The FAR Office of Public Policy has been getting a lot of questions from across the state regarding downpayment assistance for those who qualify for the federal first time homebuyer tax credit. Given that there is a state downpayment plan and a federal downpayment plan (and at least one special exemption) it definitely gets confusing, and details have been slow to emerge. Many of you are finding that local housing authorities just don't have all of the information they need to move forward and some are reporting that bankers are steering clear of the downpayment assistance programs. We have some brand new information for you tonight (see bold).
The state program was passed during the recent legislative session as part of the 2010 budget. That bill takes effect July 1, 2009 (tomorrow). The downpayment assistance program that is specific to Florida is the Florida Homebuyer Opportunity Program (FLHOP). The federal program is through FHA.
The state program, FLHOP, is intended to help Floridians maximize the $8,000 federal first-time homebuyer tax credit by allowing local housing authorities to make "bridge loans" to consumers.
If the local housing authority is the originator of the loan this tax credit may be used as part of the downpayment. In fact, Florida Housing Finance Corporation has received word from FHA that borrowers who access the $8,000 tax credit through a state or local government program may use it to make up the required 3.5% downpayment. Those who access through any other FHA-approved lender must (as with any standard FHA loan) provide the 3.5% themselves which you can read more about below.
For local housing authorities this program is very similar to SHIP - with one major difference - the income limits. Currently, SHIP uses Area Median Income (AMI) and those are typically lower, and calculated differently, than the federal tax credit limit of $75,000. The $75,000 for a single income tax filer, and $150,000 limit for joint filers, will be used for this program.
Florida Housing Finance Corporation (FHFC) insists they are training the local administrators on how to proceed with this program. Local housing authorities will have the ability and flexibility to amortize this $8,000 loan, and include penalties if need be, and restructure the repayment option. Most importantly, local governments and housing authorities should know that when repaid, the money stays with the locals as SHIP money that they may use according to standard procedure. This is a win/win for them. Also, the local government gets the standard 10% off the top for administration of this program. If you are getting push back from your local housing administrator at this point it is likely because they still don't quite understand the program themselves.
While we are anxious to get word of this program to our members, one problem that may be unavoidable is that money may not be "out the door" until the first week of August. Given that the new fiscal year begins July 1st new monies (via doc stamps) must be collected before they can be distributed. Even though FHFC appealed to the Chief Financial Officer, they say there was no way to get around this technical issue. We know it'll take time to close on a house anyway so it is not too soon for our members to start talking about this program to potential buyers who qualify. In fact, SHIP administrators should be taking applications NOW for the advance on the tax credit. Some may even have unspent money as part of their SHIP program from last year that could be used until the new money is available.
Now, on to the federal downpayment assistance that is being offered. NAR has provided information on how FHA is going to allow buyers to "advance" the tax credit. FHA-approved lenders have received the go-ahead to develop bridge-loan products that enable first-time buyers to use the benefits of the federal tax credit upfront.
FHA-approved private lenders can develop these bridge loans that home buyers can use to help cover their closing costs, buy down their interest rate, or put down more than the minimum 3.5 percent. The loans cannot be used to cover the minimum 3.5 percent needed for a downpayment on an FHA loan except in the special circumstance I mentioned above where the state or local government is the loan originator and there is not a private lender involved.
Good resources for you are the "Homebuyer Center" on our website and NAR's dedicated page to the First Time Homebuyer Tax Credit. As more information becomes available, we will certainly send updates and include them in Earlybird.
I hope this is helpful and answers some of your questions as the program gets off to a slow start.
John M. Sebree
Vice President - Public Policy
Florida Association of REALTORS®
P.O. Box 1853
Tallahassee, FL 32302
850-224-1400 (Office)
This message sent to cityrentals305@gmail.com by news@miamidaderealtors.
Wednesday, July 1, 2009
Tuesday, June 16, 2009
Home inventories poised to rise
South Florida Business Journal - by Brian Bandell
The sales agents dealing with South Florida’s huge inventory of available properties might feel like they’re running on a giant treadmill powered by foreclosures.
And they’d better be ready to keep running.
Although a recent spike in sales has cut the inventory of homes for sale, there’s a glut of tens of thousands of foreclosure lawsuits pending against properties that are not listed for sale.
Until bank repossessions wane and mortgages become more widely available, property values might start stabilizing, but they won’t recover, said Keith Fleischer, a broker at the Weston office of Keith Owen REO Collection, a Re/Max International subsidiary that helps banks sell repossessed homes.
Banks often contact REO Collection about selling a home shortly before or shortly after it is seized through foreclosure. The company gets its name from the acronym banks have for their foreclosed property – real estate owned.
While REO Collection has a pretty decent amount of active listings, it has a huge board of pre-listings set for the market, Fleischer said.
“We’re going to see an increase in available new REO listings on the market,” he said.
Statistics seem to follow that logic, as banks are filing foreclosure actions faster than they are taking back homes and putting them on the market.
According to court data analyzed by Bal Harbour-based Condo Vultures Realty, there were 7,311 property repossessions in South Florida in the first quarter and 25,263 new foreclosure filings.
A study by the Mortgage Bankers Association suggests the state may be only halfway through the mess. Of the more than 3.5 million mortgages the MBA tracks in Florida, 10.6 percent were in the foreclosure process and an additional 10.7 percent were past due on March 31.
Dealing with the backlog
“The inventory of homes for sale will substantially increase. All you need to do is look at how many pending foreclosures there are,” said Bill McCaughan, an attorney with K&L Gates in Miami who represents banks in foreclosures. “There’s no question that the volume itself causes a time lag to list properties.”
Even if it’s clear that a property will become bank-owned, the backlogged South Florida courts and the bank employees overloaded with these cases make it a lengthy process, McCaughan said. Regulations, such as the mandatory inspections before REO home sales required by Miami-Dade County, only slow it down further, he said.
Condo Vultures principal Peter Zalewski said some banks are purposely delaying the foreclosure process because they don’t want to take ownership of homes and pay to maintain them while the market is near the bottom.
“Banks want to hold back on inventory to let the inventory be depleted so they can get higher pricing,” he said. “We’re seeing inventory being depleted because not all of the foreclosures are on the market.”
Much of the pain has already played out in the subprime mortgages, but several other factors continue pushing people into foreclosure. Unemployment is near a record high, and every percentage-point increase in the unemployment rate increases the probability that people will become seriously delinquent on their mortgage by 10 percent to 20 percent, according to a research paper published in May by the Federal Reserve Bank of Atlanta.
Payment option ARM issues
Add to that more toxic mortgages. Nationwide, there are about $500 billion in outstanding payment option adjustable-rate mortgages (ARM), where borrowers can pay only a portion of the monthly interest and let the size of the mortgage grow. When the value balloons by 15 percent or 25 percent – and the borrower is under water – the loan resets and requires both interest and principal payments, which can double the monthly payments.
A report issued in April by Credit Suisse predicted that these resets would start accelerating in the spring of 2010 until they reach a peak of $14 billion in option ARMs resetting in September 2011. They would not taper off until near the end of 2012.
The delinquency rates on those loans are so high that it helped push several option ARM-heavy banks, such as BankUnited FSB and Washington Mutual, into failure.
While the initial wave of defaults of subprime mortgages put many modest and lower-tier homes and condos on the market, the next wave of foreclosures from option ARMs and unemployment will include more top-shelf homes, said Bradley Hunter, director of the South Florida market for real estate analysis firm Metrostudy in West Palm Beach. That will give buyers more attractive targets.
Hunter believes that the median housing price could rise when those nicer homes start getting sold off by the banks, but it would be a false positive. The average sales price might increase because larger homes are getting sold more often, but the discounts based on past sales would remain – or even widen, he said.
“The downward pressure on prices continues and will continue well into next year,” Hunter said. “We are most of the way through the price adjustment. We probably only have another 10 percent [decline] more to go.”
Condo associations troubled
REO Collection’s Fleischer said single-family homes prices have nearly stabilized and will remain around this level for the next few years, but condo prices could fall further because of the crippling effects missed association dues are having on condo associations. The ailing condition of some condo associations makes the Federal Housing Administration and most banks rule out lending in those complexes, Fleischer said.
The sales agents dealing with South Florida’s huge inventory of available properties might feel like they’re running on a giant treadmill powered by foreclosures.
And they’d better be ready to keep running.
Although a recent spike in sales has cut the inventory of homes for sale, there’s a glut of tens of thousands of foreclosure lawsuits pending against properties that are not listed for sale.
Until bank repossessions wane and mortgages become more widely available, property values might start stabilizing, but they won’t recover, said Keith Fleischer, a broker at the Weston office of Keith Owen REO Collection, a Re/Max International subsidiary that helps banks sell repossessed homes.
Banks often contact REO Collection about selling a home shortly before or shortly after it is seized through foreclosure. The company gets its name from the acronym banks have for their foreclosed property – real estate owned.
While REO Collection has a pretty decent amount of active listings, it has a huge board of pre-listings set for the market, Fleischer said.
“We’re going to see an increase in available new REO listings on the market,” he said.
Statistics seem to follow that logic, as banks are filing foreclosure actions faster than they are taking back homes and putting them on the market.
According to court data analyzed by Bal Harbour-based Condo Vultures Realty, there were 7,311 property repossessions in South Florida in the first quarter and 25,263 new foreclosure filings.
A study by the Mortgage Bankers Association suggests the state may be only halfway through the mess. Of the more than 3.5 million mortgages the MBA tracks in Florida, 10.6 percent were in the foreclosure process and an additional 10.7 percent were past due on March 31.
Dealing with the backlog
“The inventory of homes for sale will substantially increase. All you need to do is look at how many pending foreclosures there are,” said Bill McCaughan, an attorney with K&L Gates in Miami who represents banks in foreclosures. “There’s no question that the volume itself causes a time lag to list properties.”
Even if it’s clear that a property will become bank-owned, the backlogged South Florida courts and the bank employees overloaded with these cases make it a lengthy process, McCaughan said. Regulations, such as the mandatory inspections before REO home sales required by Miami-Dade County, only slow it down further, he said.
Condo Vultures principal Peter Zalewski said some banks are purposely delaying the foreclosure process because they don’t want to take ownership of homes and pay to maintain them while the market is near the bottom.
“Banks want to hold back on inventory to let the inventory be depleted so they can get higher pricing,” he said. “We’re seeing inventory being depleted because not all of the foreclosures are on the market.”
Much of the pain has already played out in the subprime mortgages, but several other factors continue pushing people into foreclosure. Unemployment is near a record high, and every percentage-point increase in the unemployment rate increases the probability that people will become seriously delinquent on their mortgage by 10 percent to 20 percent, according to a research paper published in May by the Federal Reserve Bank of Atlanta.
Payment option ARM issues
Add to that more toxic mortgages. Nationwide, there are about $500 billion in outstanding payment option adjustable-rate mortgages (ARM), where borrowers can pay only a portion of the monthly interest and let the size of the mortgage grow. When the value balloons by 15 percent or 25 percent – and the borrower is under water – the loan resets and requires both interest and principal payments, which can double the monthly payments.
A report issued in April by Credit Suisse predicted that these resets would start accelerating in the spring of 2010 until they reach a peak of $14 billion in option ARMs resetting in September 2011. They would not taper off until near the end of 2012.
The delinquency rates on those loans are so high that it helped push several option ARM-heavy banks, such as BankUnited FSB and Washington Mutual, into failure.
While the initial wave of defaults of subprime mortgages put many modest and lower-tier homes and condos on the market, the next wave of foreclosures from option ARMs and unemployment will include more top-shelf homes, said Bradley Hunter, director of the South Florida market for real estate analysis firm Metrostudy in West Palm Beach. That will give buyers more attractive targets.
Hunter believes that the median housing price could rise when those nicer homes start getting sold off by the banks, but it would be a false positive. The average sales price might increase because larger homes are getting sold more often, but the discounts based on past sales would remain – or even widen, he said.
“The downward pressure on prices continues and will continue well into next year,” Hunter said. “We are most of the way through the price adjustment. We probably only have another 10 percent [decline] more to go.”
Condo associations troubled
REO Collection’s Fleischer said single-family homes prices have nearly stabilized and will remain around this level for the next few years, but condo prices could fall further because of the crippling effects missed association dues are having on condo associations. The ailing condition of some condo associations makes the Federal Housing Administration and most banks rule out lending in those complexes, Fleischer said.
Wednesday, June 3, 2009
HUD Guidance on Monetizing the Tax Credit
I want to take just a few minutes to update you on some important developments on the regulatory front and highlight two excellent new member benefits.
As you know, NAR held our first-ever Real Estate Summit during the Midyear Legislative Meetings in May. The event was a resounding success. Please take a few minutes to watch the video and listen to what top government officials and industry experts had to say about the challenges we are facing.
http://www.realtor.org/meetings_and_expo/midyear_and_trade_expo/real_estate_summit
As a direct result of our Summit, we have made progress on two critical issues: improving the short-sale process and HUD’s efforts to monetize the first-time homebuyer tax credit. My latest podcast includes updates on both topics. Please listen and send to your fellow members.
http://www.realtor.org/about_nar/presidents_report/_podcast_archive/mcmillan_hudguidlines_20090602
As you know, NAR held our first-ever Real Estate Summit during the Midyear Legislative Meetings in May. The event was a resounding success. Please take a few minutes to watch the video and listen to what top government officials and industry experts had to say about the challenges we are facing.
http://www.realtor.org/meetings_and_expo/midyear_and_trade_expo/real_estate_summit
As a direct result of our Summit, we have made progress on two critical issues: improving the short-sale process and HUD’s efforts to monetize the first-time homebuyer tax credit. My latest podcast includes updates on both topics. Please listen and send to your fellow members.
http://www.realtor.org/about_nar/presidents_report/_podcast_archive/mcmillan_hudguidlines_20090602
Thursday, May 21, 2009
HUD: Homebuyer Tax Credit Loans Still on Track
News reports that the federal government is backing away from its plan to permit eligible borrowers to monetize the first-time homebuyer tax credit are off the mark, a spokesperson for the U.S. Department of Housing and Urban Development says.
"The technical details are still being finalized and will soon be published in a mortgagee letter and posted on our Web site," Lemar Wooley, a HUD spokesperson, told REALTOR® Magazine Wednesday afternoon.
Under the guidance that's under development, state agencies and other HUD-approved entities would be able to provide short-term bridge loans that households could use to help with their downpayment. The loans would be repaid with the proceeds from the households' federal tax credit.
The loans were announced on the opening day of NAR's 2009 Midyear Legislative Meetings in Washington, D.C., last week. In his announcement, HUD Secretary Shaun Donovan said guidance would be issued shortly.
When the guidance is released, it is expected to cover eligible lenders and set parameters for loan terms and repayment.
Source: REALTOR® Magazine Online
"The technical details are still being finalized and will soon be published in a mortgagee letter and posted on our Web site," Lemar Wooley, a HUD spokesperson, told REALTOR® Magazine Wednesday afternoon.
Under the guidance that's under development, state agencies and other HUD-approved entities would be able to provide short-term bridge loans that households could use to help with their downpayment. The loans would be repaid with the proceeds from the households' federal tax credit.
The loans were announced on the opening day of NAR's 2009 Midyear Legislative Meetings in Washington, D.C., last week. In his announcement, HUD Secretary Shaun Donovan said guidance would be issued shortly.
When the guidance is released, it is expected to cover eligible lenders and set parameters for loan terms and repayment.
Source: REALTOR® Magazine Online
Saturday, May 16, 2009
Uniform Short-Sales Guidelines in the Works
Extensive delays in the short-sale process has caused many buyers to go elsewhere and have left would-be sellers with no option but foreclosure. But the picture is improving.
This week the U.S. Treasury announced that it would be providing incentives for borrowers and mortgage services to pursue short sales and other foreclosure alternatives. The program includes a standard short-sales process flow, minimum performance timeframes, and standard documentation, the U.S. Treasury says.
(More information is available on the Treasury Web site and in this PDF document posted at REALTOR.org.)
The incentives and process guidelines are part of a larger initiative called Making Home Affordable, which helps home owners refinance to avoid losing their home.
“NAR is pleased that the government is stepping in to help prevent foreclosures by streamlining the short-sale and deeds-in-lieu process,” NATIONAL ASSOCIATION OF REALTORS® President Charles McMillan said in a statement. “NAR has been calling for uniform short sales procedures and other initiatives that will help today’s home owners in challenging economy.”
More Collaboration Needed
A panel of experts at the 2009 REALTORS® Midyear Legislative Meetings this week agreed with NAR's position that more needs to be done to streamline short sales.
“It’s hard to find the right person to talk to, you send in multiple forms multiple times, you’re not sure if the forms were received or processed correctly,” said Marcel Bryar, deputy general counsel and vice president at Fannie Mae.
To reach a set of standards that suits everyone, the government should collaborate with lenders, the real estate industry, and advocacy groups, he said.
“The process is going to take a while," said David Knight, head of the short sales division at Wells Fargo. "Getting them all to understand what we can all live and deal with is not going to be easy, but that is exactly what’s going to have to happen.”
Panel participants applauded the Obama administration’s efforts to streamline the short sales process, and encouraged the real estate industry to get more involved in formulating this standard.
“It’s going to take some thorough intervention,” said Boyd Campbell, a Washington, D.C.-area REALTOR®. “That’s why I think it’s so important for RPAC to get involved and make sure NAR has the resources to go in and help resolve this problem. This doesn’t just impact us as practitioners. It also impacts all of our homes and communities.”
—Brian Summerfield, REALTOR® Magazine
This week the U.S. Treasury announced that it would be providing incentives for borrowers and mortgage services to pursue short sales and other foreclosure alternatives. The program includes a standard short-sales process flow, minimum performance timeframes, and standard documentation, the U.S. Treasury says.
(More information is available on the Treasury Web site and in this PDF document posted at REALTOR.org.)
The incentives and process guidelines are part of a larger initiative called Making Home Affordable, which helps home owners refinance to avoid losing their home.
“NAR is pleased that the government is stepping in to help prevent foreclosures by streamlining the short-sale and deeds-in-lieu process,” NATIONAL ASSOCIATION OF REALTORS® President Charles McMillan said in a statement. “NAR has been calling for uniform short sales procedures and other initiatives that will help today’s home owners in challenging economy.”
More Collaboration Needed
A panel of experts at the 2009 REALTORS® Midyear Legislative Meetings this week agreed with NAR's position that more needs to be done to streamline short sales.
“It’s hard to find the right person to talk to, you send in multiple forms multiple times, you’re not sure if the forms were received or processed correctly,” said Marcel Bryar, deputy general counsel and vice president at Fannie Mae.
To reach a set of standards that suits everyone, the government should collaborate with lenders, the real estate industry, and advocacy groups, he said.
“The process is going to take a while," said David Knight, head of the short sales division at Wells Fargo. "Getting them all to understand what we can all live and deal with is not going to be easy, but that is exactly what’s going to have to happen.”
Panel participants applauded the Obama administration’s efforts to streamline the short sales process, and encouraged the real estate industry to get more involved in formulating this standard.
“It’s going to take some thorough intervention,” said Boyd Campbell, a Washington, D.C.-area REALTOR®. “That’s why I think it’s so important for RPAC to get involved and make sure NAR has the resources to go in and help resolve this problem. This doesn’t just impact us as practitioners. It also impacts all of our homes and communities.”
—Brian Summerfield, REALTOR® Magazine
Homes May Be Undervalued Today
After dropping for two years, home prices appear to be bottoming out, and any further declines would be an overcorrection, NAR Chief Economist Lawrence Yun told thousands of practitioners at the REALTORS® Midyear Legislative Meetings in Washington, D.C., on Thursday.
The median national home price today is about $169,000, down almost 14 percent from a year ago and an estimated 30 percent from its peak. Today’s prices are justified by the fundamentals of the economy and may even represent an undervaluation, Yun said.
Lender Policies Hinder Recovery
Distressed sales, which today comprise about 50 percent of transactions nationwide, are creating market distortions in otherwise stable neighborhoods. “We’re only capturing transaction prices,” he said, and those prices might be 20 percent to 25 percent below actual values. For that reason, it’s possible that widely cited projections that a third or more of homeowners are underwater might be off the mark, he said.
The consequences of these missed projections could be huge. Lenders, shying away from refinancing mortgages of troubled owners, exacerbate the downward spiral of homeowners’ financial position and that, by extension, hurts the broader economy.
Contributing to the problem is the lack of reasonably priced financing for higher-cost homes at a time when declining prices, low rates, and the home buyer tax credit are helping the entry-level market.
Indeed, while housing overall is at a 9.5 month supply, down from double digits not that long ago, homes above $729,750—the threshold for jumbo loans—face a 40-month supply.
Key Test
By summer, all of the incentives that have been put into place by the government will have had several months to work, Yun said. If sales start picking up significantly, then prices should stabilize and trigger a broader economic recovery.
If sales don’t show a significant response, then the federal government might have to look at another big injection of funds into the economy, something no one has an appetite for.
Yun’s forecast reflects the brighter scenario: “My projection is home sales will be 10 to 20 percent higher the second half of this year than last year and we will come out of this recession in 2010,” he said.
—Robert Freedman, REALTOR® Magazine
The median national home price today is about $169,000, down almost 14 percent from a year ago and an estimated 30 percent from its peak. Today’s prices are justified by the fundamentals of the economy and may even represent an undervaluation, Yun said.
Lender Policies Hinder Recovery
Distressed sales, which today comprise about 50 percent of transactions nationwide, are creating market distortions in otherwise stable neighborhoods. “We’re only capturing transaction prices,” he said, and those prices might be 20 percent to 25 percent below actual values. For that reason, it’s possible that widely cited projections that a third or more of homeowners are underwater might be off the mark, he said.
The consequences of these missed projections could be huge. Lenders, shying away from refinancing mortgages of troubled owners, exacerbate the downward spiral of homeowners’ financial position and that, by extension, hurts the broader economy.
Contributing to the problem is the lack of reasonably priced financing for higher-cost homes at a time when declining prices, low rates, and the home buyer tax credit are helping the entry-level market.
Indeed, while housing overall is at a 9.5 month supply, down from double digits not that long ago, homes above $729,750—the threshold for jumbo loans—face a 40-month supply.
Key Test
By summer, all of the incentives that have been put into place by the government will have had several months to work, Yun said. If sales start picking up significantly, then prices should stabilize and trigger a broader economic recovery.
If sales don’t show a significant response, then the federal government might have to look at another big injection of funds into the economy, something no one has an appetite for.
Yun’s forecast reflects the brighter scenario: “My projection is home sales will be 10 to 20 percent higher the second half of this year than last year and we will come out of this recession in 2010,” he said.
—Robert Freedman, REALTOR® Magazine
Tuesday, May 12, 2009
Tax Credit Can Be Used for Down Payment !
Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, on Tuesday said that the Federal Housing Administration is going to permit its lenders to allow home buyers to use the $8,000 tax credit as a down payment.
Previously, most buyers wouldn't receive the funds until after they filed their tax return, and that deterred some people from using the credit. The NATIONAL ASSOCIATION OF REALTORS® has been calling for the change.
“We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a down payment,” Donovan says. His remarks came in an address to several thousand REALTORS® gathered Tuesday morning at "The Real Estate Summit: Advancing the U.S. Economy," at the 2009 REALTORS® Midyear Legislative Meetings & Trade Expo in Washington, D.C..
He says FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.
Other Solutions for Today's Market
During his address at the summit, Donovan went on to say that the Obama administration plans to further stabilize the housing market. “I do think we have some early signs that the market overall is stabilizing,” Donovan says. “Since January we’ve seen both home sales moving up and down around a relatively stable number and we are seeing the first signs that the rapid decline in home prices is starting to abate.”
The morning session included a panel discussion that was moderated by CNBC’s Ron Insana. Panelists examined cutting-edge solutions necessary to promote and preserve homeownership and real estate development, stimulate the economy, and protect the nation’s taxpayers. They also shared their ideas on what the role and responsibility of the federal government is in the revitalization effort.
“Right now the Federal Reserve is the market,” said panelist Jay Brinkman, chief economist for the Mortgage Bankers Association. “What will be the effect when the Fed stops buying?” Brinkman explained that an exit strategy must be planned for the long-term; the federal government cannot continue to support the mortgage markets indefinitely.
“We are thrilled that so many high-caliber individuals were able to join us today at this important meeting to promote stability in the housing market and the U.S. economy,” said NAR President Charles McMillan. “We look forward to an ongoing dialogue and action toward this goal, during our midyear meetings this week and beyond.”
The real estate summit is part of the 2009 REALTORS® Midyear Legislative Meetings & Trade Expo. During the week ending May 16, more than 8,500 REALTORS® will attend meetings, visit lawmakers and inspire action on Capitol Hill.
Source: NAR
Previously, most buyers wouldn't receive the funds until after they filed their tax return, and that deterred some people from using the credit. The NATIONAL ASSOCIATION OF REALTORS® has been calling for the change.
“We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a down payment,” Donovan says. His remarks came in an address to several thousand REALTORS® gathered Tuesday morning at "The Real Estate Summit: Advancing the U.S. Economy," at the 2009 REALTORS® Midyear Legislative Meetings & Trade Expo in Washington, D.C..
He says FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.
Other Solutions for Today's Market
During his address at the summit, Donovan went on to say that the Obama administration plans to further stabilize the housing market. “I do think we have some early signs that the market overall is stabilizing,” Donovan says. “Since January we’ve seen both home sales moving up and down around a relatively stable number and we are seeing the first signs that the rapid decline in home prices is starting to abate.”
The morning session included a panel discussion that was moderated by CNBC’s Ron Insana. Panelists examined cutting-edge solutions necessary to promote and preserve homeownership and real estate development, stimulate the economy, and protect the nation’s taxpayers. They also shared their ideas on what the role and responsibility of the federal government is in the revitalization effort.
“Right now the Federal Reserve is the market,” said panelist Jay Brinkman, chief economist for the Mortgage Bankers Association. “What will be the effect when the Fed stops buying?” Brinkman explained that an exit strategy must be planned for the long-term; the federal government cannot continue to support the mortgage markets indefinitely.
“We are thrilled that so many high-caliber individuals were able to join us today at this important meeting to promote stability in the housing market and the U.S. economy,” said NAR President Charles McMillan. “We look forward to an ongoing dialogue and action toward this goal, during our midyear meetings this week and beyond.”
The real estate summit is part of the 2009 REALTORS® Midyear Legislative Meetings & Trade Expo. During the week ending May 16, more than 8,500 REALTORS® will attend meetings, visit lawmakers and inspire action on Capitol Hill.
Source: NAR
Thursday, May 7, 2009
Breathtaking Townhouse! Minutes to South Beach
www.vacationhomerentals.com/38671
Come stay at the heart of coconut grove with everything the vibrant town has to offer. Walk to shops, restaurants, bars, movie theaters and boating.
Enjoy the city in a spacious townhouse with state of the art amenities. Including a full office setup including printer/copier/fax and high speed internet. Sleeps 8 individuals but is also perfect for just a few. There is a spacious patio with a BBQ grill ready for backyard cookouts and a full kitchen for everyday meals. The townhouse also has a 50 in. plasma TV with HD digital cable, a DVR recorder and even an XBox 360 for viewing DVD's and for the kids' video games.
Come enjoy the heart of Miami with all the amenities you can imagine and proximity to all major attractions including a 10 minute drive to South Beach, The Miami International Airport, Coral Gables, Brickell, Downtown, Bayside, South Miami (Sunset Place, University of Miami) and Kendall (Dadeland Mall). All this for the fraction of the cost of a hotel room.
Come stay at the heart of coconut grove with everything the vibrant town has to offer. Walk to shops, restaurants, bars, movie theaters and boating.
Enjoy the city in a spacious townhouse with state of the art amenities. Including a full office setup including printer/copier/fax and high speed internet. Sleeps 8 individuals but is also perfect for just a few. There is a spacious patio with a BBQ grill ready for backyard cookouts and a full kitchen for everyday meals. The townhouse also has a 50 in. plasma TV with HD digital cable, a DVR recorder and even an XBox 360 for viewing DVD's and for the kids' video games.
Come enjoy the heart of Miami with all the amenities you can imagine and proximity to all major attractions including a 10 minute drive to South Beach, The Miami International Airport, Coral Gables, Brickell, Downtown, Bayside, South Miami (Sunset Place, University of Miami) and Kendall (Dadeland Mall). All this for the fraction of the cost of a hotel room.
U.S. SENATE VOTES TO CREATE NATIONWIDE MORTGAGE FRAUD TASK FORCE
MODELED AFTER MAYOR CARLOS ALVAREZ'S MORTAGE FRAUD TASK FORCE
(MIAMI, May 6, 2009) - Today, the U.S. Senate voted 91 to 5 on Bill S.896 Helping Families Save Their Homes Act of 2009. Section 302 of the bill, which was introduced by U.S. Senator Bill Nelson and Congressman Kendrick Meek of Florida and amended onto Bill S.896, establishes a Nationwide Mortgage Fraud Task Force within the U.S. Attorney General's Office modeled after Miami-Dade County Mayor Carlos Alvarez's Mortgage Fraud Task Force. Bill S.896 was introduced by U.S. Senator Christopher J. Dodd of Connecticut. In the U.S. House of Representatives, Bill H.R.1106 was introduced by Congressman John Conyers, Jr. of Michigan in February 2009.
"Mortgage fraud is one of the fastest growing crimes in Miami-Dade County and the entire country," said Mayor Alvarez. "Last year, more than 1,000 mortgage fraud cases were reported in our community and 63,000 cases nationwide. This new bill will help all communities reduce mortgage fraud and prevent victimization. I want to thank my Task Force Chairman Glenn Theobald and all of the federal legislators for this new legislation."
The Nationwide Mortgage Fraud Task Force, which will operate under the U.S. Attorney General, will address mortgage fraud in the U.S. The Attorney General shall provide the Task Force with the appropriate staff, administrative support and other resources. The Task Force will solicit the voluntary participation of federal, state and local law enforcement and prosecutorial agencies to organize initiatives to address mortgage fraud, including initiatives to enforce federal and state mortgage fraud laws.
Since its creation in September 2007, Miami-Dade County Mayor Alvarez's Mortgage Fraud Task Force has:
· Made more than 150 arrests
· Drafted new state legislation, Florida Statutes 193.133, which was adopted on July 1, 2008. The new legislation requires law enforcement to notify the property appraiser's office when fraud has been detected and mortgage fraud over $100,000 will now be considered 2nd degree felonies.
· Created the first Code of Conduct Model for real estate professionals and others involved in real estate transactions.
· Created the first local public/private partnership Task Force in the nation to fight mortgage fraud.
· Streamlined reporting and investigating of mortgage fraud by creating an online form.
· Created a Speaker's Bureau.
· Involved other local, state and federal agencies in a comprehensive approach to fight mortgage crime.
About Mayor Carlos Alvarez's Mortgage Fraud Task Force
The Mayor's Mortgage Fraud Task Force is chaired by Glenn Theobald, Chief Counsel of the Miami-Dade Police Department, and made up of law enforcement officials, prosecutors, business leaders, elected officials and other public servants. Through their vision and direction the Task Force aims to help reduce and prevent mortgage fraud through law enforcement and prosecution, legislation and public education. The Task Force was created in September 2007.
Mayor Carlos Alvarez's Mortgage Fraud Task Force Partners
Miami-Dade Police Department, Miami-Dade County Consumer Services Department, Miami-Dade County Property Appraiser's Office, Miami-Dade County Clerk of the Courts, Miami-Dade County State Attorney's Office, U.S. Secret Service, U.S. Attorney's Office, IRS, FBI, Office of the Treasury, the Florida Attorney General's Office, Florida Department of Law Enforcement, Office of Financial Regulation, and the Department of Business and Professional Regulation.
Coldwell Banker; Regions Bank; Florida Bankers Association; Florida Attorneys Title "The Fund;" Cohen, Fox; Coffey, Burlington; Abacus Lending; and National Title Insurance.
(MIAMI, May 6, 2009) - Today, the U.S. Senate voted 91 to 5 on Bill S.896 Helping Families Save Their Homes Act of 2009. Section 302 of the bill, which was introduced by U.S. Senator Bill Nelson and Congressman Kendrick Meek of Florida and amended onto Bill S.896, establishes a Nationwide Mortgage Fraud Task Force within the U.S. Attorney General's Office modeled after Miami-Dade County Mayor Carlos Alvarez's Mortgage Fraud Task Force. Bill S.896 was introduced by U.S. Senator Christopher J. Dodd of Connecticut. In the U.S. House of Representatives, Bill H.R.1106 was introduced by Congressman John Conyers, Jr. of Michigan in February 2009.
"Mortgage fraud is one of the fastest growing crimes in Miami-Dade County and the entire country," said Mayor Alvarez. "Last year, more than 1,000 mortgage fraud cases were reported in our community and 63,000 cases nationwide. This new bill will help all communities reduce mortgage fraud and prevent victimization. I want to thank my Task Force Chairman Glenn Theobald and all of the federal legislators for this new legislation."
The Nationwide Mortgage Fraud Task Force, which will operate under the U.S. Attorney General, will address mortgage fraud in the U.S. The Attorney General shall provide the Task Force with the appropriate staff, administrative support and other resources. The Task Force will solicit the voluntary participation of federal, state and local law enforcement and prosecutorial agencies to organize initiatives to address mortgage fraud, including initiatives to enforce federal and state mortgage fraud laws.
Since its creation in September 2007, Miami-Dade County Mayor Alvarez's Mortgage Fraud Task Force has:
· Made more than 150 arrests
· Drafted new state legislation, Florida Statutes 193.133, which was adopted on July 1, 2008. The new legislation requires law enforcement to notify the property appraiser's office when fraud has been detected and mortgage fraud over $100,000 will now be considered 2nd degree felonies.
· Created the first Code of Conduct Model for real estate professionals and others involved in real estate transactions.
· Created the first local public/private partnership Task Force in the nation to fight mortgage fraud.
· Streamlined reporting and investigating of mortgage fraud by creating an online form.
· Created a Speaker's Bureau.
· Involved other local, state and federal agencies in a comprehensive approach to fight mortgage crime.
About Mayor Carlos Alvarez's Mortgage Fraud Task Force
The Mayor's Mortgage Fraud Task Force is chaired by Glenn Theobald, Chief Counsel of the Miami-Dade Police Department, and made up of law enforcement officials, prosecutors, business leaders, elected officials and other public servants. Through their vision and direction the Task Force aims to help reduce and prevent mortgage fraud through law enforcement and prosecution, legislation and public education. The Task Force was created in September 2007.
Mayor Carlos Alvarez's Mortgage Fraud Task Force Partners
Miami-Dade Police Department, Miami-Dade County Consumer Services Department, Miami-Dade County Property Appraiser's Office, Miami-Dade County Clerk of the Courts, Miami-Dade County State Attorney's Office, U.S. Secret Service, U.S. Attorney's Office, IRS, FBI, Office of the Treasury, the Florida Attorney General's Office, Florida Department of Law Enforcement, Office of Financial Regulation, and the Department of Business and Professional Regulation.
Coldwell Banker; Regions Bank; Florida Bankers Association; Florida Attorneys Title "The Fund;" Cohen, Fox; Coffey, Burlington; Abacus Lending; and National Title Insurance.
Sunday, April 19, 2009
Florida Governer Crist Celebrates Improving Market
Fla. Gov. Crist Celebrates Improving Market
Florida Gov. Charlie Crist met with 10 real estate professionals from all over the state this week to celebrate an upswing in the state’s real estate market. Here’s what they had to cheer about:
● Mortgage interest rates fell below 5 percent.
● Sales of existing homes have climbed for six consecutive months.
● Florida’s single-family home sales rose 20 percent and condominiums were up 25 percent in the 12 months ending in March, according to the Florida Association of REALTORS®.
● The $8,000 federal first-time homebuyer credit is drawing in new customers.
The association urges Crist and state legislators to expand the state’s down-payment assistance to first-time homebuyers and strengthen consumer protections for buyers of foreclosed properties.
Source: St. Petersburg Times, Steve Bouquet (04/16/2009)
Florida Gov. Charlie Crist met with 10 real estate professionals from all over the state this week to celebrate an upswing in the state’s real estate market. Here’s what they had to cheer about:
● Mortgage interest rates fell below 5 percent.
● Sales of existing homes have climbed for six consecutive months.
● Florida’s single-family home sales rose 20 percent and condominiums were up 25 percent in the 12 months ending in March, according to the Florida Association of REALTORS®.
● The $8,000 federal first-time homebuyer credit is drawing in new customers.
The association urges Crist and state legislators to expand the state’s down-payment assistance to first-time homebuyers and strengthen consumer protections for buyers of foreclosed properties.
Source: St. Petersburg Times, Steve Bouquet (04/16/2009)
Federal Housing Rescue Plan Launches
The Obama Administration’s program to rescue distressed home owners got off the ground this week. The program was announced on Feb. 18, but it took several weeks to put the bureaucracy in place.
Six of the nation’s largest banks signed up to participate, the Treasury Department announced Wednesday. They are JPMorgan Chase, Wells Fargo, Citigroup, GMAC Mortgage, Saxon Mortgage Services, and Select Portfolio Servicing.
Treasury says it is allocating $50 billion to the program. The Department of Housing and Urban Development will provide the rest.
The plan calls for loan servicers to reduce interest rates so a family’s monthly mortgage obligation is no more than 38 percent of its pre-tax income. Loan servicers also can reduce loan balances. After the loans are modified, the government then provides enough money to reduce payments to 31 percent of income.
Participating servicers get $1,000 a year for each modification and another $1,000 a year for three years if the borrower remains current. Servicers get an extra $500 if they do the modifications before the borrower falls behind in his payments—and the borrower gets $1,500. Also, homeowners get $1,000 a year for five years if they remain current on their payments. The money must be used to reduce their principal balances.
Source: CNN, Tami Luhby (04/16/2009)
Six of the nation’s largest banks signed up to participate, the Treasury Department announced Wednesday. They are JPMorgan Chase, Wells Fargo, Citigroup, GMAC Mortgage, Saxon Mortgage Services, and Select Portfolio Servicing.
Treasury says it is allocating $50 billion to the program. The Department of Housing and Urban Development will provide the rest.
The plan calls for loan servicers to reduce interest rates so a family’s monthly mortgage obligation is no more than 38 percent of its pre-tax income. Loan servicers also can reduce loan balances. After the loans are modified, the government then provides enough money to reduce payments to 31 percent of income.
Participating servicers get $1,000 a year for each modification and another $1,000 a year for three years if the borrower remains current. Servicers get an extra $500 if they do the modifications before the borrower falls behind in his payments—and the borrower gets $1,500. Also, homeowners get $1,000 a year for five years if they remain current on their payments. The money must be used to reduce their principal balances.
Source: CNN, Tami Luhby (04/16/2009)
Wednesday, April 15, 2009
Credit Repair: How to Help Yourself!
You see the advertisements in newspapers, on TV, and on the Internet. You hear them on the radio. You get fliers in the mail, and maybe even calls offering credit repair services. They all make the same claims:
“Credit problems? No problem!”
“We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!”
“We can erase your bad credit — 100% guaranteed.”
“Create a new credit identity — legally.”
The Federal Trade Commission (FTC) says do yourself a favor and save some money, too. Don’t believe these claims: they’re very likely signs of a scam. Indeed, attorneys at the nation’s consumer protection agency say they’ve never seen a legitimate credit repair operation making those claims. The fact is there’s no quick fix for creditworthiness. You can improve your credit report legitimately, but it takes time, a conscious effort, and sticking to a personal debt repayment plan.
Recognizing a Credit Repair Scam
Everyday, companies target consumers who have poor credit histories with promises to clean up their credit report so they can get a car loan, a home mortgage, insurance, or even a job once they pay them a fee for the service. The truth is, these companies can’t deliver an improved credit report for you using the tactics they promote. It’s illegal: No one can remove accurate negative information from your credit report. So after you pay them hundreds or thousands of dollars in fees, you’re left with the same credit report and someone else has your money.
If you see a credit repair offer, here’s how to tell if the company behind it is up to no good:
* The company wants you to pay for credit repair services before they provide any services. Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the services they have promised.
* The company doesn’t tell you your rights and what you can do for yourself for free.
* The company recommends that you do not contact any of the three major national credit reporting companies directly.
* The company tells you they can get rid of most or all the negative credit information in your credit report, even if that information is accurate and current.
* The company suggests that you try to invent a “new” credit identity — and then, a new credit report — by applying for an Employer Identification Number to use instead of your Social Security number.
* The company advises you to dispute all the information in your credit report, regardless of its accuracy or timeliness.
If you follow illegal advice and commit fraud, you may find yourself in legal hot water, too: It’s a federal crime to lie on a loan or credit application, to misrepresent your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses. You could be charged and prosecuted for mail or wire fraud if you use the mail, telephone, or Internet to apply for credit and provide false information.
Your Rights Regarding Credit Repair
No one can legally remove accurate and timely negative information from a credit report. The law allows you to ask for an investigation of information in your file that you dispute as inaccurate or incomplete. There is no charge for this. Some people hire a company to investigate on their behalf, but anything a credit repair clinic can do legally, you can do for yourself at little or no cost. According to the Fair Credit Reporting Act (FCRA):
* You’re entitled to a free report if a company takes “adverse action” against you, like denying your application for credit, insurance, or employment. You have to ask for your report within 60 days of receiving notice of the action. The notice will give you the name, address, and phone number of the consumer reporting company. You’re also entitled to one free report a year if you’re unemployed and plan to look for a job within 60 days; if you’re on welfare; or if your report is inaccurate because of fraud, including identity theft.
* Each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — is required to provide you with a free copy of your credit report once every 12 months, if you ask for it. The three companies have a central website, a toll-free telephone number, and a mailing address for consumers to order the free annual credit reports the government entitles them to. To order, click on annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
You can use the form in this brochure, or you can print it from ftc.gov/credit. You may order reports from each of the three consumer reporting companies at the same time, or you can stagger your requests, ordering one from each company throughout the year from the central address. Don’t contact the three nationwide consumer reporting companies individually or at another address because you may end up paying for a report that you’re entitled to get for free. In fact, each consumer reporting company may charge you up to $10.50 to purchase an additional copy of your report within a 12-month period.
* It doesn’t cost anything to dispute mistakes or outdated items on your credit report. Under the FCRA, both the consumer reporting company and the information provider (that is, the person, company, or organization that provides information about you to a consumer reporting company) are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under the FCRA, contact the consumer reporting company and the information provider.
Helping Yourself
Step 1: Tell the consumer reporting company, in writing, what information you think is inaccurate. Include copies (NOT originals) of any documents that support your position. In addition to providing your complete name and address, your letter should identify each item in your report you dispute; state the facts and the reasons you dispute the information, and ask that it be removed or corrected. You may want to enclose a copy of your report, and circle the items in question. Send your letter by certified mail, “return receipt requested,” so you can document that the consumer reporting company received it. Keep copies of your dispute letter and enclosures.
Your letter may look something like the one below.
Sample Dispute Letter
Date
Your Name
Your Address,
City, State, Zip Code
Complaint Department
Name of Company
Address
City, State, Zip Code
Dear Sir or Madam:
I am writing to dispute the following information in my file. The items I dispute also are encircled on the attached copy of the report I received.
This item (identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.) is (inaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted (or request another specific change) to correct the information.
Enclosed are copies of (use this sentence if applicable and describe any enclosed documentation, such as payment records, court documents) supporting my position. Please investigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as possible.
Sincerely,
Your name
Enclosures: (List what you are enclosing.)
Consumer reporting companies must investigate the items you question within 30 days — unless they consider your dispute frivolous. They also must forward all the relevant data you provide about the inaccuracy to the organization that provided the information. After the information provider receives notice of a dispute from the consumer reporting company, it is required to investigate, review the relevant information, and report the results back to the consumer reporting company. If this investigation reveals that the disputed information is inaccurate, the information provider has to notify the nationwide consumer reporting companies so they can correct it in your file.
When the investigation is complete, the consumer reporting company must give you the results in writing, too, and a free copy of your report if the dispute results in a change. If an item is changed or deleted, the consumer reporting company is not permitted to put the disputed information back in your file unless the information provider verifies that it is accurate and complete. The consumer reporting company also must send you written notice that includes the name, address, and phone number of the information provider. If you ask, the consumer reporting company must send notices of any correction to anyone who received your report in the past six months. You also can ask that a corrected copy of your report be sent to anyone who received a copy during the past two years for employment purposes.
If an investigation doesn’t resolve your dispute with the consumer reporting company, you can ask that a statement of the dispute be included in your file and in future reports. You also can ask the consumer reporting company to provide your statement to anyone who received a copy of your report in the recent past. You can expect to pay for this service.
Step 2: Tell the creditor or other information provider, in writing, that you dispute an item. Be sure to include copies (NOT originals) of documents that support your position. Many providers specify an address for disputes. If the provider reports the item to a consumer reporting company, it must include a notice of your dispute. And if you are correct — that is, if the information is found to be inaccurate — the information provider may not report it again.
Reporting Accurate Negative Information
When negative information in your report is accurate, only the passage of time can assure its removal. A consumer reporting company can report most accurate negative information for seven years and bankruptcy information for 10 years. Information about an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer. To calculate the seven-year reporting period, start from the date the event took place. There is no time limit on reporting information about criminal convictions; information reported in response to your application for a job that pays more than $75,000 a year; and information reported because you’ve applied for more than $150,000 worth of credit or life insurance.
The Credit Repair Organizations Act
Credit repair organizations must give you a copy of the “Consumer Credit File Rights Under State and Federal Law” before you sign a contract. They also must give you a written contract that spells out your rights and obligations. Read these documents before you sign anything. And before signing, know that a credit repair company cannot:
* make false claims about their services
* charge you until they have completed the promised services
* perform any services until they have your signature on a written contract and have completed a three-day waiting period. During this time, you can cancel the contract without paying any fees.
Before you sign a contract, be sure it specifies:
* the payment terms for services, including the total cost
* a detailed description of the services the company will perform
* how long it will take to achieve the result
* any guarantees the company offer
* the company’s name and business address
Have You Been Victimized?
Many states have laws regulating credit repair companies. State law enforcement officials may be helpful if you’ve lost money to credit repair scams. Don’t be embarrassed to report a problem with a credit repair company. While you may fear that contacting the government could make your problems worse, remember that laws are in place to protect you. Contact your local consumer affairs office or your state Attorney General (AGs). Many AGs have toll-free consumer hotlines; check the Blue Pages of your telephone directory for the phone number or www.naag.org for a list of state attorneys general.
If You Need Help
Just because you have a poor credit report doesn’t mean you can’t get credit. Creditors set their own standards, and not all look at your credit history the same way. Some may look only at recent years to evaluate you for credit, and they may give you credit if your bill-paying history has improved. It may be worthwhile to contact creditors informally to discuss their credit standards.
If you’re not disciplined enough to create a workable budget and stick to it, to work out a repayment plan with your creditors, or to keep track of your mounting bills, you might consider contacting a credit counseling organization. Many credit counseling organizations are nonprofit and work with you to solve your financial problems. But remember that “nonprofit” status doesn’t guarantee free, affordable, or even legitimate services. In fact, some credit counseling organizations — even some that claim non-profit status — may charge high fees or hide their fees by pressuring consumers to make “voluntary” contributions that only cause more debt.
Most credit counselors offer services through local offices, the Internet, or on the telephone. If possible, find an organization that offers in-person counseling. Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service operate nonprofit credit counseling programs. Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.
If you are considering filing for bankruptcy, be aware that bankruptcy laws require that you get credit counseling from a government-approved organization within six months before you file for bankruptcy relief. You can find a state-by-state list of government-approved organizations at www.usdoj.gov/ust, the website of the U.S. Trustee Program. That’s the organization within the U.S. Department of Justice that supervises bankruptcy cases and trustees. Be wary of credit counseling organizations that say they are government-approved, but do not appear on the list of approved organizations.
Reputable credit counseling organizations can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops. Their counselors are certified and trained in the areas of consumer credit, money and debt management, and budgeting. Counselors discuss your entire financial situation with you, and can help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions.
Do-It-Yourself Check-Up
Regardless of your credit history, financial advisors and consumer advocates recommend reviewing your credit report periodically for three important reasons:
1. The information in your credit report affects whether you can get a loan or insurance — and how much you will have to pay for it.
2. It’s important to make sure the information is accurate, complete, and up-to-date before you apply for a loan for a major purchase like a house or car, buy insurance, or apply for a job.
3. It can help you deter, detect and defend against identity theft. That’s when someone uses your personal information — like your name, your Social Security number, or your credit card number — to commit fraud. Identity thieves may use your information to open a new credit card account in your name. Then, when they don’t pay the bills, the delinquent account is reported on your credit report. Inaccurate information like that could affect your ability to get credit, insurance, or even a job.
For More Information
To learn how to improve your credit worthiness and find legitimate resources for low or no-cost help, please see the following publications at ftc.gov/credit.
* Your Access to Free Credit Reports — Explains why it is important to monitor your credit history, how to request a report, and how to dispute errors.
* How to Dispute Credit Report Errors — Explains how to dispute and correct inaccurate information in your credit report. Includes a sample dispute letter.
* Building a Better Credit Report — Learn how to legally improve your credit report, how to deal with debt, how to spot credit-related scams, and more.
* Knee Deep in Debt — Discusses options to help you get back in the black, including: realistic budgeting, credit counseling from a reputable organization, debt consolidation, or bankruptcy.
* Fiscal Fitness: Choosing a Credit Counselor — Defines debt repayment plans, explains the differences between secured and unsecured debt, and offers questions to ask credit counseling agencies if you consider using their services.
The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
October 2008
“Credit problems? No problem!”
“We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!”
“We can erase your bad credit — 100% guaranteed.”
“Create a new credit identity — legally.”
The Federal Trade Commission (FTC) says do yourself a favor and save some money, too. Don’t believe these claims: they’re very likely signs of a scam. Indeed, attorneys at the nation’s consumer protection agency say they’ve never seen a legitimate credit repair operation making those claims. The fact is there’s no quick fix for creditworthiness. You can improve your credit report legitimately, but it takes time, a conscious effort, and sticking to a personal debt repayment plan.
Recognizing a Credit Repair Scam
Everyday, companies target consumers who have poor credit histories with promises to clean up their credit report so they can get a car loan, a home mortgage, insurance, or even a job once they pay them a fee for the service. The truth is, these companies can’t deliver an improved credit report for you using the tactics they promote. It’s illegal: No one can remove accurate negative information from your credit report. So after you pay them hundreds or thousands of dollars in fees, you’re left with the same credit report and someone else has your money.
If you see a credit repair offer, here’s how to tell if the company behind it is up to no good:
* The company wants you to pay for credit repair services before they provide any services. Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the services they have promised.
* The company doesn’t tell you your rights and what you can do for yourself for free.
* The company recommends that you do not contact any of the three major national credit reporting companies directly.
* The company tells you they can get rid of most or all the negative credit information in your credit report, even if that information is accurate and current.
* The company suggests that you try to invent a “new” credit identity — and then, a new credit report — by applying for an Employer Identification Number to use instead of your Social Security number.
* The company advises you to dispute all the information in your credit report, regardless of its accuracy or timeliness.
If you follow illegal advice and commit fraud, you may find yourself in legal hot water, too: It’s a federal crime to lie on a loan or credit application, to misrepresent your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses. You could be charged and prosecuted for mail or wire fraud if you use the mail, telephone, or Internet to apply for credit and provide false information.
Your Rights Regarding Credit Repair
No one can legally remove accurate and timely negative information from a credit report. The law allows you to ask for an investigation of information in your file that you dispute as inaccurate or incomplete. There is no charge for this. Some people hire a company to investigate on their behalf, but anything a credit repair clinic can do legally, you can do for yourself at little or no cost. According to the Fair Credit Reporting Act (FCRA):
* You’re entitled to a free report if a company takes “adverse action” against you, like denying your application for credit, insurance, or employment. You have to ask for your report within 60 days of receiving notice of the action. The notice will give you the name, address, and phone number of the consumer reporting company. You’re also entitled to one free report a year if you’re unemployed and plan to look for a job within 60 days; if you’re on welfare; or if your report is inaccurate because of fraud, including identity theft.
* Each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — is required to provide you with a free copy of your credit report once every 12 months, if you ask for it. The three companies have a central website, a toll-free telephone number, and a mailing address for consumers to order the free annual credit reports the government entitles them to. To order, click on annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
You can use the form in this brochure, or you can print it from ftc.gov/credit. You may order reports from each of the three consumer reporting companies at the same time, or you can stagger your requests, ordering one from each company throughout the year from the central address. Don’t contact the three nationwide consumer reporting companies individually or at another address because you may end up paying for a report that you’re entitled to get for free. In fact, each consumer reporting company may charge you up to $10.50 to purchase an additional copy of your report within a 12-month period.
* It doesn’t cost anything to dispute mistakes or outdated items on your credit report. Under the FCRA, both the consumer reporting company and the information provider (that is, the person, company, or organization that provides information about you to a consumer reporting company) are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under the FCRA, contact the consumer reporting company and the information provider.
Helping Yourself
Step 1: Tell the consumer reporting company, in writing, what information you think is inaccurate. Include copies (NOT originals) of any documents that support your position. In addition to providing your complete name and address, your letter should identify each item in your report you dispute; state the facts and the reasons you dispute the information, and ask that it be removed or corrected. You may want to enclose a copy of your report, and circle the items in question. Send your letter by certified mail, “return receipt requested,” so you can document that the consumer reporting company received it. Keep copies of your dispute letter and enclosures.
Your letter may look something like the one below.
Sample Dispute Letter
Date
Your Name
Your Address,
City, State, Zip Code
Complaint Department
Name of Company
Address
City, State, Zip Code
Dear Sir or Madam:
I am writing to dispute the following information in my file. The items I dispute also are encircled on the attached copy of the report I received.
This item (identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.) is (inaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted (or request another specific change) to correct the information.
Enclosed are copies of (use this sentence if applicable and describe any enclosed documentation, such as payment records, court documents) supporting my position. Please investigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as possible.
Sincerely,
Your name
Enclosures: (List what you are enclosing.)
Consumer reporting companies must investigate the items you question within 30 days — unless they consider your dispute frivolous. They also must forward all the relevant data you provide about the inaccuracy to the organization that provided the information. After the information provider receives notice of a dispute from the consumer reporting company, it is required to investigate, review the relevant information, and report the results back to the consumer reporting company. If this investigation reveals that the disputed information is inaccurate, the information provider has to notify the nationwide consumer reporting companies so they can correct it in your file.
When the investigation is complete, the consumer reporting company must give you the results in writing, too, and a free copy of your report if the dispute results in a change. If an item is changed or deleted, the consumer reporting company is not permitted to put the disputed information back in your file unless the information provider verifies that it is accurate and complete. The consumer reporting company also must send you written notice that includes the name, address, and phone number of the information provider. If you ask, the consumer reporting company must send notices of any correction to anyone who received your report in the past six months. You also can ask that a corrected copy of your report be sent to anyone who received a copy during the past two years for employment purposes.
If an investigation doesn’t resolve your dispute with the consumer reporting company, you can ask that a statement of the dispute be included in your file and in future reports. You also can ask the consumer reporting company to provide your statement to anyone who received a copy of your report in the recent past. You can expect to pay for this service.
Step 2: Tell the creditor or other information provider, in writing, that you dispute an item. Be sure to include copies (NOT originals) of documents that support your position. Many providers specify an address for disputes. If the provider reports the item to a consumer reporting company, it must include a notice of your dispute. And if you are correct — that is, if the information is found to be inaccurate — the information provider may not report it again.
Reporting Accurate Negative Information
When negative information in your report is accurate, only the passage of time can assure its removal. A consumer reporting company can report most accurate negative information for seven years and bankruptcy information for 10 years. Information about an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer. To calculate the seven-year reporting period, start from the date the event took place. There is no time limit on reporting information about criminal convictions; information reported in response to your application for a job that pays more than $75,000 a year; and information reported because you’ve applied for more than $150,000 worth of credit or life insurance.
The Credit Repair Organizations Act
Credit repair organizations must give you a copy of the “Consumer Credit File Rights Under State and Federal Law” before you sign a contract. They also must give you a written contract that spells out your rights and obligations. Read these documents before you sign anything. And before signing, know that a credit repair company cannot:
* make false claims about their services
* charge you until they have completed the promised services
* perform any services until they have your signature on a written contract and have completed a three-day waiting period. During this time, you can cancel the contract without paying any fees.
Before you sign a contract, be sure it specifies:
* the payment terms for services, including the total cost
* a detailed description of the services the company will perform
* how long it will take to achieve the result
* any guarantees the company offer
* the company’s name and business address
Have You Been Victimized?
Many states have laws regulating credit repair companies. State law enforcement officials may be helpful if you’ve lost money to credit repair scams. Don’t be embarrassed to report a problem with a credit repair company. While you may fear that contacting the government could make your problems worse, remember that laws are in place to protect you. Contact your local consumer affairs office or your state Attorney General (AGs). Many AGs have toll-free consumer hotlines; check the Blue Pages of your telephone directory for the phone number or www.naag.org for a list of state attorneys general.
If You Need Help
Just because you have a poor credit report doesn’t mean you can’t get credit. Creditors set their own standards, and not all look at your credit history the same way. Some may look only at recent years to evaluate you for credit, and they may give you credit if your bill-paying history has improved. It may be worthwhile to contact creditors informally to discuss their credit standards.
If you’re not disciplined enough to create a workable budget and stick to it, to work out a repayment plan with your creditors, or to keep track of your mounting bills, you might consider contacting a credit counseling organization. Many credit counseling organizations are nonprofit and work with you to solve your financial problems. But remember that “nonprofit” status doesn’t guarantee free, affordable, or even legitimate services. In fact, some credit counseling organizations — even some that claim non-profit status — may charge high fees or hide their fees by pressuring consumers to make “voluntary” contributions that only cause more debt.
Most credit counselors offer services through local offices, the Internet, or on the telephone. If possible, find an organization that offers in-person counseling. Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service operate nonprofit credit counseling programs. Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.
If you are considering filing for bankruptcy, be aware that bankruptcy laws require that you get credit counseling from a government-approved organization within six months before you file for bankruptcy relief. You can find a state-by-state list of government-approved organizations at www.usdoj.gov/ust, the website of the U.S. Trustee Program. That’s the organization within the U.S. Department of Justice that supervises bankruptcy cases and trustees. Be wary of credit counseling organizations that say they are government-approved, but do not appear on the list of approved organizations.
Reputable credit counseling organizations can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops. Their counselors are certified and trained in the areas of consumer credit, money and debt management, and budgeting. Counselors discuss your entire financial situation with you, and can help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions.
Do-It-Yourself Check-Up
Regardless of your credit history, financial advisors and consumer advocates recommend reviewing your credit report periodically for three important reasons:
1. The information in your credit report affects whether you can get a loan or insurance — and how much you will have to pay for it.
2. It’s important to make sure the information is accurate, complete, and up-to-date before you apply for a loan for a major purchase like a house or car, buy insurance, or apply for a job.
3. It can help you deter, detect and defend against identity theft. That’s when someone uses your personal information — like your name, your Social Security number, or your credit card number — to commit fraud. Identity thieves may use your information to open a new credit card account in your name. Then, when they don’t pay the bills, the delinquent account is reported on your credit report. Inaccurate information like that could affect your ability to get credit, insurance, or even a job.
For More Information
To learn how to improve your credit worthiness and find legitimate resources for low or no-cost help, please see the following publications at ftc.gov/credit.
* Your Access to Free Credit Reports — Explains why it is important to monitor your credit history, how to request a report, and how to dispute errors.
* How to Dispute Credit Report Errors — Explains how to dispute and correct inaccurate information in your credit report. Includes a sample dispute letter.
* Building a Better Credit Report — Learn how to legally improve your credit report, how to deal with debt, how to spot credit-related scams, and more.
* Knee Deep in Debt — Discusses options to help you get back in the black, including: realistic budgeting, credit counseling from a reputable organization, debt consolidation, or bankruptcy.
* Fiscal Fitness: Choosing a Credit Counselor — Defines debt repayment plans, explains the differences between secured and unsecured debt, and offers questions to ask credit counseling agencies if you consider using their services.
The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
October 2008
For home buyers, rock bottom prices tough to pinpoint Homes are starting to sell again, but prices will keep falling, real estate observers say.
BY MONICA HATCHER
mhatcher@MiamiHerald.com
The explanation for a surge in sales of South Florida homes last month can be found in a one-bedroom condo on the 29th floor of a Brickell Avenue condo tower.
The Club at Brickell Bay unit sold in 2006 for $410,000. Five days after real estate agent Doug DeWitt listed the foreclosed unit earlier this month for $114,000, 12 bidders swarmed, offering cash. The sale -- above the asking price -- is set to close next week.
''I am standing on the bottom,'' DeWitt said. The agent says eight of his 15 foreclosure listings now have contracts with buyers. ``Prices do not go lower than this.''
Bargains like the Brickell Bay unit continue to draw buyers back into the market at a quickening pace, February numbers showed. Analysts have said that increasing sales, along with steep declines in home prices, would signal the beginning of a long-awaited recovery in the region's ailing housing market.
February's sales figures, combined with low mortgage rates and government moves to restart lending, suggest the market has reached a pivotal point.
But most analysts believe prices still have much farther to fall and that recovery remains at least a year away -- although, as the frenzy over DeWitt's condo shows, what constitutes a market bottom depends greatly on the neighborhood and type of property.
''The sales trend is positive and we're going to see an increase in sales throughout the year,'' said William Hardin, director of real estate programs at Florida International University, ``But there is no doubt about it, prices have to come down.''
By how much is where opinions begin to vary.
Hardin said the worst of the price declines have passed. He expects them to level off around the end of the year, based on improved affordability, pent-up demand and low interest rates.
Moody's Economy.com is more pessimistic.
The research firm estimates prices will drop a further 51 percent in both Miami-Dade and Broward from November 2008 before they reach a trough in the first half of 2011. Moody's uses the highly-regarded S&P/Case-Shiller index for its calculations, which unlike Florida Association of Realtors numbers tracks sales of the same homes over time.
''It's very severe,'' said Chris Lafakis, who analyzes the South Florida economy for Moody's Economy.com. He agreed with Hardin that price declines will begin to slow in four to five months, but said ongoing job losses will offset the impacts of increased affordability and other factors.
''We're losing a tremendous number of jobs in southeast Florida and the pace of job losses is undermining any recovery,'' he said. ``While homes are more affordable, job losses are going to take away from the number of people who are willing and able to buy homes.''
Lafakis also said falling home prices will actually contribute to increased foreclosures because homeowners who bought during the boom and have lost money walk away rather than continuing to pay their mortgages. While expected to peak this summer, foreclosures will ''remain at very high levels'' after that, he said.
But that's a little too severe for Jack McCabe, a South Florida real-estate consultant who considers himself among the most pessimistic observers of the current market.
Based on Realtor data and inhouse sources, he predicted prices will bottom out in the middle part of 2010, declining a further 20 percent from current levels for homes, and perhaps 35 percent more among condos. From the boom to the bottom, he says single-family homes will lose at least 40 percent. A big reason is the sheer number of homes for sale in South Florida.
In February, the number of sales was way up over the same month last year. Still, the 1,893 properties that changed hands represented a mere 3 percent of the roughly 64,000 houses and condos for sale on the Realtors' Multiple Listing Service. At that pace, it would take three years to work through the supply. Real estate analysts generally consider a market healthy when there is a housing supply of about six months because it indicates a balance between buyers and sellers.
One positive sign: the overall number of homes and condos on the market is down by double-digits over a year ago. Shrinking inventory is an important precursor to reaching pricing stability.
In Broward, the number of single family homes for sale fell by 20 percent from last year. In Miami-Dade, single family home inventory fell 13 percent.
McCabe said Broward, indeed, would recover faster than Miami.
The gloomy forecasts should not deter buyers who stumble across their dream home at a price they can afford, said Helen Jeanne Nicastri, an international real estate marketing specialist and chairwoman of the Master Brokers Forum.
''You cannot time the bottom of the bottom of the market. There are many bottoms and it depends on what you want to buy, every niche has a different bottom,'' Nicastri said.
DeWitt and others said the best deals were being gobbled up within days of being listed and that homes in desirable neighborhoods like Weston and Coral Gables were changing hands more quickly than in the past.
However, areas like Homestead, flush with foreclosures and unsold properties, are likely to continue sliding into the distant future. And, condo prices in Miami-Dade are likely to remain in the sinkhole for as many as five to seven years.
But again, everybody's bottom is different.
For Felix Fuentes it occured Feb. 28 when he closed on a three-bedroom foreclosure that sits on 1.25 acres in Hialeah Gardens. It's blocks from his childrens' school and minutes from babysitter in-laws.
He picked it up for $350,000, marked down from its last sale price of $830,000 about two years ago. His total monthly mortgage payments, taxes and insurance: $1,900.
''Where can you find a place where you can keep horses! I will never find this size property for this amount of money in the future. I would buy it again 100 times over,'' Fuentes said.
mhatcher@MiamiHerald.com
The explanation for a surge in sales of South Florida homes last month can be found in a one-bedroom condo on the 29th floor of a Brickell Avenue condo tower.
The Club at Brickell Bay unit sold in 2006 for $410,000. Five days after real estate agent Doug DeWitt listed the foreclosed unit earlier this month for $114,000, 12 bidders swarmed, offering cash. The sale -- above the asking price -- is set to close next week.
''I am standing on the bottom,'' DeWitt said. The agent says eight of his 15 foreclosure listings now have contracts with buyers. ``Prices do not go lower than this.''
Bargains like the Brickell Bay unit continue to draw buyers back into the market at a quickening pace, February numbers showed. Analysts have said that increasing sales, along with steep declines in home prices, would signal the beginning of a long-awaited recovery in the region's ailing housing market.
February's sales figures, combined with low mortgage rates and government moves to restart lending, suggest the market has reached a pivotal point.
But most analysts believe prices still have much farther to fall and that recovery remains at least a year away -- although, as the frenzy over DeWitt's condo shows, what constitutes a market bottom depends greatly on the neighborhood and type of property.
''The sales trend is positive and we're going to see an increase in sales throughout the year,'' said William Hardin, director of real estate programs at Florida International University, ``But there is no doubt about it, prices have to come down.''
By how much is where opinions begin to vary.
Hardin said the worst of the price declines have passed. He expects them to level off around the end of the year, based on improved affordability, pent-up demand and low interest rates.
Moody's Economy.com is more pessimistic.
The research firm estimates prices will drop a further 51 percent in both Miami-Dade and Broward from November 2008 before they reach a trough in the first half of 2011. Moody's uses the highly-regarded S&P/Case-Shiller index for its calculations, which unlike Florida Association of Realtors numbers tracks sales of the same homes over time.
''It's very severe,'' said Chris Lafakis, who analyzes the South Florida economy for Moody's Economy.com. He agreed with Hardin that price declines will begin to slow in four to five months, but said ongoing job losses will offset the impacts of increased affordability and other factors.
''We're losing a tremendous number of jobs in southeast Florida and the pace of job losses is undermining any recovery,'' he said. ``While homes are more affordable, job losses are going to take away from the number of people who are willing and able to buy homes.''
Lafakis also said falling home prices will actually contribute to increased foreclosures because homeowners who bought during the boom and have lost money walk away rather than continuing to pay their mortgages. While expected to peak this summer, foreclosures will ''remain at very high levels'' after that, he said.
But that's a little too severe for Jack McCabe, a South Florida real-estate consultant who considers himself among the most pessimistic observers of the current market.
Based on Realtor data and inhouse sources, he predicted prices will bottom out in the middle part of 2010, declining a further 20 percent from current levels for homes, and perhaps 35 percent more among condos. From the boom to the bottom, he says single-family homes will lose at least 40 percent. A big reason is the sheer number of homes for sale in South Florida.
In February, the number of sales was way up over the same month last year. Still, the 1,893 properties that changed hands represented a mere 3 percent of the roughly 64,000 houses and condos for sale on the Realtors' Multiple Listing Service. At that pace, it would take three years to work through the supply. Real estate analysts generally consider a market healthy when there is a housing supply of about six months because it indicates a balance between buyers and sellers.
One positive sign: the overall number of homes and condos on the market is down by double-digits over a year ago. Shrinking inventory is an important precursor to reaching pricing stability.
In Broward, the number of single family homes for sale fell by 20 percent from last year. In Miami-Dade, single family home inventory fell 13 percent.
McCabe said Broward, indeed, would recover faster than Miami.
The gloomy forecasts should not deter buyers who stumble across their dream home at a price they can afford, said Helen Jeanne Nicastri, an international real estate marketing specialist and chairwoman of the Master Brokers Forum.
''You cannot time the bottom of the bottom of the market. There are many bottoms and it depends on what you want to buy, every niche has a different bottom,'' Nicastri said.
DeWitt and others said the best deals were being gobbled up within days of being listed and that homes in desirable neighborhoods like Weston and Coral Gables were changing hands more quickly than in the past.
However, areas like Homestead, flush with foreclosures and unsold properties, are likely to continue sliding into the distant future. And, condo prices in Miami-Dade are likely to remain in the sinkhole for as many as five to seven years.
But again, everybody's bottom is different.
For Felix Fuentes it occured Feb. 28 when he closed on a three-bedroom foreclosure that sits on 1.25 acres in Hialeah Gardens. It's blocks from his childrens' school and minutes from babysitter in-laws.
He picked it up for $350,000, marked down from its last sale price of $830,000 about two years ago. His total monthly mortgage payments, taxes and insurance: $1,900.
''Where can you find a place where you can keep horses! I will never find this size property for this amount of money in the future. I would buy it again 100 times over,'' Fuentes said.
Tuesday, April 14, 2009
Possible State Funding for 1st Time Home Buyers
States Contemplate Loans for Home Buyers
The $8,000 first-time home buyer mortgage tax credit, which is part of the Recovery and Reinvestment Act of 2009, is a great boon. But, it doesn’t help people who don’t have money for a down payment and closing costs.
Now some states are contemplating offering an $8,000 loan to home buyers before they close on the condition that they repay the loans as soon as they get their federal tax credits.
The idea has been adopted in Missouri, which advances the money to those who take out first mortgages offered through the state’s housing finance authority. The New York State Builders Association is lobbying the State of New York Mortgage Agency to adopt a similar strategy.
“A lot of states are trying to get through the technical aspects of this," says Gregory Brown, an assistant vice president for government affairs at the National Association of Home Builders. "I feel very confident they’ll find a way to make it work.”
Meanwhile, some home builders are taking matters into their own hands, offering programs that purchase the tax credit from borrowers prior to closing.
“This is a legitimate monetizing program that actually works,” says David Abrahamson, vice president of S.E. operations for American Home Key Mortgage Company, which makes the loans for many participating builders in the southeast.
Source: The New York Times, Bob Tedeschi and HousingWire.com, Paul Jackson (04/10/2009)
The $8,000 first-time home buyer mortgage tax credit, which is part of the Recovery and Reinvestment Act of 2009, is a great boon. But, it doesn’t help people who don’t have money for a down payment and closing costs.
Now some states are contemplating offering an $8,000 loan to home buyers before they close on the condition that they repay the loans as soon as they get their federal tax credits.
The idea has been adopted in Missouri, which advances the money to those who take out first mortgages offered through the state’s housing finance authority. The New York State Builders Association is lobbying the State of New York Mortgage Agency to adopt a similar strategy.
“A lot of states are trying to get through the technical aspects of this," says Gregory Brown, an assistant vice president for government affairs at the National Association of Home Builders. "I feel very confident they’ll find a way to make it work.”
Meanwhile, some home builders are taking matters into their own hands, offering programs that purchase the tax credit from borrowers prior to closing.
“This is a legitimate monetizing program that actually works,” says David Abrahamson, vice president of S.E. operations for American Home Key Mortgage Company, which makes the loans for many participating builders in the southeast.
Source: The New York Times, Bob Tedeschi and HousingWire.com, Paul Jackson (04/10/2009)
The $8000 First Time Home Buyer Tax Credit Explained!
I have been talking to and hearing lots of people talk about this tax credit for new home buyers and one thing is clear to me - there is a lot of confusion. I think a lot of it stems from the media talking so much about the proposed plans for it that now that the final version of it is approved, the details are different.
Originally, the plan was talking about $15,000, but it was going to be difficult for many to qualify for the whole amount, but the final version is a $8000 credit that most should see in their bank account.
Let me interject that I am not a tax-guy and everything I am writing here is from my own research. So, if I am missing anything, please share it in the comments below.
Who is eligible for the tax credit
- First-time home-buyers (from what I understand buyers who haven’t owned a home in the last 3 years would also qualify as “first-time” buyers)
- Buyers must make less than $75,000 for singles or $150,000 for couples. (Higher-income buyers could receive a partial credit.)
Rules to remember
- The purchase of the home must be made between Jan. 1, 2009 and Nov. 30, 2009.
- The buyers must live in the house for 3 years or more, or they will have to pay back the tax refund.
- The refund amount is $8000 or 10% of the home’s value - whichever one is less.
Tax rebate, refund, credit, deduction?
As Obama’s plan has developed, there have been lots of ideas tossed around from the Senate and the House, but let’s look at the final product. The examples below assume that you qualify for the homebuyer credit from the requirements above.
It is not a tax-deduction.
An example of a tax-deduction would be someone making $50,000 a year would only have to pay taxes on $42,000 ($50K-$8K=$42K). While that is nice, this is a whole lot better for individual taxpayers.
It is a tax credit.
Since it is a tax credit, it will show up a tax refund for most people. For example, if you paid $3000 in taxes this year and after doing your taxes found out that the IRS owed you a $500 refund, you would now get $8500 back.
From what I understand the only way you wouldn’t get at least $8000 back is if after doing your taxes you owed $1000 to the IRS, you would then get a refund check of $7000 ($8000-$1000).
What you need to do to get it
- Buy a house before November 30th, 2009.
- Claim it on your tax return.
According to CNN, there aren’t any special forms to fill out, or any other hoops to jump through to get it. While on a national level, I am not very excited about the excessive spending that our government has been partaking in, but I am planning on taking advantage of this deal. Have you already taken advantage of the homebuyer credit - or do you plan to?
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