NAPLES — There was no sugarcoating it.
Naples broker Ross McIntosh had very little good to say in his annual snapshot of the local housing market Wednesday night.
His speech — given at the Quail West Golf & Country Club off Bonita Grande Drive in North Naples — drew a crowd of more than 150. Those hoping for some good news didn’t hear much of it as McIntosh focused on the facts, including statistics about building permits that he described as shocking.
It was his 21st annual presentation. His title, “Whodathunkit,” fit the tone of his straight-talking speech as he touched on foreclosures, falling home and land prices, shrinking new home permits and cancelled projects.
He described the situation for home builders as “dismal,” mentioning only a few bright spots in the market where new homes continue to be built.
After doing the research for his snapshot, McIntosh, founder of REO Accelerated Disposition Associates in Naples, said he was surprised to learn just how many builders have been idle this year.
In 2008, 83 builders pulled at least one single-family or multi-family permit in Collier County. So far this year, 44 builders have been active, McIntosh said.
In Lee County, 175 builders pulled residential permits in 2008. That compares with 68 so far this year, McIntosh said.
Through September, 737 building permits had been pulled in Collier County. That compares with 934 in 2008.
In Lee County, 696 building permits were issued through the first nine months of this year. In 2008, there were 1,547.
In Collier, Marbella Lakes by G.L. Homes, located off Livingston Road between Pine Ridge Road and Golden Gate Parkway, has been the “single-family hot spot,” McIntosh said. The builder has pulled 119 permits so far this year, he said.
Two other communities — Lely Resort by Stock Development and VeronaWalk by Pulte Homes — each had 44 permits issued. They were the most active communities after Marbella Lakes.
Next in line was Heritage Bay by Lennar Homes with 39 permits pulled.
In Lee County, the top builder this year is Centex Homes, which has pulled 87 single-family permits — most of them at The Plantation. That compares with 131 in 2008.
Coming in behind Centex is D.R. Horton, which has pulled 69 single-family permits so far this year in Lee.
He described Lee as “ground zero for the foreclosure industry,” saying a bottom has finally been found in Lehigh Acres at about $50,000. The same home in the Naples area would go for twice that, McIntosh said.
He said multi-family projects are almost non-existent in Lee County this year
“There are two builders of multi-family,” McIntosh. “It’s a short subject.”
Centex Homes and Taylor Morrison are the two builders. They pulled permits for 42 units at four projects: The Plantation, Lucaya, Verandah and Tortuga.
He touched on the new town of Ave Maria in eastern Collier County, saying only 10 permits have been pulled this year. Other “new towns” have been postponed.
One investor, who hoped to build a new town in the city of North Port in Sarasota County, is now involved in foreclosure, McIntosh said. “Another new town dream dashed,” he said.
When builders do pull permits they are often dragging along a “ball and chain” from the boom, when they paid inflated prices for land and invested millions to start up new communities that have since been devalued by a housing slump.
Some builders invested millions in land they had hoped to put homes on that now has “no prospective use,” McIntosh said.
“Clearly this was a bubble market,” he said. “Southwest Florida is the poster child for a bubble market.”
He described the “living language” of today including such words as blanket receivership, capitulation, Chinese drywall, jobless recovery, strategic default and W-shape recession.
Two years ago, no one knew what Chinese drywall was and now it’s proving to be a costly problem for builders. Homeowners have complained the material — also known as sheetrock — has led to health problems and metal corrosion.
Here and around the county, many have filed lawsuits over Chinese drywall seeking damages. McIntosh expects many more suits will come.
McIntosh talked about several senior housing projects that have fallen through in Southwest Florida. Potential buyers are having trouble selling their other homes so demand has softened, he explained.
He was stunned a few months ago when Bonita Bay Group announced that it would not build the North River Village project in eastern Lee County after it fell behind on payments for the land.
For him, he said, it was a real “whodathunkit moment.”
He listed some of the local banks that have failed and said he expects there to be more locally and across Florida.
He didn’t offer any optimism in closing his speech. “This is it,” he said. Get used to it. Get to work.”
After his speech, one listener said she hoped for some sugar at the end. Others said they aren’t as pessimistic about the local market.
“There are definitely bright spots and I don’t think that he got that across,” said Patty Campbell, president of G.L. Homes’ Southwest Florida division.
She said he didn’t touch on all the homes that builders have sold this year that were in inventory, which is key to the market turnaround.
“The big dogs that built Naples, which are Centex and WCI, are in limbo right now,” Campbell said. “Eventually, they are going to get it back together again.”
Claudine Leger-Wetzel, director of marketing and sales for Stock Development, said her company is optimistic about 2010.
So far this year, there have been 131 new home sales in Lely Resort. Last week more than 70 registered visitors to the community’s sales center.
“Those are pretty strong numbers for the fall,” she said. “Prospects are coming into our center with optimism and interest in new home purchases.”
By By LAURA LAYDEN - Posted November 12, 2009 - NaplesNews.com
Beth Brown, P.A., GRI, ABR
Coldwell Banker
550 Fifth Ave S.
Naples, FL 34102
Cell 239-250-2408
Fax 1-866-814-2967
BethBrownRealtor@comcast.net
http://www.callnapleshome.com/
http://www.naplesforeclosurereo.com/
Monday, November 16, 2009
Monday, September 14, 2009
SALES UP 87 PERCENT - Report Shows Inventory Declines 13 Percent
NAPLES, Fla.-September 11, 2009-Buyer conditions couldn’t be better in the Naples area as August culminated in strong sales, according to a report released by the Naples Area Board of REALTORS® (NABOR), which tracks home listings and sales within Collier County (excluding Marco Island).
Overall pending sales, which are a key indicator of buyer activity, increased 87 percent with 862 contracts in August 2009 compared to 461 contracts in August 2008.
“Consumer confidence continues as every geographic area experienced an increase in both pending sales and closed sales, for the 12 months ending August 2009,” said Phil Wood, President of John R. Wood REALTORS®.
“For the 12 months ending August 2009, the Naples area pending sales increased 47 percent compared to all of 2008. This signifies the market is improving,” stated Jo Carter, President of Jo Cater & Associates.
The report provides annual comparisons of single-family home and condo sales (via the SunshineMLS), price ranges, geographic segmentation and includes an overall market summary. The statistics are presented in chart format, along with the following analysis:
Overall closed sales saw a 38 percent increase with 545 sales in August 2009 compared to 395 sales in August 2008.
Single-family pending sales increased 86 percent with 483 contracts in August 2009 compared to 260 contracts in August 2008.
Single-family pending sales for properties less than $300,000 saw a 106 percent increase with 344 contracts in August 2009 compared to 167 contracts in August 2008.
The available inventory decreased 13 percent to 9,163 in August 2009 compared to 10,532 in August 2008.
According to Brenda Fioretti, Managing Broker of Prudential Florida Realty, “The average days a property was on the market decreased 21 percent to 160 in August 2009, down from its peak of 202 days on the market in May 2008. This decrease demonstrates that buyers are motivated.”
Condo pending sales increased 89 percent with 379 contracts in August 2009 compared to 201 contracts in August 2008.
“The condo market continues to improve as pending sales increased 90 percent in August 2009. This bodes well for some condo associations that are facing budgetary issues,” stated Bill Poteet, President of Poteet Properties.
By the Naples Area Board of Realtors - September 2009
Beth Brown, P.A., GRI, ABR
Coldwell Banker
550 Fifth Ave S.
Naples, FL 34102
Cell 239-250-2408
Fax 1-866-814-2967
BethBrownRealtor@comcast.net
http://www.callnapleshome.com/
http://www.naplesforeclosurereo.com/
Overall pending sales, which are a key indicator of buyer activity, increased 87 percent with 862 contracts in August 2009 compared to 461 contracts in August 2008.
“Consumer confidence continues as every geographic area experienced an increase in both pending sales and closed sales, for the 12 months ending August 2009,” said Phil Wood, President of John R. Wood REALTORS®.
“For the 12 months ending August 2009, the Naples area pending sales increased 47 percent compared to all of 2008. This signifies the market is improving,” stated Jo Carter, President of Jo Cater & Associates.
The report provides annual comparisons of single-family home and condo sales (via the SunshineMLS), price ranges, geographic segmentation and includes an overall market summary. The statistics are presented in chart format, along with the following analysis:
Overall closed sales saw a 38 percent increase with 545 sales in August 2009 compared to 395 sales in August 2008.
Single-family pending sales increased 86 percent with 483 contracts in August 2009 compared to 260 contracts in August 2008.
Single-family pending sales for properties less than $300,000 saw a 106 percent increase with 344 contracts in August 2009 compared to 167 contracts in August 2008.
The available inventory decreased 13 percent to 9,163 in August 2009 compared to 10,532 in August 2008.
According to Brenda Fioretti, Managing Broker of Prudential Florida Realty, “The average days a property was on the market decreased 21 percent to 160 in August 2009, down from its peak of 202 days on the market in May 2008. This decrease demonstrates that buyers are motivated.”
Condo pending sales increased 89 percent with 379 contracts in August 2009 compared to 201 contracts in August 2008.
“The condo market continues to improve as pending sales increased 90 percent in August 2009. This bodes well for some condo associations that are facing budgetary issues,” stated Bill Poteet, President of Poteet Properties.
By the Naples Area Board of Realtors - September 2009
Beth Brown, P.A., GRI, ABR
Coldwell Banker
550 Fifth Ave S.
Naples, FL 34102
Cell 239-250-2408
Fax 1-866-814-2967
BethBrownRealtor@comcast.net
http://www.callnapleshome.com/
http://www.naplesforeclosurereo.com/
Friday, September 4, 2009
Not all qualify for first-time home buyer tax credit
Buyers expecting to get the first-time home buyer tax credit should check the fine print. They may not qualify.
After closing on his first home earlier this week, 83 year-old Alget Campbell got some disappointing news Thursday: He would not qualify for the first-time home buyer tax credit.
The fine print of the tax provision, which gives a credit of up to $8,000 to buyers who have not owned a home in the last three years, disqualifies individuals whose spouses have owned a home during that same period.
Michael Dobzinski, a spokesman for the Internal Revenue Service, said there are plenty of misconceptions about the so-called first-time home buyer tax credit so it always pays to be familiar with the details before buying.
In Campbell's case, his wife, Hermine, owns the home in Southwest Miami-Dade County the couple has occupied and plans to rent out to cover the mortgage on the townhome they bought for some $71,000 on Monday.
Joan Grant, Campbell's daughter who helped him through the home buying process, said she was disappointed that her father, a former Publix clerk, would not be getting the credit.
"We were hoping for that, but it's kind of late now to worry about it,'' Grant said. "I was hoping that he would get it since he is actually buying this on his own.''
Marcia Pennant, Campbell's real estate agent, said she had told the couple she was not sure they would qualify, but to consult their tax advisor.
Dobzinski, of the IRS, said to get the credit, an individual or spouse cannot have owned a home three years prior to the date of the new purchase.
Also, to keep the credit, homeowners must use the home as their primary residence for three years.
In addition, the purchase must occur on or after Jan. 1 of this year, but before Dec. 1.
The tax credit is equal to 10 percent of the purchase price of the home, up to $8,000. So, had Campbell qualified, he would have gotten a roughly $7,100 credit.
Dobzinski said people often think they will get the tax credit instantly when, in fact, it requires them to either amend their 2008 tax return or wait until they file for 2009. Because it is a tax credit, a buyer who owed no taxes would get a check of up to $8,000.
If taxes are owed, the credit could knock up to $8,000 off the bill.
The credit is phased out for single filers with a modified gross adjusted income of more than $75,000 a year and married couples filing jointing with incomes above $150,000.
Dobzinski said home buyers should consult with their tax advisor to determine whether they qualify. They can also visit www.irs.gov or call the IRS at 800-829-1040.
BY MONICA HATCHER
THE MIAMI HERALD
SEPTEMBER 2009
Beth Brown, P.A., GRI, ABR
Coldwell Banker
550 Fifth Ave S.
Naples, FL 34102
Cell 239-250-2408
Fax 1-866-814-2967
BethBrownRealtor@comcast.net
www.CallNaplesHome.com
www.NaplesForeclosureREO.com
After closing on his first home earlier this week, 83 year-old Alget Campbell got some disappointing news Thursday: He would not qualify for the first-time home buyer tax credit.
The fine print of the tax provision, which gives a credit of up to $8,000 to buyers who have not owned a home in the last three years, disqualifies individuals whose spouses have owned a home during that same period.
Michael Dobzinski, a spokesman for the Internal Revenue Service, said there are plenty of misconceptions about the so-called first-time home buyer tax credit so it always pays to be familiar with the details before buying.
In Campbell's case, his wife, Hermine, owns the home in Southwest Miami-Dade County the couple has occupied and plans to rent out to cover the mortgage on the townhome they bought for some $71,000 on Monday.
Joan Grant, Campbell's daughter who helped him through the home buying process, said she was disappointed that her father, a former Publix clerk, would not be getting the credit.
"We were hoping for that, but it's kind of late now to worry about it,'' Grant said. "I was hoping that he would get it since he is actually buying this on his own.''
Marcia Pennant, Campbell's real estate agent, said she had told the couple she was not sure they would qualify, but to consult their tax advisor.
Dobzinski, of the IRS, said to get the credit, an individual or spouse cannot have owned a home three years prior to the date of the new purchase.
Also, to keep the credit, homeowners must use the home as their primary residence for three years.
In addition, the purchase must occur on or after Jan. 1 of this year, but before Dec. 1.
The tax credit is equal to 10 percent of the purchase price of the home, up to $8,000. So, had Campbell qualified, he would have gotten a roughly $7,100 credit.
Dobzinski said people often think they will get the tax credit instantly when, in fact, it requires them to either amend their 2008 tax return or wait until they file for 2009. Because it is a tax credit, a buyer who owed no taxes would get a check of up to $8,000.
If taxes are owed, the credit could knock up to $8,000 off the bill.
The credit is phased out for single filers with a modified gross adjusted income of more than $75,000 a year and married couples filing jointing with incomes above $150,000.
Dobzinski said home buyers should consult with their tax advisor to determine whether they qualify. They can also visit www.irs.gov or call the IRS at 800-829-1040.
BY MONICA HATCHER
THE MIAMI HERALD
SEPTEMBER 2009
Beth Brown, P.A., GRI, ABR
Coldwell Banker
550 Fifth Ave S.
Naples, FL 34102
Cell 239-250-2408
Fax 1-866-814-2967
BethBrownRealtor@comcast.net
www.CallNaplesHome.com
www.NaplesForeclosureREO.com
Monday, August 31, 2009
10 Reasons to Buy NOW!
1) Section, variety, choices! It’s never been better; it’s like being a kid in a candy store.
2) Make an offer. Back up a couple of years, when you made the offer you had to compete with several others. Many times you had to pay higher than the listing price in hopes of being the best offer!
3) No bidding wars. There is no competitive bidding in this market.
4) Few, if any investors. Statistics say that 1/3 of all sales in 2005 were investors. This caused the market to inflate unrealistically and mortgage loans were given on a handshake.
5) Real loans are available to qualified buyers. Fixed rates are back, FHA financing, first time homeowner programs and special loans for teachers and police officers are back. Mortgage loan rates are at a historical all time low.
6) Plenty of time to browse. In the hot market, buyers were rushed; they had to find the house before somebody else did and hurry to make an offer. Now you can look a several homes and take a few hours to think about your decision.
7) Plenty of builder homes available. In the past when you wanted a brand new home you had to get on waiting lists, enter a lottery and attend a party to see if you won or sleep in your car in order to be at the front of a line when a new development was announced. No more waiting and builders are offering great incentives to new buyers.
8) Repair request are honored. Back in the day, when a buyer completed the home inspection, the decision was usually “do I take it as is or move on.” Backup offers were common and buyers didn’t want to upset the sellers who knew their home value was increasing daily.
9) Due diligence is protocol again. Buyers are back to basics getting their termite, mold, radon and home inspections as well as putting appraisal contingencies back into the contracts. Buyers have the advantage of feeling good about making sure they are getting what they paid for.
10) Pride of ownership and mortgage interest deductions. Pride of ownership is the number one reason that people want to own their own home. It means you can paint, modify and decorate to your own taste. You are also investing in your future and you can deduct the interest you pay on your mortgage from your taxable income.
So what are you waiting for? The time to buy is NOW!
Beth Brown P.A., GRI, ABR
Coldwell Banker
550 5th Ave S.
Naples, FL 34102
Cell 239-250-2408
Fax 866-814-2967
BethBrownRealtor@comcast.net
http://www.callnapleshome.com/
http://www.naplesforeclosurereo.com/
2) Make an offer. Back up a couple of years, when you made the offer you had to compete with several others. Many times you had to pay higher than the listing price in hopes of being the best offer!
3) No bidding wars. There is no competitive bidding in this market.
4) Few, if any investors. Statistics say that 1/3 of all sales in 2005 were investors. This caused the market to inflate unrealistically and mortgage loans were given on a handshake.
5) Real loans are available to qualified buyers. Fixed rates are back, FHA financing, first time homeowner programs and special loans for teachers and police officers are back. Mortgage loan rates are at a historical all time low.
6) Plenty of time to browse. In the hot market, buyers were rushed; they had to find the house before somebody else did and hurry to make an offer. Now you can look a several homes and take a few hours to think about your decision.
7) Plenty of builder homes available. In the past when you wanted a brand new home you had to get on waiting lists, enter a lottery and attend a party to see if you won or sleep in your car in order to be at the front of a line when a new development was announced. No more waiting and builders are offering great incentives to new buyers.
8) Repair request are honored. Back in the day, when a buyer completed the home inspection, the decision was usually “do I take it as is or move on.” Backup offers were common and buyers didn’t want to upset the sellers who knew their home value was increasing daily.
9) Due diligence is protocol again. Buyers are back to basics getting their termite, mold, radon and home inspections as well as putting appraisal contingencies back into the contracts. Buyers have the advantage of feeling good about making sure they are getting what they paid for.
10) Pride of ownership and mortgage interest deductions. Pride of ownership is the number one reason that people want to own their own home. It means you can paint, modify and decorate to your own taste. You are also investing in your future and you can deduct the interest you pay on your mortgage from your taxable income.
So what are you waiting for? The time to buy is NOW!
Beth Brown P.A., GRI, ABR
Coldwell Banker
550 5th Ave S.
Naples, FL 34102
Cell 239-250-2408
Fax 866-814-2967
BethBrownRealtor@comcast.net
http://www.callnapleshome.com/
http://www.naplesforeclosurereo.com/
Wednesday, August 26, 2009
2008 Cost vs. Value Report: Still Many Happy Returns for Home Rehabs
Remodeling magazine's annual report shows that maintenance-related projects and moderately priced upgrades are providing stable paybacks, even in a slower market.
Despite home price drops in many cities, remodeling projects are holding their own as a way for owners to add value.
Many people are wondering where their money will be safest during these uncertain economic times. When home owners turn to you for your expert advice, counsel them that some things never change: Investing in their home still pays off.
NATIONAL ASSOCIATION OF REALTORS® statistics show that home prices have fallen by an average of 7 percent nationally in the past year. But the value of home owners’ investment in remodeling projects has declined only 3.86 percent on average between 2007 and 2008, according to Remodeling’s 2008–2009 Cost vs. Value Report.
Remodeling produces the Cost vs. Value Report each year in cooperation with REALTOR® magazine. REALTORS® responding to a survey in midsummer said home owners could expect to recoup a national average of 67.3 percent of their investment in 30 different home improvement projects. At the height of the housing boom in 2005, home owners could expect to recoup a national average of 86.7 percent on projects.
Remodeling remains hot in 10 cities, where, on at least some projects, home owners can recover 100 percent of their costs. In Charlotte, N.C., for example, decks, midrange kitchen remodels, vinyl siding, and window-replacement projects all would net more than they cost, in respondents’ estimation. High rates of recovery were seen in both strong real estate markets and weak ones.
Many cities with the highest rates of recovery were smaller—Jackson, Miss., and Billings, Mont., for example—which may point to lower labor and materials costs that are easier to recoup.
Seattle also made the list of cities with a cost recovery of more than 100 percent on decks and minor kitchen remodels. In fact, Pacific Coast cities recorded the best payback on remodeling by a wide margin, as they did in 2007. Although construction costs on the Pacific Coast are nearly 17 percent higher than national averages, the value of renovations at resale more than makes up for those higher prices.
The result is an average cost-recouped percentage that’s 14.8 percent higher than in the rest of the country. The toughest place to get your money back: Midwestern cities such as Chicago, Cleveland, Indianapolis, and Milwaukee.
Top 10 Project Paybacks
Once again, exterior remodeling projects lead the way for recovery on dollars spent in this year’s Cost vs. Value survey. When you compare the national averages, replacement projects that boost curb appeal—siding, windows, and decks—give you the greatest chance of recouping your money. Inside, only kitchen remodels can compare, at least on a national level.
1. Upscale fiber cement siding (86.7%)
2. Midrange wood deck (81.8%)
3. Midrange vinyl siding (80.7%)
4. Upscale foam-backed vinyl (80.4%)
5. Midrange minor kitchen remodel (79.5%)
6. Upscale vinyl window replacement (79.2%)
7. Midrange wood window replacement (77.7%)
8. Midrange vinyl window replacement (77.2%)
9. Upscale wood window replacement (76.5%
10. Midrange major kitchen remodel (76.0%)
By G.M. Filisko December 2008
Beth Brown P.A., GRI, ABR
Coldwell Banker
550 5th Ave S.
Naples, FL 34102
Cell 239-250-2408
Fax 866-814-2967
BethBrownRealtor@comcast.net
http://www.callnapleshome.com/
http://www.naplesforeclosurereo.com/
Despite home price drops in many cities, remodeling projects are holding their own as a way for owners to add value.
Many people are wondering where their money will be safest during these uncertain economic times. When home owners turn to you for your expert advice, counsel them that some things never change: Investing in their home still pays off.
NATIONAL ASSOCIATION OF REALTORS® statistics show that home prices have fallen by an average of 7 percent nationally in the past year. But the value of home owners’ investment in remodeling projects has declined only 3.86 percent on average between 2007 and 2008, according to Remodeling’s 2008–2009 Cost vs. Value Report.
Remodeling produces the Cost vs. Value Report each year in cooperation with REALTOR® magazine. REALTORS® responding to a survey in midsummer said home owners could expect to recoup a national average of 67.3 percent of their investment in 30 different home improvement projects. At the height of the housing boom in 2005, home owners could expect to recoup a national average of 86.7 percent on projects.
Remodeling remains hot in 10 cities, where, on at least some projects, home owners can recover 100 percent of their costs. In Charlotte, N.C., for example, decks, midrange kitchen remodels, vinyl siding, and window-replacement projects all would net more than they cost, in respondents’ estimation. High rates of recovery were seen in both strong real estate markets and weak ones.
Many cities with the highest rates of recovery were smaller—Jackson, Miss., and Billings, Mont., for example—which may point to lower labor and materials costs that are easier to recoup.
Seattle also made the list of cities with a cost recovery of more than 100 percent on decks and minor kitchen remodels. In fact, Pacific Coast cities recorded the best payback on remodeling by a wide margin, as they did in 2007. Although construction costs on the Pacific Coast are nearly 17 percent higher than national averages, the value of renovations at resale more than makes up for those higher prices.
The result is an average cost-recouped percentage that’s 14.8 percent higher than in the rest of the country. The toughest place to get your money back: Midwestern cities such as Chicago, Cleveland, Indianapolis, and Milwaukee.
Top 10 Project Paybacks
Once again, exterior remodeling projects lead the way for recovery on dollars spent in this year’s Cost vs. Value survey. When you compare the national averages, replacement projects that boost curb appeal—siding, windows, and decks—give you the greatest chance of recouping your money. Inside, only kitchen remodels can compare, at least on a national level.
1. Upscale fiber cement siding (86.7%)
2. Midrange wood deck (81.8%)
3. Midrange vinyl siding (80.7%)
4. Upscale foam-backed vinyl (80.4%)
5. Midrange minor kitchen remodel (79.5%)
6. Upscale vinyl window replacement (79.2%)
7. Midrange wood window replacement (77.7%)
8. Midrange vinyl window replacement (77.2%)
9. Upscale wood window replacement (76.5%
10. Midrange major kitchen remodel (76.0%)
By G.M. Filisko December 2008
Beth Brown P.A., GRI, ABR
Coldwell Banker
550 5th Ave S.
Naples, FL 34102
Cell 239-250-2408
Fax 866-814-2967
BethBrownRealtor@comcast.net
http://www.callnapleshome.com/
http://www.naplesforeclosurereo.com/
Moving Done Right
With more than 40 million Americans moving each year, the Department of Transportation (DOT), which oversees the moving industry, receives up to 4,000 complaints each year. Most of these complaints stem from damaged goods and overcharging. If you have clients planning a move, here are some important tips they should consider.
Qualify the mover. Ask to see the movers’ DOT registration. Most complaints involve “rogue movers,” which are companies that operate without the proper certifications. Check their reputability on Angie’s List (angieslist.com) and the Better Business Bureau (bbb.org). Avoid any mover that offers quotes over the phone or the Internet. Instead, get at least three written estimates from separate professional movers that require an in-home inspection before providing a quote. Be wary of any quote substantially lower than others you get. The tactic of low balling to get the job and then demanding additional charges to cover actual costs is all too common.
Know your estimate. Professional movers offer different kinds of estimates. They can include binding and, more often, non-binding estimates with a guaranteed not-to-exceed price. Discuss all options and identify in writing any exclusions to the guaranteed not-to-exceed price.
Get additional insurance. The default insurance that movers provide is called valuation coverage, which assumes liability for no more than 60 cents per pound per item. Meaning: The 32" Sony LCD HDTV that cost $497.99 will fetch $15 if found damaged upon delivery. Fortunately, movers offer additional insurance policies in which you can pay to cover depreciation value or even replacement cost. Regardless of the type of insurance, notify the mover in writing about any articles of high value.
Finally, do not sign a delivery receipt for your household goods if it contains any language about releasing the moving company from liability. By law, anyone moving has up to nine months to file a written claim. Strike out this kind of language or refuse delivery until a proper receipt is provided.
Copyright 2009 Prospect Mortgage
Beth Brown P.A., GRI, ABR
Coldwell Banker
550 5th Ave S.
Naples, FL 34102
Cell 239-250-2408
Fax 866-814-2967
BethBrownRealtor@comcast.net
www.CallNaplesHome.com
www.NaplesForeclosureREO.com
Qualify the mover. Ask to see the movers’ DOT registration. Most complaints involve “rogue movers,” which are companies that operate without the proper certifications. Check their reputability on Angie’s List (angieslist.com) and the Better Business Bureau (bbb.org). Avoid any mover that offers quotes over the phone or the Internet. Instead, get at least three written estimates from separate professional movers that require an in-home inspection before providing a quote. Be wary of any quote substantially lower than others you get. The tactic of low balling to get the job and then demanding additional charges to cover actual costs is all too common.
Know your estimate. Professional movers offer different kinds of estimates. They can include binding and, more often, non-binding estimates with a guaranteed not-to-exceed price. Discuss all options and identify in writing any exclusions to the guaranteed not-to-exceed price.
Get additional insurance. The default insurance that movers provide is called valuation coverage, which assumes liability for no more than 60 cents per pound per item. Meaning: The 32" Sony LCD HDTV that cost $497.99 will fetch $15 if found damaged upon delivery. Fortunately, movers offer additional insurance policies in which you can pay to cover depreciation value or even replacement cost. Regardless of the type of insurance, notify the mover in writing about any articles of high value.
Finally, do not sign a delivery receipt for your household goods if it contains any language about releasing the moving company from liability. By law, anyone moving has up to nine months to file a written claim. Strike out this kind of language or refuse delivery until a proper receipt is provided.
Copyright 2009 Prospect Mortgage
Beth Brown P.A., GRI, ABR
Coldwell Banker
550 5th Ave S.
Naples, FL 34102
Cell 239-250-2408
Fax 866-814-2967
BethBrownRealtor@comcast.net
www.CallNaplesHome.com
www.NaplesForeclosureREO.com
Tuesday, August 18, 2009
America's 10 Best Undervalued Places to Live
America's 10 Best Undervalued Places to Live:
(Percent of undervaluation, according to IHS Global Insight.)
1. Las Vegas: 41 percent
2.Houston: 37 percent
3.Naples, Fla.: 33 percent
4.Oklahoma City: 29 percent
5. Sarasota, Fla. 28 percent
The real estate bust has created some attractive bargain opportunities in certain housing markets. While the national housing bust has devastated property values, it has also created some outstanding bargain opportunities for would-be home buyers—if you know where to look.
During the first half of the decade, easy credit and speculative fervor sent home prices in certain states—Florida, California, Nevada—scorching to phenomenal heights. But nearly three years into a real estate crash that's dragged home prices down 32 percent from their
2006 peaks, some of these once wildly overpriced markets present today's real estate shoppers with perhaps their best shot at long-term value. "What we have seen is that those markets that became significantly overvalued [during the housing boom] are right now very undervalued," says Jeannine Cataldi, senior economist and manager of IHS Global Insight's Regional Real Estate Service.
To pinpoint the nation's most undervalued housing markets, we turned to IHS Global Insight's first-quarter 2009 House Prices in America report, which uses household income, population density, and other data to compare a market's actual value with where it should be on a statistical basis. We then used employment, quality-of-life, and other research to determine America's best undervalued places to live.
Las Vegas. After a dizzying run-up in prices, Sin City has become a cautionary tale for real estate investors everywhere.
Since its 2006 peak, Las Vegas home values have plummeted by more than 50 percent. And today—at $77 a square foot— existing homes are actually priced below the cost of building materials, says Steve Bottfeld, the principal of Las Vegas-based People Who Read This Also Read The Top 10 Housing Markets for the Next 10 Years Top 5 Fastest- Growing States in the Union 10 Affordable Places to Retire The 10 Most Dollar- Discounted Housing Markets- 11 Best-Kept-Secret Careers
Marketing Solutions, which specializes in real estate economics. "That's truly undervalued," he says. Although the market may be depressed today, several factors will support strong housing demand in Las Vegas over the long haul, Bottfeld says. The opening of MGM Mirage's CityCenter, which is expected later this year, will bring new jobs. The city's enviable climate—hot summers and mild winters—and its exciting downtown district will continue to attract residents. And the best-in-class architectural design of area properties will appeal to would-be buyers. "We are on the bottom of prices at this point," Bottfeld says. "There is no question that the residential market in Las Vegas is undervalued." The median single family home price in Las Vegas was $140,000, in the first quarter, which IHS Global Insight considers 41 percent undervalued.
Houston. Unlike other metropolitan areas, Houston has not been hammered by the national housing bust. In fact, real home prices increased nearly 5 percent from the first quarter of 2008 to the first quarter of 2009, according to a Brookings Institution report.
But even without a sharp decline in real estate values, projected job and population growth should drive future home price appreciation and create value, says James Gaines, a research economist at the Real Estate Center at Texas A&M University. "The medium- and long-term prospects for Houston are extremely good," he says. The area's low-tax, probusiness climate will lure new employers to Houston and help bolster an already sound local economy anchored by the energy and healthcare sectors, Gaines says. More jobs, of course, mean more residents and greater demand for housing. "[Houston has] good demographic growth, job growth, and a reasonably balanced housing market," he says. The median home price in Houston was $120,000, in the first quarter, which IHS Global Insight considers 37 percent undervalued.
Naples, Fla. More than two years of price declines have turned some of Florida's most overpriced communities into buying opportunities, says Jack McCabe of Florida-based McCabe Research & Consulting. "There are definitely opportunities in the marketplace now that make sense," he says. The upscale retirement community of Naples is one such market, McCabe says. With plenty of golf, beaches, and fishing, Naples is an enchanting, sun-drenched spot along Florida's southwest coastline. And after home prices plummeted by nearly 50 percent from the first quarter of 2006 to the first quarter of 2009, the housing America's 10 Best Undervalued Places to Live . Naples market is looking increasingly tempting. IHS Global Insight considers the median home price in Naples—$200,000—to be 33 percent undervalued.
Oklahoma City. Like Houston, Oklahoma City was able to dodge the housing crash. Real home prices in Oklahoma City increased nearly 3 percent from the first quarter of 2008 to the first quarter of 2009. Housing demand was fueled by a strong local economy, which had the nation's ninth-lowest unemployment rate—5.6 percent—as of March of 2009, according to the Brookings Institution. The state's pro-business philosophy plays a key role in its economic strength, says Dawn Kennedy, the CEO of the Oklahoma City Metropolitan Association of Realtors. "Businesses come in because the tax situation is favorable," she says. "They bring in jobs, which brings in workers, which brings in homeowners." At the same time, the pleasant weather, friendly residents, and an affordable real estate market make Oklahoma City a great place to live, Kennedy says. "It is like the biggest small town on Earth." IHS Global Insight considers the median home price in Oklahoma City— $105,000—to be 29 percent undervalued.
Sarasota, Fla. Another alluring option for those looking to buy into the depressed Florida housing market is Sarasota, McCabe says. Like Naples, Sarasota is a relatively upscale community along the state's west coast. "Sarasota has got a lot of culture to it—a lot of art, a lot of art festivals," McCabe says. "It's a nice boating community, and they have got a lot of beautiful homes there." And after home prices plunged 44 percent from the first quarter of 2006 to the first quarter of 2009, the market presents would-be buyers with some attractive opportunities. IHS Global Insight considers the median home price in Sarasota— $141,000—to be 28 percent undervalued.
1. Las Vegas: 41 percent
2.Houston: 37 percent
3.Naples, Fla.: 33 percent
4.Oklahoma City: 29 percent
5. Sarasota, Fla. 28 percent
6. San Francisco: 25 percent
7. Atlanta: 24 percent
8.Omaha: 23 percent
9. College Station-Bryan, Texas: 21 percent
10.San Diego: 21 percent
By Luke Mullins Posted July 16, 2009
USNews.com
Beth Brown P.A., GRI, ABR
Coldwell Banker
550 5th Ave S.
Naples, FL 34102
Cell 239-250-2408
Fax 866-814-2967
BethBrownRealtor@comcast.net
http://www.callnapleshome.com/
http://www.naplesforeclosurereo.com/
(Percent of undervaluation, according to IHS Global Insight.)
1. Las Vegas: 41 percent
2.Houston: 37 percent
3.Naples, Fla.: 33 percent
4.Oklahoma City: 29 percent
5. Sarasota, Fla. 28 percent
The real estate bust has created some attractive bargain opportunities in certain housing markets. While the national housing bust has devastated property values, it has also created some outstanding bargain opportunities for would-be home buyers—if you know where to look.
During the first half of the decade, easy credit and speculative fervor sent home prices in certain states—Florida, California, Nevada—scorching to phenomenal heights. But nearly three years into a real estate crash that's dragged home prices down 32 percent from their
2006 peaks, some of these once wildly overpriced markets present today's real estate shoppers with perhaps their best shot at long-term value. "What we have seen is that those markets that became significantly overvalued [during the housing boom] are right now very undervalued," says Jeannine Cataldi, senior economist and manager of IHS Global Insight's Regional Real Estate Service.
To pinpoint the nation's most undervalued housing markets, we turned to IHS Global Insight's first-quarter 2009 House Prices in America report, which uses household income, population density, and other data to compare a market's actual value with where it should be on a statistical basis. We then used employment, quality-of-life, and other research to determine America's best undervalued places to live.
Las Vegas. After a dizzying run-up in prices, Sin City has become a cautionary tale for real estate investors everywhere.
Since its 2006 peak, Las Vegas home values have plummeted by more than 50 percent. And today—at $77 a square foot— existing homes are actually priced below the cost of building materials, says Steve Bottfeld, the principal of Las Vegas-based People Who Read This Also Read The Top 10 Housing Markets for the Next 10 Years Top 5 Fastest- Growing States in the Union 10 Affordable Places to Retire The 10 Most Dollar- Discounted Housing Markets- 11 Best-Kept-Secret Careers
Marketing Solutions, which specializes in real estate economics. "That's truly undervalued," he says. Although the market may be depressed today, several factors will support strong housing demand in Las Vegas over the long haul, Bottfeld says. The opening of MGM Mirage's CityCenter, which is expected later this year, will bring new jobs. The city's enviable climate—hot summers and mild winters—and its exciting downtown district will continue to attract residents. And the best-in-class architectural design of area properties will appeal to would-be buyers. "We are on the bottom of prices at this point," Bottfeld says. "There is no question that the residential market in Las Vegas is undervalued." The median single family home price in Las Vegas was $140,000, in the first quarter, which IHS Global Insight considers 41 percent undervalued.
Houston. Unlike other metropolitan areas, Houston has not been hammered by the national housing bust. In fact, real home prices increased nearly 5 percent from the first quarter of 2008 to the first quarter of 2009, according to a Brookings Institution report.
But even without a sharp decline in real estate values, projected job and population growth should drive future home price appreciation and create value, says James Gaines, a research economist at the Real Estate Center at Texas A&M University. "The medium- and long-term prospects for Houston are extremely good," he says. The area's low-tax, probusiness climate will lure new employers to Houston and help bolster an already sound local economy anchored by the energy and healthcare sectors, Gaines says. More jobs, of course, mean more residents and greater demand for housing. "[Houston has] good demographic growth, job growth, and a reasonably balanced housing market," he says. The median home price in Houston was $120,000, in the first quarter, which IHS Global Insight considers 37 percent undervalued.
Naples, Fla. More than two years of price declines have turned some of Florida's most overpriced communities into buying opportunities, says Jack McCabe of Florida-based McCabe Research & Consulting. "There are definitely opportunities in the marketplace now that make sense," he says. The upscale retirement community of Naples is one such market, McCabe says. With plenty of golf, beaches, and fishing, Naples is an enchanting, sun-drenched spot along Florida's southwest coastline. And after home prices plummeted by nearly 50 percent from the first quarter of 2006 to the first quarter of 2009, the housing America's 10 Best Undervalued Places to Live . Naples market is looking increasingly tempting. IHS Global Insight considers the median home price in Naples—$200,000—to be 33 percent undervalued.
Oklahoma City. Like Houston, Oklahoma City was able to dodge the housing crash. Real home prices in Oklahoma City increased nearly 3 percent from the first quarter of 2008 to the first quarter of 2009. Housing demand was fueled by a strong local economy, which had the nation's ninth-lowest unemployment rate—5.6 percent—as of March of 2009, according to the Brookings Institution. The state's pro-business philosophy plays a key role in its economic strength, says Dawn Kennedy, the CEO of the Oklahoma City Metropolitan Association of Realtors. "Businesses come in because the tax situation is favorable," she says. "They bring in jobs, which brings in workers, which brings in homeowners." At the same time, the pleasant weather, friendly residents, and an affordable real estate market make Oklahoma City a great place to live, Kennedy says. "It is like the biggest small town on Earth." IHS Global Insight considers the median home price in Oklahoma City— $105,000—to be 29 percent undervalued.
Sarasota, Fla. Another alluring option for those looking to buy into the depressed Florida housing market is Sarasota, McCabe says. Like Naples, Sarasota is a relatively upscale community along the state's west coast. "Sarasota has got a lot of culture to it—a lot of art, a lot of art festivals," McCabe says. "It's a nice boating community, and they have got a lot of beautiful homes there." And after home prices plunged 44 percent from the first quarter of 2006 to the first quarter of 2009, the market presents would-be buyers with some attractive opportunities. IHS Global Insight considers the median home price in Sarasota— $141,000—to be 28 percent undervalued.
1. Las Vegas: 41 percent
2.Houston: 37 percent
3.Naples, Fla.: 33 percent
4.Oklahoma City: 29 percent
5. Sarasota, Fla. 28 percent
6. San Francisco: 25 percent
7. Atlanta: 24 percent
8.Omaha: 23 percent
9. College Station-Bryan, Texas: 21 percent
10.San Diego: 21 percent
By Luke Mullins Posted July 16, 2009
USNews.com
Beth Brown P.A., GRI, ABR
Coldwell Banker
550 5th Ave S.
Naples, FL 34102
Cell 239-250-2408
Fax 866-814-2967
BethBrownRealtor@comcast.net
http://www.callnapleshome.com/
http://www.naplesforeclosurereo.com/
Thursday, August 6, 2009
The ins and outs of short sales
Many of us have now become familiar with the term “short sale” in the context of the current real estate market. For those less familiar, this is a transaction where the seller agrees to sell the property for less than the balance owed on the seller’s mortgage. This is subject to the approval of all lien holders on the property, to the short payoff and release of the lien encumbering the property to enable the seller to deliver clear title to the buyer.
A short sale typically presents an opportunity for a buyer to purchase a property at a discount. The opportunity cost of the short sale for the buyers, however, is time. Buyers often endure many months of waiting before the seller’s lender approves the short sale. But what happens to the short sale contract if the seller files for bankruptcy protection before the short sale closing occurs?
At the time the seller files for bankruptcy protection a “snap shot” of all the seller’s assets and liabilities is taken. All of the seller’s property, except that protected by law, becomes part of the bankruptcy estate and is subject to being sold by the assigned bankruptcy trustee in the case to pay creditors. All uncompleted contracts also are listed in the bankruptcy filing, and this would include both the contract between buyer and seller as well as the contract between seller and broker. The seller lists the real estate in question in the bankruptcy petition, indicates intentions regarding that real estate, which, in the case of a property in a short sale contract under Chapter 7 bankruptcy, would typically be to abandon the property, and it is up to the assigned bankruptcy trustee then to make a determination as to whether to attempt to sell the property for the benefit of creditors or to abandon it again.
Because short sale real estate typically offers no equity for the seller, in other words, they owe more on any mortgages than the current fair market value, there is generally nothing for the bankruptcy trustee to administer or liquidate for the benefit of unsecured creditors. Because the bankruptcy trustee represents the interests of the seller/debtor’s unsecured creditors, he or she would also be likely to abandon the property after a review of its value and the liens encumbering it. The reason is that those liens must be satisfied, to the degree they can be, from sale proceeds, leaving nothing for unsecured creditors.
In a case where there is no short sale or where the trustee abandons the property, the lender will, with the bankruptcy court’s permission or upon completion of the bankruptcy case, proceed in state court with its foreclosure remedy. The lender may even pre-empt the trustee and request that the court permit the lender to proceed in state court prior to the trustee’s determination that the property will yield nothing for the bankruptcy estate.
After the state court foreclosure action, the bank will take title to the real estate, sell it and apply the proceeds to the mortgage balance. The bankruptcy discharge prohibits the lender from making any attempt to try to force the seller/debtor to make up any shortfall between the sale price of the property and what was owed on any liens against it.
However, seller’s/debtor’s attorney may also request that the bankruptcy court permit the debtor permission to go forward with the short sale transaction while the bankruptcy case is pending. The seller’s bankruptcy attorney will bring a motion in the bankruptcy court to sell the real estate. Once the court has heard the motion, an order to sell the real estate may be granted so long as the trustee has not determined that there is value in the property for the unsecured creditors and no creditor objects. Any lien holders on the property are made aware of the bankruptcy filing, as creditors in the seller’s bankruptcy, may object. However, many lenders may not object, and may continue on to approve the short payoff and the closing can still occur. This may benefit the lender because the longer the property lies empty, the lower the value the lender will receive once it finally finishes its foreclosure and then liquidates the property. It is better, then, to have a willing buyer at an acceptable price to present to the lender for short sale approval.
Although the seller cannot be held liable for the liens on the property post-discharge, there is still a possibility that he or she could incur liabilities for personal injuries on the property or code violations. Accordingly the short sale, which quickly removes title to the property from the seller’s name to that of buyer, protects the seller from such post-bankruptcy filing liabilities.
The Bradenton Herald
Published July 13, 2009
A short sale typically presents an opportunity for a buyer to purchase a property at a discount. The opportunity cost of the short sale for the buyers, however, is time. Buyers often endure many months of waiting before the seller’s lender approves the short sale. But what happens to the short sale contract if the seller files for bankruptcy protection before the short sale closing occurs?
At the time the seller files for bankruptcy protection a “snap shot” of all the seller’s assets and liabilities is taken. All of the seller’s property, except that protected by law, becomes part of the bankruptcy estate and is subject to being sold by the assigned bankruptcy trustee in the case to pay creditors. All uncompleted contracts also are listed in the bankruptcy filing, and this would include both the contract between buyer and seller as well as the contract between seller and broker. The seller lists the real estate in question in the bankruptcy petition, indicates intentions regarding that real estate, which, in the case of a property in a short sale contract under Chapter 7 bankruptcy, would typically be to abandon the property, and it is up to the assigned bankruptcy trustee then to make a determination as to whether to attempt to sell the property for the benefit of creditors or to abandon it again.
Because short sale real estate typically offers no equity for the seller, in other words, they owe more on any mortgages than the current fair market value, there is generally nothing for the bankruptcy trustee to administer or liquidate for the benefit of unsecured creditors. Because the bankruptcy trustee represents the interests of the seller/debtor’s unsecured creditors, he or she would also be likely to abandon the property after a review of its value and the liens encumbering it. The reason is that those liens must be satisfied, to the degree they can be, from sale proceeds, leaving nothing for unsecured creditors.
In a case where there is no short sale or where the trustee abandons the property, the lender will, with the bankruptcy court’s permission or upon completion of the bankruptcy case, proceed in state court with its foreclosure remedy. The lender may even pre-empt the trustee and request that the court permit the lender to proceed in state court prior to the trustee’s determination that the property will yield nothing for the bankruptcy estate.
After the state court foreclosure action, the bank will take title to the real estate, sell it and apply the proceeds to the mortgage balance. The bankruptcy discharge prohibits the lender from making any attempt to try to force the seller/debtor to make up any shortfall between the sale price of the property and what was owed on any liens against it.
However, seller’s/debtor’s attorney may also request that the bankruptcy court permit the debtor permission to go forward with the short sale transaction while the bankruptcy case is pending. The seller’s bankruptcy attorney will bring a motion in the bankruptcy court to sell the real estate. Once the court has heard the motion, an order to sell the real estate may be granted so long as the trustee has not determined that there is value in the property for the unsecured creditors and no creditor objects. Any lien holders on the property are made aware of the bankruptcy filing, as creditors in the seller’s bankruptcy, may object. However, many lenders may not object, and may continue on to approve the short payoff and the closing can still occur. This may benefit the lender because the longer the property lies empty, the lower the value the lender will receive once it finally finishes its foreclosure and then liquidates the property. It is better, then, to have a willing buyer at an acceptable price to present to the lender for short sale approval.
Although the seller cannot be held liable for the liens on the property post-discharge, there is still a possibility that he or she could incur liabilities for personal injuries on the property or code violations. Accordingly the short sale, which quickly removes title to the property from the seller’s name to that of buyer, protects the seller from such post-bankruptcy filing liabilities.
The Bradenton Herald
Published July 13, 2009
Wednesday, July 22, 2009
Mortgage Certificate Tax Credits-Doubling Your Borrowers’ Tax Benefits
It seems like as much as things have changed, the more they stay the same. It never ceases to amaze me how the programs we used to use, are making a come back in today’s lending environment.
Mortgage Credit Certificates (MCC’s) are such a program. Best of all, it can be used in combination with the $8000 tax credit. Of course, they have to qualify for each program, but if they do, it’s a DOUBLE TAX BENEFIT!
An MCC is a dollar for dollar tax credit on a borrower’s federal tax return. This credit is used to offset a tax liability. That means in order to get the full benefit of the credit your client must have a tax liability at the end of the year.
In a nutshell, this liability is “washed” away by the tax credit.
Most borrowers create a tax liability by changing their withholdings out of their paycheck. That means more money in every paycheck. Because the amount of tax withheld from the borrowers check is decreased, this should lead to a tax liability at the end of the year. The tax liability can
be washed away dollar for dollar by the MCC credit.
Read the examples, how it works. Download copies of the IRS forms, IRS Publication 530. And always, always, refer clients to a tax advisor.
MCC’s are generally issued by State/Local Housing Finance Agencies (HFA’s) but are not offered in all states. MCC’s are generally limited to First Time Homebuyers, while some HFA’s may allow buyers in targeted geographic areas to be non-first time buyers. Generally, MCC’s are limited to
low to moderate income borrowers. Income limits vary according to the geographic location of the property and are determined by the HFA that is issuing the MCC.
An MCC credit is equal to a minimum of 10% of the interest paid by a borrower during the year and can be as high as 50% of the interest paid for some borrowers. In most cases, the MCC credit is 10 to 25% of the interest paid on a mortgage during the calendar year. The percentage of the credit is set by the HFA that issues it.
If a borrower pays $5,000 a year in interest and has a 20% MCC credit, that credit amounts to an extra $1,000 for the borrower over the year. That equals an extra $83.33 per month in the borrowers pocket and can mean as much as an extra $5k to $10k in buying power for a client. In addition for borrowers with higher debt ratios the MCC credit may help them qualify.
Borrowers using an MCC credit are qualified differently depending on the type of loan they are doing. Conventional mortgage borrowers can have the amount of the credit added back into their monthly income to help them qualify.
Borrowers using an FHA loan can choose to either have the MCC added to monthly income or used as a direct offset against the monthly payment (greatest impact on debt ratios). In most cases, you will need a copy of the commitment to issue the MCC from the Housing Finance Agency prior to closing as well as a copy of a revised W-4 showing the borrower has modified their withholding’s accordingly to create the necessary tax liability to take full advantage of the
credit.
Let’s take a look at an example:
Prior to buying a home, borrower gets a tax refund of approximately $1,500 every year. The Buyer has an estimated $5,000 per year in mortgage interest and will have an MCC for 20%. The value of the MCC is $1,000 for the year ($5,000 x 20%). In order to get the full benefit of the tax credit, the borrower must have a tax liability of $1,000. If they are currently getting aproximately $1,500 per year in refund they must modify their withholdings to reflect $2,500 ($1,500 anticipated tax refund + $1,000 MCC credit).
Past Tax Return Estimate: $1500
MCC Tax Credit $1000
Total Tax Credit $2500
Divided by 12 months = $208.33
By getting the extra $2,500 over the year the borrower will have an extra $208.33 per month in their check to use toward their house payment. At the end of the year when they file their tax return they would have a “tax liability” of $1,000. The value of the MCC would eliminate the tax liability and the borrower would get no refund but had the extra $208.33 per month to use toward their dream home.
By filing a new W-4 form with their employer; using the $208 estimate, the employer will include that extra money in the clients’ paycheck. If you’ve even seen a W-4 form, it’s a 2-page form, with lots of questions and figures. However, your client does not have to go thru the formulas— they can just write down a flat dollar amount on the page where they sign their name. As for couples, filing jointly, who are both employed, they can split that dollar amount any way they choose. —Again by filing a new W-4 form. One person may file for $150 and the other for $58.33.
Sure beats giving the government an interest free loan!
Keep in mind, the amount of interest that can be claimed on a borrowers Schedule A is reduced by the value of the MCC credit. In this example, the borrower paid $5,000 in interest over the year. However, the value of the MCC was $1,000. Schedule A mortgage interest deduction is limited to $4,000 ($5,000 interest paid - $1,000 MCC benefit).
So what happens is they don’t use the entire tax credit? If the borrower does not withhold correctly and they do not get the full benefit of the entire tax credit, they can carry the value of that credit forward for as long as three years and take advantage of it next year. If the MCC credit rate is higher than 20%, the maximum credit is $2,000 per year. In addition, any amount over $2,000 cannot be carried forward to following years for borrowers whose credit exceeds 20%.
If a homeowner refinances, some HFA’s will reissue the MCC for the new loan but will likely limit the amount of the benefit to mirror at best the original loan terms. In no cases will the IRS allow the credit on a refinanced loan to exceed the original MCC credit. In addition, not all HFA’s will allow a borrower who refinances to maintain their MCC.
Like a mortgage bond program, if the home is sold within the first nine years the borrower may be subject to a recapture tax depending on if the home was sold for a profit and what their income is at the time of sale.
Most Housing Finance agencies have a fee for issuing a MCC. The fee can vary from agency to agency. Check with your local or state Housing Finance Agency to see if an MCC is available in your area.
By learning what the terms and guidelines are, you can use this as a tool to get more lead from first time buyers.
By Dan Moralez, Staff Writer, www.MortgageCurrentcy.com
Sr. VP First Place Bank
Mortgage Credit Certificates (MCC’s) are such a program. Best of all, it can be used in combination with the $8000 tax credit. Of course, they have to qualify for each program, but if they do, it’s a DOUBLE TAX BENEFIT!
An MCC is a dollar for dollar tax credit on a borrower’s federal tax return. This credit is used to offset a tax liability. That means in order to get the full benefit of the credit your client must have a tax liability at the end of the year.
In a nutshell, this liability is “washed” away by the tax credit.
Most borrowers create a tax liability by changing their withholdings out of their paycheck. That means more money in every paycheck. Because the amount of tax withheld from the borrowers check is decreased, this should lead to a tax liability at the end of the year. The tax liability can
be washed away dollar for dollar by the MCC credit.
Read the examples, how it works. Download copies of the IRS forms, IRS Publication 530. And always, always, refer clients to a tax advisor.
MCC’s are generally issued by State/Local Housing Finance Agencies (HFA’s) but are not offered in all states. MCC’s are generally limited to First Time Homebuyers, while some HFA’s may allow buyers in targeted geographic areas to be non-first time buyers. Generally, MCC’s are limited to
low to moderate income borrowers. Income limits vary according to the geographic location of the property and are determined by the HFA that is issuing the MCC.
An MCC credit is equal to a minimum of 10% of the interest paid by a borrower during the year and can be as high as 50% of the interest paid for some borrowers. In most cases, the MCC credit is 10 to 25% of the interest paid on a mortgage during the calendar year. The percentage of the credit is set by the HFA that issues it.
If a borrower pays $5,000 a year in interest and has a 20% MCC credit, that credit amounts to an extra $1,000 for the borrower over the year. That equals an extra $83.33 per month in the borrowers pocket and can mean as much as an extra $5k to $10k in buying power for a client. In addition for borrowers with higher debt ratios the MCC credit may help them qualify.
Borrowers using an MCC credit are qualified differently depending on the type of loan they are doing. Conventional mortgage borrowers can have the amount of the credit added back into their monthly income to help them qualify.
Borrowers using an FHA loan can choose to either have the MCC added to monthly income or used as a direct offset against the monthly payment (greatest impact on debt ratios). In most cases, you will need a copy of the commitment to issue the MCC from the Housing Finance Agency prior to closing as well as a copy of a revised W-4 showing the borrower has modified their withholding’s accordingly to create the necessary tax liability to take full advantage of the
credit.
Let’s take a look at an example:
Prior to buying a home, borrower gets a tax refund of approximately $1,500 every year. The Buyer has an estimated $5,000 per year in mortgage interest and will have an MCC for 20%. The value of the MCC is $1,000 for the year ($5,000 x 20%). In order to get the full benefit of the tax credit, the borrower must have a tax liability of $1,000. If they are currently getting aproximately $1,500 per year in refund they must modify their withholdings to reflect $2,500 ($1,500 anticipated tax refund + $1,000 MCC credit).
Past Tax Return Estimate: $1500
MCC Tax Credit $1000
Total Tax Credit $2500
Divided by 12 months = $208.33
By getting the extra $2,500 over the year the borrower will have an extra $208.33 per month in their check to use toward their house payment. At the end of the year when they file their tax return they would have a “tax liability” of $1,000. The value of the MCC would eliminate the tax liability and the borrower would get no refund but had the extra $208.33 per month to use toward their dream home.
By filing a new W-4 form with their employer; using the $208 estimate, the employer will include that extra money in the clients’ paycheck. If you’ve even seen a W-4 form, it’s a 2-page form, with lots of questions and figures. However, your client does not have to go thru the formulas— they can just write down a flat dollar amount on the page where they sign their name. As for couples, filing jointly, who are both employed, they can split that dollar amount any way they choose. —Again by filing a new W-4 form. One person may file for $150 and the other for $58.33.
Sure beats giving the government an interest free loan!
Keep in mind, the amount of interest that can be claimed on a borrowers Schedule A is reduced by the value of the MCC credit. In this example, the borrower paid $5,000 in interest over the year. However, the value of the MCC was $1,000. Schedule A mortgage interest deduction is limited to $4,000 ($5,000 interest paid - $1,000 MCC benefit).
So what happens is they don’t use the entire tax credit? If the borrower does not withhold correctly and they do not get the full benefit of the entire tax credit, they can carry the value of that credit forward for as long as three years and take advantage of it next year. If the MCC credit rate is higher than 20%, the maximum credit is $2,000 per year. In addition, any amount over $2,000 cannot be carried forward to following years for borrowers whose credit exceeds 20%.
If a homeowner refinances, some HFA’s will reissue the MCC for the new loan but will likely limit the amount of the benefit to mirror at best the original loan terms. In no cases will the IRS allow the credit on a refinanced loan to exceed the original MCC credit. In addition, not all HFA’s will allow a borrower who refinances to maintain their MCC.
Like a mortgage bond program, if the home is sold within the first nine years the borrower may be subject to a recapture tax depending on if the home was sold for a profit and what their income is at the time of sale.
Most Housing Finance agencies have a fee for issuing a MCC. The fee can vary from agency to agency. Check with your local or state Housing Finance Agency to see if an MCC is available in your area.
By learning what the terms and guidelines are, you can use this as a tool to get more lead from first time buyers.
By Dan Moralez, Staff Writer, www.MortgageCurrentcy.com
Sr. VP First Place Bank
Tuesday, March 24, 2009
MARCH 23, 2009
My Plan for Bad Bank Assets
The private sector will set prices. Taxpayers will share in any upside.
By TIMOTHY GEITHNER
The American economy and much of the world now face extraordinary challenges, and confronting these challenges will continue to require extraordinary actions.
No crisis like this has a simple or single cause, but as a nation we borrowed too much and let our financial system take on irresponsible levels of risk. Those decisions have caused enormous suffering, and much of the damage has fallen on ordinary Americans and small-business owners who were careful and responsible. This is fundamentally unfair, and Americans are justifiably angry and frustrated.
The depth of public anger and the gravity of this crisis require that every policy we take be held to the most serious test: whether it gets our financial system back to the business of providing credit to working families and viable businesses, and helps prevent future crises.
Over the past six weeks we have put in place a series of financial initiatives, alongside the Recovery and Reinvestment Program, to help lay the financial foundation for economic recovery. We launched a broad program to stabilize the housing market by encouraging lower mortgage rates and making it easier for millions to refinance and avoid foreclosure. We established a new capital program to provide banks with a safeguard against a deeper recession. By providing confidence that banks will have a sufficient level of capital even if the outlook is worse than expected, more credit will be available to the economy at lower interest rates today -- making it less likely that the more negative economy they fear will take place.
We started a major new lending program with the Federal Reserve targeted at the securitization markets critical for consumer and small business lending. Last week, we announced additional actions to support lending to small businesses by directly purchasing securities backed by Small Business Administration loans.
Together, actions over the last several months by the Federal Reserve and these initiatives by this administration are already starting to make a difference. They have helped to bring mortgage interest rates near historic lows. Just this month, we saw a 30% increase in refinancing of mortgages, which means millions of Americans are taking advantage of the lower rates. This is good for homeowners, and it's good for the economy. The new joint lending program with the Federal Reserve led to almost $9 billion of new securitizations last week, more than in the last four months combined.
However, the financial system as a whole is still working against recovery. Many banks, still burdened by bad lending decisions, are holding back on providing credit. Market prices for many assets held by financial institutions -- so-called legacy assets -- are either uncertain or depressed. With these pressures at work on bank balance sheets, credit remains a scarce commodity, and credit that is available carries a high cost for borrowers.
Today, we are announcing another critical piece of our plan to increase the flow of credit and expand liquidity. Our new Public-Private Investment Program will set up funds to provide a market for the legacy loans and securities that currently burden the financial system.
The Public-Private Investment Program will purchase real-estate related loans from banks and securities from the broader markets. Banks will have the ability to sell pools of loans to dedicated funds, and investors will compete to have the ability to participate in those funds and take advantage of the financing provided by the government.
The funds established under this program will have three essential design features. First, they will use government resources in the form of capital from the Treasury, and financing from the FDIC and Federal Reserve, to mobilize capital from private investors. Second, the Public-Private Investment Program will ensure that private-sector participants share the risks alongside the taxpayer, and that the taxpayer shares in the profits from these investments. These funds will be open to investors of all types, such as pension funds, so that a broad range of Americans can participate.
Third, private-sector purchasers will establish the value of the loans and securities purchased under the program, which will protect the government from overpaying for these assets.
The new Public-Private Investment Program will initially provide financing for $500 billion with the potential to expand up to $1 trillion over time, which is a substantial share of real-estate related assets originated before the recession that are now clogging our financial system. Over time, by providing a market for these assets that does not now exist, this program will help improve asset values, increase lending capacity by banks, and reduce uncertainty about the scale of losses on bank balance sheets. The ability to sell assets to this fund will make it easier for banks to raise private capital, which will accelerate their ability to replace the capital investments provided by the Treasury.
This program to address legacy loans and securities is part of an overall strategy to resolve the crisis as quickly and effectively as possible at least cost to the taxpayer. The Public-Private Investment Program is better for the taxpayer than having the government alone directly purchase the assets from banks that are still operating and assume a larger share of the losses. Our approach shares risk with the private sector, efficiently leverages taxpayer dollars, and deploys private-sector competition to determine market prices for currently illiquid assets. Simply hoping for banks to work these assets off over time risks prolonging the crisis in a repeat of the Japanese experience.
Moving forward, we as a nation must work together to strike the right balance between our need to promote the public trust and using taxpayer money prudently to strengthen the financial system, while also ensuring the trust of those market participants who we need to do their part to get credit flowing to working families and businesses -- large and small -- across this nation.
This requires those in the private sector to remember that government assistance is a privilege, not a right. When financial institutions come to us for direct financial assistance, our government has a responsibility to ensure these funds are deployed to expand the flow of credit to the economy, not to enrich executives or shareholders. These provisions need to be designed and applied in a way that does not deter the participation by the private sector in generally available programs to stabilize the housing markets, jump-start the credit markets, and rid banks of legacy assets.
We cannot solve this crisis without making it possible for investors to take risks. While this crisis was caused by banks taking too much risk, the danger now is that they will take too little. In working with Congress to put in place strong conditions to prevent misuse of taxpayer assistance, we need to be very careful not to discourage those investments the economy needs to recover from recession. The rule of law gives responsible entrepreneurs and investors the confidence to invest and create jobs in our nation. Our nation's commitment to pursue economic policies that promote confidence and stability dates back to the very first secretary of the Treasury, Alexander Hamilton, who first made it clear that when our government gives its word we mean it.
For all the challenges we face, we still have a diverse and resilient financial system. The process of repair will take time, and progress will be uneven, with periods of stress and fragility. But these policies will work. We have already seen that where our government has provided support and financing, credit is more available at lower costs.
But as we fight the current crisis, we must also start the process of ensuring a crisis like this never happens again. As President Obama has said, we can no longer sustain 21st century markets with 20th century regulations. Our nation deserves better choices than, on one hand, accepting the catastrophic damage caused by a failure like Lehman Brothers, or on the other hand being forced to pour billions of taxpayer dollars into an institution like AIG to protect the economy against that scale of damage. The lack of an appropriate and modern regulatory regime and resolution authority helped cause this crisis, and it will continue to constrain our capacity to address future crises until we put in place fundamental reforms.
Our goal must be a stronger system that can provide the credit necessary for recovery, and that also ensures that we never find ourselves in this type of financial crisis again. We are moving quickly to achieve those goals, and we will keep at it until we have done so.
Mr. Geithner is the U.S. Treasury secretary.
My Plan for Bad Bank Assets
The private sector will set prices. Taxpayers will share in any upside.
By TIMOTHY GEITHNER
The American economy and much of the world now face extraordinary challenges, and confronting these challenges will continue to require extraordinary actions.
No crisis like this has a simple or single cause, but as a nation we borrowed too much and let our financial system take on irresponsible levels of risk. Those decisions have caused enormous suffering, and much of the damage has fallen on ordinary Americans and small-business owners who were careful and responsible. This is fundamentally unfair, and Americans are justifiably angry and frustrated.
The depth of public anger and the gravity of this crisis require that every policy we take be held to the most serious test: whether it gets our financial system back to the business of providing credit to working families and viable businesses, and helps prevent future crises.
Over the past six weeks we have put in place a series of financial initiatives, alongside the Recovery and Reinvestment Program, to help lay the financial foundation for economic recovery. We launched a broad program to stabilize the housing market by encouraging lower mortgage rates and making it easier for millions to refinance and avoid foreclosure. We established a new capital program to provide banks with a safeguard against a deeper recession. By providing confidence that banks will have a sufficient level of capital even if the outlook is worse than expected, more credit will be available to the economy at lower interest rates today -- making it less likely that the more negative economy they fear will take place.
We started a major new lending program with the Federal Reserve targeted at the securitization markets critical for consumer and small business lending. Last week, we announced additional actions to support lending to small businesses by directly purchasing securities backed by Small Business Administration loans.
Together, actions over the last several months by the Federal Reserve and these initiatives by this administration are already starting to make a difference. They have helped to bring mortgage interest rates near historic lows. Just this month, we saw a 30% increase in refinancing of mortgages, which means millions of Americans are taking advantage of the lower rates. This is good for homeowners, and it's good for the economy. The new joint lending program with the Federal Reserve led to almost $9 billion of new securitizations last week, more than in the last four months combined.
However, the financial system as a whole is still working against recovery. Many banks, still burdened by bad lending decisions, are holding back on providing credit. Market prices for many assets held by financial institutions -- so-called legacy assets -- are either uncertain or depressed. With these pressures at work on bank balance sheets, credit remains a scarce commodity, and credit that is available carries a high cost for borrowers.
Today, we are announcing another critical piece of our plan to increase the flow of credit and expand liquidity. Our new Public-Private Investment Program will set up funds to provide a market for the legacy loans and securities that currently burden the financial system.
The Public-Private Investment Program will purchase real-estate related loans from banks and securities from the broader markets. Banks will have the ability to sell pools of loans to dedicated funds, and investors will compete to have the ability to participate in those funds and take advantage of the financing provided by the government.
The funds established under this program will have three essential design features. First, they will use government resources in the form of capital from the Treasury, and financing from the FDIC and Federal Reserve, to mobilize capital from private investors. Second, the Public-Private Investment Program will ensure that private-sector participants share the risks alongside the taxpayer, and that the taxpayer shares in the profits from these investments. These funds will be open to investors of all types, such as pension funds, so that a broad range of Americans can participate.
Third, private-sector purchasers will establish the value of the loans and securities purchased under the program, which will protect the government from overpaying for these assets.
The new Public-Private Investment Program will initially provide financing for $500 billion with the potential to expand up to $1 trillion over time, which is a substantial share of real-estate related assets originated before the recession that are now clogging our financial system. Over time, by providing a market for these assets that does not now exist, this program will help improve asset values, increase lending capacity by banks, and reduce uncertainty about the scale of losses on bank balance sheets. The ability to sell assets to this fund will make it easier for banks to raise private capital, which will accelerate their ability to replace the capital investments provided by the Treasury.
This program to address legacy loans and securities is part of an overall strategy to resolve the crisis as quickly and effectively as possible at least cost to the taxpayer. The Public-Private Investment Program is better for the taxpayer than having the government alone directly purchase the assets from banks that are still operating and assume a larger share of the losses. Our approach shares risk with the private sector, efficiently leverages taxpayer dollars, and deploys private-sector competition to determine market prices for currently illiquid assets. Simply hoping for banks to work these assets off over time risks prolonging the crisis in a repeat of the Japanese experience.
Moving forward, we as a nation must work together to strike the right balance between our need to promote the public trust and using taxpayer money prudently to strengthen the financial system, while also ensuring the trust of those market participants who we need to do their part to get credit flowing to working families and businesses -- large and small -- across this nation.
This requires those in the private sector to remember that government assistance is a privilege, not a right. When financial institutions come to us for direct financial assistance, our government has a responsibility to ensure these funds are deployed to expand the flow of credit to the economy, not to enrich executives or shareholders. These provisions need to be designed and applied in a way that does not deter the participation by the private sector in generally available programs to stabilize the housing markets, jump-start the credit markets, and rid banks of legacy assets.
We cannot solve this crisis without making it possible for investors to take risks. While this crisis was caused by banks taking too much risk, the danger now is that they will take too little. In working with Congress to put in place strong conditions to prevent misuse of taxpayer assistance, we need to be very careful not to discourage those investments the economy needs to recover from recession. The rule of law gives responsible entrepreneurs and investors the confidence to invest and create jobs in our nation. Our nation's commitment to pursue economic policies that promote confidence and stability dates back to the very first secretary of the Treasury, Alexander Hamilton, who first made it clear that when our government gives its word we mean it.
For all the challenges we face, we still have a diverse and resilient financial system. The process of repair will take time, and progress will be uneven, with periods of stress and fragility. But these policies will work. We have already seen that where our government has provided support and financing, credit is more available at lower costs.
But as we fight the current crisis, we must also start the process of ensuring a crisis like this never happens again. As President Obama has said, we can no longer sustain 21st century markets with 20th century regulations. Our nation deserves better choices than, on one hand, accepting the catastrophic damage caused by a failure like Lehman Brothers, or on the other hand being forced to pour billions of taxpayer dollars into an institution like AIG to protect the economy against that scale of damage. The lack of an appropriate and modern regulatory regime and resolution authority helped cause this crisis, and it will continue to constrain our capacity to address future crises until we put in place fundamental reforms.
Our goal must be a stronger system that can provide the credit necessary for recovery, and that also ensures that we never find ourselves in this type of financial crisis again. We are moving quickly to achieve those goals, and we will keep at it until we have done so.
Mr. Geithner is the U.S. Treasury secretary.
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