Californians have a brief window of opportunity to receive up to $18,000 in combined federal and state homebuyer tax credits.  To take advantage of both tax credits, a first-time homebuyer must enter into a purchase contract for a principal residence before May 1, 2010, and close escrow between May 1, 2010 and June 30, 2010, inclusive.  Buyers who are not first-time homebuyers may use the same timeframes to receive up to $16,500 in combined tax credits if they are long-time residents of their existing homes as permitted under federal law, and they purchase properties that have never been previously occupied as provided under California law.

Under the federal law slated to soon expire, a first-time homebuyer may receive up to $8,000 in tax credits, and a long-time resident may receive up to $6,500, for certain purchase contracts entered into by April 30, 2010 that close escrow by June 30, 2010.  Additionally, under a newly enacted California law, a homebuyer may receive up to $10,000 in tax credits as a first-time homebuyer or buyer of a property that has never been occupied.  The new California law applies to certain purchases that close escrow on or after May 1, 2010 (see Cal. Rev. & Tax Code section 17059.1(a)(4)).  California law generally allows buyers of never-occupied properties to reserve their credits before closing escrow, but buyers seeking to combine the federal and state tax credits will not be able to satisfy the timing requirements for such reservations (see Cal. Rev. & Tax Code section 17059.1(c)(1)(A)).  Other terms and restrictions apply to both tax credits.

Bookmark to:

Short-sale sellers and their agents have plenty to think about, and it is understandable if they are annoyed by the reams of paperwork that may come their way. Nonetheless, it really is important not only to pay attention to what is in the paperwork but also to be sure to retain it for possible future use. This is because of bad consequences that the seller may experience sometime after the sale has taken place.

Bad enough that a short sale involves the loss of one’s home with no equity to show for it, and a credit negative that may last for years; it also has the potential to produce two very bad after-effects. One is that the lender, or the lender’s assignee, may continue to pursue the beleaguered seller for the remainder of the debt. The other is that the I.R.S. may come knocking on the seller’s door, seeking tax on the amount of debt that was unpaid.

The first possibility is often contained in the paperwork that goes along with the seller’s ok of the short sale. The borrower may be required to sign a promissory note for the difference between the debt owed and the short sale proceeds received by the lender. Or, a lender may require the borrower to sign a paper acknowledging that the lender reserves its right to pursue the borrower for this amount.

The second possibility resides in the fact that, if a debt is forgiven, the borrower may be taxed on the amount he didn’t have to pay back. (see I.R.S. publication 4681). To be sure, there may be short sales where the debt that is unpaid is not taxable. For those exemptions, see a tax accountant.

The point here is that the short-sale seller may suffer one of those unpleasant consequences; but he ought not to suffer both.

The point is raised because here is what can happen: In allowing the short sale, the bank requires the borrower to sign a note for the difference, or to acknowledge that the bank has the right to take action to collect that amount. Also, probably sometime later, the bank sends out a 1099-C, informing the I.R.S. that a certain amount of debt had been canceled.

NO ONE who has dealt with a short sale would raise the question: “How could this happen? The two actions contradict each other!” That is because anyone who has been through the process knows that it is common for the right hand of the bank not to know what the left hand is doing. Indeed, it is not uncommon for the right hand not to know what the right hand is doing.

This is why it is important for the seller to be sure to keep his paperwork. If he signed a document to the effect that the bank was going to pursue its unpaid interest, he should hang on to that. Then, if he receives a 1099-C saying that the debt was forgiven (and, therefore, taxable), he will have support for the claim that the 1099-C is incorrect.

Conversely, suppose that there was no specific release of the debt and that the paperwork contained no reference to it. Then, if the seller receives a 1099-C, saying the debt was canceled, he should keep that, just in case the bank, or its assignee, comes calling a year or so later, trying to collect the debt.

None of what has been said here should be construed as tax or legal advice. I am not certified to do that sort of thing. But I hope this little piece will encourage short-sale sellers to consult with their appropriate advisers about these matters.

Lenders may accept short sale offers or requests for short sales even if a Notice of Default has not been issued or recorded with the locality where the property is located. Given the unprecedented and overwhelming number of losses that mortgage lenders have suffered from the 2009 foreclosure crisis, they are now more willing to accept short sales than ever before. This presents an opportunity for “under-water” borrowers who owe more on their mortgage than their property is worth and are having trouble selling to avoid foreclosure as a result.

Be sure to visit www.CityRidge.com for latest news and helpful tools for your real estate needs!

*source: Wikipedia

Bookmark to:

With today’s real estate market trend, it could be a good time to start investing in real estate…especially with reduced prices and foreclosures. BUT, if you don’t know what you’re doing, it might not be a great idea.

No doubt, investing in real estate is difficult. You are competing with multiple, legitimate offers. Investors are now crawling out from the caves.

You have to treat real estate investments just like like you’re buying a home to reside in. It requires you to rack up your financial goals, and start mapping out a lifestyle that is able to support your investments.

You’ve already reached the half way mark if you have the money (obviously), lifestyle, and most importantly the time to manage your real estate investment.

The other half requires the following:

• Own Your Home First.The main reason why you should own your own home first, aside from having a place to stay, is simply because you’re gaining experience in buying and owning a property. Think of it as practice. It preps you up for financials, market conditions and maintenance.

The other benefit of owning your own home prior to investing in real estate is that you can potentially turn your primary residence into an investment property. Rent your home and upgrade into a larger house in a better location.

Note: If you are upgrading from your existing residence, lenders will most likely require 20 percent equity in your current residence prior to lending for another property.

• Get Educated. Take advantage of useful resources, such as the Internet, books, investment groups, college/university courses, or even fellow real estate licensees to better acquaint yourself with the industry. There are plenty of real estate sites that very helpful. To name a few: zillow.com, trulia.com, realtor.com (highly suggested), and yes…activerain!!

• Get Help from a PRO. Now is probably the best time to seek help from an experienced, competent realtor or lender to assist you in your real estate venture…the right way. Look for a mentor, the same way you seek for a trustworthy and honest professional that is looking out for your best interest. Get referrals from friends, family, clients, other professionals, co-workers…just about anyone. Get help from a real estate professional, but not just anyone. Trust the professional.

• Learn the Market. Understanding the market you want to investment is the ONLY key to success and making money. You may buy a property in a market that gives you a vacation rental income, which covers costs of principal, property taxes, insurance, maintenance, homeowner association dues…but does not appreciate in value. Yet, purchasing a property in a market that may not bring in sufficient rent to cover costs of owning the property, but might appreciate in value to potentially make up any loss from the costs.

Either way, the outcomes are unpredictable and you must keep a close eye on the market and keep your ears open for any market changes.

The risks of investing is most definitely there. That’s why it’s crucial to have an Exit Plan mapped out just in case your calculations are off and you need to unload your property.

Bookmark to:

Lenders are freezing, slashing, and cutting off home equity lines of credit (HELOC), but there’s a growing manual of strategies you can use to avoid or mitigate what could be financially debilitating.

Some say it’s better to take the equity money and run before lenders make a move. And why shouldn’t you prudently cover your assets?

After all, lenders cover their assets when they reduce your home equity line of credit (HELOC).

When your lender issued you the credit card-like line of credit backed by your home, chances are, your home value was much higher.

Now with shrinking values, lenders want to shake you down to reduce the chance they won’t get paid should you default on your home — which now may be worth less than the total of your outstanding mortgages.

Consider it a home equity loan meltdown as home equity stakes have been stumped.

Maybe you didn’t use proper home equity protection practices.

In any event, the Federal Reserve offers the latest come-to-your-rescue tips for dealing with home equity that’s been hammered.

• Read the notice your lender sends you. Your HELOC lender must provide you a written notice if they have frozen or reduced your HELOC. Your lender must send the notice to you no later than three business days after the freeze or reduction. The notice also must include information about any other changes to your HELOC.

• Call your lender. Even if you have a good payment record, if your home’s value has fallen, your lender may freeze or reduce your HELOC. Contact your lender if you have questions or concerns about a freeze or reduction.

• Learn why your lender froze or reduced your HELOC. A freeze or reduction notice should include specific reasons for the action. The most common reasons for a HELOC freeze or reduction are, again, a decline in the value of your home, or a change in your financial circumstances.

Understanding your lender’s reasoning may help if you want to take steps to have your credit line reinstated to its original amount. For example, a lender may not be aware that you made significant equity saving home improvements to help shore up the value of your home and its equity.

Or, if your financial circumstances changed for the worse and that change resulted in a lower credit score, investigate ways to rebuild your credit.

• Ask your lender how to have your HELOC reinstated. Your lender must reinstate your credit privileges when the conditions permitting the freeze or reduction no longer exist. You may need to put in writing your request to have your line of credit reinstated. Once your lender receives your written request, they must promptly investigate and determine whether your HELOC can be reinstated.

• Remember that your lender can impose fees for reinstating your HELOC. Fees include costs for an appraisal or credit report. Your lender cannot, however, charge you a fee to reinstate your credit line once the condition that caused them to freeze or reduce your HELOC no longer exists.

Bookmark to:

There are several things you can do to make sure potential buyers see the great things about your home.  It’s not necessary to spend lots of time or money on prepping your home.  Instead, try these easy, cost-effective tips for prepping your house for sale:

• Depersonalize.   Pack away personal pictures, items on the fridge, and anything that’s personal to you but may not matter to someone else.  Potential buyers want to visualize themselves living in this space.  That’s difficult to do with pictures of another family dominating the walls.
• Declutter.  Clutter can make our spaces look messy, disorganized, and smaller than they are. Pack away all unnecessary items, including knick-knacks, unused appliances, extra books and magazines, and anything else that might be just sitting around taking up space.  It might be a good idea to declutter the space, then have someone else – a friend or relative who doesn’t live in the house – come in and give you ideas on how you can do even more decluttering.  We sometimes become immune to our own messes and don’t see all the things that could be put away.
• Take out extra furniture.  Too much furniture can create the illusion that a space is smaller than it actually is.  If necessary, rent a storage unit to store your furniture until you move.
• Paint.  A fresh coat of paint is an inexpensive and easy way to freshen up the look of your home. Use neutral, light colors to create the illusion of bigger spaces, especially in small rooms.
• Clean the carpets.  Your carpet may not be in the best condition, but deep cleaning it will make it look better.  If you can’t hire it done, rent a steam cleaner from your local retailer and shampoo them yourself.
• Don’t ignore those hidden-away places.  How many times have you shoved clutter into a closet or cabinet when company comes over, just to quickly clean up the mess?  Potential buyers will be looking in all corners of the house.  Be sure to clean those easily forgotten areas, including the garage, the basement, and all closets and cabinets.
• Clean, clean, clean.  As difficult as it is to keep a house “show-ready,” it’s even more difficult to sell a house that is dirty or dingy.  Make sure all floors are swept, counters are wiped out, and bathrooms are sparkling.

Let’s face it – selling a house is hard work.  However, you can create better odds that your house will sell if you follow these easy, inexpensive methods for creating an enticing environment for potential buyers.

Bookmark to:

The Consumer Product Safety Commission (CPSC), recently set up a Web site to keep consumers, drywall manufacturers, builders and other apprised of its investigation into the latest problematic Chinese import, drywall used to build homes.

Drywall imported from China, blamed for rotten egg odors, fast metal corrosion and health problems for some homeowners, contains sulfur and other materials not found in U.S. made drywall, according to preliminary federal tests.

CPSC’s Drywall Information Center offers updates (online and via email) on the investigation, help for homeowners trying to determine if their drywall is making them sick, where drywall problems have been reported and other related information.

Preliminary research from the U.S. Environmental Protection Agency found the Chinese-made drywall contained sulfur, which is not in U.S. drywall, but widely used in black gunpowder, matches, insecticides and fungicides.

EPA tests also found strontium, (a metallic element that is highly reactive chemically, including, in a finely powdered state, spontaneous ignition at room temperature) at levels 10 times as high as in U.S. drywall.

The EPA also found two other organic compounds, generally found in acrylic paint, but not in U.S.-made wallboard. They were • propanoic acid, 2-methyl-, 2,2-dimethyl-1-(2-hydroxy-1-methylethyl) propyl ester • propanoic acid, 2-methyl-, 3-hydroxy-2,4,4-trimethylpentyl ester.

Since those findings, the CPSC has worked with their Chinese counterpart, the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) and hope to visit Chinese gypsum ore mining and wall board manufacturing facilities. CPSC also hosted Chinese officials visiting homes in Florida and Louisiana.

Some 36,000 homes in Florida, as well as additional properties in post-Hurricane Katrina Louisiana and Virginia, Alabama, Mississippi and California, were constructed with the Chinese-made material, recently found to be quite different from U.S.-made drywall.

CPSC is also investigating complaints, tracking imports, analyzing health effects, air sampling 50 homes, collecting samples and otherwise pursing the investigation. The questionable residential building material has been installed in some 100,000 homes nationwide according to U.S. Senator Bill Nelson (D-FL), whose high number of complaining constituents put him at spearhead of an effort to learn more about the suspect drywall.

The case has drawn class action and builder-originated suits against suppliers and manufacturers.

Bookmark to:

· Consumers should keep detailed written records of every contact they have with their servicer, including logs of phone calls and copies of written correspondence.

· If the servicer makes a promise, such as crediting a payment, modifying the loan, or stopping a foreclosure sale, for example, the homeowner must get it in writing.

· When seeking a loan modification, consumers should send a request in writing asking the servicer who owns the mortgage loan. Some banks and investors have policies on which loans they will modify.

· Consumers should beware of servicers advising them to stop making payments because they have applied for a loan modification. Instead, homeowners should continue making payments for as long as possible, even if they cannot make the payment in full. Otherwise, the loan will accrue more interest, and will cost more in the long run.

· Borrowers who feel they cannot resolve their problem or those who think their servicer may be violating their rights are advised to contact a non-profit housing counselor or seek legal help. Housing counselors can help negotiate a loan modification for free.

· Consumers can visit the Treasury’s homeowners Web site www.makinghomeaffordable.gov to find out if they qualify for a loan modification under the Obama administration’s program Making Home Affordable.

Bookmark to: