I was at an office meeting this week and one of the agents described the following scenario in one of his short sale escrows — true story.  The agent was representing the seller of a home which was in escrow as a short sale that had been approved by the seller and the bank which held the note.  The buyer was approved and ready to close on the house when about 3 days from closing the sellers filed bankruptcy.  The sale was frozen which means that the buyer can’t buy and the seller can’t sell and, of course, the agents cannot collect their commissions on the deal that they put together.

The question from the agent at the meeting was should they file to become one of the vendors that the bankruptcy court orders paid?  My answer was yes, of course.  The agent had provided the service that was contracted for.  He had brought a bonafide offer that was approved by the seller and their bank.  The agent did what was contracted for — so he should be paid.  What do you think?

Also, I was wondering what you might think of this scenario in general.  The seller was able to stay in this house without making a mortgage payment for about 1 year.  Now that the situation has changed and they have filed bankruptcy, more than likely they will be able to stay in the house for another 6-12 months without paying a mortgage.  Yes, the bankruptcy will destroy the sellers’ credit but not paying your mortgage for a year probably had a similar affect on the credit too.

If  someone out there has an opinion on either of these issues,  I would like to hear it.

Jennifer and I attended an informational meeting today at the North Tahoe Conference Center that was put on by the TRPA. Shay Navarro, Associate Environmental Specialist with the Agency did a good job of explaining what the BMPs are. This is an acronym for “Best Management Practices.” The problem is that the clarity of our finest lake — Lake Tahoe – has diminished since 1968 when the visibility was 102 feet. At last measurement 2008, the visibility was 69 feet. Apparently the cause of this regression is a lot of sediment entering the Lake from things like water dripping off of roofs, moving dirt down the road and into the Lake. Another cause might be snow melt off on unformed and unpaved driveways, again picking up sediment including oil from autos and moving it into the lake.

The TRPA has been charged with remedying this situation and one of the ways they plan to do that is to require property owners to have their property assessed and bear the responsibility for mitigating any problems that their property may be causing. The 3 ways they are forcing the property owners hand are requiring the BMP certificate of compliance at 1) the point of application for a building permit; 2) application for a buoy permit; 3) targeted enforcement; or 4) at the point of a real estate transaction as something that must be disclosed to a potential buyer.

Some drastic measure of cooperation must be taken since out of the 45,000 properties within the Tahoe Basin that need to have compliance with this BMP situation, only 12,000 properties have stepped up to the plate (and this has been required since 2003).

For more information on this — there is a lot at the TRPA’s dedicated website where you can even find out if your property has a certificate.

First, the Bank of America announced this past month that it will introduce “principal forgiveness.” This term refers to reducing the loan balances of some distressed homeowners who have either adjustable rate mortgages or sub-prime loans. If a borrower “qualifies” for this reduction, it will not only reduce his principal (the loan amount) but also his monthly payments.

The Obama administration’s Home Affordable Modification Program, or HAMP, has a goal of lowering the payment on a first mortgage to about 31% of a borrower’s gross income.

Not sure how this is going to work, or how it will be received by the people who are not currently “distressed,” but it remains to be seen whether or not the Bank of America actually carries through with this promise.

Another problem that has held homeowner’s hostage over the past 2-4 years is the second mortgage. It seems that even though some people qualified for relief for their principal mortgage under the U.S. Treasury’s mortgage-modification program, their home equity or second mortgages were still putting them at risk for default (some consumers’ second loan payments are higher than their first’s). Wells Fargo and the Bank of America have bowed to pressure from the federal government to modify these home-equity loans.

As for its part, government has come to the aid of distressed homeowners in that the IRS has been told not to pursue taxing the forgiveness (the difference between what a short sale/foreclosure/loan modification nets the bank and what the borrower owes), on principal residences. For a while it looked like this would NOT be the case in the state of California but another bill passed very recently by the state legislature (SB 401) and expected to be signed by Governor Swartzenegger in time for April 15, 2010, would, make homeowners immune from state taxation on this “forgiveness” also.

for more info

and even more

and for info on state forgiveness

Under the combined state and federal provisions, a first time buyer who enters into a purchase contract for a principal residence before May 1, 2010 and closes escrow between May 1, 2010 and June 30, 2010, inclusive are eligible for up to $18,000 in combined tax credits.  Home buyers who are not first time buyers but have lived in their residences for awhile may also take advantage of up to $16,500 combined tax credit if they purchase a home that has never been lived in.  Federal benefit is up to $6,500 and California is up to $10,000.

The timing is critical on both of these programs.  Also, California has a limit of $100 million in credits to be given to each program (first time buyer and new home buyer).

The FHA is talking about increasing the fee from the current level of 1.75 percent of the loan to 2.25 percent.  That would mean that based on a $300,000 mortgage, a borrower will now have to pony up  $6,750 instead of $5,250. This amount will still be able to be financed by adding it to the total loan.  These changes are expected to take effect sometime in the first half of this year (2010).

For the reader who is not aware, the FHA does not make loans, they insure loans against default, something that we have seen a lot of lately.   According to The Mortgage Banker’s Association, 18 percent of FHA borrowers are at least one payment behind or in foreclosure, compared with 14 percent of all loans.   FHA insured loans are traditionally granted to those borrowers who put a minimum of 3.5% downpayment of their own money.

So, Buyers, hurry up.  On top of this looming cloud, don’t forget the other reasons to purchase NOW.

1)  prices are lower than they have been in years,  here is a list of homes under $350,000 – there are condos too, call us for more info.
2)  The federal government has offered a tax credit of up to $8000 for the first time buyer. This credit is set to expire in April 2010;
3)  There are many down payment assistance plans in your neighborhood. If you live in Truckee check it out here at. If you live elsewhere, check with your city or county website or housing affordability department.  I’ll bet there is something similar there, everyone is trying to stimulate the economy.

Whatever you do, be sure to go talk to a mortgage broker and a Realtor about your chances of purchasing your new home this year.  We’re Realtors and We would love to help you!!

After 20 years of working in this industry, you would have thought I would recognize all of the warning signs of something too good to be true.  Well, maybe I did but was just thinking that just this once, things would work out.

When the press reports about the difficulties we are having getting these about to be foreclosed upon homes sold, they don’t mention that the banks aren’t always the ones that stymie the deals.  Yes, they are difficult to work with, unless you follow the rules.  On this particular transaction, I felt that the bank was totally up front about what they would accept and considering that the loan amount was $640K and the sale price that they agreed to was $379K, I am sure you would agree that this constitutes the bank working with the seller, the buyer and the real estate professionals.

Yes, this time it was the consumer who messed up the deal.

Oh well, enough of this feeling sorry for myself — back to the drawing board.  Back on the Market!

This downpayment assistance program is available to people who live and work in Truckee.  The assistance comes in the form of a “silent second” loan at 3%.  The payments and the principal are deferred until the borrower either sells the home, pays off the mortgage or the home becomes something other than his principal residence.

The surprising thing to me is that this program is available to those who want to purchase a mobile home in a mobile home park.  JoAnn told me that they have been successful with one borrower on a home in the Coachland Mobile Home Park.   If you are someone who thinks they can benefit from this opportunity — give us a call and we will supply the application and more information.

This program is designed to be used on some of the affordable stock within the town of Truckee’s inventory.  We are not talking about just deed restricted properties, rather, also those properties that are currently lowering in price to the point where they become affordable.

As you can imagine, there are some restrictions with regard to income, family size and to the price to be paid for the home.  The eligible home prices are from $265,000 to $445,000.  These home prices are available in the Truckee area (see link below).   Be sure to get in touch with us for more information or call David Griffith, Redevelopment and Housing Coordinator with the Town of Truckee.  He is the expert and really great to deal with.

HERE IT IS TRUCKEE!!  Now with the extension of the 1st time homebuyer tax credit this tool makes it impossible not to look at NOW as being a great time to get into the housing market.   Call us for a list of homes that qualify or just check it out here.

TAX CREDIT OVERVIEW

Who Gets What?

First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Current Owners: The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What are the New Deadlines?

In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

What are the Income Caps?

The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible

Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

What is the Maximum Purchase Price?

Qualifying buyers may purchase a property with a maximum sale price of $800,000.

What is a Tax Credit?

A tax credit is a direct reduction in tax liability owed by an individual to the Internal Revenue Service (IRS). In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual is owed. Unlike the tax credit that existed in 2008, this credit does not require repayment unless the home, at any time in the first 36 months of ownership, is no longer an individual’s primary residence.

How Much are First-Time Homebuyers (FTHB) Eligible to Receive?

An eligible homebuyer may request from the IRS a tax credit of up to $8,000 or 10% of the purchase price for a home. If the amount of the home purchased is $75,000, the maximum amount the credit can be is $7,500. If the amount of the home purchased is $100,000, the amount of the credit may not exceed $8,000.

Who is Eligible fort FTHB Tax Credit?

Anyone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title, is eligible.

This applies both to single taxpayers and married couples. In the case where there is a married couple, if either spouse has owned a primary residence in the last 36 months, neither would qualify. In the case where an individual has owned property that has not been a primary residence, such as a second home or investment property, that individual would be eligible.

As mentioned above, the tax credit has been expanded so that existing homeowners who have owned and occupied a primary residence for a period of five consecutive years during the last eight years are now eligible for a tax credit of up to $6,500.

How Much are Current Home Owners Eligible to Receive?

The tax credit program includes a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Can Homebuyers Claim the Tax Credit in Advance of Purchasing a Property?

No. The IRS has recently begun prosecuting people who have claimed credits where a purchase had not taken place.

Can a Taxpayer Claim a Credit if the Property is Purchased from a Seller with Seller Financing and the Seller Retains Title to the Property?

Yes. In situations where the buyer purchases the property, even though the seller retains legal title, the taxpayer may file for the credit. Some examples of this would include a land contract or a contract for deed.

According to the IRS, factors that would demonstrate the ownership of the property would include:

1. Right of possession,
2. Right to obtain legal title upon full payment of the purchase price,
3. Right to construct improvements,
4. Obligation to pay property taxes,
5. Risk of loss,
6. Responsibility to insure the property, and
7. Duty to maintain the property.

Are There Other Restrictions to Taking the FTHB Credit?

Yes. According to the IRS, if any of the following describe a homebuyer’s situation, a credit would not be due:

• They buy the home from a close relative. This includes a spouse, parent, grandparent, child or grandchild. (Please see the question below for details regarding purchases from “step-relatives.”)
• They do not use the home as your principal residence.
• They sell their home before the end of the year.
• They are a nonresident alien.
• They are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. (This does not apply for a home purchased in 2009.)
• Their home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)
• They owned a principal residence at any time during the three years prior to the date of purchase of your new home. For example, if you bought a home on July 1, 2008, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2005, through July 1, 2008.

Can Homebuyers Purchase a Home from a Step-Relative and Still be Eligible for the Credit?

Yes. As long as the person they buy the home from is not a direct blood relative, the purchase would be allowed.

If a Parent (Who Will Not Live In The Property) Cosigns for a Mortgage, Will Their Child Still be Eligible for the Credit?

Yes, provided that the child meets the other requirements for the tax credit.

Ephraim Schwartz

Partner, Mortgage Consultant CMPS

O’Dette Mortgage Group

415-931-2129 (San Francisco Office) * 1842 Union St., San Francisco, CA 94123

530-582-3345 (Tahoe Office) * 11209 Brockway Rd. #304, Truckee, CA 96161

415-297-8514 (cell)

866-304-8323 (fax)

www.omglenders.com

Tahoe Donner: 30 homes, (3 REOs,), 5 condos (1 REO)

Northstar: 2 homes, 9 condos (1 REO)

Glenshire, Cambridge, Juniper Hill, Juniper Creek, The Meadows: 11 homes (2 ss 2 REOs)

Prosser Lake Area: 6 homes (2 REOs)

Sierra Meadows, Ponderosa Palisades, Winter Creek: 5 homes (1 REO) 1 condo

Martiswoods, Ponderosa Ranchos: 0 residential properties

Olympic Heights: 0 residential properties

Lahontan: 2 homes

Timlick: 0 residential properties

Old Greenwood: 0 residential properties

Gray’s Crossing: 0 residential properties

Martis Camp: 1 home

Truckee Proper: 1 home (REO), 2 condos (1 REO)

Donner Crest: 0 residential properties

Donner Lake: 3 homes

Donner Summit: 1 home

West shore Lake Tahoe: 20 homes (1 REO), 1 condo

Tahoe City: 5 homes, 3 condos

North shore Lake Tahoe: 1 home, 2 condos

Kings Beach & Tahoe Vista: 13 homes (2 ss, 2 REOs), 3 condos

Alpine & Squaw Valley: 13 homes (1 REO), 3 condos (2 REOs)

Shared Ownerships – entire region: 2 sales

Mobile Homes – entire region: 0 sales

Condos and Homes sold over $1M in Truckee and North Lake Tahoe: 13

Highest priced home or condo sold:  a $4,750,000 Lake Tahoe Lakefront home located in Homewood at 5090 West Lake Blvd.  This 3700 square foot 4 bedroom, 4.5 bath, 2 car garage home was on the market originally for $5,900,000 and after 365 days on the market, it sold for – HOLD ON HERE FOLKS – CASH!

Lowest priced home or condo sold:  at $99,000 this studio condo located at Tahoya Shores, again a Lake Tahoe lakefront condo project.  After 70 days on the market it sold for its asking price, again CASH.

The list to sell ration on the median was 94%.  In other words, the homes sold within 94% of the list price.  The median list price for this period was $509,450, median sale price was $477,000.  Moving up.