NAR President Moe Veissi said. “We urge the president and Congress to do no harm.”
The president’s proposal calls for reducing the value of itemized deductions for taxpayers earning more than $200,000 in annual income — or $250,000 for joint filings of married couples. It limits the value of the deduction to 28 cents on the dollar for affected taxpayers, rather than 33 cents or 35 cents.
NAR’s concern is limitations on the MID would harm home values, hindering a budding housing recovery.
“While progress has been made in bringing stability to the housing market, the recovery has been slow,” Veissi said. “The nation’s home owners already pay 80 to 90 percent of U.S. federal income taxes. Raising taxes on them, now or in the future, could critically erode home values at all price levels.”
Source: “Obama budget: Tax plans aim at rich,” CNNMoney (Feb. 13, 2012) and NAR
Sunday, February 19, 2012
Bad News on Phoenix Area Home Valuations, but Next Year May be Better
Courtesy of The Arizona Republic / azcentral.com
Article by Catherine Reagor - Feb. 18, 2012 12:29 AM
Article by Catherine Reagor - Feb. 18, 2012 12:29 AM
Few Maricopa County homeowners will be surprised when they open their latest property valuations to learn that their homes are officially worth less than they were a year ago. It's the fifth straight year for annual drops in the region's home prices.
But based on home-price increases during the past few months, this could be the last of the declining numbers for some metro Phoenix homeowners.
Residential-property values fell an average of 7.6 percent in 2011, compared with 11 percent in 2010, according to the latest report from the Maricopa County Assessor's Office. Though 2011 is the fifth year of value declines, it also shows that the rate of annual decline in values continues to slow.
In 2009, metro Phoenix residential-property values fell 15 percent. In 2008, they plummeted 23 percent, the biggest drop of the prolonged retreat in home prices. In 2007, values declined 13 percent.
County Assessor Keith Russell said that the valuations homeowners receive in the mail next week could be better than some people expected and that next year's assessment could be even better.
"I am optimistic that the extreme price fluctuations we saw in single-family residential values are behind us," he said. "Home-price declines have to slow before they stop."
Russell said that, based on the slowdown in foreclosures and recent upticks in home prices in some parts of the Valley, some property owners could see an improvement in their home's value next year.
The property-valuation assessments going out now will be reflected in 2013 tax bills.
The overall median value of homes in the county fell to $109,100 from $118,100 in 2010.
Some Phoenix-area cities fared better than others. Home values declined slightly less than 1 percent in Tolleson, a community hit hard by the foreclosure crisis. But in Tempe, a city with a lower foreclosure rate, home values fell an average of 13.7 percent. That's the biggest 2011 home-value drop for any Valley city. However, past declines in Tempe home values have been in the single digits.
Maricopa County homeowners shouldn't count on a significant drop in their property taxes this fall. Many Valley municipalities and school districts are still facing budget gaps and will likely have to raise property-tax rates again, effectively wiping out any or most of a tax reduction that the lower valuations would suggest.
Property-tax bills, which are issued 18 months after valuations, are based on a complex formula that includes funding for municipalities and school districts. Most property-tax money is spent on education.
The annual tax bill that homeowners will receive this September will be based on 2010's valuation, not on the new figures released today. The lag is built into Arizona's property-tax process so homeowners can appeal their valuations if they believe the initial appraisal is too high or low.
Property owners can appeal their valuations with the Assessor's Office until April 17.
Russell's office received 3,300 residential-valuation appeals last year. About 25 percent of those appeals were successful, said Paul Petersen of the Maricopa County Assessor's Office.
About 1.5 million properties were valued by the county assessor during 2011. To appeal your home's 2011 assessment, go to www.maricopa.gov/assessor or call 602-506-3406.
Read more: http://www.azcentral.com/news/But based on home-price increases during the past few months, this could be the last of the declining numbers for some metro Phoenix homeowners.
Residential-property values fell an average of 7.6 percent in 2011, compared with 11 percent in 2010, according to the latest report from the Maricopa County Assessor's Office. Though 2011 is the fifth year of value declines, it also shows that the rate of annual decline in values continues to slow.
In 2009, metro Phoenix residential-property values fell 15 percent. In 2008, they plummeted 23 percent, the biggest drop of the prolonged retreat in home prices. In 2007, values declined 13 percent.
County Assessor Keith Russell said that the valuations homeowners receive in the mail next week could be better than some people expected and that next year's assessment could be even better.
"I am optimistic that the extreme price fluctuations we saw in single-family residential values are behind us," he said. "Home-price declines have to slow before they stop."
Russell said that, based on the slowdown in foreclosures and recent upticks in home prices in some parts of the Valley, some property owners could see an improvement in their home's value next year.
The property-valuation assessments going out now will be reflected in 2013 tax bills.
The overall median value of homes in the county fell to $109,100 from $118,100 in 2010.
Some Phoenix-area cities fared better than others. Home values declined slightly less than 1 percent in Tolleson, a community hit hard by the foreclosure crisis. But in Tempe, a city with a lower foreclosure rate, home values fell an average of 13.7 percent. That's the biggest 2011 home-value drop for any Valley city. However, past declines in Tempe home values have been in the single digits.
Maricopa County homeowners shouldn't count on a significant drop in their property taxes this fall. Many Valley municipalities and school districts are still facing budget gaps and will likely have to raise property-tax rates again, effectively wiping out any or most of a tax reduction that the lower valuations would suggest.
Property-tax bills, which are issued 18 months after valuations, are based on a complex formula that includes funding for municipalities and school districts. Most property-tax money is spent on education.
The annual tax bill that homeowners will receive this September will be based on 2010's valuation, not on the new figures released today. The lag is built into Arizona's property-tax process so homeowners can appeal their valuations if they believe the initial appraisal is too high or low.
Property owners can appeal their valuations with the Assessor's Office until April 17.
Russell's office received 3,300 residential-valuation appeals last year. About 25 percent of those appeals were successful, said Paul Petersen of the Maricopa County Assessor's Office.
About 1.5 million properties were valued by the county assessor during 2011. To appeal your home's 2011 assessment, go to www.maricopa.gov/assessor or call 602-506-3406.
Negotiation Need-to-Knows
Courtesy of Trulia
Article by Tara-Nicholle Nelson | Broker in San Francisco, CA
Reactions to the prospect of negotiating run the gamut, almost like a Rorschach of people’s comfort levels when it comes to thinking, talking and asserting themselves about money matters. Some people get so excited about haggling they adopt an entirely new persona when the time comes to talk their way into saving even a few bucks here or there. Others cringe at the mere thought of trying to suss out what’s going on in the minds of those on the other side of the bargaining table in order to strike a deal, even when hundreds of thousands of dollars (and their own best interests) are at stake.
And in light of the current market, it can seem like every real estate pundit you’ve ever seen on TV, the old guys from the Fed, Suze Orman, Jim Cramer - even the President! - have each pulled a chair up to the table and chimed into your transaction, too! Trying to factor market dynamics into your personal negotiation equation only ups the complexityfactor (and the fear factor to boot).
When it comes to buying or selling your home, there is a handful of negotiation need-to-knows that can go a long way toward protecting your best interests - and your cash! Here are five essential negotiation need-to-knows for savvy home buyers and sellers:
1. Work from a foundation of sound information. It’s essential that you amass an arsenal of information, and use that as the basis for your negotiation. You are in no position to negotiate, aggressively or otherwise, unless and until you are well acquainted with the real estate market immediately surrounding your home, including:
Not only will your agent help you understand these numbers and how they should relate to your own offer or response, your agent is also in a good position to reach out to the other agent and collect any available information about what is important to the other party: do they care more about moving quickly, getting top dollar, or certainty that the other side can close the deal? The other agent isn’t obligated to divulge any information but often will, in the interest of facilitating deal that addresses their client’s priorities.
Finally, it’s uber-critical to know what your own priorities are. Ultimately, the bar for whether your negotiation for your home is successful is based on what the home and the terms of the contract are worth to you. Know your own bottom and top line for price, and what your own priorities are, before the negotiation begins.
2. Approach the negotiation as a problem-solving challenge. Today’s negotiations are really more like problem solving scenarios, when you take into account all the parties whose needs must be met for the transaction to move forward. Traditionally, negotiations were a two-way power struggle between the buyer and seller, based primarily on their wants and their respective bargaining leverage. But on today’s market, the bank - or banks on both sides -- often have their own guidelines and needs that impact the terms of the deal, whether it be the seller’s lender insisting on a certain price in a short sale, or the buyer’s lender and appraiser refusing to lend anything above a certain price.
Many a buyer has thought they were scoring a great deal by scoring a bargain basement price on a short sale, only to have the seller’s bank condition approval of the deal on a massive increase in the sale price. And the opposite is also true: a significant number of the deals that fall apart on today’s market do so because the home fails to appraise for the purchase price the buyer has agreed to pay. Ultimately, this is even the case when it comes to the buyer’s and seller’s needs: if the buyer can’t qualify for a high enough mortgage, or the seller can’t pay their mortgage balance off, at the price in the other party’s mind, there will be no deal, and the negotiation is inherently unsuccessful.
In this context, it’s more important than ever to approach your negotiation as an exercise in problem solving, with the aim of meeting the needs of as many parties involved as possible. If you get some of your wants met, too, you’re golden!
3. Manage your own mindset.
You probably shouldn’t even try to buy a home that you don’t strongly like, or even love. It often makes sense to hone in on a specific offer price (within the range what is reasonable for a home) based on how much you want it, or how much you’d hate to lose it - especially in a multiple offer situation, where you may only have one chance to make an offer.
With that said, be aware that when it comes to negotiating, she who is the least emotionally attached to a particular outcome usually has the greater bargaining power. The more attached you are to a particular home or a particular price point or set of terms for your home, the more likely you are to panic, freak out, throw money at the situation or cave in on important points unnecessarily when you get even the faintest sense that your desires may be at risk.
When it comes to managing your own mindset and stamina through the course of a negotiation (uncertainty is tiring!), knowing what is and what isn’t within each party’s - control is key. Your agent can help you stay clear on this, which will help you avoid the emotional exhaustion that results from trying to negotiate things that are not really negotiable (e.g., the bank’s bottom line, cosmetic repairs on most foreclosures, etc.). On the flip side, knowing the full range of items that can be negotiated - which extends beyond price into areas like deposit amount, length of escrow, seller repairs, and whether the property is to be taken in as-is condition - empowers you to maximize how compelling your offer is to the other side, given the resources at your disposal.
4. Minimize time pressures.
Over the years, I have seen many a buyer and seller make brow-raisingly questionable offers and counteroffers based solely on the fact that they have to move by a certain deadline. Because shelter is a basic human need, the prospect of having to move out, relocating to a new job or moving to a new town without having housing in place can cause even the most nimble among us to feel ungrounded.
Problem is, in the context of buying a home, moving deadlines can cost you thousands and thousands of dollars - and can even cause you to make needless compromises in terms of the actual property itself: compromises you might later (deeply) regret. If you are approaching a deadline for moving out or relocating, you’d do better to find a rental housing situation that will work for awhile or will work as a Plan B than to try to hurry your home’s purchase or sale to meet the deadline.
5. Act and react quickly - not impulsively.
When you find ‘your’ place, make an offer. When you get an offer or counteroffer), respond to it. In real estate, time is always of the essence, and prolonged hesitation often results in lost opportunities. There’s nothing wrong with sleeping on a decision overnight, especially if the ‘right’ move is unclear. But you never know when another buyer or another property might show up on the scene and change the whole bargaining dynamic, costing you more money or wooing away your home’s buyer.
This is why it’s so important to be clear on the market data, your own budget and your own top and bottom lines from the start, so that you are positioned to act quickly, strategically and intelligently when the circumstances require it.
Article by Tara-Nicholle Nelson | Broker in San Francisco, CA
Reactions to the prospect of negotiating run the gamut, almost like a Rorschach of people’s comfort levels when it comes to thinking, talking and asserting themselves about money matters. Some people get so excited about haggling they adopt an entirely new persona when the time comes to talk their way into saving even a few bucks here or there. Others cringe at the mere thought of trying to suss out what’s going on in the minds of those on the other side of the bargaining table in order to strike a deal, even when hundreds of thousands of dollars (and their own best interests) are at stake.
And in light of the current market, it can seem like every real estate pundit you’ve ever seen on TV, the old guys from the Fed, Suze Orman, Jim Cramer - even the President! - have each pulled a chair up to the table and chimed into your transaction, too! Trying to factor market dynamics into your personal negotiation equation only ups the complexityfactor (and the fear factor to boot).
When it comes to buying or selling your home, there is a handful of negotiation need-to-knows that can go a long way toward protecting your best interests - and your cash! Here are five essential negotiation need-to-knows for savvy home buyers and sellers:
1. Work from a foundation of sound information. It’s essential that you amass an arsenal of information, and use that as the basis for your negotiation. You are in no position to negotiate, aggressively or otherwise, unless and until you are well acquainted with the real estate market immediately surrounding your home, including:
- what have similar homes recently sold for;
- how much above or below asking do they normally sell for;
- how long do homes stay on the market, on average, compared with the home you’re buying or selling?
Finally, it’s uber-critical to know what your own priorities are. Ultimately, the bar for whether your negotiation for your home is successful is based on what the home and the terms of the contract are worth to you. Know your own bottom and top line for price, and what your own priorities are, before the negotiation begins.
2. Approach the negotiation as a problem-solving challenge. Today’s negotiations are really more like problem solving scenarios, when you take into account all the parties whose needs must be met for the transaction to move forward. Traditionally, negotiations were a two-way power struggle between the buyer and seller, based primarily on their wants and their respective bargaining leverage. But on today’s market, the bank - or banks on both sides -- often have their own guidelines and needs that impact the terms of the deal, whether it be the seller’s lender insisting on a certain price in a short sale, or the buyer’s lender and appraiser refusing to lend anything above a certain price.
Many a buyer has thought they were scoring a great deal by scoring a bargain basement price on a short sale, only to have the seller’s bank condition approval of the deal on a massive increase in the sale price. And the opposite is also true: a significant number of the deals that fall apart on today’s market do so because the home fails to appraise for the purchase price the buyer has agreed to pay. Ultimately, this is even the case when it comes to the buyer’s and seller’s needs: if the buyer can’t qualify for a high enough mortgage, or the seller can’t pay their mortgage balance off, at the price in the other party’s mind, there will be no deal, and the negotiation is inherently unsuccessful.
In this context, it’s more important than ever to approach your negotiation as an exercise in problem solving, with the aim of meeting the needs of as many parties involved as possible. If you get some of your wants met, too, you’re golden!
3. Manage your own mindset.
You probably shouldn’t even try to buy a home that you don’t strongly like, or even love. It often makes sense to hone in on a specific offer price (within the range what is reasonable for a home) based on how much you want it, or how much you’d hate to lose it - especially in a multiple offer situation, where you may only have one chance to make an offer.
With that said, be aware that when it comes to negotiating, she who is the least emotionally attached to a particular outcome usually has the greater bargaining power. The more attached you are to a particular home or a particular price point or set of terms for your home, the more likely you are to panic, freak out, throw money at the situation or cave in on important points unnecessarily when you get even the faintest sense that your desires may be at risk.
When it comes to managing your own mindset and stamina through the course of a negotiation (uncertainty is tiring!), knowing what is and what isn’t within each party’s - control is key. Your agent can help you stay clear on this, which will help you avoid the emotional exhaustion that results from trying to negotiate things that are not really negotiable (e.g., the bank’s bottom line, cosmetic repairs on most foreclosures, etc.). On the flip side, knowing the full range of items that can be negotiated - which extends beyond price into areas like deposit amount, length of escrow, seller repairs, and whether the property is to be taken in as-is condition - empowers you to maximize how compelling your offer is to the other side, given the resources at your disposal.
4. Minimize time pressures.
Over the years, I have seen many a buyer and seller make brow-raisingly questionable offers and counteroffers based solely on the fact that they have to move by a certain deadline. Because shelter is a basic human need, the prospect of having to move out, relocating to a new job or moving to a new town without having housing in place can cause even the most nimble among us to feel ungrounded.
Problem is, in the context of buying a home, moving deadlines can cost you thousands and thousands of dollars - and can even cause you to make needless compromises in terms of the actual property itself: compromises you might later (deeply) regret. If you are approaching a deadline for moving out or relocating, you’d do better to find a rental housing situation that will work for awhile or will work as a Plan B than to try to hurry your home’s purchase or sale to meet the deadline.
5. Act and react quickly - not impulsively.
When you find ‘your’ place, make an offer. When you get an offer or counteroffer), respond to it. In real estate, time is always of the essence, and prolonged hesitation often results in lost opportunities. There’s nothing wrong with sleeping on a decision overnight, especially if the ‘right’ move is unclear. But you never know when another buyer or another property might show up on the scene and change the whole bargaining dynamic, costing you more money or wooing away your home’s buyer.
This is why it’s so important to be clear on the market data, your own budget and your own top and bottom lines from the start, so that you are positioned to act quickly, strategically and intelligently when the circumstances require it.
Tuesday, February 14, 2012
Happy 100th Birthday, Arizona!
Yes, I DO love you, Arizona! So happy to have had the opportunity to raise our sons here! For those who haven't had the opportunity to visit this amazing state, you must put it on your bucket list!
And, by the way, HAPPY VALENTINE'S DAY, too!
National Mortgage Settlement: What You Need To Know
Courtesy of Keeping Current Matters/The KCM Blog
Posted: 13 Feb 2012 04:00 AM PST
Last week, the Federal government and 49 state governments (Oklahoma being the exception) agreed to a $25 billion settlement regarding robo-signing and the challenges it created in the foreclosure process. We want to give a synopsis of the settlement and some perspective on what effect it will have on the housing market in 2012.
$17 Billion National Commitment to Foreclosure Relief Efforts
The servicers collectively agree to commit a minimum of $17 billion directly to borrowers through foreclosure relief effort options, including principal reduction for qualifying borrowers, short sales, anti-blight measures, and enhanced homeowner transition programs.
$3 Billion National Commitment to Underwater Mortgage Refinancing Program
The servicers collectively agree to commit $3 billion to refinance “underwater” homes (when a homeowner owes more on a mortgage than a home’s current market value). To qualify, borrowers must be current on their mortgage payments on a mortgage owned by one of the five banks.
$5 Billion Payment to States and Federal Government
The servicers’ $4.25 billion payment to the states includes $1.5 billion for payments to borrowers who lost their home to foreclosure by one of the five servicers…$750 million of the state-federal payment will go to the federal government to resolve federal claims.
For further details on the settlement you can go to the official website.
IHS Global Insights
Housing Wire
Posted: 13 Feb 2012 04:00 AM PST
Last week, the Federal government and 49 state governments (Oklahoma being the exception) agreed to a $25 billion settlement regarding robo-signing and the challenges it created in the foreclosure process. We want to give a synopsis of the settlement and some perspective on what effect it will have on the housing market in 2012.The Basics
The $25 billion in funds will be dispersed as follows:$17 Billion National Commitment to Foreclosure Relief Efforts
The servicers collectively agree to commit a minimum of $17 billion directly to borrowers through foreclosure relief effort options, including principal reduction for qualifying borrowers, short sales, anti-blight measures, and enhanced homeowner transition programs.
$3 Billion National Commitment to Underwater Mortgage Refinancing Program
The servicers collectively agree to commit $3 billion to refinance “underwater” homes (when a homeowner owes more on a mortgage than a home’s current market value). To qualify, borrowers must be current on their mortgage payments on a mortgage owned by one of the five banks.
$5 Billion Payment to States and Federal Government
The servicers’ $4.25 billion payment to the states includes $1.5 billion for payments to borrowers who lost their home to foreclosure by one of the five servicers…$750 million of the state-federal payment will go to the federal government to resolve federal claims.
For further details on the settlement you can go to the official website.
Will the Settlement Have a Major Impact on a Housing Recovery?
Probably not. Though it is a step in the right direction, it may be too little too late. Here are some opinions on the settlement:IHS Global Insights
“Like many previous plans to stem foreclosures, this agreement will help at the edges. The problem is too big for it to have a large impact, however…This agreement will help the housing market move ahead in 2012 in a small way. But it is hardly a game changer.”HSH.com
“While there is no doubt some benefit to formalizing and organizing the process of foreclosure and better monitoring of the process, the fact is that the settlement changes little.”Capital Economics
“While it is good that the settlement has been finalized and will offer principal reductions and refinancing schemes to borrowers, the bigger picture is that the settlement is not large enough to dramatically alter the outlook for the housing market or the wider economy.”
What about Foreclosures Moving Forward?
The settlement did bring clarity to one major issue – foreclosures. Banks have been holding off the foreclosure process on millions of homes over the last 18 months as they waited for the particulars of the settlement. They now know how they can move forward without penalty. The result will be an increase in foreclosures coming to the housing market.Housing Wire
“It will speed up processing, and perhaps mean that foreclosures that have been waiting around since robo-signing came to light in 2010 will now gain legitimacy.”Calculated Risk
“It does appear the number of completed foreclosures will increase following this settlement – especially in some judicial states with large backlogs – so there will probably be more REOs (lender Real Estate Owned) for sale.”Bloomberg News
“The $25 billion settlement with banks over foreclosure abuses may result in a wave of home seizures…Lenders slowed the pace of foreclosures as they negotiated with attorneys general in all 50 states for more than a year over allegations of faulty and fraudulent paperwork used to repossess homes. With yesterday’s agreement, banks are likely to resume property seizures.”Wells Fargo
“Mark Vitner, a senior economist at Wells Fargo Securities, said the settlement helps the housing market in the long run because it allows banks to proceed with millions of foreclosures that have been stalled. Many lenders have refrained from foreclosing on homes as they awaited the settlement.”
9 Documents That Help You Reap Real Estate Tax Breaks
Courtesy of Trulia.com
Article by By Tara-Nicholle Nelson | Broker in San Francisco, CA
Technically speaking, April 15th is tax day. But for Americans who expect a refund - including many homeowners who want to cash in on real estate-related tax perks - filing sooner holds the promise of getting that check in hand, stat. If you count yourself in that number, here’s a handy guide for 9 pieces of paper you should be sure to round up as you prepare to file, in order to reap every penny of the tax rewards you’ve earned by virtue of owning a home.
(If you haven’t received yours yet, most lenders that have online account management services also post the form digitally in your secure account on the web. Just login like you would to make your monthly payment, and look for a notice that says you can now download your 2011 Form 1098.)
Article by By Tara-Nicholle Nelson | Broker in San Francisco, CA
Technically speaking, April 15th is tax day. But for Americans who expect a refund - including many homeowners who want to cash in on real estate-related tax perks - filing sooner holds the promise of getting that check in hand, stat. If you count yourself in that number, here’s a handy guide for 9 pieces of paper you should be sure to round up as you prepare to file, in order to reap every penny of the tax rewards you’ve earned by virtue of owning a home.
- Mortgage Interest Statement - IRS Form 1098. The meatiest real estate tax deduction on the books is the one that allows you to deduct 100 percent of the mortgage interest you paid in a year - including prepaid interest or points you might have paid at close of escrow, if you bought a home last year. By now, you should have received in the mail a Form 1098 from your mortgage lender that reports how much that interest totaled up to in 2011. If you itemize your taxes and claim a mortgage interest deduction, you must include this form with your tax form when you file.
- Property Tax Statements. In addition to deducting your mortgage interest, if you own a home you are eligible to deduct the property taxes you pay to your local city, county and/or state. You are not allowed to deduct some of the other miscellaneous expenses that some localities bundle up with the taxes they collect, like waste management and local assessments for things like street lighting,libraries and sidewalk construction. To get this deduction right, the best practice is to have your property tax statements at hand and make sure you’re only deducting what’s allowed.
- Uniform Settlement Statement (HUD-1). If you bought or sold a home last year, right after closing you should have received a form called the HUD-1 Settlement Statement (hint: it’s usually on legal-sized paper and contains an accounting of credits and debits for you and your home’s buyer or seller). That form documents a number of line items which might help you out at tax time, including prepaid interest, the prorated property taxes you paid at closing, and closing costs like original fees and discount points. Some states offer tax credits for buying a foreclosure; check with your tax pro to find out if any such credits apply to you. If so, this statement might be your ticket to lower taxes.
- Moving Expense Receipts. Moving expenses are tax deductible, if your move is closely related, both in time and in place, to the start of work at a new or changed job location and you meet the IRS’ time and distance tests. Long story short, your new home must be at least 50 miles farther from your new workplace than your old home was from your prior place of work, and you must work essentially full-time. So, if you bought or sold a home and moved in 2011, you’ll need to include receipts from expenses you incurred making the move (meals not included) in your tax prep paperwork.
- Cancellation of Debt Statement - IRS Form 1099. Homeowners who lost a home to foreclosure, or divested of one by negotiating a short sale or deed in lieu of foreclosure with their lender might receive some version of Form 1099 from their lenders, charging them with income in the amount of the mortgage debt that has been cancelled. You see, if you borrow money from someone, then they cancel the debt, that money you originally borrowed becomes income in the eyes of the IRS - and income is, as you know, taxable.
- Utility statements for home office. For the average everyday homeowner who works at their employer’s place of business, utilities are not deductible (sorry!). But if there is a part of your home that is “regularly and exclusively” used for business, you might be able to claim that portion of your home as a home office, and deduct some portion of your home utilities and costs of painting and repairs, as a result.Talk with your tax provider about what expenses are allowable to be claimed under your home office deduction, and whether or not you should take it.
- Income and Expense statements from rental properties. Some of you have elevated the art of home ownership to a business! If you are a landlord, your tax situation is more complicated than that of the average bear; you’ll need to have complete income and expense statements when you put your tax returns together. It might actually behoove you to consult with a tax professional to make sure you are appropriately depreciating the property over time and not taking deductions that will expose you to the risk of audits, as well as to begin cultivating a long-term tax strategy for your real estate portfolio.
- Contractor receipts from energy efficient home improvements. Under the Nonbusiness Energy Tax Credit, homeowners who have made improvements to their homes that fall within a list of energy efficient upgrades might be eligible to claim tax credits. If, during 2011, you installedenergy efficient improvements such as insulation, new dual-paned windows and furnaces, you might be eligible for a tax credit of 10 percent of the cost of these upgrades, up to $500 - only $200 of which may be used to offset the cost of windows.
- Mortgage Credit Certificate (MCC). If you own a home you bought in the last few years using a Mortgage Credit Certificate issued by a local housing authority, that Certificate may entitle you to a pretty hefty tax credit, based on a percentage of the mortgage interest you paid - on top of your mortgage interest deduction. MCCs apply as long as you live in the home and have a mortgage on it, but they only apply to defray taxes you actually owe - you can’t use them to get a refund. In any event, your mortgage credit certificate, if you have one, is a must-have document as you start putting your tax prep plan in play.
Wednesday, February 1, 2012
Home Affordable Refinance Program (HARP 2) and Obama's Proposed Program for Non-Fannie Mae or Freddie Mac Loans
Today there are a huge number of homes in the United States with a market value that is less than what is owed on the home (commonly referred to as being "underwater"). Currently about 70% of all homes in the U.S. have a mortgage and about 24% of those are underwater. According to the U.S. census, there are 75 million owner-occupied homes in America, with about 12 million being "underwater." Sadly, a large number of those homeowners lose their homes to foreclosure or must sell their homes through a "Short Sale," walking away with nothing. But, there are many homeowners out there who, in spite of being "underwater" continue to pay their mortgages each month at rates well above the available current rates. For those who may not be aware, there is currently a program in place called "Home Affordable Refinance Program" or HARP 2, that makes it possible for some homeowners with loans owned by Fannie Mae or Freddie Mac to refinance to current rates, if they qualify. Today, President Obama called for a similar program for loans not owned by Frannie or Freddie. Congress must vote on the latter program and there is no guarantee that it will pass. It's likely that this political issue will keep them arguing for a long time...
Today's Topics includes information on the HARP 2 program and President Obama's proposed plan. If you or someone you know have a loan that is owned by Fannie or Freddie, be sure to review the information and see if you might quality to refinance.
Be sure to check out the January Housing Trends Newsletter that is posted at my website.
Home Affordable Refinance Program (HARP)
Source: Making Home Affordable.Gov
Eligibility
You may be eligible for HARP if you meet all of the following criteria:
Program Availability
- The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
- The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
- The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.
- The current loan-to-value (LTV) ratio must be greater than 80%.
- The borrower must be current on the mortgage at the time of the refinance, with a good payment history in the past 12 months.
Program Availability
Ask your mortgage servicer (the company to which you make your mortgage payments) if they participate in HARP. Not all mortgage servicers do. Contact Fannie Mae or Freddie Mac for help in determining if you may be eligible for HARP.
Program ends December 31, 2013.
Program ends December 31, 2013.
Steps to HARP Refinance
- Determine whether your mortgage is owned or guaranteed by Fannie Mae or Freddie Mac by visiting their respective Loan Lookup Tools.
- Contact your current mortgage servicer or another that is approved by Fannie Mae or Freddie Mac to inquire about HARP.
- Compare rates and costs with additional mortgage companies to ensure best refinance terms.
For More Information
- Visit FannieMae.com or call (800)7Fannie.
- Visit FreddieMac.com, call (800)Freddie.
- If you have additional questions about getting mortgage help, contact one of our housing experts at 888-995-HOPE (4673). These HUD-approved housing counselors will help you understand your options, design a plan to suit your individual situation and prepare your application. Research shows that homeowners who work with housing experts like these are more successful and have better long-term outcomes. There is no cost to you for this valuable, around-the-clock service. Help is available in more than 160 languages.
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Obama Plans Assistance for Rentals, Mortgage Refinancing
Source: Bloomberg Business Week
Article by Lorraine Woellert
Article by Lorraine Woellert
Feb. 1 (Bloomberg) -- President Barack Obama announced a package of proposals designed to jolt the housing market, his latest effort to reignite the economy after four years of foreclosures and falling home prices.
“This housing crisis struck right at the heart of what it means to be middle class in America: our homes,” Obama said in a speech in the Washington suburb of Falls Church, Virginia. “We need to do everything in our power to repair the damage and make responsible families whole.”
The president said his plan would make it easier for homeowners to refinance their mortgages into current low interest rates, which are now below 4 percent. Borrowers, even those who owe more than their homes are worth, would be able to refinance into loans guaranteed by the Federal Housing Administration.
To pay for the program, Obama will ask Congress for a tax on financial companies with more than $50 billion in assets. Congress has refused to act on similar requests twice in the last two years.
“No more red tape, no more runaround from the banks,” Obama said. “A small fee on the largest financial institutions will make sure that it doesn’t add to the deficit.”
More Disclosure
In addition to the refinancing plan, Obama laid out actions that the administration will take without congressional approval. One is a Homeowners Bill of Rights, which will make it easier to shop for a loan by simplifying mortgage forms and improving disclosures on costs and fees. The Consumer Financial Protection Bureau last year began work to establish standards.
Obama also is promoting a pilot program to sell foreclosed properties in bulk to investors who maintain the homes as rentals. It will be limited to homes owned by Fannie Mae, the mortgage company under government conservatorship.
In a separate announcement, the Federal Housing Finance Agency, which is independent of the Obama administration, said it will auction blocks of properties. It invited real estate investors to apply to bid.
To qualify, investors must show financial wherewithal and experience and agree to keep “certain information” about the program confidential. Investors may apply at www.homepath.com/
Investment in Foreclosures
“This is an important step toward increasing private investment in foreclosed properties to maximize value and stabilize communities,” FHFA Acting Director Edward J. DeMarco said today in a press release.
Obama spoke in Virginia, a state that is expected to be an important election battleground. The economy will be the main issue as Obama seeks a second term in the November election and the president indirectly sought to draw a contrast on the housing issue with the leading candidate for the Republican nomination, Mitt Romney.
The former Massachusetts governor last year told the Las Vegas Review-Journal in Nevada that he wouldn’t intervene.
“Let it run its course and hit the bottom,” Romney said in an interview published Oct. 17. “Allow investors to buy homes, put renters in them, fix the homes up and let it turn around and come back up.”
Obama today said “it is wrong for anyone to suggest that the only option for struggling responsible homeowners is to sit and wait for the housing market to hit bottom.”
Dropping Values
Residential real estate values have dropped 33 percent from their July 2006 peak and have left about 11 million households underwater, or owing more on their homes than the properties are worth. Earlier this month, the Federal Reserve Board called the housing market “depressed.”
Today’s announcement adds to a mosaic of existing programs aimed at boosting the housing market, which is entering its fourth year of weak sales and high foreclosures.
House Speaker John Boehner criticized the president’s latest proposal as more of the same.
“How many times have we done this?” Boehner said. “I don’t know why anyone would think that this next idea is going to work.”
Previous efforts have done nothing but “delay the clearing of the market,” the Ohio Republican said.
Streamlining
The streamlined refinancing, if it wins funding from Congress, would make new mortgages less expensive and limit paperwork. Appraisals and tax returns would not be required, according to the White House fact sheet.
“A lender need only confirm that the borrower is employed,” according to the document. Unemployed borrowers might qualify for the loans if they meet other credit requirements.
The proposal could save borrowers an average of $3,000 a year, Obama said. The program is open only to “responsible” homeowners current on their payments and with no more than one delinquency in the previous six months.
“This plan, like the other actions we’ve taken, will not help the neighbors down the street who bought a house they couldn’t afford, then walked away and left a foreclosed home behind,” Obama said. “It will not help those who bought multiple homes just to speculate and make a quick buck.”
Loan Eligibility
Loan applicants must have a credit score of 580 or higher to be eligible and occupy the property they want to finance.
Loans must not exceed FHA lending limits, which range from $271,050 to $729,750, depending on the location of the purchase property. Borrowers who are underwater, or owe more than their home is worth, would be eligible to apply for the loans if they met other requirements.
The FHA, created in 1934 with the goal of expanding homeownership for under-served communities, charges lenders and borrowers a fee in exchange for a guarantee that mortgages will be paid. The agency has grown rapidly since the 2008 subprime lending collapse and now insures more than a third of U.S. mortgages. At the same time, the agency’s cash reserves hit a record low of $2.6 billion last year.
Since the 2008 subprime lending collapse, the FHA has paid $37 billion in claims related to defaulted mortgages, according to an independent audit released in November.
In a separate announcement last week, Obama expanded the Home Affordable Modification Program, or HAMP, relaxing rules on loan modifications and tripling incentives to banks to help homeowners lower their interest rates and shed mortgage debt.
The revision, which would be funded with about $20 billion in unobligated TARP money, would pay Fannie Mae and Freddie Mac to forgive debt on devalued homes. The companies, which were taken under government conservatorship in 2008 amid massive losses, so far have refused to reduce mortgage debt for distressed borrowers.
Article written with assistance from Hans Nichols, James Rowley and Roger Runningen in Washington. Editors: Joe Sobczyk, Steven Komarow
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