dwo34 Smooth Blog

Some Great Tax Tips

2011-03-08T08:22:00.000-08:00

This is a great article written by By Tara-Nicholle Nelson Broker in San Francisco, CA

Ask a roomful of homeowners what's so great about owning versus renting, and you'll hear them holler in unison: "the tax deductions!" And it's true – homeowners who itemize their taxes are able to deduct 100% of their mortgage interest and property taxes from their income tax returns.That means that if you're in a 28% tax bracket, Uncle Sam effectively subsidizes about a third of your borrowing costs or more, making your home more affordable or allowing you to buy a larger home than you could have otherwise. Also, big chunks of your closing costs are tax deductible, and hundreds of thousands of dollars of any profit (or capital gains) that you realize when you sell your home are exempt from income taxes.At tax time, it's critical to know what you're entitled to, so you can claim it. So, here are five essential need-to-knows about home-related income tax tips to help you get the most tax-reducing bang out of your home-owning buck – and to avoid hefty home ownership-related tax traps.

1. You Have to Itemize Your Return - to Claim Your DeductionsDuring the recent debate on Capitol Hill about whether the mortgage interest deduction should be eliminated (it won't be, not anytime soon), it came out that nearly 40% of homeowners lose out on their major tax advantages every year when they fail to itemize their income taxes. If you own a home and otherwise have a fairly simple return, it might be tempting just to take the standard deduction – and if your mortgage, property taxes and income are low enough, the standard deduction might outweigh your homeowners' deductions. But you'll never know if you're losing out on the tax advantages of itemizing unless you try; before you grab a pen and start filling in that 1040-EZ grab those forms from your mortgage company and answer the questions on tax software like TurboTax, which will automatically do the math on whether itemizing or taking the standard deduction will result in the lowest tax bill – or the highest tax refund – for you.

2. Plan Ahead and Be Strategic - When Taking a Home Office DeductionAccording to the Small Business Administration, the average home office deduction is $3,686 – multiply that by your tax bracket – 15%, 20%, 30% or whatever it is, and that's what you'll save on your taxes by writing off your home office. Know, though, that the space you designate as your home office cannot be exempted from capital gains tax when you sell your home later. The $250,000 (single)/ $500,000 (married filing jointly) income tax exemption for capital gains is only good on your personal residence, after all – not including any space in your home you've claimed as your tax-advantaged office. If you foresee selling your home for much more than you bought it in the future, near or far, discuss this with your tax preparer to see if the few hundred bucks you save is worth the capital gains complication later.

3. Tax Relief for Loan Modifications, Short Sales and Foreclosures - Is Only Around Through 2012While the long-term housing outlook is beginning to look up, 2011 is projected to be the peak year for foreclosures during this market cycle. Distressed homeowners who are on the brink of a short sale, loan modification or foreclosure should be aware that normally, any mortgage balance that is wiped out by one of these outcomes is taxed as what the IRS calls Cancellation of Debt Income, or CODI.Under the Mortgage Debt Forgiveness Relief Act of 2007, the IRS is currently not charging income taxes on CODI incurred through a loan mod, short sale or foreclosure on most primary residences through 2012. But right now, banks are taking many months, or even years, to work out mortgages in all of these ways; the average foreclosure in New York state right now occurs only after 22 months of missed mortgage payments. If you foresee any of these outcomes in your future, don't put things off. Do what you can to get to closure on your distressed home and loan, ASAP, while you won't have income taxes to add as the insult on top of your significant housing injury.

4. Project the Income Tax Consequences of a Refinance or Property Tax Appeal Homeowners everywhere are working on applying for a lower property tax bill on the basis of the last few years' decline in their home's value. Those who have equity have flocked en masse to refinance their 7% home loans into the 4% to 5% rates of the last few months. These strategies offer some of the heftiest household savings out there for the corresponding investment in time and money they take. But here's a caveat for savvy homeowners who slash these costs: remember that property taxes and mortgage interest, the very costs you're minimizing, are also the basis for the major tax benefits of being a homeowner. So plan ahead for your income tax deductions to go down along with your taxes and interest.

5. Don't Forget Those Closing Costs - If you bought or refinanced your home in 2010, you may be so focused on your mortgage interest and property tax deductions that you forget all about your closing costs. Any origination fees or discount points that were paid to your mortgage lender at closing are tax deductible on your 2010 return, get this – even if the seller paid your closing costs. If you can't figure out exactly what you paid, look for your HUD-1 settlement statement, that legal sized paper full of line item credits and debits that you should have received from your escrow provider or title attorney at, or just after, closing. Can't find it? Drop your real estate agent or mortgage broker an email; they can usually get a copy to you quickly.

Contact me if you have any other questions or need further clarification. I will either do some research or put you in contact with a good CPA.

My name is David Ohara and I am very Bullish on Sacramento Real Estate

@dwo34

dwo34@aol.com

Help for Homeowners who are struggling

2011-02-16T20:59:00.000-08:00

I came across the article. I think this may have some teeth. I will do some further investigation and report back to you.

$2 billion in aid open to struggling homeowners

By Lily Leung

Monday, February 14, 2011 at 6 a.m.

Howard Lipin / Union-Tribune staff

More financial help is on its way to those fighting to remain in their homes throughout the state, including the San Diego region.

Eligibility requirements

Applicants must:

Own and occupy their homes as their primary residence.
Not exceed $729,750 in current unpaid principal balances on first mortgages.
Meet low- and moderate- income limits
Complete and sign a hardship affidavit to document reasons for hardships.
Have mortgage loans that are delinquent or "in imminent default."
Have enough income to pay modified mortgage payments according to guidelines from servicers participating in the programs.

Source: keepyourhomecalifornia.com

To apply

To apply, call 888-954-KEEP (5337) or your mortgage servicer - the company to which you send you monthly mortgage payments.

Each program requires the participation of the company or agency that holds the mortgage.

For more, visit KeepYourHomeCalifornia.org.

Four new mortgage-aid programs costing $2 billion might help 100,000 households avoid foreclosure, California Housing Finance Agency officials say.

The state program, "Keep Your Home California," is available to eligible homeowners throughout the state, including in San Diego County.

The four components would:

Offer up to $3,000 a month for unemployed homeowners, up to six months of benefits.
Help those who have fallen behind on payments due to temporary change in housing circumstance with payments of up to $15,000 per household.
Give relocation assistance to homeowners are have finished short sales or deed-in-lieu of foreclosure transactions.
Provide capital to cut the outstanding principal balances of struggling borrowers who owe significantly more than their homes are worth.

Each program requires the participation of the company or agency servicing the mortgage. As of last week, GMAC, Guild Mortgage, the California Housing Finance Agency and California Department of Veterans Affairs are all taking part in all four programs.

Others, including Bank of America, JPMorgan Chase, CitiMortgage and Wells Fargo, are currently in some of the programs. Housing agency officials are expecting that list to grow in the coming weeks. (See a chart of servicers and their programs.)

"We're excited to offer this program," said Housing Finance Agency spokeswoman Evan Gerberding. "It's not only going to help individual families, it's also going to help to stabilize entire communities."

Funding comes from the U.S. Treasury Department’s Hardest Hit fund, money intended to help homeowners stave off foreclosures.

After receiving the $2 billion, officials from the California Housing Finance Agency - which has helped renters and first-time homebuyers with financing and programs for 35 years - spoke to community stakeholders throughout the state to create the four new programs.

“No one program will solve the foreclosure crisis affecting our state, but together we hope to make a difference for as many families as possible," said Assemblymember Norma Torres, Chair of Assembly Committee on Housing and Community Development, in a media statement. Torres is Democrat representing part of San Bernardino County.

The programs are intended for Californians who own and occupy their homes as primary residences. They must meet certain income and financial-hardship requirements.

News of the efforts comes about a week after the state Attorney General's Office announced a new statewide foreclosure fund fueled by a $6.5 million settlement of a case against two former Countrywide executives accused of predatory-lending practices. (Read "$6.5M Countrywide settlement could help homebuyers".)

Lily Leung: (619)293-1719; lily.leung@uniontrib.com; Twitter @LilyShumLeung

My name is David Ohara and I am bullish on Sacramento!

dwo34@aol.com

@dwo34

Some Great Homes Coming on the Market Soon

2010-12-06T14:32:00.000-08:00

Hello Friends:

First I apologize for being remiss and not posting more. I will do my best to maintain a page that is updated on a regular basis. I hope everyone had a great Thanksgiving and are preparing for a festive Christmas!

I wanted to give you all a "heads up" on some homes I that I will be putting on the market shortly. These four homes are located in great locations of Sacramento. I will be listing homes in the Elk Grove, Roseville, North Natomas and Bridgeway Island (West Sacramento) areas. The homes will be priced:

North Natomas: $179,900 for a 3 bedroom, 2 bath home with 1500 sf! This home is in show room condition and is located on a quiet street. This home has an open floor plan. Recent comps show that the home should be valued at $192,000.

Roseville: $340,000 for a 5 bedroom, 3 bath home. Located close to shopping, schools, parks and transportation. If you act now, you can pick the color of paint and carpeting. Great floor plan with a bedroom and bath downstairs. Big open kitchen. Recent appraisal done at $370,000!

West Sacramento: $269,000. This large 4 bedroom home is located in the Bridgeway Island area. New development! Open and spacious. This is an exceptional buy! Some homes in this area have sold for more than $300,000.

Elk Grove: $224,900. 4 bedrooms and 3 baths with a pool! This home is loaded with upgrades! Chance to get a great buy before it hits the market! Open floor plan with lots of natural light.

Call me for more information. Once again, these homes will be hitting the market soon. I hope you are all enjoying your day!

I am very Bullish on Sacramento.

David Ohara

Prudential Dunnigan

dwo34@aol.com

@dwo34

916-600-9495

What is HAFA?

2010-05-26T11:15:00.000-07:00

Hello Friends:

I have been getting some emails and calls from friends and clients regarding a program called HAFA. They all asked the same thing "David, what is HAFA, and can this program help us?" I wanted to get the specific details directly from the Housing and Urban Development. Here is what they have to say about HAFA.

In early 2009, the National Association of REALTORS® (NAR) urged the U.S. Treasury Department, the Federal Housing Finance Agency, Fannie Mae and Freddie Mac to improve the short sales process.

NAR’s concerns were first addressed on May 14, 2009, when the Obama Administration announced the outline of a program to provide incentives and uniform procedures for short sales and deeds-in-lieu of foreclosure (DIL) under the Making Home Affordable Program.

The Obama Administration released guidelines and uniform forms for its Home Affordable Foreclosure Alternatives Program (HAFA) on November 30, 2009 and released an updated version on March 26, 2010. April 5, 2010 was the effective date for the program.

Modified HAFA rules for loans owned or guaranteed by Fannie Mae or Freddie Mac were still being developed as of April 28, 2010 (check www.realtor.org/shortsales for updates). HAFA does not apply to FHA or VA loans.

About HAFA

HAFA is a program primarily designed for homeowners who are unable to stay in their home even with a loan modification under the Home Affordable Modification Program (HAMP). Under HAFA, homeowners may be able to avoid a foreclosure by selling the home as a “short sale” (where the value of the home is less than the remaining amount of the mortgage) or by transferring title to the lender through a process called a “deed-in-lieu of foreclosure.”

HAFA: Complements HAMP by providing a viable alternative for borrowers (the current homeowners) who are HAMP eligible but nevertheless unable to keep their home.

Uses borrower financial and hardship information already collected under HAMP.

Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds and acceptable closing costs).

Requires borrowers to be fully released from future liability for the first mortgage debt and, if the subordinate lien holders receive an incentive under HAFA, those debts as well (no cash contribution, promissory note, or deficiency judgment is allowed).

Uses a standard process, uniform documents, and deadlines.

Provides financial incentives: $3,000 for borrower relocation assistance; $1,500 for mortgage servicers to cover administrative and processing costs; and up to a $2,000 match for mortgage investors for allowing a total of up to $6,000 in short sale proceeds to be distributed to subordinate lien holders (up to 6 percent of the remaining balance of each junior lien).

Requires all servicers participating in HAMP to implement HAFA in accordance with their own written policy, consistent with investor guidelines. The policy may include factors such as the severity of the potential loss, local markets, timing of pending foreclosure actions, and borrower motivation and cooperation.

The program sunsets on December 31, 2012.

TIMELINE

Determination of Eligibility and Notification

Servicers must consider HAMP-eligible borrowers for HAFA within 30 calendar days after the borrower does at least one of the following: Does not qualify for a HAMP trial period plan Does not successfully complete a HAMP trial period plan Is delinquent on a HAMP modification (misses at least 2 consecutive payments) Requests a short sale or DIL

If the servicer determines a borrower is eligible based on its written policy and has not already discussed a short sale or DIL with the borrower, it must notify the borrower in writing of these options and give the borrower 14 calendar days to respond, orally or in writing. If the borrower does not respond, that ends the servicer’s duty to give a HAFA offer. If the borrower asks for consideration but a short sale or DIL is not available, the servicer must inform the borrower with an explanation and provide a toll-free number.

Short Sale Agreement

If the borrower is interested in a short sale, the servicer fills out the Short Sale Agreement (SSA) and sends it to the borrower. The borrower has 14 calendar days from the date of the SSA to sign and return it to the servicer. The real estate broker also must sign the SSA. The SSA must give the borrower an initial period of 120 calendar days to sell the house (servicers may extend up to a total of 12 months, if agreed to by the borrower).

Sale Contract

Within 3 business days of receiving an executed sale contract, the borrower (or real estate agent) must submit a completed Request for Approval of Short Sale (RASS) to the servicer, including a copy of the sale contract and all addenda buyer documentation of funds or pre-approval/commitment letter from a lender all information on the status of subordinate liens and/or negotiations with subordinate lien holders.

Servicer Approval

Within 10 business days after the servicer receives the RASS and all required attachments, the servicer must approve or deny the request and advise the borrower (with a statement of the reasons in the case of disapproval).

Closing and Lien Release

The servicer may require the closing to take place within a reasonable period after it approves the RASS, but not sooner than 45 calendar days from the date of the sales contract unless the borrower agrees.

The servicer must follow local or state laws to time the release of its first mortgage lien. If local or state law does not govern, the servicer must release its first mortgage lien within 30 business days. Investors must waive rights to seek deficiency judgments and may not require

a promissory note for any deficiency. These rules also apply to junior lien holders receiving incentives.

NAR FAQs

HAFA is a complex program with nearly 50 pages of guidelines and forms. To help you better understand the process, NAR has prepared some frequently asked questions that address the basics. For more information on HAFA and more detailed NAR FAQs, please visit www.realtor.org/shortsales

Who is eligible for HAFA?

The borrower must meet the basic eligibility criteria for HAMP: Principal residence (including certain vacant properties for borrowers who recently moved at least 100 miles for employment and meet program requirements) First lien originated before 2009 Mortgage delinquent or default is reasonably foreseeable Unpaid principal balance no more than $729,750 (higher limits for two- to four-unit dwellings) Borrower’s total monthly payment exceeds 31% of gross income

How is the program being implemented?

Supplemental Directive 09-09 (revised March 26, 2010) gives servicers guidance for carrying out the program. Check www.realtor.org/shortsales for future updates.

A short sale agreement (SSA) will be sent by the servicer to the borrower after determining the borrower is interested in, and eligible for, a short sale and the property qualifies. It informs the borrower how the program works and the conditions that apply.

After the borrower contracts to sell the property, the borrower submits a “Request for Approval of Short Sale” (RASS) to the servicer within 3 business days for approval. If the borrower already has an executed sales contract and asks the servicer to approve it before an SSA is executed, the Alternative RASS is used instead. The servicer must still consider the borrower for a loan modification.

What are the steps for evaluating a loan to see if it is a candidate for HAFA?

1. Borrower solicitation and response

2. Assess expected recovery through foreclosure and disposition compared to a HAFA short sale or deed in lieu of foreclosure (DIL)

3. Use of borrower financial information from HAMP

4. Property valuation

5. Review of title

6. Borrower notice if short sale or DIL not available (to borrowers that have expressed interest in HAFA).

What are the HAFA rules regarding real estate commissions? The servicer specifies the amount of commission in the Short Sale Agreement (SSA) as a “reasonable and customary” closing cost. The borrower and the prospective real estate broker may negotiate with the servicer on the terms of the SSA, including the commission. There is a different rule if the borrower submits an executed sales contract to the servicer for approval before a SSA is executed. In that case, the sales contract is submitted to the servicer with an Alternative Request for Approval of Short Sale. The amount of the commission in that case is the amount negotiated in the listing agreement, not to exceed 6 percent. Neither buyers not sellers may earn a commission in connection with the short sale, even if they are licensed real estate brokers or agents. They may not have any side deals to receive a commission indirectly.

What else should I know? The deal must be “arms length.” Borrowers can’t list the property or sell it to a relative or anyone else with whom they have a close personal or business relationship. The amount of debt forgiven might be treated as income for tax purposes. Under a law expiring at the end of 2012, however, forgiven debt will not be taxed if the amount does not exceed the debt that was used for acquisition, construction, or rehabilitation of a principal residence. Check with a tax advisor or the IRS. The servicer will report to the credit reporting agencies that the mortgage was settled for less than full payment, which may hurt credit scores. Buyers may not reconvey the property for 90 days (no “flipping”).

If there any additional questions please let me know. I am here to help and provide as much information as possible.

It is May 26, 2010, and I am BULLISH on Sacramento!

David Ohara

@dwo34

dwo34@aol.com

More Photos of Kraze Apparel

2010-04-12T11:20:00.000-07:00

More great designs by Peter Tsuru at Kraze Apparel!

Remember to visit his

website at:

krazeapparel.com

Kraze Apparel - The Ultimate in Island Designs!

2010-04-12T09:51:00.000-07:00

Good Monday Morning Everyone!

I hope you all had a great weekend! I want to introduce you to my good friend Peter Tsuru and his company Kraze Apparel (pronounced CRAZE.) I met Peter through Twitter and quickly formed a great friendship. Peter embodies the term "Aloha Spirit" and I am proud to call him a great friend. Peter has some of the nicest designs I have seen. I have been to Hawaii on several different occasions and am very fond of "Island" designs. Some of my favorite designs are from Local Motion, Hawaiian Island Creations, Matsumoto's Shaved Ice, TC, and Quicksilver. Peter's designs rank up there with all the "bigger" companies. I recently interviewed Peter for this blog.

@dwo34: Peter, tell me how you came up with the name Kraze Apparel?

@PT: We wanted a name that represented our apparel line with a trendy feel to it. We found the word Kraze which is a play on words from "craze" meaning fashion or trend.

@dwo34: Peter, what inspires your designs?

@PT: Our daily surroundings in Hawaii inspire our designs. The blend of cultures, music, art and lifestyle reflects in all our work. Every visual object to me can be interpreted into a design.

@dwo34: Having been to Hawaii several times, I can see the island influence in your designs and like I have always told you "Your designs are top notch" my friend!

@PT: Mahalo brother!

@dwo34: Peter, how long has your company been in existence?

@PT: Kraze Apparel has been in business for 3 years.

@dwo34: What has been your greatest moment in business?

@PT: The greatest moment in business has been customers coming back to us because they love our designs.

@dwo34: Tell us some of your goals with Kraze Apparel

@PT: We would like to see Kraze Apparel expand to more retail stores, the outer islands of Hawaii and to the west and east coasts on the US mainland. We will be venturing into toddler to youth clothing, board shorts, caps and accessories. With everyone going green, we would also like to start heading in that direction. As we mature as a business, we are going to create a foundation to give back to the community.

@dwo34: Right on Peter! I have a great feeling that your brand will do very well in the mainland and there is a serious need for some "fresh" designs!

@PT: Thank you for your ongoing support David, it means a lot to us here at Kraze Apparel.

@dwo34: Peter, let everyone know where can people order your shirts?

@PT: People can order our shirts online at http://www.krazeapparel.com.

@dwo34: Also people can see you at Twitter @KrazeApparel on on Facebook (Kraze Apparel or Peter Tsuru).

@dwo34: Peter, tell me which is your favorite design and why.

@PT: I really don’t have just one favorite design. I enjoy all the designs because each design has its own personality.

@dwo34: I agree with you Peter. As you know, I have about 10 Kraze Apparel shirts and I get complimented where ever I go. I wish you and Kraze Apparel the best of luck!

@PT: Mahalo and aloha to you David.

Peter is such a nice guy. I am proud to call him my friend. Please visit his site, I am sure you will love his designs and want to place an order. Tell him David Ohara sent you! Have a great week my friends!

It's April 12, 2010 and I am very Bullish on Kraze Apparel!

David Ohara

@dwo34

dwo34@aol.com

FHA 203 "Fixer Upper" Loans

2010-04-01T11:25:00.001-07:00

Good Thursday Everyone!

I am ran into this informative article on FHA 203 financing. The program is designed to assist in the borrower in "fix up" costs associated with a property he/she is purchasing. This is good reading.

RISMEDIA, March 27, 2010—(MCT)—The word “as-is” can indeed be one scary phrase. Especially when buying a home in today’s market where foreclosures and short sales that need fix-up work are plentiful.

But a little-known Federal Housing Administration (FHA) loan program that’s been around since 1978 can help take the sting out of “as-is.” Only 219 borrowers took advantage of the FHA’s 203k program in 2009. Not that many lending and real estate professionals are aware of the program, say observers.

Last year, Tom Meyer found a classic Oakland, Calif., home built in 1925 near Mills College he liked a lot. As a short sale it was priced right and about half the original asking price. Trouble was, the place needed some fix-up work—foundation improvements, dry rot work, a new roof over the garage and other improvements.

With the help of the FHA’s 203k renovation financing loan program, Meyer folded about $100,000 worth of repairs and improvements into his $422,000 mortgage. He had bought the home for $320,000. “I would not be able to pay a contractor $100,000 and buy a house at the same time,” said Meyer, who works in corporate media at Shaklee’s Pleasanton headquarters. “It had been essentially allowed to start falling apart over the last 20 years.”

He had rented in San Francisco for 25 years before moving into his new digs last September with his girlfriend, Cathy Keating. “We like old houses, and a great benefit of this program is that it helped us keep a beautiful but deteriorating house from deteriorating further. With the work we did, we expect it to still be standing and beautiful 80 years from now,” he said.

Renovation financing through the 203k program allows the costs of needed repairs and improvements to be included in the FHA federally-insured loan amount instead of having the buyer come up with cash or a separate loan to do the work.

“This is a perfect loan for an as-is situation,” said Kristine Marr, a loan officer with Prospect Mortgage in Lafayette, Calif. “It’s not a new loan program, although I think it’s going to have a lot more use today because we have so many foreclosures and bank-owned properties. You go into lots of homes and see people have yanked out stoves and ovens and fixtures and sinks.”

The work has to be done within six months after escrow closes. Borrowers have the option of putting up to six months of mortgage payments on the end of the loan if they don’t want to live in the house while the work is being done.

“Renovation financing is a program that allows you to not only finance the purchase of a home but finance any repairs and/or improvements. It provides buyers with a responsible way to purchase a fixer-upper property,” said Luis C. Munoz, who helped Meyer with the loan and is a renovation loan specialist with the Oakland branch of Mason-McDuffie Mortgage Corp. Munoz also gives presentations about the program at monthly home ownership workshops sponsored by the Unity Council, an Oakland-based nonprofit.

At a time when equity loans are hard to get, the program can also be used as a refinancing vehicle for borrowers who want to do repairs and improvements, provided the value of the home is greater than the value of the loan. “At the same time as you refinance, you pop in the extra dollars you need for whatever you want to do,” Marr said.

FHA home loans require certain health and safety standards be met and that needed repairs identified during the inspection process be completed before escrow closes. However, minor repairs and improvements costing between $5,000 and $15,000 can be done after escrow closes for borrowers who opt for a streamlined repair program.

A 203k loan can help buyers finance both minor and major repairs and improvements. It can also help buyers compete with investors when bidding for short sales and foreclosures, said Sheri Powers, director of the Homeownership Center at Unity Council.

The loans can also be used to pay for improvements such as new appliances, second-story additions, remodeled kitchens and bathrooms, and skylights, just to name a few examples. “Property repairs cost money and they want to make sure people using their loan program are going to be in the home in long run and not just the short run,” Powers said.

The loans have become more popular since home prices started falling and FHA lending limits were raised a couple years ago but are still a tiny sliver of overall FHA loan volume. Last year, 203k loans accounted for 219 mortgages in the Bay Area, compared to 35 in 2008, one in 2007 and none in 2005 and 2006, according to Department of Housing and Urban Development statistics. “It’s making a comeback,” said Powers.

Marr said that 203k financing is not for everyone. A buyer will have to work with contractors and may have to wait several months before moving in, she said. And there is no guarantee they won’t be outbid by an investor for the property. “A lot of listing agents are preferring the investors, because the investors tend to be all cash or 50% cash. That’s always hard to compete with,” she said.

Eve Mitchell

It is Thursday, April 1, 2010 and I am Very Bullish on Sacramento!

David Ohara

@dwo34

dwo34@aol.com

How Much Will the TARP Bailout Cost?

2010-03-18T21:12:00.000-07:00

Good Evening Everyone!

This is a great piece I wanted to share with you. It talks about the actual cost of the Federal Bailout money. I encourage you to read.

Price tag of TARP bailout: $109 billion!

By Annalyn Censky, staff reporterMarch 18, 2010: 10:12 AM ET

NEW YORK (CNNMoney.com) -- The government's unprecedented $700 billion economic bailout will actually cost taxpayers just 16% of that total, according to a Congressional Budget Office report released Wednesday.

The Treasury's losses on the Troubled Asset Relief Program (TARP) will total $109 billion over the program's lifetime, CBO latest estimates show. That's up $10 billion from the agency's last projection, released in January.

CBO, which is charged with reviewing congressional budgets, has released a series of TARP cost calculations in the 17 months since the bailout began, each time updating its numbers with the latest data. At one point CBO expected the cost to be as high as $356 billion, but faster-than-expected bank repayments and other cost adjustments have drastically reduced the expected price tag.

TARP's two big moneysuckers are AIG and the auto industry.

AIG got TARP money in two forms: the government bought $40 billion in preferred stock and created a $30 billion line of credit for the company. CBO previously estimated the AIG bailout would cost the government $9 billion, but AIG hasn't paid the Treasury the quarterly dividends it owes. AIG's weak financial position prompted CBO to increase its loss projection to $36 billion -- more than half of the AIG bailout cost.

Other major losses -- a total of $34 billion -- will come from TARP assistance to the automotive industry, CBO said. The government committed $85 billion to bailing out the automakers.

On the flip slide, the highly unpopular capital infusion for banks will actually net the government $7 billion, CBO expects -- even including a $2 billion loss from CIT Group (CIT, Fortune 500), which declared bankruptcy, and Pacific Coast National Bancorp, which was taken over by the Federal Deposit Insurance Corporation.

CBO isn't the only agency attempting to tally up TARP's cost. The latest estimates from the Office of Management and Budget, released in early February, predict TARP will cost $18 billion more than CBO's estimates. The numbers from the two agencies differ because of different assumptions about the cost of some items and a varied timeframe for some of the data they evaluated.

Foreclosure help forecast

As for President Obama's mortgage modification program, the CBO estimates that the Treasury Department will use no more than $20 billion of TARP funds, less than half of the $50 billion originally allocated. That's because the CBO expects many fewer people will participate in the program than the government originally expected, a view held by many housing industry observers.

When Obama announced the program in February 2009, he said up to 4 million people could save their homes through the loan modification program, which lowers eligible borrowers' monthly payments to no more than 31% of their pre-tax income. But more recently, officials have backtracked and said up to 4 million people could qualify for trial modifications, during which loan servicers assess their borrowers' eligibility and ability to pay.

Through February, around 170,000 distressed homeowners have received long-term modifications under the program.

Another $1.5 billion in TARP funds will be used to provide grants to state housing agencies in California, Arizona, Nevada, Florida and Michigan. These agencies are tasked with coming up with programs to assist the unemployed, the underwater who owe more than their homes are worth, and the second-lien holders.

CNNMoney.com senior writer Tami Luhby contributed to this report.

It's March 18, 2010 and I am very BULLISH on Sacramento!

David Ohara

@dwo34

dwo34@aol.com

Customer Service Lacking in Real Estate

2010-03-16T08:48:00.000-07:00

Good Tuesday Morning Everyone!

I came across this article from RISMedia addressing the issue of customer service in the real estate industry. I knew from my personal dealings with certain agents in the Sacramento area, that service was lacking, but I did not know it was this shabby. My dealings with with these certain agents left me asking "How could these buyer's possibly want to work with their agent?" Poor communication skills, terrible penmanship, lack of understanding of the real estate purchase contract, leaving doors open and unlocked, and the list goes on and on. Folks, if you are serious about buying or selling a home, you need to connect with a Realtor who has the expertise to represent you properly. A poorly written offer or lack of communication can mean the difference between you having your offer accepted or declined. Here is the article from RISMedia.

RISMEDIA, March 16, 2010—It doesn’t take a genius to know that events of the past few years have greatly affected the public’s view of real estate agents. Now that image is below that of used car salesmen (except, perhaps, Toyota used car salesmen!) and many are publicly stating that the agent’s time is over, that maybe it’s time to take corrective action. What do you think?

Before exploring that, however, you should know that the study referenced above was conducted by the California Association of Realtors and reported in many newspapers (I’m quoting the Orange County Register, here). “California leads the nation,” we used to say around here, but lately, its in dubious distinctions like this one, it seems. It is possible that in other parts of the country, dissatisfaction is not quite this high.

The study reported on consumer responses to one simple proposition: “Yes, I would use the same agent” over the six-year period from 2004 to 2009. It reports that 79% of respondents said “Yes” in 2004 but only 22% said “Yes” in 2009. Statistics like these do not inspire loyalty campaigns or much hope for referrals, do they?

What happened?

According to the study, 64% of sellers said “the house took too long to sell” and 51% said, “We didn’t get the price we wanted.” Thus, the disaster fomented by Wall Street has been neatly transferred onto the backs of real estate agents. It’s no comfort to realize that while some Wall Street ‘Investment Banker’ is spending his seven-figure bonus on that house on the Vineyard and the newest Bentley, the public’s anger at the financial crisis has trickled down to those not responsible for it.

The very people you are working your butt off for, blame you for their unrealistic expectations and in many cases, agents are enabling that by not setting sellers straight on the new realities of real estate pricing and financing. It is doubtful that the consumer will wake up anytime soon. Anyone with an ARM can no longer afford can blame you. Anyone in a house worth 30% less than what they paid for it can now blame you as being the reason for their dilemma. That’s much easier than blaming their own greed or naiveté, of course, but who ever wants to take personal responsibility anymore? Certainly not consumers, it would appear!

Short-term consequences for real estate companies

Branding takes a hit

The financial crisis that produced the “Hate your real estate agent” trend also has reduced the power of Internet corporate real estate brands. Consumers today are more attracted to individuals than entities: no one cares about being friends with a company and no one thinks a company will treat them as well as a real person will (i.e., a buyer will search for “Wasilla AK Real Estate,” not “International Behemoth Real Estate agent in Wasilla AK”). The Internet shopper resists and resents any effort to make them go through even one unnecessary step to acquire the information they want and that includes being driven through hoops on the Intergalactic Amalgamated Real Estate Behemoth websites. The consumer today is more likely to identify with an individual agent than a corporate leviathan. For the individual agent, this is good.

Personal response and service have become vital to success

In our business, we see structures in brokerages and corporations that literally make us shake our heads and wonder how those organizations are surviving. One of these is the lackadaisical approach to inquiries from Internet buyers. Believe it or not, over 50% of Internet leads are never responded to in person and believe it or not, 50% of such inquiries are responded to in an average of 54 hours. This has enabled savvy agents to structure their leads and inquiries for their websites to be SMS texted to their powerful phones, where—with a simple touch—the inquirer can be called back in minutes. If you were an Internet buyer, would you wait days for a response that might never come or would you respond favorably to the agent who calls you personally within minutes and asks how they can assist you?

In the next few years, the business will return to a model where personal service is given at a high level and where the agent becomes the source for information. Just dumping people in an IDX or MLS doesn’t cut it anymore, folks—you must do the looking for them. For the hardworking agent, this is good.

More agents will develop the guts to just say ‘No’

When there’s nothing in the pipeline and the opportunity to take a listing for a property that is priced 30% higher than reality now dictates arises, it is very hard to walk away. After all, someone will take the listing, right? Please—let someone else take such listings. That same survey we’ve been referencing also revealed that an incredible 2 out of 3 homeowners originally listed their home with a different agent than the agent who had the listing when it finally sold. Imagine all the blood, sweat, tears and money wasted by agents who take unrealistically priced listings. This nonsense won’t stop until agents remember that a listing gained at an unrealistic price will only result in an unhappy customer, and another statistic for such studies. For the agent who wants to stay sane, this is good.

Long-term consequences

Skill, hard work and mastering technology to bring you prospects will become more important than spending hours blogging, posting listings, tinkering with websites and generally not selling. Technology that simply requires more involvement from the agent will languish – in large measure—because consumers aren’t driving the use of video, the endless hours of social networking, the ubiquitous IDX systems and other colossally unproductive drudges that agents are now told they must embrace; it’s the technology companies driving that.

The consumer wants help choosing a home and getting it financed from a knowledgeable and responsive agent. They want to pay a fair price; they want a deal that will appraise out; they do not want to waste their time on uneconomic transactions. Most of all, if they call or write in on your website, they want an instant and friendly response. In short, they want the service that used to be inherent in a real estate agent and they will continue to gravitate to a minority of agents who give such service. The Internet helps them find those agents, faster. Sometimes agents don’t know that their way has been made obsolete and they inadvertently give poor service. For example:

This week, an agent complained that he wasn’t getting sales for the Internet leads he was receiving. We asked him why he had not attended the free class on how to best follow up those leads. He replied: “I know how to follow up Internet leads! We send an immediate auto responder and put them on an MLS drip email system! I don’t need your @#%#@ training!”

Folks, kill all auto responders. Do not put people on drip email systems. Do not automate anything about the sales process until and unless you have spoken with the prospect and they have asked you to do so. This agent was wasting the fruit of his labors by not contacting people personally and consistently. Today, it’s a merciless marketplace and every one of those uncontacted leads is now speaking to another agent.

That’s just one simple example, but many others exist; repeat after me: “Succeeding today is about personal service, hard work, professional representation, and modest use of effective technology.”

Isn't this amazing! Remember, connect with a Realtor who can represent you appropriately and professionally. A home purchase is more than opening a lockbox and selling your home is more than putting a sign in the front yard. If you have questions about locating a Realtor in your area, contact me and I can connect you with a professional Realtor who will represent you well. Don't fall into the category mentioned in the article!

It is March 16, 2010 and I am very Bullish on Sacramento!

David Ohara

@dwo34

dwo34@aol.com

Home Buyer Tax Credit

2010-03-12T08:48:00.000-08:00

Only a Very Little Time Remains!

Frequently Asked Questions
About the First-Time Home Buyer Tax Credit
The Worker, Homeownership, and Business Assistance Act of 2009 has extended the tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence. The tax credit now applies to sales occurring on or after January 1, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify.

For sales occurring after November 6, 2009, the Act establishes income limits of $125,000 for single taxpayers and $225,000 for married couples filing joint returns.

The income limits for sales occurring on or after January 1, 2009 and on or before November 6, 2009, are $75,000 for single taxpayers and $150,000 for married taxpayers filing joint returns.

The following questions and answers provide basic information about the tax credit. If you have more specific questions, we strongly encourage you to consult a qualified tax advisor or legal professional about your unique situation.
Who is eligible to claim the $8,000 tax credit?
What is the definition of a first-time home buyer?
How is the amount of the tax credit determined?
Are there any income limits for claiming the tax credit?
The income limits for claiming the tax credit were raised when the tax credit was extended. Are the higher income limits retroactive?
What is “modified adjusted gross income”?
If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?
Can you give me an example of how the partial tax credit is determined?
How is this home buyer tax credit different from the tax credit that Congress enacted in early 2009?
How do I claim the tax credit? Do I need to complete a form or application? Are there documentation requirements?
What types of homes will qualify for the tax credit?
I read that the tax credit is "refundable." What does that mean?
Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?
Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?
I live in the District of Columbia. Can I claim both the Washington, D.C. first-time home buyer credit and this new credit?
I am not a U.S. citizen. Can I claim the tax credit?
Is a tax credit the same as a tax deduction?
I bought a home in 2008. Do I qualify for this credit?
Is there any way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2009 or 2010 tax return?
HUD is now allowing "monetization" of the tax credit. What does that mean?
If I’m qualified for the tax credit and buy a home in 2009 (or 2010), can I apply the tax credit against my 2008 (or 2009) tax return?
For a home purchase in 2009 or 2010, can I choose whether to treat the purchase as occurring in the prior or present year, depending on in which year my credit amount is the largest?
How can two unmarried buyers allocate the tax credit if one qualifies for the $8,000 first-time home buyer tax credit and the other qualifies for the $6,500 repeat home buyer credit?
Does a married couple qualify for any home buyer tax credit in the following situation? Spouse A has lived in and owned the same principal residence for at least five years. Spouse B has lived in and owned the same principal residence for less than five years.

Who is eligible to claim the $8,000 tax credit?
First-time home buyers purchasing any kind of home—new or resale—are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and on or before April 30, 2010. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner. A limited exception exists for certain contract for deed purchases and installment sale purchases. See the IRS website for more detail.

However, the law also allows home sales occurring by June 30, 2010 to qualify, provided they are due to a binding sales contract in force on or before April 30, 2010.

Persons who are claimed as dependents by other taxpayers or who are under age 18 are not qualified for the tax credit program.

What is the definition of a first-time home buyer?
The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.

For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, IRS Notice 2009-12 allows unmarried joint purchasers to allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.

How is the amount of the tax credit determined?
The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.

Are there any income limits for claiming the tax credit?
Yes. For sales occuring after November 6, 2009, the income limit for single taxpayers is $125,000; the limit is $225,000 for married taxpayers filing a joint return. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $125,000 for single taxpayers and $225,000 for married taxpayers filing a joint return. The phaseout range for the tax credit program is equal to $20,000. That is, the tax credit amount is reduced to zero for taxpayers with MAGI of more than $145,000 (single) or $245,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.

The income limits for claiming the tax credit were raised when the tax credit was extended. Are the higher limits retroactive?
No. The new income limits are only applicable to purchases occurring after November 6, 2009.

The income limits for sales occuring on or after January 1, 2009 and on or before November 6, 2009 are $75,000 for single taxpayers and $150,000 for married couples filing jointly.

What is “modified adjusted gross income”?
Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine “adjusted gross income” or AGI. AGI is total income for a year minus certain deductions (known as “adjustments” or “above-the-line deductions”), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of income including wages, salaries, interest income, dividends and capital gains.

To determine modified adjusted gross income (MAGI), add to AGI certain amounts of foreign-earned income. See IRS Form 5405 for more details.

If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?
Possibly. It depends on your income. Partial credits of less than $8,000 are available for some taxpayers whose MAGI exceeds the phaseout limits.

Can you give me an example of how the partial tax credit is determined?
Just as an example, assume that a married couple has a modified adjusted gross income of $235,000. The applicable phaseout to qualify for the tax credit is $225,000, and the couple is $10,000 over this amount. Dividing $10,000 by the phaseout range of $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.

Here’s another example: assume that an individual home buyer has a modified adjusted gross income of $138,000. The buyer’s income exceeds $125,000 by $13,000. Dividing $13,000 by the phaseout range of $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.

Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.

How is this home buyer tax credit different from the tax credit that Congress enacted in early 2009?
The tax credit’s income limits were increased, the documentation requirements were tightened, and the program's deadlines were extended.

How do I claim the tax credit? Do I need to complete a form or application? Are there documentation requirements?
You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on line 67 of the 1040 income tax form for 2009 returns (line 69 of the 1040 income tax form for 2008 returns). Please note that although the Form is titled “First-Time Homebuyer Credit,” this is the correct form for claiming both the $8,000 first-time homebuyer tax credit and $6,500 repeat buyer tax credit.

No other applications are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests. Note that you cannot claim the credit on Form 5405 for an intended purchase for some future date; it must be a completed purchase. Home buyers must attach a copy of their HUD-1 settlement form (closing statement) to Form 5405 as proof of the completed home purchase. In cases where a HUD-1 form is not used, such as for construction of some new homes, you should attach a copy of the certificate of occupancy in lieu of the HUD-1. Homebuyers should be sure to read the instructions for the revisedIRS Form 5405 to be sure they meet the new program requirements.

What types of homes will qualify for the tax credit?
Any home that will be used as a principal residence will qualify for the credit, provided the home is purchased for a price less than or equal to $800,000. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats. The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences.

It is important to note that you cannot purchase a home from, among other family members, your ancestors (parents, grandparents, etc.), your lineal descendants (children, grandchildren, etc.) or your spouse or your spouse’s family members. Please consult with your tax advisor for more information. Also see IRS Form 5405.

I read that the tax credit is “refundable.” What does that mean?
The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.

For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed).

Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?
Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been “purchased” on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after January 1, 2009 and on or before April 30, 2010 (or by June 30, 2010, provided a binding sales contract was in force by April, 30, 2010).

In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date. To provide proof of purchase, homebuyers must attach a copy of the HUD-1 Form or certificate of occupancy to IRS Form 5405.

Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?
Yes. The tax credit can be combined with an MRB home buyer program. Note that first-time home buyers who purchased a home in 2008 may not claim the tax credit if they are participating in an MRB program.

I live in the District of Columbia. Can I claim both the Washington, D.C. first-time home buyer credit and this new credit?
No. You can claim only one.

I am not a U.S. citizen. Can I claim the tax credit?
Maybe. Anyone who is not a nonresident alien (as defined by the IRS), who has not owned a principal residence in the previous three years and who meets the income limits test may claim the tax credit for a qualified home purchase. The IRS provides a definition of “nonresident alien” in IRS Publication 519.

Is a tax credit the same as a tax deduction?
No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $8,000 in income taxes and who receives an $8,000 tax credit would owe nothing to the IRS.

A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $8,000 in income taxes. If the taxpayer receives an $8,000 deduction, the taxpayer’s tax liability would be reduced by $1,200 (15 percent of $8,000), or lowered from $8,000 to $6,800.

I bought a home in 2008. Do I qualify for this credit?
No, but if you purchased your first home between April 9, 2008 and January 1, 2009, you may qualify for a different tax credit. Please consult with your tax advisor for more information.

Is there a way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2009 or 2010 tax return?
Yes. Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the downpayment.

Buyers should adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.

In addition, rule changes made as part of the economic stimulus legislation allow home buyers to claim the tax credit and participate in a program financed by tax-exempt bonds. As a result, some state housing finance agencies have introduced programs that provide short-term second mortgage loans that may be used to fund a downpayment. Prospective home buyers should check with their state housing finance agency to see if such a program is available in their community. To date, 18 state agencies have announced tax credit assistance programs, and more are expected to follow suit. The National Council of State Housing Agencies (NCSHA) has compiled a list of such programs, which can be found here.

HUD is now allowing "monetization" of the tax credit. What does that mean?
It means that HUD allows buyers using FHA-insured mortgages to apply their anticipated tax credit toward their home purchase immediately rather than waiting until they file their 2009 or 2010 income taxes to receive a refund. These funds may be used for certain downpayment and closing cost expenses.

Under HUD’s guidelines, non-profits and FHA-approved lenders are allowed to give home buyers short-term loans of up to $8,000. The guidelines also allow government agencies, such as state housing finance agencies, to facilitate home sales by providing longer term loans secured by second mortgages.

Housing finance agencies and other government entities may also issue tax credit loans, which home buyers may use to satisfy the FHA 3.5 percent downpayment requirement. In addition, approved FHA lenders can purchase a home buyer’s anticipated tax credit to pay closing costs and downpayment costs above the 3.5 percent downpayment that is required for FHA-insured homes.

More information about the guidelines is available on the NAHB web site. Read the HUD mortgagee letter (pdf) and an explanation of the FHA Mortgagee Letter on Tax Credit Monetization (pdf). An FAQ about monetization (pdf) is available at the NAHB web site.

If I’m qualified for the tax credit and buy a home in 2009 (or 2010), can I apply the tax credit against my 2008 (or 2009) tax return?
Yes. The law allows taxpayers to choose (“elect”) to treat qualified home purchases in 2009 (or 2010) as if the purchase occurred on December 31, 2008 (or if in 2010, December 31, 2009). This means that the previous year’s income limit (MAGI) applies and the election accelerates when the credit can be claimed. A benefit of this election is that a home buyer in 2009 or 2010 will know their prior year MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.

Taxpayers buying a home who wish to claim it on their prior year tax return, but who have already submitted their tax return to the IRS, may file an amended return claiming the tax credit using Form 1040X. You should consult with a tax professional to determine how to arrange this.

For a home purchase in 2009 or 2010, can I choose whether to treat the purchase as occurring in the prior or present year, depending on in which year my credit amount is the largest?
Yes. If the applicable income phaseout would reduce your home buyer tax credit amount in the present year and a larger credit would be available using the prior year MAGI amounts, then you can choose the year that yields the largest credit amount.

How can two unmarried buyers allocate the tax credit if one qualifies for the $8,000 first-time home buyer tax credit and the other qualifies for the $6,500 repeat home buyer credit?
The buyers can allocate the tax credit in any reasonable manner, provided neither claims a tax credit higher than the one they qualify for and the home purchase does not yield a total of more than $8,000 in tax credits. For example, the repeat home buyer could claim $6,500 and the first-time home buyer could claim $1,500. Alternatively, both buyers could claim a $4,000 tax credit.
Does a married couple qualify for any home buyer tax credit in the following situation? Spouse A has lived in and owned the same principal residence for at least five years. Spouse B has lived in and owned the same principal residence for less than five years.
In this situation, the couple does not qualify for any home buyer tax credit. Because the couple is married, the law tests the ownership history of both spouses. Spouse A clearly does not qualify for the $8,000 first-time home buyer tax credit, so neither does Spouse B.

Spouse A does appear to qualify for the $6,500 repeat buyer credit, but because Spouse B has not owned and lived in the same principal residence for at least five years, neither of them can claim the repeat home buyer tax credit.
The above information was provided by the National Association of Home Builders. If you have any additional questions or comments. Please let me know. Thank you and have a great day!

It's March 12, 2010 and I am very Bullish on Sacramento!

David Ohara
@dwo34
dwo34@aol.com

This Is It!

2010-02-03T16:09:00.001-08:00

Good Afternoon Everyone!

I had the fortune of receiving the Michael Jackson movie called "This Is It" as a birthday gift. Ironically, the movie became available for purchase on my birthday, January 26, 2010. I have always been a Michael Jackson fan and I have always defended his creative brilliance. I wanted to see "This Is It" because I had heard some stories that he was "over the hill," "fragile looking," "out of performing shape," and "unable to sing anymore."

The movie begins with a few interviews and jumps into Michael performing "Want to Be Starting Something." In typical MJ fashion, he takes command of the stage and is absolutely amazing. He still has all the moves, all the facial expressions, and still has the magical voice. The movie is a collection of memories for most, as covers songs from his Thriller album and his famous Jackson Five melody.

One of the things that I marveled at is MJ's ability to "see" and "visualize" how the song and performance should sound and look like. His stage presence is second to none.

It is also amazing that his tour attracted the best and most dynamic dancers in the world! Dancers globally showed up for the auditions. The final dance team is top notch, yet compared to the "gloved one," there is no comparison who is the premiere dancer. And remember, MJ was a sprite 50 years old!

I give this movie two big thumbs up! Everyone should watch this movie. It is entertaining, informative, and amazing!

It's February 3, 2010 and I am Bullish on Sacramento!

David Ohara

dwo34@aol.com

@dwo34

Happy New Year! Time to Set Your Goals...

2010-01-04T23:42:00.001-08:00

Happy New Year Everyone!

With the start of the new year, I thought I would blog on "Setting Goals." As I look back at my real estate career, I equate my success with proper goal setting. In the years that I did not do as well as I expected, I can attribute it to poor or a lack of goal setting. In the next couple of days, I will begin to map out my goals for 2010. I am looking forward to a very productive year! To help you get started with those goals, here are some helpful pointers. Good luck and have a great year!

Set Specific Goals

Set specific measurable goals. If you achieve all conditions of a measurable goal, then you can be confident and comfortable in its achievement. If you consistently fail to meet a measurable goal, then you can adjust it or analyse the reason for failure and take appropriate action to improve skills.

Set Realistic Goals

Goals may be set unrealistically high for the following reasons:

Other people: Other people (parents, media, society) can set unrealistic goals for you, based on what they want. Often this will be done in ignorance of your goals, desires and ambitions.
Insufficient information: If you do not have a clear, realistic understanding of what you are trying to achieve and of the skills and knowledge to be mastered, it is difficult to set effective and realistic goals.
Always expecting your best performance: Many people base their goals on their best performance, however long ago that was. This ignores the inevitable backsliding that can occur for good reasons, and ignores the factors that led to that best performance. It is better to set goals that raise your average performance and make it more consistent.
Lack of respect for self: If you do not respect your right to rest, relaxation and pleasure in life then you risk burnout.

Setting Goals Too Low

Alternatively goals can be set too low because of:

Fear of failure: If you are frightened of failure you will not take the risks needed for optimum performance. As you apply goal setting and see the achievement of goals, your self- confidence should increase, helping you to take bigger risks. Know that failure is a positive thing: it shows you areas where you can improve your skills and performance.
Taking it too easy: It is easy to take the reasons for not setting goals unrealistically high as an excuse to set them too low. If you're not prepared to stretch yourself and work hard, then you are extremely unlikely to achieve anything of any real worth.

Setting Goals at the Right Level

Setting goals at the correct level is a skill that is acquired by practice.

You should set goals so that they are slightly out of your immediate grasp, but not so far that there is no hope of achieving them: no-one will put serious effort into achieving a goal that they believe is unrealistic. However, remember that the belief that a goal is unrealistic may be incorrect. Such a belief can be changed by effective use of imagery.

Personal factors such as tiredness, other commitments and the need for rest, etc. should be taken into account when goals are set.

Now review the goals you have set, and then measure them against the points above. Adjust them to meet the recommendations and then review them. You should now be able to see the importance of setting goals effectively.

Thinking a goal through

When you are thinking about how to achieve goals, asking the following questions can help you to focus on the sub-goals that lead to their achievement:

What skills do I need to achieve this?
What information and knowledge do I need?
What help, assistance, or collaboration do I need?
What resources do I need?
What can block progress?
Am I making any assumptions?
Is there a better way of doing things?

It's January 4, 2010, and I am very Bullish on Sacramento!

David Ohara

@dwo34

dwo34@aol.com

Part Two - Julie Collins

2009-12-15T07:55:00.001-08:00

Good Morning Friends!

As promised, here is the second installment of introducing my friend Julie Collins. Julie is an up and coming star. She is a dynamic performer. Please read my prior posting to learn all about her. Today's entry is my interview I did with Julie.

@dwo34: Hi Julie! Please tell us about how you got involved with the "Hive Mind Movie"

@jc76: I joined Twitter for other reasons than my music and acting but people knew I was Julie Collins from Myspace so music was talked about, Ladd & I started talking and he liked my "Turn This World Around" and said it would be a good song to open the film. So I agreed and the rest is history.

@dwo34: Tell us about your roll in the movie

@jc76: Ladd then asked if I'd read for the part of Hive Mind I recorded the script and got it to him asap thankfully he liked what I did and I landed the role of The Hive mind .

@dwo34: Did you have to do anything special to prepare yourself for the movie?

@jc76: I read the script a few times and familiarized myself with the character, I knew it was almost Borg like but sexy and sassy with a sense of humour, I hope this comes across in my dialogue with Doug Trench, Last Man On Earth!

@dwo34: Tell me about your prior experiences in the entertainment field and how does the Hive Mind Movie compare

@jc76; since I was 3 I've Been performing on stage theatre & TV always auditioning for bands and playing for charity as a Madonna impersonator, films - I was in Hitchhikers, Guide to the Galaxy and Wimbledon and also play lead role in Heather Brothers Production in a film called Bullets Buzz and Mr Fish, i have been an extra in so many things! I love it! (Laughs) I also secured a record deal in USA for 5 years in 2000 but my mother contracted cancer and I wanted to be with her. My deal expired in 2005. I have released my work in iTunes & amazon now & hoping for another good deal.

@dwo34: What was most fun about being a part of this movie?

@jc76: I love the idea that all humans are devoured by me as hive! They will have no choice but to hear me sing Lol,

@dwo34: Your music is so cool, what and who are your inspirations?

@jc76: thanks. I have always sang since I was a small child I love Smokey Robinson & the Beatles Pink Floyd & older Madonna stuff! Karen Carpenter & Barbara Streisand were great singers to emulate.

The songs on my EP is a diary if you like of what I have done, I like to be varied, I'm no one trick pony (smiles and laughs)

@dwo34: What's on the horizon for Julie Collins?

@jc76: I'm recording all the time & looking to tour next year, hoping I land another deal again as I'm ready now more than ever to give it my best shot! I will act more as well if I get the chance, I believe I may work with Ladd again and this time you'll see my face as well as hear my voice.

I am aiming for the top!

@dwo34: How can your fans stay in tune with you?

@jc76: my fans have been very loyal, I have Myspace friends that are like family now, some even have a poster of me on their Walls. You can find me

Amazon for my work > http://bit.ly/25gdBI http://hereico.me/JulieCollins xxxx www.myspace.com/juliecollins

YouTube @ madjoolie 13

EP Julie Collins (7 track) & The Hive Mind Movie are for sale now in Amazon. I'm sure people will love the film & dance and sing to my EP.

@dwo34: Thank you so much Julie! You are an awesome performer! Keep rocking!

@jc76: You are so welcome David. I'm a firm believer of going for your dreams , I have been bullied taunted and upset by some people as they think I should get a proper job. Well this is my chosen field, entertainment and I love performing for you all! Never be afraid to dream. Plus I'm a good role model as I'm a good size 12, I love my food, and I have many many stories. I'm going to write a book eventually!

@dwo34: We can't wait. World, meet Julie Collins!

It's December 15, 2009 and I am Bullish on Sacramento and Julie Collins!

David Ohara

@dwo34

dwo34@aol.com

Meet Julie Collins the star of The Hive Mind!

2009-12-08T19:05:00.001-08:00

Good Evening Everyone!

I want to introduce to my friend Julie Collins! She is a star ready to shine and she has the lead role as the "Hive" in the new release "The Hive Mind." She is a talented and beautiful performer. My introduction to Julie will be in two parts. The first part will be an introduction to Julie and information on the new movie she stars in "The Hive Mind." Please enjoy.

About the movie "The Hive Mind." Doug Trench is the last man on earth. Before humanity was assimilated by Hive Mind, he'd been heir to the kingdoms of Limbaugh, Hannity, Levin, Boortz and Beck. Now, running out of supplies in his undisclosed broadcast bunker, driven half-mad from isolation after twenty years, Trench fires up his radio show one last time to fight the Hive Mind with half his brain tied behind his back.

The final battle between individuality and collectivism begins...

"When our own President said we're too individualistic and need to think collectively, well, that's horrifying," said Ladd. "So naturally as a filmmaker I thought: scifi-horror film! Eco-friendly collectivist techno-zombies!"

Zombies created by a nanotech cell phone that merges with your brain. Dubbed the "I-Mind," the phone lets you Twitter telepathically, download movies straight to your brain, and keep your contacts forever. Britney, J-Lo, Pamela and Paris all love their I-Minds. But there's a sinister side-effect: loss of free will to the collective Hive consciousness. Everyone is either assimilated or killed in Hive's eco-efforts to reduce the population.

Hive Mind is the future of humanity. It is a collective consciousness born from implant-cell-phone-technology gone awry, comprised of every human being on earth from Britney Spears to John Kerry...

The lone hold-out is Doug Trench, conservative talk-show host and stevedore of freedom. He's lived in a bunker for twenty years, ever since humanity was consumed by the collective.

Hive Mind rules Earth with love. Eco-friendly and imminently progressive, Hive Mind is pollution free, boasting a completely carbon-free footprint. Hive Mind is poverty-free, war-free, and freedom-free. It brooks no dissent for it has no dissent.

It's described as a techno-collectivist horror film with a cast of billions

One of the stars of the movie is Julie Collins. Julie is a friend of mine who I met on Twitter. I was excited when I learned that Julie was selected to be in the movie and be cast as the title roll of Hive.

Julie was Born in Lincolnshire UK 19th December 1973. She was introduced to music through her parents. Julie says her "father was a drummer & footballer." As a child, Julie starred in many shows & appeared as an extra in television and film. In her teens and early twenties she auditioned for girl bands, film and television. In her own words "I was always out there!"

When she returned home. she auditioned to be a Red Coat (big gig in UK) 4000 people auditioned and only 30 selected. Julie was one of the 30 and loved it but it was "hard work." Julie also participated in many bands and wrote "This This World Around" this was the first song she wrote. After some small gigs in all girl bands, Julie knew she wanted to be a soloist. In 1991, Julie says she was discovered at a karaoke bar in Brighton by a man called Sir David Land (he discovered Sir Andrew Lloyd Webber & Sir Tim Rice,) he ran the Theatre Royal in Brighton and invited Julie to audition for Cinderella pantomime, and she got it! Unfortunately, Julie got ill and had to drop out. More auditions and more gigs led to Julie responding to an ad in NME looking for the next "Big Thing!" Needless to say Julie, was the next "Big Thing" and signed a five year deal in 1999! That same year, Julie's mother got cancer and she so wanted to share her dream with her, but she fought for 4 years with Julie by her side. Julie went to LA shot her video, on her Myspace page, and did some promotional gigs. Julie's first single was a Beatles cover "Something" (thanks to Olivia Harrison & Wesley Magoogan for producing it.) Julie was due to go on The Jay Leno Show and a tour was getting arranged but her mother took a turn for the worse and she returned home because to care for her mother. Julie's mother passed away from cancer and since 2006 Julie has been recording quietly from her bedroom and has had to battle depression and grief. Julie joined Twitter and met Ladd, the director of the "Hive" Julie says "he liked my songs, especially, Turn This World Around and Talk Dirty and he asked if they could be in his film The Hive Mind." Julie was very excited that her songs were to be featured in the film. Then Ladd asked if Julie would play the voice of Hive Mind!!! Julie adds "I am so elated and humbled to be so lucky and grateful to Ladd for seeing my potential!" Stay tuned to learn more about Julie Collins, UK dreamer who never gave up.... Ever! Read the interview tomorrow.

It's December 8, 2009 and I am Bullish on Sacramento!

David Ohara

@dwo34

dwo34@aol.com

Housing Affordability Reaches 70.1%!!!

2009-12-02T19:02:00.000-08:00

Housing Affordability Record-High Level for Third Consecutive Quarter

November 19, 2009 - Nationwide housing affordability, bolstered by affordable interest rates and low house prices, hovered for the third consecutive quarter near its highest level since the series was first compiled 18 years ago, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) released today.

The HOI showed that 70.1 percent of all new and existing homes sold in the third quarter of 2009 were affordable to families earning the national median income of $64,000, down slightly from a near-record 72.3 percent during the previous quarter and up from 56.1 percent during the third quarter of 2008.

"At a time when housing is at its most affordable, we applaud the recent actions taken by Congress and President Obama to stimulate housing by extending the federal tax credit beyond its Nov. 30 deadline and expanding it to a wider group of eligible home buyers," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. "With interest rates now lower than last quarter, the tax credit will encourage even more home buyers to enter the market and help stabilize housing and the economy by creating new jobs, stimulating home sales, reducing foreclosures, cutting excess inventories and stabilizing home prices."

Indianapolis was the most affordable major housing market in the country during the third quarter, a position the metro area now has held for 17 consecutive quarters. Almost 95 percent of all homes sold were affordable to households earning the area's median family income of $68,100.

Also near the top of the list of the most affordable major metro housing markets were Youngstown-Warren-Boardman, Ohio-Pa., and three Michigan metropolitan areas, Detroit-Livonia-Dearborn; Warren-Troy-Farmington Hills; and Grand Rapids-Wyoming.

Five smaller housing markets posted even higher affordability scores than Indianapolis, with Kokomo, Ind. outscoring all others. There, 96.7 percent of homes sold during the third quarter of 2009 were affordable to median-income earners. Other smaller housing markets near the top of the index included Springfield, Ohio; Bay City, Mich.; Mansfield, Ohio; and Elkhart-Goshen, Ind.

New York-White Plains-Wayne, N.Y.-N.J., was the nation's least affordable major housing market during the third quarter of 2009, the New York metro area's sixth consecutive appearance at the bottom of the list. Slightly more than 19 percent of all homes sold during the third quarter were affordable to those earning the New York area's median income of $64,800.

The other major metro areas near the bottom of the affordability scale included San Francisco; Honolulu; Santa Ana-Anaheim-Irvine, Calif.; and Nassau-Suffolk, N.Y.

San Luis Obispo-Paso Robles, Calif. was the least affordable of the smaller metro housing markets in the country during the third quarter. Others near the bottom of the chart included Ocean City, N.J.; Santa Cruz-Watsonville, Calif.; Santa Barbara-Santa Maria-Goleta, Calif.; and Brownsville-Harlingen, Texas.

It's December 2, 2009 and I am Bullish on Sacramento!

David Ohara

@dwo34

dwo34@aol.com

Buyer Update! Mission Accomplished

2009-11-25T13:31:00.000-08:00

Happy Thanksgiving Everyone!

I wanted to give you all an update on a previous Buyer that I was working with and had blogged about. The Buyer was referred to as "Ryno." Ryno is a teacher at Inderkum High School in Natomas and is looking for a home in the North Natomas area. As you might remember, Ryno and I have been searching for a home for a few months now. We have made offers on several different homes, only to be outbid by another Buyer.

Last week, we looked at a nice 3 bedroom, 2 bath home in a great neighborhood. After consideration, we decided to submit an offer on it. The home is in immaculate shape, with new stainless steel appliances, palm trees, hardwood floors, fresh paint, tile roof, close to shopping, parks, and most importantly, his work. We wrote up a nice and clean offer for the home, and I submitted it to the Seller's agent. After we discussed the offer, the agent told me that he was going to recommend that the Seller accept our offer as written. I enjoy working with quality agents that you can communicate with. Needless to say, Ryno had his offer accepted as written! He should be able to get the keys to his new home a few days after Christmas! Congratulations Ryno! I know you will be happy at your new home.

It's November 25, 2009 and I am extremely Bullish on Sacramento!

David Ohara

@dwo34

dwo34@aol.com

Flipping - The 90 Day Wait Period

2009-11-17T18:50:00.000-08:00

Good Evening Everyone!

I have been getting a lot of inquiries about the 90 day "flipping rule" from several people. Essentially, some lenders will not underwrite a loan on a property that has been purchased by an investor with the intention of "flipping" the property for a quick profit. These lenders require that these investors hold title for at least 90 days before they will consider the property for a loan. The 90 day rule does not apply in situations where the lending institutions that acquired the property back through the foreclosure process. Below is the actual language directly from the United States Department of Housing and Urban Development.

HUD No. 03-055

BUSH ADMINISTRATION PROVIDES HOMEBUYERS NEW PROTECTION FROM PREDATORY LENDING PRACTICE

New "Anti-Flipping" Rule Holds Lenders, Sellers and Appraisers Accountable

WASHINGTON - Housing and Urban Development Secretary Mel Martinez today announced a new initiative in the Bush Administration's efforts to crack down on predatory lending. HUD published a final rule today in the Federal Register addressing property "flipping" on mortgages insured by the Federal Housing Administration (FHA).

Property "flipping" occurs when a recently acquired property is resold for a considerable profit with an artificially inflated value.

"The Bush Administration is committed to maintaining a strong housing market in which consumers can feel confident that they are protected from unscrupulous practices," Martinez said. "This final rule represents a major step in our efforts to eliminate predatory lending practices."

Predatory lending results when home purchasers become unwitting victims of lenders, sellers and appraisers, often working together. The unsuspecting homebuyers either purchase homes with sales prices far in excess of the fair market value, or are substantially overcharged with costs associated with obtaining a mortgage.

The final rule, "FR-4615 Prohibition of Property Flipping in HUD's Single Family Mortgage Insurance Programs," (view as TEXT or view as PDF file) makes recently flipped properties ineligible for FHA mortgage insurance. It also allows FHA to better manage its insurance risk by requiring additional support for a property's value when a significant increase between sales occurs. Features include:

Sale by Owner of Record: Only the owner of record may sell a home to an individual who will obtain FHA mortgage insurance for the loan; it may not involve any sale or assignment of the sales contract, a procedure often observed when the homebuyer is determined to have been a victim of predatory practices.

Time Restrictions on Re-sales:

Re-sales occurring 90 days or less following acquisition will not be eligible for a mortgage to be insured by FHA. FHA's analysis disclosed that among the most egregious examples of predatory lending was on "flips" that occurred within a very brief time span, often within days. Thus, the "quick flips" will be eliminated.

Re-sales occurring between 91 and 180 days will be eligible provided that the lender obtains an additional appraisal from an independent appraiser based on a re-sale percentage threshold established by FHA; this threshold would be relatively high so as to not adversely affect legitimate rehabilitation efforts but still deter unscrupulous sellers, lenders, and appraisers from attempting to flip properties and defraud homebuyers. Lenders may also prove that the increased value is the result of rehabilitation of the property.

Re-sales occurring between 90 days and one year will be subject to a requirement that the lender obtain additional documentation to support the value to address circumstances or locations where HUD identifies property flipping as a problem. This authority would supersede the higher expected threshold established for the above-mentioned 90 to 180 day period and will be invoked when FHA determines that substantial abuse may be occurring in a particular locality.

Other recent actions by the Bush Administration to protect homeowners from predatory lending and promote homeownership include:

A proposed rule making lenders accountable for appraisals on mortgage insured by FHA.

A recent plan announced by HUD to expand protection of homeowners by proposing performance standards for appraisers of FHA-single family homes under its Appraiser Watch Initiative. Under Appraiser Watch, some 25,000 appraisers will be held accountable for faulty appraisals, which too often lead to default and foreclosure. FHA will monitor appraisers' default and claim rates and will levy sanctions - including removal from its list of approved appraisers - against those whose rates are excessive.

A proposal to reform the regulatory requirements of the Real Estate Settlement Procedures Act (RESPA) that would make the process of buying and refinancing a home significantly simpler, potentially less expensive and would protect consumers from unscrupulous lending practices.

The "Homebuyer Bill of Rights," which requires greater disclosure of costs associated with buying a home, allows consumers more choices in choosing providers of closing services, limits excessive settlement fees and encourages innovation and competition in the marketplace.

HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities, creating affordable housing opportunities for low-income Americans, supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development as well as enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet.

If you have any questions about this or a property, please let me know and I can do the research for you.

It's November 17, 2009 and I am very Bullish on Sacramento

David Ohara

@dwo34

dwo34@aol.com

Details of the Federal Tax Credit

2009-11-13T17:56:00.000-08:00

Good Evening Everyone:

Earlier this month, President Obama signed the extension of the tax credit for home buyers. Below is some detailed information about this tax credit and how it now includes owners looking to move up. The bulk of this information was obtained from the National Association of Home Builders.

The Worker, Homeownership, and Business Assistance Act of 2009 has extended the tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence. The tax credit now applies to sales occurring on or after January 1, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify.

For sales occurring after November 6, 2009, the Act establishes income limits of $125,000 for single taxpayers and $225,000 for married couples filing joint returns.

The income limits for sales occurring on or after January 1, 2009 and on or before November 6, 2009, are $75,000 for single taxpayers and $150,000 for married taxpayers filing joint returns.

The following questions and answers provide basic information about the tax credit. If you have more specific questions, we strongly encourage you to consult a qualified tax advisor or legal professional about your unique situation.

Who is eligible to claim the $8,000 tax credit?
First-time home buyers purchasing any kind of home—new or resale—are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and on or before April 30, 2010. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner. A limited exception exists for certain contract for deed purchases and installment sale purchases. See the IRS website for more detail.

However, the law also allows home sales occurring by June 30, 2010 to qualify, provided they are due to a binding sales contract in force on or before April 30, 2010.

Persons who are claimed as dependents by other taxpayers or who are under age 18 are not qualified for the tax credit program.
What is the definition of a first-time home buyer?
The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.

For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, IRS Notice 2009-12 allows unmarried joint purchasers to allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.
How is the amount of the tax credit determined?
The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.
Are there any income limits for claiming the tax credit?
Yes. For sales occuring after November 6, 2009, the income limit for single taxpayers is $125,000; the limit is $225,000 for married taxpayers filing a joint return. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $125,000 for single taxpayers and $225,000 for married taxpayers filing a joint return. The phaseout range for the tax credit program is equal to $20,000. That is, the tax credit amount is reduced to zero for taxpayers with MAGI of more than $145,000 (single) or $245,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.
The income limits for claiming the tax credit were raised when the tax credit was extended. Are the higher limits retroactive?
No. The new income limits are only applicable to purchases occurring after November 6, 2009.

The income limits for sales occuring on or after January 1, 2009 and on or before November 6, 2009 are $75,000 for single taxpayers and $150,000 for married couples filing jointly.
What is “modified adjusted gross income”?
Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine “adjusted gross income” or AGI. AGI is total income for a year minus certain deductions (known as “adjustments” or “above-the-line deductions”), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of income including wages, salaries, interest income, dividends and capital gains.

To determine modified adjusted gross income (MAGI), add to AGI certain amounts of foreign-earned income. See IRS Form 5405 for more details.
If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?
Possibly. It depends on your income. Partial credits of less than $8,000 are available for some taxpayers whose MAGI exceeds the phaseout limits.
Can you give me an example of how the partial tax credit is determined?
Just as an example, assume that a married couple has a modified adjusted gross income of $235,000. The applicable phaseout to qualify for the tax credit is $225,000, and the couple is $10,000 over this amount. Dividing $10,000 by the phaseout range of $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.

Here’s another example: assume that an individual home buyer has a modified adjusted gross income of $138,000. The buyer’s income exceeds $125,000 by $13,000. Dividing $13,000 by the phaseout range of $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.

Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.
How is this home buyer tax credit different from the tax credit that Congress enacted in early 2009?
The tax credit’s income limits were increased, the documentation requirements were tightened, and the program's deadlines were extended.
How do I claim the tax credit? Do I need to complete a form or application? Are there documentation requirements?
You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on line 67 of the 1040 income tax form for 2009 returns (line 69 of the 1040 income tax form for 2008 returns). No other applications are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests. Note that you cannot claim the credit on Form 5405 for an intended purchase for some future date; it must be a completed purchase. Home buyers must attach a copy of their HUD-1 settlement form (closing statement) to Form 5405 as proof of the completed home purchase.
What types of homes will qualify for the tax credit?
Any home that will be used as a principal residence will qualify for the credit, provided the home is purchased for a price less than or equal to $800,000. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats. The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences.

It is important to note that you cannot purchase a home from, among other family members, your ancestors (parents, grandparents, etc.), your lineal descendants (children, grandchildren, etc.) or your spouse or your spouse’s family members. Please consult with your tax advisor for more information. Also see IRS Form 5405.
I read that the tax credit is “refundable.” What does that mean?
The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.

For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed).
Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?
Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been “purchased” on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after January 1, 2009 and on or before April 30, 2010 (or by June 30, 2010, provided a binding sales contract was in force by April, 30, 2010).

In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date.
Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?
Yes. The tax credit can be combined with an MRB home buyer program. Note that first-time home buyers who purchased a home in 2008 may not claim the tax credit if they are participating in an MRB program.
I live in the District of Columbia. Can I claim both the Washington, D.C. first-time home buyer credit and this new credit?
No. You can claim only one.
I am not a U.S. citizen. Can I claim the tax credit?
Maybe. Anyone who is not a nonresident alien (as defined by the IRS), who has not owned a principal residence in the previous three years and who meets the income limits test may claim the tax credit for a qualified home purchase. The IRS provides a definition of “nonresident alien” in IRS Publication 519.
Is a tax credit the same as a tax deduction?
No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $8,000 in income taxes and who receives an $8,000 tax credit would owe nothing to the IRS.

A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $8,000 in income taxes. If the taxpayer receives an $8,000 deduction, the taxpayer’s tax liability would be reduced by $1,200 (15 percent of $8,000), or lowered from $8,000 to $6,800.
I bought a home in 2008. Do I qualify for this credit? No, but if you purchased your first home between April 9, 2008 and January 1, 2009, you may qualify for a different tax credit. Please consult with your tax advisor for more information.

If you need anymore information about the tax credit, please let me know and I can get it for you.

It's November 13, 2009 and I am very Bullish on Sacramento

David Ohara

@dwo34

dwo34@aol.com

Happy Veteran's Day

2009-11-10T22:22:00.000-08:00

Good Evening Everyone!

The following is an excerpt from The United States Department of Veteran Affairs. I found this to be the best description of what this day symbolizes. On November 11, we pay homage to the true American Hero!

History of Veterans Day

World War I – known at the time as “The Great War” - officially ended when the Treaty of Versailles was signed on June 28, 1919, in the Palace of Versailles outside the town of Versailles, France. However, fighting ceased seven months earlier when an armistice, or temporary cessation of hostilities, between the Allied nations and Germany went into effect on the eleventh hour of the eleventh day of the eleventh month. For that reason, November 11, 1918, is generally regarded as the end of “the war to end all wars.”

In November 1919, President Wilson proclaimed November 11 as the first commemoration of Armistice Day with the following words: "To us in America, the reflections of Armistice Day will be filled with solemn pride in the heroism of those who died in the country’s service and with gratitude for the victory, both because of the thing from which it has freed us and because of the opportunity it has given America to show her sympathy with peace and justice in the councils of the nations…"

The original concept for the celebration was for a day observed with parades and public meetings and a brief suspension of business beginning at 11:00 a.m.

The United States Congress officially recognized the end of World War I when it passed a concurrent resolution on June 4, 1926, with these words:

Whereas the 11th of November 1918, marked the cessation of the most destructive, sanguinary, and far reaching war in human annals and the resumption by the people of the United States of peaceful relations with other nations, which we hope may never again be severed, and

Whereas it is fitting that the recurring anniversary of this date should be commemorated with thanksgiving and prayer and exercises designed to perpetuate peace through good will and mutual understanding between nations; and

Whereas the legislatures of twenty-seven of our States have already declared November 11 to be a legal holiday: Therefore be it Resolved by the Senate (the House of Representatives concurring), that the President of the United States is requested to issue a proclamation calling upon the officials to display the flag of the United States on all Government buildings on November 11 and inviting the people of the United States to observe the day in schools and churches, or other suitable places, with appropriate ceremonies of friendly relations with all other peoples.

An Act (52 Stat. 351; 5 U. S. Code, Sec. 87a) approved May 13, 1938, made the 11th of November in each year a legal holiday—a day to be dedicated to the cause of world peace and to be thereafter celebrated and known as "Armistice Day." Armistice Day was primarily a day set aside to honor veterans of World War I, but in 1954, after World War II had required the greatest mobilization of soldiers, sailors, Marines and airmen in the Nation’s history; after American forces had fought aggression in Korea, the 83rd Congress, at the urging of the veterans service organizations, amended the Act of 1938 by striking out the word "Armistice" and inserting in its place the word "Veterans." With the approval of this legislation (Public Law 380) on June 1, 1954, November 11th became a day to honor American veterans of all wars.

Later that same year, on October 8th, President Dwight D. Eisenhower issued the first "Veterans Day Proclamation" which stated: "In order to insure proper and widespread observance of this anniversary, all veterans, all veterans' organizations, and the entire citizenry will wish to join hands in the common purpose. Toward this end, I am designating the Administrator of Veterans' Affairs as Chairman of a Veterans Day National Committee, which shall include such other persons as the Chairman may select, and which will coordinate at the national level necessary planning for the observance. I am also requesting the heads of all departments and agencies of the Executive branch of the Government to assist the National Committee in every way possible."

On that same day, President Eisenhower sent a letter to the Honorable Harvey V. Higley, Administrator of Veterans' Affairs (VA), designating him as Chairman of the Veterans Day National Committee.

In 1958, the White House advised VA's General Counsel that the 1954 designation of the VA Administrator as Chairman of the Veterans Day National Committee applied to all subsequent VA Administrators. Since March 1989 when VA was elevated to a cabinet level department, the Secretary of Veterans Affairs has served as the committee's chairman.

The Uniform Holiday Bill (Public Law 90-363 (82 Stat. 250)) was signed on June 28, 1968, and was intended to ensure three-day weekends for Federal employees by celebrating four national holidays on Mondays: Washington's Birthday, Memorial Day, Veterans Day, and Columbus Day. It was thought that these extended weekends would encourage travel, recreational and cultural activities and stimulate greater industrial and commercial production. Many states did not agree with this decision and continued to celebrate the holidays on their original dates.

The first Veterans Day under the new law was observed with much confusion on October 25, 1971. It was quite apparent that the commemoration of this day was a matter of historic and patriotic significance to a great number of our citizens, and so on September 20th, 1975, President Gerald R. Ford signed Public Law 94-97 (89 Stat. 479), which returned the annual observance of Veterans Day to its original date of November 11, beginning in 1978. This action supported the desires of the overwhelming majority of state legislatures, all major veterans service organizations and the American people.

Veterans Day continues to be observed on November 11, regardless of what day of the week on which it falls. The restoration of the observance of Veterans Day to November 11 not only preserves the historical significance of the date, but helps focus attention on the important purpose of Veterans Day: A celebration to honor America's veterans for their patriotism, love of country, and willingness to serve and sacrifice for the common good.

It's November 11, 2009 and I am very Bullish on Sacramento

David Ohara

@dwo34

dwo34@aol.com

Congress Votes to Extend the Tax Credit for Home Buyers

2009-11-05T22:27:00.000-08:00

Good Evening Everyone!

The U.S. House of Representatives today voted 403 to 12 to extend and expand the home buyer tax credit. The bill passed the U.S. Senate late yesterday and now will go to President Obama for his signature, where it is expected to be signed this week.

The tax credit will be extended through April 30, 2010, with a 60-day extension if a binding contract is in place prior to the deadline. First-time home buyers will continue to receive a tax credit of up to $8,000, while existing homeowners will receive a credit of up to $6,500. Existing homeowners will be eligible for the $6,500 if they have lived in their current residences for at least five years. The bill also will increase the qualifying income limits from $75,000 for single tax filers and $150,000 for joint filers to $125,000 and $225,000, respectively. The purchase price of the home is capped at $800,000.

Nationwide, more than 1.4 million first-time home buyers were given the opportunity to become homeowners as a result of the Federal Tax Credit for First-time Home Buyers. According to C.A.R. research, nearly 40 percent of first-time home buyers surveyed said they would not have purchased a home without the federal tax credit, and approximately 70 percent said the tax credit was "the most important" or a "very important" factor in their decision to buy a home.

The bulk of this information was provided by the California Association of Realtors.

It's November 5, 2009 and I am very Bullish on Sacramento!

David Ohara

@dwo34

dwo34@aol.com

Short Sale Fix? Time Will Tell

2009-11-04T09:24:00.000-08:00

Good Morning All

In an effort to be proactive in dealing with the always "frustrating" short sale process, Bank of America has made a move to using Equator, formerly known as REOTrans. Below is an article on the move. I have some comments on what all lenders can do to help expedite the process, but for now:

10/22/2009 By: Carrie Bay, reporter for DS News

California-based Equator (formerly known as REOTrans) says it has launched the industry's first-ever short sale module for a large national lender.

Although Equator declined to name the lender, the San Francisco Chronicle has reported that Bank of America is the company in question. A representative from BofA recently told the paper that they were using the Equator platform to manage the short sale process. "This is the first time that short sales have been handled through an electronic platform," said Equator CEO Chris Saitta. "With our new system, everyone works together in real time, dramatically improving communication and approval timelines for our client, its borrowers, vendors, and real estate agents."

Short sales, in which a lender and borrower reach an agreement to dispose of a property threatened by foreclosure at a price that is "short" of the amount owed on the mortgage, have become more popular among lenders lately as a viable method for dealing with distressed properties. According to Equator, the number of successful short sales has increased spectacularly across the country in the wake of the foreclosure crisis.

Kevin Kieffer, a Realtor with Keller Williams Realty in Danville, California, told the Chronicle, "A year ago I wouldn't touch a short sale. It would be random prices banks wouldn't agree to, you would be tied up six months hoping to get a property sold. But now we're seeing banks up front negotiating prices and giving us criteria. They're getting creative to make things move."

Equator says the keys to a successful short sale are accessibility, responsiveness, communication, and fulfillment. By adopting its short sale platform, the company says large lenders, such as the unnamed Bank of America, can ensure troubled borrowers have 24/7 access to a portal through which they can provide the necessary information to process a short sale and receive real-time status updates electronically.

"Short sales can be a daunting, complicated, frustrating task for everyone involved," Saitta said. "This fresh approach using our sophisticated platform makes it fast and efficient for all parties involved."

Equator's short sale module also automates decisioning for the lender, handles approvals for faster turnaround, provides quick fulfillment, and assures full compliance with government programs, Saitta said.

My recommendation to all lenders out there who are dealing with a lot of short sales, is simple. Train your staff properly. The real estate agents out there who are working the short sales, are your allies. Treat them as such. A lot of the lenders I have dealt with, have employees in customer service positions who are malcontents. A poor attitude from the lender's customer service department is frustrating to the agent and is enough in some situations, to have the agent give up. Memo to the lenders: Call me and I will show you how you can implement an user friendly process to help facilitate all of your short sale files.

It's November 4, 2009, and I am very Bullish on Sacramento

David Ohara

@dwo34

dwo34@aol.com

Information About Credit Scores, Foreclosures, Etc...

2009-11-03T00:12:00.000-08:00

Good Evening Everyone!

I have been getting a lot of emails and call from people on how a foreclosure, short sale or bankruptcy effects one's credit score. I came across a great Q/A from the California Association of Realtor article that breaks it all down. The article discusses how underwriters will view things regarding your credit. After you read this, you will know more than most people. This is one of those blogs that is a must read.

Credit After Foreclosure, Bankruptcy, or Short Sale

purposes provided credit is given to the C.A.R. Legal Department. Other reproduction or use is strictly prohibited withoutthe express written permission of the C.A.R. Legal

One of the concerns a consumer has after experiencing a bankruptcy, foreclosure, or short sale

(referred to as a "preforeclosure sale" by Fannie Mae) is the ability to obtain credit to purchase

another home. Fannie Mae has updated its credit guidelines. This legal article summarizes those

guidelines in Part I. In addition, since lenders use FICO scores in order to determine the

creditworthiness of a borrower, this article covers the impact of a bankruptcy, foreclosure or short

sale on FICO scores in Part II..

I. Fannie Mae Credit Guidelines

Q 1. How long is the time period after a foreclosure before a consumer can be eligible to

obtain credit to purchase a home?

A Five years from the date the foreclosure sale was completed.

Additional requirements that apply after 5 years and up to 7 years following the completion date are

as follows:

. The purchase of a principal residence is permitted with a minimum 10 percent down payment

and minimum representataive credit score of 680.

. Purchase of a second home or investment property is not permitted.

. Limited cash-out refinances are permitted for all occupancy types pursuant to the eligibility

requirements in effect at that time.

. Cash-out refinances are not permitted for any occupancy type.

(Source: FNMA Announcement 08-16, 6-25-08 )

Q 2. Why do the additional requirements for foreclosures in Question 1 only apply from 5 to 7 years following the foreclosure completion date?

A According to Fannie Mae policy in Part X, Section 103 of the Selling Guide, Fannie Mae requires

only a 7-year history to be reviewed for all credit and public record information. The 7-year

Home Page > Legal > All Legal Q&As > 2009 Legal Q&As > Credit After Foreclosure, Bankruptcy, or Short Sale

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timeframe also aligns with the information provided by the borrower on the loan application relative to

disclosure of a past foreclosure action. (Source: FNMA Selling Guide, 4-1-09. )

Q 3. Does a shorter time period apply if the borrower has "extenuating circumstances" that led to the foreclosure?

A Yes. Three years from the date the foreclosure sale was completed. The same additional

requirements apply as listed in Question 1 except the minimum credit score of 680 is not required.

(Source: FNMA Announcement 08-16, 6-25-08. )

Q 4. What are"extenuating circumstances" ?

A Fannie Mae describes "extenuating circumstances" as follows:

Extenuating circumstances are nonrecurring events that are beyond the borrower's control that

result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in

financial obligations.

If a borrower claims that derogatory information is the result of extenuating circumstances, the

lender must substantiate the borrower's claim. Examples of documentation that can be used to

support extenuating circumstances include documents that confirm the event (such as a copy of

a divorce decree, medical bills, notice of job layoff, job severance papers, etc.) and documents

that illustrate factors that contributed to the borrower's inability to resolve the problems that

resulted from the event (such as a copy of insurance papers or claim settlements, listing

agreements, lease agreements, tax returns (covering the periods prior to, during, and after a

loss of employment), etc.).

The lender must obtain a letter from the borrower explaining the relevance of the

documentation. The letter must support the claims of extenuating circumstances, confirm the

nature of the event that led to the bankruptcy or foreclosure-related action, and illustrate the

borrower had no reasonable options other than to default on their financial obligations.

(Source: FNMA Selling Guide, 4-1-09 at 391. )

Q 5. How long is the time period after a deed-in-lieu of foreclosure before a consumer can be eligible to obtain credit to purchase a property?

A Four years from the date the deed-in-lieu was executed.

Additional requirements that apply after 4 years and up to 7 years following the completion date are

as follows:

. Borrower may purchase a property secured by a principal residence, second home, or

investment property with the greater of 10 percent minimum down payment ro the minimum

down payment required for the transaction.

. Limited-cash-out and cash-out refinance transactions secured by a principal residence,

second home, or investment property are permitted pursuant to the eligibility requirements in

effect at that time.

(Source: FNMA Announcement 08-16, 6-25-08. )

Q 6. Does a shorter time period apply if the borrower has "extenuating circumstances" that led to the deed-in-lieu of foreclosure?

A Yes. Two years from the date the deed-in-lieu was executed. The same additional requirements

apply as listed in Question 4 after 2 years up to 7 years. (Source: FNMA Announcement 08-16, 6-25-08. )

See Question 4 for the definition of "extenuating circumstances."

Q 7. How long is the time period after a "preforeclosure sale" before a consumer can be

eligible to obtain credit to purchase a property?

A Two years from the completion date. No exceptions are permitted to the 2-year period due to

extenuating circumstances. (Source: FNMA Announcement 08-16, 6-25-08. )

Q 8. What is a "preforeclosure sale" mentioned in Question 6 and is that the same as a short sale?

A "A preforeclosure sale involves the sale of the property by the borrower to a third party for less

than the amount owed to satify the delinquent mortgage, as agreed to by the lender, investor, and

mortgage insurer" (Source: FNMA Announcement 08-16, 6-25-08 ).

Although the terms preforeclosure sale and short sale have been used interchangeably, there is a significant difference for purposes of obtaining credit. For Fannie Mae purposes, a preforeclosure assumes that the borrower has been delinquent in paying his or her mortgage and the lender agrees to accept a lesser amount to avoid the time and expense of a foreclousre action. A short-sale, however, can also refer to situations in which the lender of the mortgage agrees to a payoff of a lesser amount than is actually owed, even on a current mortgage, to faciiate the sale of teh property to a third party. (Source: FNMA Announcement 08-16 Q&A, 8-13-08. )

Q 9. Does a shorter time period apply if the borrower has "extenuating circumstances" that led to the preforeclosure (short) sale?

A No. There are no exceptions to the 2-year time period. (Source: FNMA Announcement 08-16, 6-25-08. )

Q 10. If a borrower sold his or her property as a short sale but was never delinquent on that mortgage and is now attempting to purchase a new primary residence, will Fannie Mae purchase the loan?

A The loan will be eligible for delivery to Fannie Mae provided that the borrower's previous

mortgage history complies with Fannie Mae's excessive prior mortgage delinquency policy--that is the borrower does not have one or more 60-, 90-, 120-, or 150-day delinquencies reported within the 12 months prior to the credit report date--and the borrower has not entered into any agreement with the short sale lender to repay any amounts assoicated with the short sale, including a deficiency judgment. (Source: FNMA Announcement 08-16 Q&A, 8-13-08 ; FNMA Selling Guide, Part X, Chapter 3, Section 302.09. .)

Q 11. Are preforeclosure (short) sales and deed-in-lieu of foreclosure actions identified on a credit report?

A Preforeclosure sales may be reported as "paid in full" with a "settled for less than owed" remarks code, and the mortgage tradeline would indicate any recent delinquency. A deed-in-lieu may be reported by a remarks code indicating a deed-in-lieu. (Source: FNMA Announcement 08-16 Q&A, 8-13-08. )

Q 12. How long is the time period after a bankruptcy (all except Chapter 13) before a

consumer can be eligible to obtain credit to purchase a property?

A Four years from the discharge or dismissal date of the bankruptcy action (Source: FNMA

Announcement 08-16, 6-25-08 ).

Q 13. How long is the time period after a Chapter 13 bankruptcy before a consumer can be

eligible to obtain credit to purchase a property?

A Two years from the discharge date and four years from the dismissal date (Source: FNMA

Announcement 08-16, 6-25-08 ).

Q 14. Does a shorter time period apply if the borrower has "extenuating circumstances" that led to the bankruptcy (all actions)?

A Yes. Two years from the discharge or dismissal; however, no exceptions are permitted to the 2- year time period after a Chapter 13 discharge (Source: FNMA Announcement 08-16, 6-25-0).

See Question 4 for the definition of "extenuating circumstances."

Q 15. How long is the time period after multiple bankruptcy filings before a consumer can be eligible to obtain credit to purchase a property?

A Five years from the most recent dismissal or discharge date for borrowers with more than one

bankrutcy filing within the past 7 years (Source: FNMA Announcement 08-16, 6-25-08 ).

Q 16. Does a shorter time period apply if the borrower has "extenuating circumstances" that led to the multiple bankruptcies?

A Yes. Three years from the most recent discharge or dismissal date. The most recent

bankruptcy filing must have been the result of extenuating circumstances. (Source: FNMA

Announcement 08-16, 6-25-08. )

See Question 4 for the definition of "extenuating circumstances."

Q 17. What is the difference between a Chapter 13 bankruptcy and a Chapter 7 bankruptcy?

A Chapter 13 permits a borrower with a regular income to propose a plan to repay some or all of his or her obligations over a period of up to five years. A borrower who files a Chapter 7 is permitted to retain exempt assets and receive a discharge of the borrower's debts. Chapter 7 is a relatively quick liquidation process that is generally completed within 120 days. Chapter 7 cases are rarely dismissed. (Source: FNMA Announcement 08-16 Q&A, 8-13-08. )

Q 18. What is the difference between a Chapter 13 dismissal and a Chapter 13 discharge?

A A borrower who files a Chapter 13 can dismiss the case at any time (voluntary dismissal) or the case may be dismissed by the court based on the borrower's failure to comply with the requirements of the Bankruptcy Code or to make the required payments. If the borrower who files a Chapter 13 case makes all of the payments required by the plan, the borrower receives a discharge at the end of the plan. A borrower who doesn't make all the payment required by the plan may still receive a discharge if the court finds, among other things, that the borrower made a certain amount of the payments and the borrower's failure to make all of the payments was due to circumstances beyond the borrower's control. (Source: FNMA Announcement 08-16 Q&A, 8-13-08. )

Q 19. What are the requirements to re-establish a credit history?

A After a bankruptcy or foreclosure-related action, a credit history must meet the following

rquirements to be considered re-established:

. It must meet the requirements for elapsed time (as discussed in this article.

. It must reflect that all accounts are current as of the date of the mortgage application.

. it must include a minimum of four credit references. At least one of the references must be a

traditional credit reference, and one of the references must be housing-related.

A housing-related reference must cover the period following the bankruptcy discharge or

dismissal, foreclosure, or deed-in-lieu, and can be in the form of mortgage payments or

rental payments.

If rental payments wre not reported to the crdit repositories, the lender must obtain copies

of bank statements, money orders, or cnacled checks for the most recent 12-mnth period

as a supplement to the rent verification.

. It must reflect three of the four credit references, including rental housing references, as

active in the 24 months preceding the date of the mortgage application.

. It must include no more than two installment or revolving debt payments 30 days past due in

the last 24 months.

. It must include no installment or revolving debt payments 60 or more days past due since the

discharge or dismissal of the bankruptcy or the completion of the foreclosure-related action.

. It must include no housing debt payments past due since the discharge or dismissal of the

bankruptcy or the completion of the foreclosure-related action.

. It must include no new public records since the discharge or dismissal of the bankruptcy or

the completion of the foreclousre-related action. Public records include bankruptcies,

foreclousres, deeds-in-lieu, preforeclosure sales, unpaid jdugments or collections,

garnishments, liens, etc.

(Source: FNMA Selling Guide, 4-1-09 at 392. )

II. Bankruptcy, Foreclosure, and Short Sale and the Impact on a FICO® Score

Q 20. What is a FICO® Score?

A A FICO® score is a number representing the creditworthiness of a person or the likelihood that

person will pay his or her debts. The three credit reporting agencies, Equifax, Experian, and

TransUnion, collect data about consumers in order to compile credit reports. The credit agencies use FICO® software to generate FICO® scores, which are then sold to lenders. Actually FICO® is just one of the several credit scoring systems available. The Fair Isaac Corporation (known as FICO®) created the first credit scoring system in 1958. Others are NextGen, VantageScore, and the CE Score. They all evaluate the creditworthiness of a borrower. However, FICO appears to be the most -used credit scoring system. A FICO® score is between 300 and 850. The higher the better the credit. Each consumer has three credit scores at any given time for any given scoring model because the three credit agencies have their own databases, gather reports from different creditors, and receive information from creditors at different times.

Q 21. What factors go into determining a FICO® score?

A Credit scores are designed to measure the risk of default by taking into account various factors in a person's financial history. Although the exact formulas for calculating credit scores are closely guarded secrets, FICO® has disclosed the following components and the approximate weighted contribution of each:

35% — Payment History – Late payments on bills, such as a mortgage, credit card or

automobile loan, can cause a consumer’s FICO® score to drop. Paying bills as agreed over

time will improve a consumer’s FICO® score.

30% — Credit Utilization - The ratio of current revolving debt (such as credit card balances) to

the total available revolving credit (credit limits). Consumers can improve their FICO® scores by

paying off debt and lowering their utilization ratio. The closing of existing revolving accounts will

typically adversely affect this ratio and therefore have a negative impact on their FICO® score.

15% — Length of Credit History – As consumer’s credit history ages, assuming they pay their

bills, it can have a positive impact on their FICO® score.

10% — Types of Credit Used (installment, revolving, consumer finance) – Consumers can

benefit by having a history of managing different types of credit.

10% — Recent search for credit and/or amount of credit obtained recently - Multiple credit

inquiries for a consumer seeking to open new credit, such as credit cards, retail store accounts,

and personal loans, can hurt an individual’s score. Applying for lots of new credit in a short

period of time is also viewed as risky and can cause a drop in an individual’s score. However,

individuals shopping for a mortgage or auto loan over a short period will likely not experience a

decrease in their scores as a result of these types of inquiries.

(Source: http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx)

Q 22. How does a mortgage modification affect my FICO® score?

A FICO® credit scores are calculated from the information in consumer credit reports. Whether a

loan modification affects the borrower's FICO® score depends on whether and how the lender

chooses to report the event to the credit bureau, as well as on the person's overall credit profile. If a lender indicates to a credit bureau that the consumer has not made payments on a mortgage as originally agreed, that information on the consumer's credit report could cause the consumer's

FICO® score to decrease or it could have little to no impact on the score.

(Source: http://www.myfico.com/crediteducation/questions/Mortgage_Modification.aspx)

Q 23. How does a bankruptcy affect my FICO® score?

A A bankruptcy is considered a very negative event regardless of the type. A bankruptcy is factored into your FICO® score until it is removed from your credit report. As long as the bankruptcy is listed on your credit report, it will be factored into your score. If you are considering bankruptcy as an alternative to foreclosure, keep in mind that it may have a greater impact on your FICO® score. Typically, you can expect bankruptcies to remain on your credit report, from the date filed, as follows:

(1) Chapter 11 and Chapter 7 bankruptcies up to 10 years.

(2) Completed Chapter 13 bankruptcies up to 7 years.

These time periods refer to the public record item associated with filing for bankruptcy. All of the

individual accounts included in the bankruptcy should be removed from your credit report after 7

years. (Source: http://www.myfico.com/crediteducation/Questions/Bankruptcy-Types.aspx)

If you plan to file a bankruptcy, here are some things you should do to make sure your creditors are accurately reporting the bankruptcy filing:

(1) Check your credit report to ensure that accounts that were not part of the bankruptcy filing

are not being reported with a bankruptcy status.

(2) Make sure your bankruptcy is removed as soon as it is eligible to be "purged" from

your credit report.

After a bankruptcy has been filed, the sooner you begin re-establishing credit in good standing, the sooner you can expect your FICO® score to rebound. A good practice is to obtain a secured credit card and continually make all of your payments on time. As time passes and the impact of the bankruptcy lessens, you might apply for a traditional credit card and also continually make all of your payments on time.

(Source: http://www.myfico.com/crediteducation/questions/Bankruptcy-Reach.aspx)

Q 24. How does a short sale, deed-in-lieu-of foreclosure. or a foreclosure affect my FICO®

score?

A The alternatives to foreclosure, such as a deed-in-lieu of foreclosure or a short sale, aren’t any

better as far as a FICO® score is concerned. The common alternatives to foreclosure, such as short sales, and deeds-in-lieu of foreclosure are all "not paid as agreed" accounts, and considered the same by your FICO® score. This is not to say that these may not be better options for you from a financial or tax perspective, just that they will be considered no better or worse for your FICO® score. If you are considering bankruptcy as an alternative to foreclosure, that may have a greater impact on your FICO® score. While a foreclosure is a single account that you default on, declaring bankruptcy has the opportunity to affect multiple accounts and therefore has potential to have a greater negative impact on your FICO® score.

(Source: http://www.myfico.com/CreditEducation/Questions/foreclosure-alternatives-fico-score.aspx)

Q 25. What won't affect my FICO® score?

A The following information is not considered by the FICO® scoring formula:

. Your race, color, religion, national origin, sex, or marital status

. Your age

. Your salary, occupation, title, employer, date employed, or employment history

. Where you live

. Any interest rate being charged on a particular credit card or other account

. Certain types of inquiries (such as promotional, account review, insurance or employmentrelated

inquiries)

. Credit counseling

. Any information not found in your credit report

. Any information that is not proven to be predictive of future credit performance

(Source: http://myfico.custhelp.com/cgi-bin/myfico.cfg/php/enduser/std_adp.php?p_faqid=55)

Q 26. Where can I get more information?

A This article is just one of the many legal publications and services offered by C.A.R. to its

members. For a complete listing of C.A.R.'s legal products and services, please visit C.A.R. Online at www.car.org.

Readers who require specific advice should consult an attorney. C.A.R. members requiring legal

assistance may contact C.A.R.'s Member Legal Hotline at 213.739.8282, Monday through Friday, 9:00 A.M. to 6:00 P.M., and Saturday, 10:00 A.M. to 2:00 P.M. C.A.R. members who are brokerowners, office managers or Designated REALTORS® may contact the Member Legal Hotline at 213.739.8350 to receive expedited service. Members may also fax or e-mail inquiries to the Member Legal Hotline at 213.480.7724 or legal_hotline@car.org. Written correspondence should be addressed to:

CALIFORNIA ASSOCIATION OF REALTORS®

Member Legal Services

525 South VirgilAvenue

Los Angeles, California 90020

The information contained herein is believed accurate as of October 13, 2009. It is intended to provide general answers to general questions and is not intended as a substitute for

individual legal advice. Advice in specific situations may differ depending upon a wide variety of factors. Therefore, readers with specific legal questions should seek the advice of an

attorney.

It is November 2, 2009 and I am very Bullish on Sacramento!

David Ohara

@dwo34

dwo34@aol.com

Halloween Safety Tips

2009-10-31T13:01:00.000-07:00

Halloween Safety Tips - Be Safe

Anytime a child has an accident, it's tragic. The last thing that you want to happen is for your child to be hurt on a holiday, it would forever live in the minds of the child and the family.

There are many ways to keep your child safe at Halloween, when they are more prone to accidents and injuries. The excitement of children and adults at this time of year sometimes makes them forget to be careful. Simple common sense can do a lot to stop any tragedies from happening.

	Help your child pick out or make a costume that will be safe. Make it fire proof, the eye holes should be large enough for good peripheral vision.
	If you set jack-o-lanterns on your porch with candles in them, make sure that they are far enough out of the way so that kids costumes won't accidentally be set on fire.
	Make sure that if your child is carrying a prop, such as a scythe, butcher knife or a pitchfork, that the tips are smooth and flexible enough to not cause injury if fallen on.
	Kids always want to help with the pumpkin carving. Small children shouldn't be allowed to use a sharp knife to cut the top or the face. There are many kits available that come with tiny saws that work better then knives and are safer, although you can be cut by them as well. It's best to let the kids clean out the pumpkin and draw a face on it, which you can carve for them.
	Treating your kids to a spooky Halloween dinner will make them less likely to eat the candy they collect before you have a chance to check it for them.
	Teaching your kids basic everyday safety such as not getting into cars or talking to strangers, watching both ways before crossing streets and crossing when the lights tell you to, will help make them safer when they are out Trick or Treating.

Make Halloween a fun, safe and happy time for your kids and they'll carry on the tradition that you taught them to their own families some day!

Thank you to the Halloween Safety Guide for providing us this pertinent information!

It's October 31, 2009 and I am very Bullish on Sacramento!

David Ohara

@dwo34

dwo34@aol.com

An Inside Look into a "Pot House" After the DEA Goes Through It Part II Photos

2009-10-27T21:03:00.001-07:00

Good Evening!

This is the second set of photos regarding my blog on "Pot Houses." On another note, it was reported recently that the DEA had made more arrests. One person who was arrested was a bay area real estate agent.

Once again, It's October 27, 2009 and I am Very Bullish on Sacramento!

David Ohara

@dwo34

dwo34@aol.com

An Inside Look into a "Pot House" After the DEA Goes Through It

2009-10-27T20:52:00.000-07:00

Good Evening Friends

One of the big topics that has been featured in many of the media outlets in the Sacramento/Northern California area, are the infamous "pot houses." A "pot house" is a residential property aka home, that has been turned into a marijuana farm. The people who turn nice four bedroom homes in nice neighborhoods, have to make some serious alterations to the home in order to plant and cultivate it. This is one a type of blog that will be better done in photos. I don't know how many I can post per blog, so if I need to, I will create another post and add more photos. You will be amazed! I could not believe my eyes when I walked through this home. Holes in the walls and ceilings. Extension cords all over the place. A thermal foil paper located on all the windows, the kitchen stripped of its cabinets and appliances.

Look at the photos and be amazed! I took a lot of photos so I can send you more if you would like.

It's October 27, 2009 and I am Very Bullish on Sacramento!

David Ohara

@dwo34

dwo34@aol.com

Resolution of the "Missing Fifty Thousand Dollars"

2009-10-26T21:40:00.000-07:00

Good Evening

As a follow up to my last post "A First for Me!" where I talked about the case of the missing $50,000 cashier's check, I wanted to bring this saga to an end and let you all know what transpired today.

During our short negotiations and escrow period, I had built up a good rapport with the Seller. I handled the negotiations in a non-adversarial manner. I wanted to know if she had received her funds so I decided to give her a call and ask her. I called this morning and this is how our conversation went:

dwo34: Good Morning, how are you?

Seller: I am fine, but I have an issue with the title company.

dwo34: Really? What is your issue?

Seller: Well, as you know we went on record on Wednesday of last week. I received a phone call from the title company last week notifying me. I gave her instructions to wire the funds to my account and she said she would. She told me that the wire would be sent out on Thursday morning because we recorded in the afternoon. Well, I called my bank around lunch on Thursday and my money was not there. I called the escrow officer and she said she was so busy she did not have time to wire the money.

dwo34: The escrow officer can instruct anyone in the office to contact their bank to wire the money. She does not do this herself.

Seller: I know. She lied to me. She told me that she wired the money on Friday. But the fact is, she never did. When I spoke to her this morning she told me that they misplaced $50,000 and the amount she had for me was short. I told her that's not my problem and wire me the money. They are still holding the other portion of my money too. They won't release any of my money and they told me they would try to get the property back for me. I don't want the property back, it closed and I want my money. I am so furious that she lied to me and was so negligent with the Buyer's money.

dwo34: I knew about this on Thursday and I am sorry that you have to go through this. I wished you would have allowed me to open the escrow at the company I always deal with (Stewart Title). Where did you leave it with the title company?

Seller: I told her to send me my money or I will sue them. They screwed up. She told me that she had all the money to close on Tuesday. So I place the blame on them. How long should I give them before I call my attorney?

dwo34: I will go and meet with them today and see if I can get it ratified. I will call you later and let you know the outcome.

Seller: Thank you and I appreciate you stepping in and helping.

I did have a meeting with the title company and I basically said:

Look, the Buyer brought in all the funds to close. You confirmed it in writing to me. Some where between receiving the funds and getting ready to deposit the funds, you lost it. That is your problem. We don't have an issue with the Seller. You do. As a matter of fact, I spoke to the Seller this morning and she tells me that you have not been totally honest with her and it appears you are trying to "cover up" something. The Buyer will not be signing the property back over to the Seller. The Seller is not willing to wait 90 days for her funds. Unless you file a claim with your insurance company for $50,000, we will be contacting the insurance commissioner and letting them know what transpired and all of your mixed signals. We will also show all of our documentation that we have that clearly shows you are not being honest and broke your fiduciary responsibility.

After some phone calls to upper brass, we got what I had come for. The title company will end up sending the Seller the $50,000 that they "lost." The Buyer will be reimbursed for the added expenses he incurred while trying to get another "cashier's check." And I have the satisfaction of having a happy client and perhaps picking up a new one (Seller).

I also told the manager that I spoke to, that I did not appreciate any of the tactics that her mid level manager tried to use on me in an attempt for me to have the Buyer sign back the property. He tried to use intimidation and his "enormous legal team" as his weapon of choice. When he said that I replied "Go ahead Brian, some of my best friends are lawyers and I actually enjoy chatting with lawyers, so I am sure I will have a nice time with your team. How long shall we drag this process?" I told the manager today, with mid level managers like that, I can see why you have to maintain such a large team of attorneys. She ultimately apologized for the debacle and their bungling the escrow. I did call the Seller and informed her of the good news, as well as the Buyer.

Once again, when you are dealing with people, there are choices. It's prudent to chose your service providers wisely. Call me, I have built a solid team of professionals that I can refer you to in most industries. Even the simplest of tasks can cause large problems. Memo to this title company: Handle those cashier's checks a little more diligently and not so carelessly!

It's October 26, 2009, and I am very Bullish on Sacramento!

David Ohara

@dwo34

dwo34@aol.com

A First for Me!

2009-10-24T21:00:00.000-07:00

Good Evening:

Ever hear of the saying "There is a first time for everything?" Well, I truly had thought I had seen it all in my real estate career. I have seen homes burn, I have seen couples separate during escrow, I have seen people have their relocation plans change during escrow, but something happened on Thursday that I had never seen nor experienced before!

To set the story up, one of my clients had successfully made an offer on a property and was going to pay cash for the home. We signed our papers and sent in our funds to close the escrow. We were notified by the escrow company that they had received the buyer's funds and all closing documents needed to consummate the sale. The escrow called me the next day (Wednesday) to let me know that the property would be closing that afternoon. I received an email late Wednesday that the property did close and the please relay the good information to the Buyer, which I did.

A nice easy escrow. A seven day close. No hassles with appraisers, pest companies, home inspections, and lenders. At least that is what we all thought. I get a call from the escrow officer and she sounded frantic. I was in a meeting so I missed her call. The Buyer also called me and said "get a hold of the escrow lady, because she just called and makes no sense...."

When I called her back this is how our conversation went.

dwo34: I got a message you called. What can I do for you?

Escrow Officer: Your buyer needs to bring in additional funds. He was short.

dwo34: What do you mean? You confirmed you had the funds and we are on record. As a matter of fact we brought in more than what was needed to close. You owe him money.

EO: I cannot find the other check. Are you sure you gave it to me? Maybe you only gave me one check.

dwo34: You confirmed receipt of the funds. If you did not have enough, you would not have let it record. Did you lose one of the checks?

EO: I don't know. Can you see if it is at your office, or in the buyer's car, or maybe you still have it.

dwo34: We gave it to you. You confirmed it. I would have more respect for you if you just admitted you lost it or misplaced it.

EO: I don't know where it is. I take full responsibility for the check. I cannot find it. Can you have the buyer cancel the check and get me a new one?

dwo34: I will call him, I know he cannot do it today, he is out of town. I will see what he can do.

EO: Thank you

Amazing!! Misplacing a check for $50,000! I know she received it, because you will not close an escrow when there are not enough funds. The thing is with banks, they will not give you access to your funds for 90 days! Even though we stopped pay on the check, we cannot get another check for 90 days! The head brass at the title company did not act the way I thought they should. They wanted me to have the buyer sign back the deed to the seller. I said "Give him his money back, including access to his $50,000 and we would. The story is not over. My client has a home and the seller who sold it to him is probably short $50,000. Not a good way to start your weekend if you were the escrow officer!

I'll finish this blog this upcoming week. We need to get this ratified. One of the reasons I wanted to blog on this is simple: Use qualified service people!! Use people who will pay attention to details. Even the simplest tasks can be botched. In this case, a simple depositing of a check would have made all the difference in the world!

It's Saturday, October 24, 2009, and I am very Bullish on Sacramento!

David Ohara

@dwo34

dwo34@aol.com