Tuesday, October 30, 2012

Top 10 Things to Know about the Infamous 3.8% Tax

This isn't my opinion talking here. I've copied and pasted from the National Association of Realtors for you clarity in understanding how/if this tax effects Real Estate transaction.

1) When you add up all of your income from every possible source, and that total is less than $200,000 ($250,000 on a joint tax return), you will NOT be subject to this tax.

2) The 3.8% tax will NEVER be collected as a transfer tax on real estate of any type, so you’ll NEVER pay this tax at the time that you purchase a home or other investment property.

3) You’ll NEVER pay this tax at settlement when you sell your home or investment property. Any capital gain you realize at settlement is just one component of that year’s gross income.

4) If you sell your principal residence, you will still receive the full benefit of the $250,000 (single tax return)/$500,000 (married filing joint tax return) exclusion on the sale of that home. If your capital gain is greater than these amounts, then you will include any gain above these amounts as income on your Form 1040 tax return. Even then, if your total income (including this taxable portion of gain on your residence) is less than the $200,000/$250,000 amounts, you will NOT pay this tax. If your total income is more than these amounts, a formula will protect some portion of your investment.

5) The tax applies to other types of investment income, not just real estate. If your income is more than the $200,000/$250,000 amount, then the tax formula will be applied to capital gains, interest income, dividend income and net rents (i.e., rents after expenses).

6) The tax goes into effect in 2013. If you have investment income in 2013, you won’t pay the 3.8% tax until you file your 2013 Form 1040 tax return in 2014. The 3.8% tax for any later year will be paid in the following calendar year when the tax returns are filed.

7) In any particular year, if you have NO income from capital gains, rents, interest or dividends, you’ll NEVER pay this tax, even if you have millions of dollars of other types of income.

8) The formula that determines the amount of 3.8% tax due will ALWAYS protect $200,000 ($250,000 on a joint return) of your income from any burden of the 3.8% tax. For example, if you are single and have a total of $201,000 income, the 3.8% tax would NEVER be imposed on more than $1000.

9) It’s true that investment income from rents on an investment property could be subject to the 3.8% tax. BUT: The only rental income that would be included in your gross income and therefore possibly subject to the tax is net rental income: gross rents minus expenses like depreciation, interest, property tax, maintenance and utilities.

10) The tax was enacted along with the health care legislation in 2010. It was added to the package just hours before the final vote and without review. NAR strongly opposed the tax at the time, and remains hopeful that it will not go into effect. The tax will no doubt be debated during the upcoming tax reform debates in 2013.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Just an FYI for ya!

Friday, October 26, 2012

'Shadow' Inventory Can Now Be Seen on Zillow

Funny how things have changed in the decade I've been helping people in and out of homes. And, funny, how so many Realtors still try to hold information so tight to their chest. Don't want to give it out, we may lose value as a Realtor.

Anyone that works with me knows I've a giver of information. And, I once had one of the owners of my company tell me I give too much info. I ignored that tid-bit, I still give tons of info out.

Needless to say, I'm perfectly fine with Zillow providing buyers/sellers information about pre-foreclosure homes. Buyers and Sellers need to know what's out there. Need to be properly informed about the condition of the market when they are deciding to contact a Realtor to help them buy or sell.

But, keep in mind, only a working Realtor knows the true value of your home that you want to sell and the appropriate way to write an offer for the home you want to buy.

Good to be informed, learn as much as you can. It's one of the most important decisions in your life. But, make sure you have a Realtor that can guide you in that decision.

Tuesday, October 23, 2012

More Banks Fail & SS/Foreclosure Homeowners Coming Back To Buy

Three more banks have failed in 2012 bringing the total to 46. The FDIC has to dig into their insurance fund for that. Seems like a lot, but this time last year the number was at 80 failures with the total for 2011 being 92, twice where we are now.

So, while it stinks that banks have failed, one it was noted "had experienced substantial dissipation of assets and earnings due to unsafe and unsound practices". Go figure. Think they deserve to fail?
And, on another note,....homeowners that Short-Sold or were Foreclosed upon are coming back on the market as new buyers. So, the competition is getting even fiercer. My first Short-Sale was almost exactly four years ago. And, while many have been completed since then, I'm just now seeing ones trying to repurchase.

All I can say is, let's make sure we have a darn good reason for the Short-Sale/Foreclosure and that everything is scrutinized with a magnifying glass before another loan is issued.

Friday, October 19, 2012

Great Presidential Article

I read daily, and this one dropped in today  ~ it is pretty detailed if you are waffling with concerns about housing and the Presidential nominees. Copied and pasted for your pleasure.


"Obama, Romney's Housing Plans Won't Make Huge Difference: Report

While Barack Obama and Mitt Romney may have been “frustratingly light on detail” so far with regards to housing, an analysis by Capital Economics reveals the two candidates’ policies may have more in common than they care to admit.

In a Housing Market Update released by the company, property economist Paul Diggle writes that, based on the information Capital Economics has pieced together, “it looks like anyone expecting either candidates’ housing plan to make a dramatic difference to the course of the housing recovery will be disappointed.”

When it comes to the continuation of current housing policies, both President Obama and Governor Romney largely agree. For one thing, both candidates support selling off government-owned REOs to investors, a process that has already been tested to some success. Both favor the greater use of foreclosure alternatives, promoting a shift toward short sales and deeds in lieu of foreclosure. And both share at least a small section of common ground with regards to principal reductions.

“Obama supports outright principal reductions on underwater mortgages owned or guaranteed by Fannie Mae and Freddie Mac in an attempt to reduce the delinquency rate. Romney, meanwhile, gave a brief supportive mentioned to shared appreciation-whereby lenders forgive borrowers some of their outstanding mortgage balance in exchange for a share of future house price gains-in his housing plan,” Diggle said.

As president, either man will likely face some measure of opposition from the FHFA, which has expressed its opposition to principal reductions and has so far “made for an effective roadblock” on those efforts. Diggle speculated that the forced removal of FHFA acting director Edward DeMarco may be necessary for progress on that front.

In addition, both Obama and Romney seem to agree on paring back the mortgage interest deduction, but neither wants to scrap the deduction entirely. While altering the deduction will probably change the renting/buying trade-off somewhat, Capital Economics’ calculations suggest even without a deduction, buying is still a better deal at the moment.

While there appear to be many similarities in the candidates’ housing plans, they don’t agree on every point. For one thing, “it’s likely that Obama would use a second term to renew efforts towards allowing more mortgage borrowers to refinance onto lower rates,” including an expansion of the HARP program outside of Fannie and Freddie-owned mortgages.

Romney, on the other hand, proposes to create looser mortgage credit conditions by repealing Dodd-Frank. His concern is that the current uncertainty about the definition of a “qualified mortgage” is hindering credit availability. Diggle cited a recent survey by the Federal Reserve that revealed legislative concerns are becoming an “important factor” in mortgage credit for about a third of respondents. However, that issue seemed to worry lenders less than put-back risk, the availability of mortgage insurance, and the house price outlook.

The bottom line, Diggle said, is that while both candidates’ policies would likely be helpful for the housing recovery, neither candidate is likely to improve the current course of housing greatly.

“The fundamental drivers of the housing recovery will continue to be the very favourable level of valuations and affordability, meaning that the housing market should continue recovering with or without further policy tinkering,” Diggle said."



Tuesday, October 16, 2012

How Many Short-Sales Since 2009?

As I'm reading my daily news, Realtor stuff, Mortgage info...I came across one that sounded like every other one. "Lookie here how much we've done!" It's about the HOPE NOW information that has been collected regarding the number of homeowners that have been given permanent loan modifications, principal reductions, and completed Short-Sales.

All with the ultimate goal in mind...Avoid Foreclosure.

But, Really, Lookie Here:

Short-Sales completed since December 2009 ~ 1,013,565

HOPE NOW, the voluntary, private sector alliance of mortgage servicers, investors, mortgage insurers and non-profit counselors, also stated that the industry has seen 5.75 million loan mods.

Between the Short-Sales and Loan mods, 6.77 Million in avoiding foreclosure for American homeowners.


Saturday, October 13, 2012

MLS Stats & Headlines Today

Up super early on a gorgeous Saturday morning prepping for my day with two new buyers and working out the details on two new listings.

Headlines, just in LA Times are all about the rebounding of the housing market ~

'Major dip in foreclosure sales drives Southland home price gains'
'Median home price in Southland climbs as supply is squeezed'
'Wells Fargo profit rises 22%'
'JP Morgan's profit surges 34% on mortgage growth'
'Foreclosure filings drop to five-year low in September'

Well, you can't help but get a little smiley about those headlines if you are in my business. But the other side of that is the inventory report for you today. Not so smiley in Santa Clarita Valley ~

ACTIVE Listings ~ 364 Total / REO's are 19 of that and Short-Sales number 92.

UNDER CONTRACT Listings ~ 1107 / REO's account for 74 and the big winner is SS to the tune of 789.

SOLD in the last 30 days ~ 377 total units / REO's were 46 and SS were 149.

And, that's my news for the day!

Wednesday, October 10, 2012

Distressed Homeowner Initiative Results

The Distressed Homeowner Initiative, first nationwide effort focused on fraud schemes targeting struggling homeowners, report their first year results and I'm happy to share them with you!

10/1/2011-9/30/12 Results ~

530 Criminal Defendants charged in 285 federal criminal indictments ~ YES!!

The cases involved more than 73k homeowner victims and estimated loss exceeding 1 Billion dollars ! Bastards! (Ooops, sorry...)

Other groups also filed 110 federal civil cases against 153 defendants identifying 15k victims and losses of more than 37 million. Can I say the 'B" word again?!?!?

The AG, FBI and FTC feel very strongly about making sure mortgage fraud is handled with more than just investigation and without hesitation. They want to "Ensure the integrity of the housing market, and to keep our communities safe."

Also they have forced into compliance almost 1000 websites and advertisers that were considered fraudulent or 'confusing'. Thank goodness!

 I've talked about this before, damn ambulance chasers ought to be driven over by one!

Friday, October 5, 2012

1/3 of Americans Think Strategic Default is OK

WHAAAATTTTT?!?!? Okay, now really, that's just terrible. The only Strategic Default that I would think is okay is if you just can't afford your home and you've exhausted every possibility to keep it. You've tried a Loan Mod, you've asked for a Principal Reduction, you've even attempted a Short-Sale. And, none of those programs worked for you. But, you still can't afford to keep your family home.

But, the article I read this morning states that 32% of Americans justify a Strategic Default. Oh, that just breaks my heart. Now, I'm not going to lie, as a Realtor I've talked to many a homeowner about defaulting on their home. The ramifications of doing so, the pros and the cons. Most have worked through a Short-Sale, Loan Mod, or Principal Reduction instead. Most.

A poll, called the Zogby Poll, found that so many feel it's acceptable to walk away. Some feel justified in their decision because they feel the mortgage market has been full of deceit for many years. Lending to people that didn't understand what they were borrowing. Many were less than concerned about the aftermath on their credit scores and felt it was A.O.K. to have a low FICO score.

But, gee, go figure on this final note in the article from the Poll : "In addition to those findings, 17 percent said they would exaggerate personal information to obtain credit"

It would be great if when filling out their next loan application,
 we could watch their nose to see if they were lying or not.

Tuesday, October 2, 2012

Another Round with Short Sales

As a working Realtor, and Certified Distressed Property Expert, in the Santa Clarita Valley, I've had my share of Short-Sales. The first was when Countrywide was still Countrywide...seems like eons ago. 

Most of this year has been working with buyers, but I'm initiating a new Short-Sale listing this morning, and another one in a week or two. 

Don't shoot the messenger the bank reps and myself say. I'm nice, polite, ask lots of questions....and they are nice and polite back. So far so good. Two loans, two banks.

My work is cut out for me. But, I'm a nagger, so it'll be best if they are ready for that up front.

When working a short-sale the hardest part is keeping the buyer interested. Shouldn't be too hard considering the lack of inventory.

Wells Fargo will work the Equator program. Love it, all uploaded and followed. E-Trade is the second, no history with them, but 'Bobby' over there was very efficient just answering the phone. We'll see if that follows through by sending me their short-sale packet.

Hard work is like food for me though, I thrive on it.

And a positive attitude ~ gotta have one!