President Barack Obama recently signed legislation that extends the deadline on the first-time home buyer tax credit and adds a smaller tax credit for move-up and other home buyers.

The extension and expansion gives home buyers a tax incentive to buy a home until at least April 30, 2010 — April 30, 2011 for qualifying military personnel. The previous deadline was just weeks away, November 30, 2009.

“The extension of the first-time home buyer tax credit will be crucial to clearing out unsold inventory and especially the lagging bank owned inventory that has not even hit the market yet,” said Kim DiBenedetto, president of the Monterey County Association of Realtors.

That’s true of many housing markets.

“California Association of Realtor studies tell us that for more than 75 percent of home buyers this year, the tax credit was very important and more than 40 percent of the home buyers would not have been able to buy without the credit,” added DiBenedetto.

The existing tax credit for first-time homebuyers remains at a maximum $8,000.

A new tax credit of up to $6,500 is available to qualifying existing homeowners who buy a new primary residence (or have one built) by April 30, 2010, if they owned their existing home for five consecutive years over the last eight years. Second homes don’t qualify for the credit.

Home buyers have to repay the credit if they live in their primary residence less than 36 months and are not members of the military.

The new rule also raises the qualifying income limits to $125,000 for single taxpayers and $225,000 for joint taxpayers, from the current $75,000 and $150,000.

The maximum allowed home purchase price is $800,000, which won’t be as useful to move-up buyers in high-cost areas.

“Part of the bill also expanded the credit to move up buyers, however, it may not be as helpful to the homeowners in our areas because there is a cap on the purchase price of $800,000, but we are grateful to anything that will help even a few,” said DiBenedetto, a real estate agent with Coldwell Banker Del Monte Realty in Carmel.

That’s also true of high-cost markets nationwide.

Both first-time home buyers and others must contract to buy a home by April 30, but close escrow by June 30, 2010.

Buyers can claim the credit on their 2009 taxes, even if the purchase is made in 2010 by filing an amended return.

DiBenedetto said “This will also assist in selling the short sale inventory that those buyers were afraid to consider because of the time frame involved in closing them when they were on this deadline to close by the end of the month (November).”

Buyers who don’t owe taxes can have the credit refunded to them as a rebate.

More information is available from the Internal Revenue Service (IRS}, including a question and answer page.

It’s all good news for the housing market.

The National Association of Realtors says as many as 400,000 resale transactions (1.2 million for both new and resale homes) were completed specifically because of the first-time home buyer tax credit, since it began, and that put a dent in the housing inventory.

Home sales also add property and sales tax revenues to the coffers of local governments as reduced inventory helps boost prices and home values.

The first-time home buyer tax credit’s availability has coincided with mortgage rates often hanging below 5 percent, according to Jeff Howard, CEO of Erate.com.

As the November 30 tax credit deadline neared, reports from the Commerce Department, revealed new home sales slipped 3.6 percent in September and were down 7.8 percent from September 2008.

Tax credit history

As part of the Housing and Economic Recovery Act of 2008, Congress first created a $7,500 first-time home buyer tax credit for those who purchased a home between April 8, 2008, and July 1, 2009.

Later, under the American Recovery and Reinvestment Act of 2009, Congress extended the credit and raised it to an $8,000 tax credit for those who purchased homes by the current November 30, 2009 expiration date.

By October 9, 2009, more than 1.2 million tax returns had claimed about $8.5 billion in the refundable tax credit, for both new and resale homes – according to the Treasury Inspector General for Tax Administration (TIGTA).

A TIGTA audit also revealed last month that nearly 90,000 taxpayers — including nearly 600 children — may have fraudulently enjoyed the credit, hoodwinking the government out of more than $600 million.

The new legislation includes provisions to stifle fraud after the Internal Revenue Service identified 167 suspected criminal schemes and opened nearly 107,000 examinations of potential civil violations of the first-time homebuyer tax credit.

Cheating the IRS is a federal felony that comes with a fine of up to $250,000 and three years in a federal pen, or both.

To combat fraud, a HUD-1 Settlement Statement will have to be attached to the tax return to secure the credit.

by Broderick Perkins

Home sales throughout the San Fernando Valley increased for the 15th consecutive month during September, rising 4.0 percent over a year ago and up 2.1 percent from this August, the Southland Regional Association of Realtors® reported recently. A total of 684 single-family homes changed owners last month, 26 sales higher than a year ago and 14 transactions above the August tally.

“First-time home buyers continued to drive home sales during September,” said Ana Maria Colon, president of the Southland Regional Association of Realtors®.

“The federal tax credit, which is set to expire on Nov. 30, clearly prompted many buyers to jump into the market,” Colon said. “The credit needs to be extended and expanded to include all buyers.”

The median price of the homes sold last month was $380,000, down 3.2 percent from a year ago and 2.3 percent the August median.

It was the third consecutive month that the median was in the $380,000 range or higher and the third consecutive month of single-digit declines – with each of the prior two months in the 8 percent range. Price declines peaked in June 2008 with a 34.2 percent drop and the slide has been slowing ever since.

“The continued presence of distressed properties on the market is a double-edged sword,” said Jim Link, the Association’s chief executive officer. “On one hand, distressed properties have made homes more affordable than at any point in recent memory; on the other, the market won’t completely stabilize until dis-tressed properties are gone and traditional buyers have more faith in resale prices.”

Both Link and Colon noted that prices have leveled off, but the lack of listings has created heated competition for virtually every property under $500,000, a contest that threatens to make it difficult to achieve a “normal” market.

The Association reported a total of 3,009 homes and condos listed for sale at the end of September – 49.9 percent below a year ago.

At the current pace of sales, the inventory is a mere 3.4-month sup-ply, compared to the 6.9-month supply of a year ago. A balance market is achieved when the listings-to-sales ratio hovers between a 5- and 6-month supply.

Pending escrows – a measure of future resale activity – were down 9.1 percent.

A slowdown in sales could be equal parts seasonal factors – sales almost always taper off as holidays and the end of the year approach – a lack of listing, the looming expiration of the first-time buyer tax credit and ongoing difficulty obtaining a loan.

Realtors® also closed escrow last month on 189 condominium sales. That number was down 10.4 percent from a year ago and off 17.8 percent from this August.

With ads everywhere touting the $8,000 federal tax credit for first-time homebuyers, it may have been easy to overlook other programs that can help home shoppers save big.

The best deals often go to buyers who take a combo-platter approach to home finance. Your state, city, employer and neighborhood improvement association may all have deals that you can tap. Alumni associations and rural development agencies might also help reduce your housing costs.

Don’t forget the big three. The seller, builder and lender can kick in some serious sweeteners, according to mortgage brokers and real-estate agents. And don’t lollygag: Mortgage incentive programs can change frequently and without notice. It pays to research what’s available right now.

“Research what programs are available in a given locale,” says John Karsten, broker and owner of Karsten Real Estate in Waupun, Wis. “You have to go item by item by item. Each lender is offering programs that are a little bit different.”

Often, you won’t find out about these public and private programs without putting in some time doing online and phone research that is tailored to your personal situation, including your exact location, income level and profession. Those who read each program’s fine print are the ones who win.

While the soon-to-expire federal tax credit would arrive only after you own the home, builders, sellers, lenders and some localities will give you cash when you need it most — to seal the deal at the closing table.

Start with the state
Some states offer excellent housing assistance. You may be able to double-dip and get state help now and a federal credit later.

On June 8, 2009, despite its budget troubles, California reinstituted a down-payment assistance loan program and special loans for homes owned by the California Housing Authority. The state’s Web site emphasizes that some buyers can get state help and the federal tax credit.

California offers low- and moderate-income deals, though “moderate” can be far from paltry. For example, in Marin County, Calif., a single borrower earning up to $81,300 is eligible for down-payment help.

To find out what your state has, try the U.S. Housing and Urban Development Web site, which has a scroll-down, state-specific menu.

Note that the rule of “buyer beware” applies. No matter what your state offers, compare its mortgage deal with the low-down-payment programs offered through the Federal Housing Administration and those offered by the Department of Veterans Affairs, if you served in the armed forces.

City perks and neighborhood funds
Even in this market, some cities and towns still have money earmarked to help develop particular neighborhoods.

In Chicago, buyers in some areas can get up to 4 percent of the home price back in their choice of down-payment assistance, closing costs or rate buy-down. That’s cash you don’t want to miss out on just because you weren’t aware of it or you used the wrong bank.

In addition, the city’s TaxSmart program provides a tax credit equivalent to 20% of the interest paid on a mortgage for first-time buyers and those buyers who purchase in targeted areas. Specific participating lenders are listed on the city’s Web site, but other banks may match that deal to get your business. And it’s not just in Chicago.

“I’ve seen a few isolated cases of people getting grant money to help with their down payment from (other) local programs,” says Carolyn Warren, author of “Mortgage Rip-Offs and Money Savers,” and a banker-broker for Shelter Mortgage who lives in Bellevue, Wash. “One was in San Diego and the other was in Michigan.”

Sometimes, nonprofits team up with a particular bank to offer special deals for qualified buyers. In Washington, D.C., Manna Mortgage Corp. — affiliated with Neighborhood Housing Services of America, a national nonprofit that aims to revitalize neighborhoods — partners with Citibank, which kicks in up to $3,000 in closing costs. Meanwhile, Neighborhood Housing Services of Chicago offers fixed-rate loans with down payments as low as 1 percent plus “gap” loans that let borrowers avoid paying private mortgage insurance.

And don’t forget city tax deals. Washington, D.C., has a first-time homebuyer tax credit of up to $5,000. There is also a five-year, property-tax abatement program, and the city even has recording and transfer tax credits that can go toward closing costs, totaling up to 2.2 percent of the purchase price.

By Aviya Kushner of Bankrate.com

CALIFORNIA ASSOCIATION OF REALTORS

1. Roots and impact: A tax credit of as much as $8,000 for certain qualified first-time home buyers was included in the Obama administration’s sweeping economic stimulus package, which the president signed in mid-February. The measure was designed to stimulate additional demand for residential real estate and help absorb the overhang of unsold properties that was putting downward pressure on home prices. Along with cheaper home prices and attractive mortgage rates, the perk has helped reduce the glut of unsold properties. Mark Zandi, the chief economist at Moody’s Economy.com, expects the tax credit to result in as many as 400,000 additional home sales by the time of its scheduled expiration at the end of November. But trade groups—like the National Association of Home Builders and the National Association of Realtors—have been lobbying Congress to push the deadline back, arguing that failing to do so would jeopardize recent signs of stability in the housing market. The NAHB, for example, blamed yesterday’s weaker-than-expected new home sales report on the tax credit’s impending expiration.

2. Extending the deadline: Although various proposals to extend and expand the credit have circulated in Congress for weeks, Senate lawmakers finally reached a deal in recent days. Under the terms of the agreement, the deadline for first-time home buyers to claim the $8,000 credit would be pushed back to April 30, 2010. But the term “deadline” doesn’t mean the same thing as it does in the current credit. The Senate agreement stipulates that buyers must have a sales contract on a house by April 30 to be eligible, but it gives them an additional 60 days to close the purchase. That’s much different from the current credit, in which transactions must be closed by November 30. Looked at one way, the effective deadline of the credit under this agreement is actually the end of June.

3. Existing buyers: But perhaps the most significant change is that current homeowners would become eligible for the tax perk as well. The current credit prevents home buyers who have owned a primary residence within the past three years from claiming the credit. The agreement, however, would allow current homeowners to claim up to $6,500 as long as the property they are vacating has been their primary residence for at least five years. Expanding the credit beyond first-time buyers is intended to boost home sales to “move up” buyers—those moving from one house to another—which some lawmakers, most notably Georgia Republican Sen. Johnny Isakson, argue is essential to a housing recovery.

4. More-affluent home buyers: The agreement also enables more affluent Americans to claim the tax credit. Senators moved to increase its annual income limits from $75,000 to $125,000 for single buyers and from $150,000 to $225,000 for married couples. These limits apply to both first-time and move-up buyers, although neither can purchase a home for more than $800,000 and still get the credit. Anyone taking the credit on a 2010 purchase can claim it on his or her 2009 tax return. And as long as home buyers live in the property they purchased via the credit for three years or more, the tax credit does not have to be repaid.

5. Credit controversy: Zandi estimates that the Senate agreement would generate more home sales than the current credit would. “It’s broader, [and] the industry is geared up to take advantage of it now,” he says. But first-time home buyer tax credits have already cost the government more than $10 billion in lost revenue, and Zandi expects that the Senate agreement would cost at least as much. And although it’s been popular with those purchasing homes, some economists have called the credit an inefficient use of federal resources. Calculated Risk, a financial blog, has estimated that Uncle Sam has paid $43,000 for every additional home sale. And the Senate agreement—which enables households making more than $200,000 a year to claim the credit—could certainly appear overly generous in a time of trillion-dollar budget deficits.

At the same time, the credit has recently been linked to widespread abuse. Russell George, the Treasury Department’s inspector general for tax administration, told a congressional panel last week that 19,300 taxpayers had claimed the first-time home buyer credit before they had even purchased a home. In another 74,000 cases—totaling more than $500 million—taxpayers claimed the credit despite evidence that they had owned a home within the past three years. And in at least one case, a 4-year-old claimed the credit, George said.

Although the agreement appears to have broad bipartisan support, it still has to get out of the chamber. Along the way, it could be stripped of certain generous provisions. But in light of the White House support, it appears all but certain that at the very least, the first-time home buyer tax credit will be extended beyond its November 30 deadline.

By Luke Mullins

Posted: October 29, 2009

From Southland Regional Association of Realtors website
Submitted by isabel on Mon, 10/12/2009 – 10:07am

SEE FULL STORY BELOW!

Oct. 29 (Bloomberg) — The Obama administration endorsed a plan to extend an $8,000 tax credit for first-time homebuyers, saying it is helping stabilize the housing market.
The tax break, enacted early this year as part of the economic stimulus, has “brought new families into the housing market and contributed to three consecutive months of rising home prices nationwide,” Treasury Secretary Timothy Geithner said today in a statement.
Senate Democrats plan to extend and expand the credit, which expires at the end of next month, to include some people who already own residences. An agreement reached yesterday would let homeowners who buy a new home qualify for a $6,500 credit if they have lived in their prior residence for five years, according to Regan Lachapelle, an aide to Senate Majority Leader Harry Reid.
“The compromise we have now would expand the credit beyond first-time homebuyers,” Lachapelle said. Lawmakers expect to consider the measure as part of a bill to extend unemployment benefits, she said. That measure has been held up by a disagreement with Republicans over other proposed amendments.
Lawmakers have said they want to keep home sales from slipping as the economy struggles to recover from the worst drop in home prices since the Great Depression. The plan would extend the homebuyers’ credit to home purchases under contract by April 30, 2010, with borrowers allowed another 60 days to close the sale, according to a person familiar with the details of the agreement.
Up to $250,000
The credit would be available to individuals earning as much as $125,000, or $250,000 for couples, up from $75,000 for individuals and $150,000 for couples under the current law, Lachapelle said.
The amendment on the homebuyers’ credit is being packaged with a separate proposal to extend and expand a tax break for companies with net operating losses.
Any legislation would have to be reconciled with a House unemployment measure approved last month that omits the homebuyer tax provisions and extends jobless benefits only in states with the highest unemployment rates.
House Speaker Nancy Pelosi, a California Democrat, is waiting to see the final Senate agreement before deciding whether to support it, said spokesman Nadeam Elshami.
More than 1.2 million borrowers through Oct. 9 have claimed almost $8.5 billion of the $13.6 billion set aside for “first- time” homebuyer tax credits this year, according to U.S. Treasury data.
Stabilizing Sales
Realtors and mortgage bankers said the credits, which are available for taxpayers who haven’t owned a home in the past three years, have helped stabilize housing sales this year.
“Already we’ve seen the impact of this credit in jump- starting the housing sector,” Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, said on the Senate floor. He said it would be a “great mistake” to allow the break to lapse. Dodd estimated that more than 70 percent of current homebuyers would be eligible for the break.
While the tax credit speeds demand for homes from next year to this year, it won’t necessarily increase overall sales, said Scott Buchta, head of investment strategy at Guggenheim Securities LLC in Chicago.
“They do need to expand the credit to get more people involved, but at the end of the day you are paying people tax dollars to do what they probably would have done anyway,” Buchta said. “If it is passed, home sales of lower-priced homes should continue to hold their ground. However, if it is not passed we will probably see home sales slow down as we wait for natural demand to build up again.”
Significant Support
Reid, a Nevada Democrat, said on the Senate floor yesterday that there is significant support among both parties for the homebuyers’ tax credit. He said the other amendments sought by Republicans are unrelated to the unemployment bill and are designed to embarrass his colleagues.
Republicans want to vote on amendments on immigration and to bar funding for the community activist group Acorn.
Senate Minority Leader Mitch McConnell, a Kentucky Republican, agreed that most lawmakers support the unemployment and homebuyer measures. “We’re not that far away from an agreement,” he said yesterday.
The $2.4 billion unemployment measure would extend jobless benefits by 14 weeks in all states and provide an additional six weeks of benefits in states with the highest unemployment rates.
About 1.9 million Americans will exhaust their unemployment benefits by the end of this year unless Congress acts, the Labor Department said.

By Dawn Kopecki and Brian Faler

http://www.fhainfo.com/fhaappraisals.htm
http://www.fhainfo.com/fhaappraisals2.htm
http://www.fhainfo.com/fhaappraisals3.htm
http://www.fhainfo.com/fhaappraisals4.htm

Michelle Bennett
Bank of America
Mortgage Loan Officer
818-380-5220 direct
818-565-9456 cell
866-576-4804 Fax
MichelleBennett914@gmail.com
www.MichelleBennettLoans.com

Sales jumped 9.4 percent to a seasonally adjusted annual rate of 5.57 million last month, from a downwardly revised pace of 5.1 million in August, the National Association of Realtors said Friday.

That pace was the strongest in two years and beat Wall Street forecasts. Sales had been expected to rise to an annual rate of 5.35 million, according to economists surveyed by Thomson Reuters.

“There’s a mini-boom going on in the housing market,” said Thomas Popik, who conducts a monthly survey of real estate agents for Campbell Communications, a research firm.

Nationwide sales are up nearly 24 percent from their bottom in January, but are still down 23 percent from four years ago.

Prices, however, continued to be dragged down by foreclosures and short sales, where the mortgage exceeds the sales price. The median price last month was $174,900, down almost 9 percent from $191,200 a year earlier, and slightly lower than August’s median of $177,300.

The inventory of unsold homes on the market fell about 7 percent to 3.63 million. That’s less than an eight-month supply at the current sales pace, and the lowest level since March 2007.

Sales rose around the country, especially in the West, where they grew 13 percent from a month earlier. Foreclosure sales are booming in cities like Los Angeles, San Diego and Las Vegas.

First-time homebuyers and investors are snapping up those homes and taking advantage of low mortgage rates. These buyers can also take advantage of a tax credit of 10 percent of the sales price, up to $8,000, if the sale is completed by the end of November.

The tax credit is so important to some buyers that they are adding a clause to their contracts, allowing them to back out if the sale doesn’t close by Nov. 30. However, economists note that bargain-priced foreclosures and low mortgage rates are making a big contribution to the sales boom.

“We think the housing market has touched bottom and it is now only a matter of time until home prices stabilize — something that we anticipate to occur in late 2010,” wrote Joseph LaVorgna, chief U.S. economist at Deutsche Bank.

Prices could fall further because rising unemployment leads to more foreclosures. The jobless rate, currently at 9.8 percent is expected to rise as high as 10.5 percent next year, causing more people to fall behind on their mortgages.

“There’s more supply that’s going to come into the marketplace,” said Stan Humphries, chief economist at real estate Web site Zillow.com. “That additional supply will outpace demand.”

With concerns about the housing market still prominent, Congress is considering several proposals to extend the tax credit for first-time buyers. Senators Johnny Isakson, R-Ga., and Christopher Dodd, D-Conn., want to extend it through June 30, and expand it to include all home buyers, at an estimated cost of $16.7 billion.

Realtors and homebuilders are loudly in favor, arguing that the tax credit is crucial to get the housing market back on its feet.

“We are not there in terms of removing the consumer fear factor,” said Lawrence Yun, the Realtors’ chief economist.

However, some analysts say the tax credit may not be as critical to the housing market as real estate agents suggest. “The group has an incentive to talk up the effects of the credit as it is urging Congress to extend it, and it therefore may be exaggerating the credit’s effects,” wrote Zach Pandl, an economist with Nomura Securities.

One potential roadblock to an extension also emerged this week. There are concerns that some of the 1.5 million applications for the tax credit are fraudulent.

At a hearing on Thursday the Treasury Department’s inspector general for taxes questioned the legitimacy of some 100,000 claims for the credit, potentially including some illegal immigrants and 580 people under 18. The youngest taxpayers to apply for the credit were 4 years old.

Copyright 2009 The Associated Press