Those who’ll get the credit probably would have moved anyway.

From the LA Times:

If you have owned and lived in a home for at least five consecutive years of the last eight years, you could qualify for a $6,500 tax credit, if you buy a new home between now and April 30.

The “five-of-eight” requirement means that this credit could accommodate people who lost their homes in the last year or two to foreclosure or even sold a house and didn’t immediately replace it, said John. W. Roth, senior tax analyst with CCH Inc., a Riverwoods, Ill., publisher of tax information.

Would you have to sell your residence for it to qualify for the $6,500 credit, if you wanted to buy a new one? Not necessarily, Roth said. The home you purchase must become your principal residence, so you would have to move there. But nothing in the law says you cannot keep your existing residence as a second home or rental, he said.

If you do choose to sell your existing residence, you need to pay close attention to how much you earn on that sale, Stretch said. That’s because taxable profits from the sale of your residence will be added to your other earnings to determine whether your adjusted gross income exceeds the allowable thresholds.

This credit also phases out for singles earning more than $125,000 and married couples earning more than $225,000.

On the bright side, some profits from the sale of a personal residence don’t count. That’s because taxpayers are allowed to exclude up to $250,000 per person or $500,000 per couple in profits on the sale of their personal residence from tax, if they lived in that home for two of the last five years, Stretch said. Only profits exceeding those excluded amounts would be included in income, he noted.

Getting muddled? Let’s look at an example to clarify.

John and Sue Smith own a home that they bought for $100,000 in 1965. They’re now retired and want to scale back, selling that home, which is now worth $750,000, and buying a smaller home with the help of the new $6,500 credit.

Their net profit on this sale would be $650,000, but they can exclude $500,000 of that gain from tax, based on existing law. They will have to add the remaining $150,000 capital gain to their adjusted gross income to determine whether they can qualify for the new credit.

If all of their other income adds up to less than $75,000, they have no worries because the $150,000 and $75,000 add up to $225,000 — the beginning of the credit’s phase-out range for married couples. If they earn more, however, they begin to lose their ability to take the credit.

There are other arcane rules relating to profits earned on the sale of a home, so those with substantial profits may want to consult a tax professional before banking on the credit.

“It’s really confusing,” Roth allowed. “It’s as if they took the old law and threw it in a Mixmaster. Some things still apply; others don’t. The time frames are all new. This is going to keep a lot of tax accountants in business for a long time.” 

Let’s add in the 212 NODs:

We saw Lago Lindo list for $1,879,000 and receive eight offers, with bids over $2 million. These days the buyers roam from REO to REO, in search of the right deal, with only glimmers of hope that a regular seller will be reasonable on price.

Will this new REO listing get swept up in the frenzy?

Let’s just look at the 100 SFRs valued between $685,000 and $1,250,000 in Carlsbad, 92009 and 92011 that have received their notice of trustee sale, or have met their fate on the steps of the county court house:

What’s the mix of Defaulted Purchase Loans vs. Refinances?  If you refi’d your way into trouble, and wound up over-encumbered, that’s one thing.  How many people either never saw the downturn coming, or or were hit by a hardship after purchasing?

How Many were Neg-ams?  Tabulated by counting those who must have only made the minimum payment, and whose loan balance increased substantially, as noted on the NOTS.   The cutoff was simple – if the amount on the notice of trustee sale was more than 10%, it was called a neg-am:

Conservative vs. Riskier?  Breakdown of above – How did folks use the neg-am loan as an affordability product?

Skin vs. No Skin in Game?  How many used at least a 10% down payment when they purchased?

What Year was the Mortgage Originated?  How long are people able/willing to endure?

How Quick are Banks Processing?  How many months have gone, or went by since the first notice of trustee sale was recorded?

Auction List/Bank-Owned/3rd Party? 

Trying to Sell?  Five of the REOs just closed, and the other is pending (there are no active REO listings currently). The 3rd parties jump right on it, of the four: two are ACT, one PEND, and one SOLD:

Shadow Inventory? The reverse of above. Once a property gets on the auction list, how much chance is there that they’ll be saved? If not saved, how many properties on the list are heading for market?

The 75 properties will probably roll onto the open market spread over the next 2-4 months, and get plenty of attention. The REOs that have already sold closed for $99,000 over list, $91,000 over list, $20,000 over list, list price, and $10,000 under list price.

Will the short-term market get overwhelmed with REOs and short sales, or just get dripped to death? Either way, I think there will be buyers – it’s just a matter of price!

If the next-door buyer relied on the same faulty tax roll information that I had, he should sue.

A glimmer of light is shining through San Diego’s bleak real estate market, judging from the sale this week of the La Jolla oceanfront home owned by Doug and Betsy Manchester.

The six-bedroom, 11-bath estate, with swimming pool and boathouse, closed escrow Tuesday for $18.15 million. The sale price will make the county tax man happy but, even so, it is 44 percent less than the original $33 million asking price by the Manchesters, who are divorcing.

The buyer is Dallas multimillionaire Darwin Deason, the founder and primary shareholder of Affiliated Computer Solutions, which Xerox Corp. is in the process of acquiring for $6.4 billion. Darwin’s wife, Katerina Panos, is a graduate of La Jolla High School and has strong ties to San Diego.

The Deasons, who will be part-time residents, also own a 205-foot luxury yacht, Apogee, which they plan to bring to Shelter Island next year.

Willis Allen real estate agent Edward Mracek, who with Karen Rockwell represented the buyer, says the high-end market seems to be improving. While there have been higher priced residential sales in the county, he knows of only one La Jolla home that has sold for more — the $23.5 million purchase of a large La Jolla Farms estate by attorney William Lerach in 2005.

more photos here: http://www.sdlookup.com/MLS-090008894

The Deasons also are in escrow to buy a home listed at $10.5 million next door to the Manchester property. They plan to merge the two properties, which once were part of a single estate designed by architect Tom Shepherd in 1929.

The Deed for Lease Program, which Fannie plans to roll out on Thursday, will offer borrowers who fail to complete or don’t qualify for a loan modification or other workout to deed their property to the lender in exchange for a lease. Borrowers-turned-tenants will be able to sign leases of up to 12 months and will pay market rents, which in most cases are lower than the cost of mortgage payments.

Fannie Mae wouldn’t say how many homeowners it expects will take advantage of the program. The company acquired 57,000 properties through foreclosure during the first half of the year, bringing its total real-estate owned inventory to 63,000 properties valued at $6 billion. The rental program will allow Fannie to hold inventory off of already saturated housing markets and makes a bet that the housing market will be stronger one year from now.
 
Borrowers who haven’t missed any mortgage payments aren’t eligible for the program, and the borrower’s mortgage servicer would have to show that a borrower isn’t eligible for a loan modification before the homeowner could apply for the Deed for Lease program.

The following program eligibility criteria must be met:

1.  The mortgage loan is a first lien mortgage loan secured by a one- to four-unit property. All property types are eligible. Second lien mortgage loans are not eligible.

2.  The mortgage loan is not guaranteed or insured by a federal agency (FHA, HUD, VA, or Rural Development).

3.  The borrower resides in the property as a primary residence or has leased the property to a tenant who uses the property as a primary residence. Second homes or vacation homes are not eligible.

4. At least three payments have been made since origination or since the last modification.

5.  At the time of the referral to Fannie Mae for the D4L, the borrower is not 12 or more payments past due on the mortgage loan.

6.  The borrower is not involved in an active bankruptcy proceeding and is not a party to litigation involving the subject property or the mortgage loan.

7.  Marketable title is able to be conveyed (a title insurance policy is required).

8.  If there are subordinate liens secured against the subject, lien releases can be obtained.

9.  The occupant of the property (i.e., the borrower or the borrower’s tenant) has verifiable income. Occupants with no source of income are not eligible.

 
“I’m sure Fannie is hoping that when they sell the properties, the values will be higher,” says David Berson, chief economist for PMI Group Inc., a private-mortgage insurer. “A year from now, we should be a year further into the economic recovery, and housing demand will be stronger…That will allow you to release homes that have been foreclosed upon but not put on the market.”
 
The program could also help Fannie preserve the value of its nonperforming assets because occupied homes are more likely to hold up better that vacant homes. The rental programs also provide some rental income to the government-backed mortgage finance giants.
 
The move by Fannie follows a program by Freddie Mac that began offering month-to-month leases to owner-occupants who had lost their homes to foreclosure. But Freddie continues to market those homes for sale. The Fannie Mae program differs in one important respect: foreclosed homes won’t be listed for sale. In February, both companies began allowing tenants whose landlords had lost their properties to foreclosure to sign month-to-month leases.
 
Borrowers will have to show that the monthly rent is less than 31% of their gross income. The program, which will use a professional management company to handle maintenance, will allow borrowers to renew their leases on a term or monthly basis and properties that are sold during the lease period will include an assignment of that lease to the new owner.
 
So far, around two-thirds of owner-occupants who have been offered monthly leases by Freddie Mac have taken them, and the break down of owner-occupants to tenants who have rented under the program is roughly two-to-one.
 
Freddie Mac says it is considering whether to extend longer-term leases to some troubled homeowners. “We’re looking into our options because there are certain markets where there’s just so much inventory on the market,” said Ingrid Beckles, senior vice president of default asset management at Freddie Mac.
 
In recent months, some industry analysts have been puzzled over why more homes haven’t been put up for sale as the rate of borrowers who default climbs higher. Well-intentioned efforts to keep families in their homes have led to delays that some analysts believe is prolonging the mortgage crisis by creating a “shadow” inventory of pent-up supply that will ultimately hit the market.
 
That has prompted some to question the logic of keeping homes off of the market at a time when demand for bank-owned properties has been soaring. The number of foreclosed properties for sale in Las Vegas, for example, has fallen to a less than three months’ supply, according to SalesTraq, a local real-estate research firm. But housing demand typically falls in the winter, and the number of foreclosures continues to grow. “We’re past the peak of when you would want to sell,” says Mr. Lawler.