Saturday, February 28, 2009

$10,000 California tax credit for new home purchases

A tax credit has been approved for people who buy brand new homes until March 1, 2010or when the $100 million dollars allocated has been exhausted, whichever comes first. It’s estimated that only about 10,000 home buyers will receive the credit.

The California tax credit is $10,000 or 5% of the home’s purchase price if the buyer certifies that they will live in the home for at least two years and that the home will be their principal residence. Buyers will receive the credit over three years or $3,333 per year.

Home buyers could qualify for both the federal and California credit programs if they meet all the requirements.

The Franchise Tax Board’s website will track how much of the $100 million is still available starting soon.

Saturday, February 21, 2009

Homeowner Affordability and Stability Plan announced

The news is full of information on the new plan to help homeowners in trouble. Click here for a link to a great chart of who will qualify per a New York Times article.

We received the update below from the National Association of Realtors that discusses in detail the latest help planned for homeowners in trouble:

On February 18, 2009, President Obama announced his Homeowner Affordability and Stability Plan, designed to help up to 7-9 million families avoid foreclosure by restructuring or refinancing their mortgages. There are three main elements.

1. GSE Refinancing for Responsible Homeowners Suffering from Falling Home Prices.
Fannie Mae and Freddie Mac (the government sponsored enterprises, or GSEs) will refinance the mortgages for 4-5 million homeowners with loans owned or guaranteed by the GSEs. The streamlined refinancing program is designed to help borrowers with loan-to-value ratios above 80 percent up to 105 percent.

2. $75 Billion Homeowner Stability Initiative to Reach up to 3 to 4 Million At-Risk Homeowners
The goal of the 3-year Homeowner Stability Initiative is to reduce the monthly payment of homeowners to affordable levels using $75 billion from TARP and the GSEs. The program will be available for home owner-occupants “at risk of imminent default” even if they are current in making mortgage payments, as well as those already delinquent. It will only apply to mortgages at or below the GSE conforming loan limits.

Key elements of the plan:
· The lender world first be required to reduce rates, without assistance, so the monthly payment does not exceed 38 percent of borrower income (debt-to-income ratio of 38 percent). After that, federal assistance would be used to match, on a dollar-for-dollar basis, further reductions to bring the debt-to-income ratio down to 31 percent.
· After 5 years, the rate could increase gradually to the loan rate in effect at the time of the modification.
· Lenders may reduce monthly payments by reducing principal. Federal assistance would share the cost (up to the amount the lender would receive for reducing interest rates).
· As an incentive to loan servicers, they will receive $1,000 up front for each qualified loan modification. For borrowers who stay current on the modified loan, servicers will receive a monthly “pay for success” fees up to $1,000 a year for 3 years.
· As an incentive to borrowers, borrowers will receive a monthly reduction in their mortgage balance, up to $1,000 a year for 5 years.
· As an additional incentive to help borrowers avoid going into delinquency, servicers will receive $500 and mortgage holders will receive $1,500, if they modify at-risk mortgages before the borrower becomes delinquent.
· As an incentive for lenders to modify more mortgages, the Obama plan—together with the FDIC—has developed a partial guarantee initiative. The Treasury Department will establish an insurance fund of up to $10 billion to discourage lenders from foreclosing on mortgages, by limiting their lose if home prices decline more than expected. Mortgage holders of modified mortgages could receive a payment on each modified loan, linked to home price index declines.
· Treasury will establish uniform guidelines for loan modifications, working with bank regulators and the FDIC. All financial institutions receiving Financial Stability Plan assistance will have to agree to follow the guidance. The GSEs will use the guidance for their loans, and the government will work to apply them “when permissible and appropriate” to all federally owned or guaranteed loans, including Ginnie Mae, FHA, Treasury, Federal Reserve, FDIC, VA and Agriculture loans.
· The plan includes other elements, including:
o Strong oversight .
o “Allow Judicial Modification of Home Mortgages During Bankruptcy for

Borrowers Who Have Run Out of Options.” Only mortgages under GSE loan limits would qualify. Homeowners must first seek a loan modification. Legislation is needed. The plan also anticipates legislation to give FHA and VA authority to pay partial claims if there is a bankruptcy or voluntary loan modification so holders of FHA and VA guaranteed loans are not hurt.
o Funding for displaced renters and neighborhood stabilization.
o Improving Hope for Homeowners and other FHA programs.

3. Supporting Low Mortgage Rates by Strengthening Confidence in Fannie Mae and Freddie Mac
The Obama Plan beefs up the current support for the GSEs.
· The Treasury Department is doubling, from $100 billion to $200 billion for each GSE, its pledge to invest money to make sure that the GSEs maintain a positive net worth. This will further assure that the federal government is committed to maintaining the mission of the GSEs. In a statement issued today, Director Lockhart described this mission as “providing much-needed liquidity, stability and affordability to the housing market at this time.” He went on to say that doubling the commitment “should remove any possible concerns debt and mortgage-backed securities investors have about the strong commitment of the U.S. Government to support Fannie Mae and Freddie Mac.” He expects the increased commitment to help keep interest rates low, which will help both current and future homeowners. The additional $200 billion is from HERA in connection with the conservatorship, not from the Financial Stability Plan or TARP.
· Treasury will continue to buy GSE MBSs, as announced when the GSEs were placed into conservatorship.
· The GSEs will be able to increase their portfolios by $50 billion to $900 billion, and increase their outstanding debt.
· The Administration will work with the GSEs to support state housing finance agencies.

Monday, February 16, 2009

2009 Stimulus Package Details Emerging

President Obama is scheduled to sign the American Recovery and Reinvestment Act of 2009 tomorrow in Colorado. Details of the $787 billion dollar plan are slow to surface but here are the top real estate related tidbits as currently being reported.

Homebuyer Tax Credit – The bill provides for an up to $8,000 tax credit (capped at 10 percent of the home price or $8,000) that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. The tax credit phases out for individuals earning more than $75,000 and couples earning more than $150,000.

The credit does not require repayment. Most of the mechanics of the credit will be the same as under the 2008 rules: the credit will be claimed on a tax return to reduce the purchaser's income tax liability. If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.

FHA, Fannie Mae and Freddie Mac Loan Limits -The bill reinstates last year's 2008 loan limits for FHA, Freddie Mac, and Fannie Mae loans. These limits were equal to the greater of 125% of the 2008 local area median home price or $271,050 for FHA and $417,000 for Fannie and Freddie, with an overall maximum cap of $729,750. For the few areas where the 2009 limits were higher, the higher limits will apply. In addition, the bill includes language providing the HUD Secretary with the discretion, if warranted, to increase the loan limit for any “sub-area”, i.e. an area smaller than a county. The Secretary's discretion is again limited by the $729,750 cap. These 2009 limits will expire December 31, 2009.

The inclusion of these loan limit provisions in the final bill is a victory for homeowners, buyers and Realtors. While these new limits were included in version of the original stimulus bill approved by the House, the bill first approved by the Senate did not.

Energy Efficient Housing Tax Credits & Grants - Through 2010, homeowners will be able to claim a 30% tax credit up to $1,500 (up from 10%) for purchases of new furnaces, windows and insulation. There is also $5 billion for weatherization assistance for low income households and $2 billion for federally assisted housing (section 8) efficiency efforts.

Wednesday, February 11, 2009

Decline on Property Value Tax Reduction Alert:

The San Mateo County Assessor's Office asked the San Mateo County Sheriff's
 Office to send out the following cautionary note regarding unsolicited
 property tax reduction offers.

In the past week, San Mateo County property owners have been blanketed with 
solicitations from private companies that are luring people to spend money 
to reduce their property taxes. These companies cannot guarantee reduction 
in property taxes to anyone. The law establishes which properties are 
eligible for this property tax relief program known as a "Decline in Value."

A "Decline in Value" request is FREE to any homeowner. We need your help to get the word out--tell your constituents, employees, friends, neighbors and 
family NOT to get ripped off--do NOT pay for these services. If anyone 
should ask, this is how the Decline in Value program works: 

First, a property owner requests a Decline in Value review by filling out a
 simple form and sending to the Assessor's office (online, by fax, mail or in
 person). It only takes a couple of minutes to complete.

Second, our offices review the request. If a property's assessed value is more than its market value as of Jan. 1, the property owner will be eligible 
for a temporary reduction in assessed value. We will start the process that
 will lower their property tax bill or earn them a property tax credit.

Third, if the property is ineligible for relief, we will advise the owner as 
to why their property did not qualify for a reduction.

Where can someone get a form? Decline in Value request forms are available
 online and in downloadable paper formats from our web site at We will also mail them to a property owner and forms are
 available in our office if a person stops by.

And lastly, properties that are reduced are reviewed by the office on an 
annual basis. If the property continues to qualify, it will remain on the 
program in future years until the property's value is regained.

Please help us spread the word. I've attached the press release that we sent 
to the media and samples of the solicitations. You will note that is very
 professional looking and that is why it may snare unsuspecting property 
owners into this scam.

Thank you,

Warren Slocum