CA State Tax Credit Details

by | Mar 30, 2010 | Housing Tax Credit, Thinking of Buying? | 12 comments

Details on the 2010 California Tax Credit were released today, click here for the link to the ftb.gov website for the whole package:

http://www.ftb.ca.gov/individuals/New_Home_Credit.shtml

 Here are the highlights: 

The New Home / First-Time Buyer Credits are available only for purchases that close escrow on or after May 1, 2010. 

Applying for the 2010 New Home/First Time Buyer tax credits:  Applications must be submitted after escrow closes. The new application will be available by May 1, 2010.  We will deny the application if the 2009 form is used or if we receive the 2010 application before May 1, 2010.

General Information: These tax credits are available for taxpayers who purchase a qualified principal residence on or after May 1, 2010, and before January 1, 2011. Additionally, the New Home Credit is available for taxpayers who purchase a qualified principal residence on or after December 31, 2010, and before August 1, 2011, pursuant to an enforceable contract executed on or before December 31, 2010.  The purchase date is defined as the date escrow closes.

These tax credits are limited to the lesser of 5 percent of the purchase price or $10,000 for a qualified principal residence. Taxpayers must apply the total tax credit in equal amounts over 3 successive tax years (maximum of $3,333 per year) beginning with the tax year in which the home is purchased. The tax credits cannot reduce regular tax below tentative minimum tax (TMT). The tax credits are nonrefundable and unused credits cannot be carried over.

The total amount of allocated tax credit for all taxpayers may not exceed $100 million for the New Home Credit and $100 million for the First-Time Buyer Credit. However, since many taxpayers will not be able to utilize the entire tax credit, the legislation specifies that the $100 million cap for the New Home Credit will be reduced by 70 percent of the tax credit allocated to each buyer and the $100 million cap for the First-Time Buyer Credit will be reduced by 57 percent of the tax credit allocated to each buyer. We will allocate the tax credits on a first-come, first-served basis. 

Only one tax credit is allowed per taxpayer. If a taxpayer qualifies for both tax credits, the law specifies that we will allocate the amount under the New Home Credit.

Taxpayers will not be eligible for either tax credit if any of the following apply:

  • The taxpayer was allowed a 2009 New Home Credit.
  • The taxpayer is under 18 years old. (A taxpayer who is married as of the date of purchase will be considered to be 18 if the spouse/registered domestic partner (RDP) of the taxpayer is 18 or older on the date of purchase.)
  • The taxpayer or the taxpayer’s spouse/RDP is related to the seller.
  • The taxpayer qualifies as a dependent of any other taxpayer for the tax year of the purchase.

First-Time Buyer Credit:  A qualified principal residence, for purposes of the First-Time Buyer Credit, must:

  • Be a single family residence, either detached or attached.
  • Be eligible for the California property tax homeowner’s exemption.
  • Be occupied by the taxpayer as their principal residence for a minimum of 2 years immediately following the purchase.

A first-time buyer is any individual (and the individual’s spouse/RDP, if married) who did not have an ownership interest in a principal residence during the preceding 3 year period ending on the date of the purchase of the qualified principal residence.

If you are only applying for the First-Time Buyer Credit, you will not be able to reserve the tax credit before escrow closes.

Claiming the tax credit:

  • The taxpayer must receive a Certificate of Allocation from us to claim the tax credit on their California personal income tax return. The Certificate of Allocation will state the maximum amount the taxpayer can claim listed by tax year.
  • The taxpayer should refer to the 2010 New Home / First-Time Buyer Credit Publication for instructions on claiming the tax credit (the publication will be available by December, 2010).
  • Special rules apply to married/RDP taxpayers filing separately, in which case each spouse/RDP is entitled to one-half of the tax credit, even if their ownership percentages are not equal. For 2 or more taxpayers who are not married/RDP, the tax credit amount will have already been allocated to each taxpayer occupying the residence on their respective tax credit allocation letter.
  • If the available tax credit exceeds the current year net tax, the unused tax credit may not be carried over to the following tax year.
  • The tax credit may not reduce regular tax below TMT.
  • The tax credit is not refundable.
  • Any disallowance of the tax credit may not be protested or appealed.

 

Case-Shiller Thoughts (SD +0.9%)

by | Mar 30, 2010 | Same-House Sales | 21 comments

From the L.A. Times:

Karl E. Case, a professor at Wellesley College and co-creator of the index, said the improvements were a sign that the economic recovery was beginning to help consumers gain confidence.

“What people are seeing in the stock market, and what people are feeling, is the beginning of a real recovery,” Case said. “Now that the economy is starting to come back, I think the psychology has changed.”

But David M. Blitzer, chairman of the Index Committee at Standard & Poor’s, characterized the report as “mixed,” with 12 cities posting increases on a seasonally adjusted basis. When left unadjusted for seasonal variations, the 20-city index fell 0.4%.  Economists surveyed by Bloomberg had expected the index to fall in January.

Richard Green, director of the USC Lusk Center for Real Estate, said Southern California is showing gains because it was one of the earliest markets to get hit and is rebounding before other areas.

“We fell first, we fell deeply and we didn’t overbuild the way other parts of the country did,” he said. “And if you look at the long-term horizon, the amount of housing built relative to population was less than other places, and it is still really hard to build new houses here.”

That means the chances of recovering sooner are good, he said.

Others were not as optimistic.

“If you look at the last two big real estate bubbles in the late 80s and 70s, you didn’t see the market rebound for five years,” said Christopher Thornberg, principal of Beacon Economics. “It’s amazing to me that people can look at a rebounding market after the largest bubble ever and possibly think this could be sustainable.”

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Click here for interview with Robert Shiller – he says the chances of a double-dip are about 50/50.

Neg-Ams Receding

by | Mar 29, 2010 | Loan Mods, Mortgage News, Neg-Am, Option-ARMs, Thinking of Buying? | 47 comments

From our friends at the W-S-J:

The struggling housing market appears as if it will sustain less damage than expected this year from a spike in the monthly payments on hundreds of thousands of exotic adjustable-rate mortgages.

The number of such loans scheduled to adjust to higher payments this year has shrunk. Lower-than-expected interest rates, coupled with efforts to aggressively modify loans, are likely to mute payment shocks for some borrowers. Many others already have defaulted on their loans even before their payments adjusted upward.

“The peaks of the reset wave are melting very quickly because the delinquency and foreclosure rates on these are loans are already very high,” says Sam Khater, senior economist at First American CoreLogic.

The housing market still faces enormous challenges, and a full recovery is likely to take years. The threat posed by resetting payments, Mr. Khater says, is “a drop in the bucket” compared to problems posed by the sheer volume of borrowers who owe more than their homes are worth, known as being “under water.”

Still, for years, housing analysts have worried about the threat of an aftershock from a big spike in mortgage defaults from so-called option adjustable-rate mortgages, which require low minimum payments before resetting to sharply higher levels, and “interest-only” loans, for which no principal payments are due for several years.

Most option-ARM borrowers made minimal payments, so their loan balances grew. That sparked worries about what would happen when those loans “recast” and begin requiring full payments on larger loan balances, usually five years from when they were originated or when the balance reached a designated cap.

Option ARMs may be among the most likely to benefit from the White House plan, announced on Friday, to force banks to consider writing down loan balances when modifying mortgages. Until now, the administration’s Home Affordable Modification Program, or HAMP, has focused on lowering monthly payments by reducing interest rates and extending loan terms to 40 years.

A separate program could benefit borrowers who are current on their loans but under water by allowing investors to refinance those borrowers into loans backed by the Federal Housing Administration. Investors are most likely to refinance the riskiest loans that qualify.

The majority of option ARMs are set to recast over the next two years. But the volume of outstanding loans has fallen sharply because many borrowers, prior to facing higher payments, received modifications, refinanced or defaulted. Option ARM volume peaked at 1.05 million active loans in March 2006. At the end of last year, there were 580,000 loans outstanding, according to First American CoreLogic.

(more…)

Enough

by | Mar 28, 2010 | Flips, Jim TV, REOs for sale, Thinking of Buying? | 37 comments

I don’t want to beat a dead horse – we know that realtors are committing fraud and deceit. Here’s an example of one guy, the previous listing agent of this house, who has been inputting short-sale listings onto the MLS for the last 1+ years, with the vast majority (over 75% of them) marked pending or contingent immediately.

If your clients are getting what they want, then maybe you can sleep at night. But when just as many of a broker’s listings are being foreclosed on, as are selling, there’s a problem:

Fear and Loathing Contest

by | Mar 27, 2010 | Contests | 68 comments

This REO was assigned to me on September 10th, and just hit the open market today, listed for $414,800. Has it been going up in value the last few months?

We’ll see – if you feel like guessing the final sales price in the comment section, the closest will get a to-be-determined prize package, including an assortment of Padres tickets and bubbleinfo t-shirts. We’ll see if the B & D appliances still pull their same cachet! 

I had so much trouble giving away Padres games last year, I didn’t renew my season tickets, after 12 years.

Foreclosure Drip

by | Mar 27, 2010 | Buying at Trustee Sale, Thinking of Buying? | 13 comments

In order to track the bank-owned inventory trends, we have followed the same four REO agents over the last couple of years.

With 7,293 properties on the NOD list, and 9,885 on the NOTS auction list in San Diego County, you’d think that the REO listing specialists would be rocking with business, right?

Here are their listings:

Date Actives Pendings
March 13, 2008
477
205
March 9, 2009
223
223
March 27, 2010
51
109

They aren’t having any trouble selling the few listings they have, you’d think that the banks would notice and push a few more through the system during the government double-cheese era. Instead, the foreclosure flood as been turned down to a trickle – they have 77% fewer REO listings today than they had two years ago. They are probably thinking about laying off staff!

Pathetic MLS

by | Mar 26, 2010 | Train Wrecks | 17 comments

There has been a wave of deceit being perpetrated by realtors around the county – listing agents who inflict short-sale negotiator fees upon the buyers of their listings.

If a listing agent needs help processing a short sale, they should pay for it, not the buyer.

What’s worse is that this fee is either camouflaged, or not disclosed at all until after the offer is accepted.  I have been involved with transactions having short-sale negotiator fees as high as 2% of the sales price.

People have been complaining, so Sandicor, the company that runs our MLS, finally addressed it on the system’s home page:

“There are numerous questions that our industry is faced with based on the climate of today’s market.  Sandicor is seeking to find answers for those issues that directly relate to the MLS.  A very popular question pertains to the use of a short sale negotiator and the fees associated with negotiator services.  After seeking legal counsel it was determined that it is only necessary to disclose the amount the buyer’s agent is being offered through the MLS and if necessary the formula the listing agent will be using to make that offer.  If the listing agent cannot determine that amount by using the CBB field(e.g. X.96%), then the listing agent shall disclose the formula in the CFR (CFR = confidential remarks).

What IS allowed in the CFR:

“Any reduction in commission to be split xx/xx “minus X%”.

What is NOT allowed in the CFR:

“Any reduction in commission to be split xx/xx “minus X% for short sale negotiator fee”.

“Buyer to pay negotiator fee” **

**Seller and buyer negotiations are not permitted in the MLS. The contractual agreement enforceable in the MLS is between listing and cooperating broker.

My point?  Sandicor and our governing body, the local board of realtors, are doing nothing to stop the fraud and deceit being inflicted upon consumers and fellow agents. 

They both have the opportunity to help agents provide a better experience for clients.  But instead of banning negotiator fees, or at least allowing them to be fully disclosed, they lay out guidelines on how to disguise them.  They are hiding behind lawyers and mergers, either scared or oblivious to doing what’s right.

I’m embarassed to be a part of these organizations, and look forward to a complete overhaul, or elimination.

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