Tax authorities in several states with high state and property taxes are looking for residents who claim to qualify for the homestead exemption in some lower-tax state.
New York is particularly aggressive. It particularly challenges people who split their time between New York and Florida, which has a much more favorable tax structure. Typically, they target people who claim their Florida home as their principal residence, but actually spend more than half their time in New York.
Other states that have been cracking down on people they consider cheats and collecting money include Ohio, South Carolina, Georgia, Texas, Mississippi, and the District of Columbia.
Recently, LexisNexis, the information services company, began offering the Homestead Exemption Fraud Detection Solution, which allows tax officials to cross-reference homestead registrations with multiple public records databases to find inconsistencies such as a driver’s license or voting record in another state.
Source: The New York Times, Kate Murphy (09/01/2010)
Mortgage rates have hit a new record low for the 10th time in 11 weeks as investors continue to turn to Treasury bonds as a safe haven; the shift in money is cutting yields, which mortgage rates tend to follow.
Freddie Mac reports that 30-year fixed loans averaged 4.32 percent, down from 4.36 percent a week ago; and the 15-year fixed rate fell to a new low of 3.83 percent, down from 3.86 percent.
Will the government revive tax credits to encourage home sales? Housing experts are dubious. Even suggesting that the tax credit might be revived could have a negative effect on the market, says housing economist Tom Lawler, because it could “lead many a prospective home buyer to hold off on buying a home.” Earlier this month Richard Dugas, CEO of PulteGroup Inc., said earlier in August on an earnings call: “Almost regardless of how future demand plays out, we still believe that the tax credit had to end. We need to know the true level of demand without government stimulus distorting the market so that we can continue to properly position our business for ongoing improvement.”
Source: The Wall Street Journal, Nick Timiraos (08/30/2010)
Aug. 24 (Bloomberg) — Sales of U.S. previously owned homes probably plunged in July to the lowest level since March 2009, evidence the market is restrained by foreclosures and limited job growth, economists said before a report today.
A tax credit of up to $8,000 boosted sales earlier in the year, pulling forward demand and indicating additional advances will prove difficult. Mortgage rates at record lows have provided scant relief to the industry as unemployment hovers close to 10 percent, foreclosures hold near record-highs and the economy cools.
“There’s obviously a very severe payback going on,” from the expiration of the government tax credit, said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York. “Prices need to come down further to deal with the looming oversupply.”
Housing’s inability to build on the temporary boost generated by government assistance is one reason the economy is having trouble strengthening.
Bloomberg – By Courtney Schlisserman
Residential real estate may keep struggling for the rest of this year, while into “2011 and beyond, it is difficult to determine,” Richard Dugas, chief executive officer at Pulte Group Inc., said in an Aug. 20 interview with Bloomberg Television. Bloomfield Hills, Michigan-based Pulte is the largest U.S. homebuilders by revenue.
‘Demand Is Low’
“Demand is low across the country,” Dugas said. “You have record-low interest rates and excellent pricing, but consumer confidence eased. We really need the economy to improve and job creation to take hold before people feel comfortable stepping into a home.”
The National Association of Home Builders/Wells Fargo confidence index on Aug. 16 reflected Dugas’s comments. The August index of builder sentiment dropped to the lowest level since March 2009.
The Standard & Poor’s Supercomposite Homebuilder Index, which includes Pulte and Miami-based Lennar Corp., has dropped 13 percent this year through yesterday, while the S&P 500 Index is down 4.3 percent.
The timing of the tax incentive has caused swings in the existing-home sales data. After surging to a 33-month high of 6.49 million in November, the month the credit was initially set to expire, purchases dropped for the next three months. Demand recovered in March and April, which was the deadline for signing contracts, before slipping again the next two months.
Closing Deadline
The June 30 deadline to close deals, which is when existing home sales are tabulated, was extended to the end of September to ensure prospective buyers had enough time to complete transactions. Sales of new homes are recorded when contracts are signed, and a Commerce Department report tomorrow may show little change in July purchases from a month earlier.
To help bring stability to the market, the Obama administration will offer $1 billion in zero-interest loans to help homeowners who’ve lost income avoid foreclosure as part of $3 billion in additional aid targeting economically distressed areas.
The Department of Housing and Urban Development plans to make loans of as much as $50,000 for borrowers “in hard hit local areas” to make mortgage, tax and insurance payments for as long as two years, according to an Aug. 11 statement. The Treasury Department will also provide as much as $2 billion in aid under an existing program for 17 states and the District of Columbia.
Lower Rates
Mortgage rates have declined as well. The average rate on a 30-year fixed mortgage dropped to a record 4.42 percent in the week ended Aug. 19, according to Freddie Mac.
Private payrolls rose a less-than-forecast 71,000 in July and were revised down for the previous month, the Labor Department reported Aug. 6. Economists surveyed by Bloomberg forecast unemployment will end the year at 9.5 percent, unchanged from the rate in June and July.
Foreclosures and short sales are boosting the so-called shadow inventory and competing with owners trying to sell properties. Home seizures increased almost 4 percent in July from the previous month, with 325,229 properties last month getting a notice of default, auction or bank repossession, RealtyTrac Inc. said Aug. 12.
Read Original Article here:
Tuesday, December 1st, 2009, 10:38 am
As HousingWire first reported, the US Treasury Department will launch the Home Affordable Foreclosure Alternatives Program (HAFA) in 2010.
HAFA will complement the Home Affordable Modification Program (HAMP) by providing financial incentives to servicers, borrowers and investors to go forward with short sales or a deed-in-lieu, according to a Treasury announcement late Monday.
In a short sale, the bank sells the property for a price short of the balance owed on the property’s loan.
Under HAMP, the Treasury allocates capped incentives to servicers for the modification of loans on the verge of foreclosure. Borrowers must be HAMP-eligible to qualify for HAFA and must be considered for the new program within 30 days of failing to qualify for or complete a HAMP trial.
Borrowers must be able to provide the buyer of the home with a clear title. Any subordinate liens must be paid off in full. The borrower can also negotiate with the holder to release the liens before the closing date.
HAFA allows the borrower to receive pre-approved short sale terms before the property is listed and frees them from future liability for the debt. Also, servicers utilizing the program are prohibited from requiring a reduction in the real estate commission agreed to in the listing agreement.
The borrower also receives a $1,500 incentive for relocation after the transaction. The servicer receives a $1,000 incentive to cover administration and processing costs, and investors will be paid a maximum of $1,000 for allowing up to $3,000 in short-sale proceeds to be paid out to subordinate lien holders. In total, each transaction under HAFA will cost the Treasury up to $3,500 of incentive payments.
HAFA will officially launch on April 5, 2010, but servicers can implement the program prior to that date. However, in order to participate in the program, the servicer must have signed a HAMP servicer participation agreement by Dec. 31, 2009.
HousingWire first reported on HAFA’s forthcoming launch in October, when the chief of the Homeowner Preservation Office at the Treasury, Laurie Maggiano, released information on HAFA when she spoke at the Mortgage Bankers Association’s annual convention in San Diego.
Two weeks later, Herb Allison testified before the Congressional Oversight Panel (COP), which reviews actions taken by the Treasury, and indicated guidelines were being developed.
Read original article here:
http://www.housingwire.com/2009/12/01/short-sale-incentives-coming-in-2010-treasury-says
Daily Real Estate News | July 28, 2010 |
>A newly released Census survey indicates that the recession has eroded housing conditions significantly in just two years.
The Census survey of 60,000 units, 45,000 of them occupied, shows:
• 3.1 million households, or 18 percent, of those who moved in the last year say their new home is in worse condition and/or in a worse neighborhood.
>Households that moved in the past year because they were evicted rose 127 percent to 191,000.
>The number of households that had additional people move in rose 10 percent to 6 million.
Source: USA Today, Haya El Nasser (07/26/2010)
Daily Real Estate News | July 28, 2010
>The homeownership rate fell to 66.9 percent in the second quarter, down from 67.1 percent in the first quarter, according to the U.S. Census Bureau. This was the lowest level since 1999.
>The homeownership rate reached a record high of 69.2 percent in the second and fourth quarters of 2004.
>Rising foreclosures are driving the decline. A record 4.6 percent of U.S. mortgages were in foreclosure in the first three months of 2010, the Mortgage Bankers Association reported in May.
Source: Bloomberg, Kathleen M. Howley (07/27/2010)
About 18.9 million homes in the U.S. stood empty during the second quarter as surging foreclosures helped push ownership to the lowest level in a decade. The number of vacant properties, including foreclosures, residences for sale and vacation homes, rose from 18.6 million in the year-earlier quarter, the U.S. Census Bureau said in a report today. The ownership rate, meaning households that own their own residence, was 66.9 percent, the lowest since 1999.
Lenders are accelerating foreclosures as borrowers fall behind in mortgage payments after the worst housing crash since the Great Depression. A record 269,962 U.S. homes were seized in the second quarter. Foreclosures probably will top 1 million this year. The share of homes empty and for sale, known as the vacancy rate, was 2.5 percent, matching the year-earlier period and down from 2.6 percent in the first quarter, the Census Bureau said. The homeownership rate fell from 67.1 percent in the first quarter, the third straight decline. The rate reached a record high of 69.2 percent in the second and fourth quarters of 2004.
Inflation on the rise?
Shorter-term securities rose as the government sold $37 billion of five-year notes in the smallest auction of the debt in a year, the second of three note sales this week totaling $104 billion.
The offering of 1.796 percent, compared with an average forecast of 1.820 percent in a Bloomberg News survey of seven of the Federal Reserve’s 18 primary dealers. The bid- to-cover ratio, which gauges demand by comparing total bids with total securities offered, was 3.06, compared with an average of 2.66 for the previous 10 sales. Treasuries gained earlier after data showed durable-goods orders unexpectedly fell and before a Fed business survey.
the reason – People are looking at safety, liquidity and inflation. Unfortunately, the market believes that things will remain much slower and the recovery will take longer than anticipated.
The yield on the current five-year note fell 2 basis points, or 0.02 percentage point, to 1.77 percent The two-year note yield fell 2 basis points to 0.65 percent.
Today’s auction is the smallest five-year note offering since an equal amount was sold in June 2009. Its yield was the lowest since December 2008. Last month’s $38 billion sale drew a yield of 1.995 percent, the lowest yield since April 2009.
Foreign Central Banks continue to purchase US assets, purchasing 47.3 percent of the notes today, compared with 34.6 percent at the June auction and an average of 46.16 percent for the past 10 sales.
D
Common short sale myths once evidenced widespread confusion about what a short sale is – mostly misconceptions that they are quick, or faster than “normal” real estate transactions. In reality, the “short” in short sale has nothing to do with timing. Short sales usually take many multiples of time longer than traditional real estate deals – running anywhere from 3 to 8 months-plus, on average, from contract to closing!
The only thing short in a short sale is the sales price – it is less than, or “short” of, the amount the seller would need to pay off all the loans and other outstanding obligations (tax liens, delinquent HOA dues, etc.) against the property. In these situations, unless the seller is willing to write a check to make up the difference, their lender(s) must agree to forgive the shortfall in order for the sale to close.
But most short sale buyers – and sellers – know this stuff by now. With one in four homeowners in America owing more on their homes than they are worth, short sales won’t be going anywhere for a long time to come. And the more people get involved in a short sale transaction, the more confusion and misunderstandings result.
Here are 5 of these “next-generation” myths about short sales, and the facts to shatter them:
Myth #1: That there is anything typical, standard or normal when it comes to getting a short sale approved.
Fact: There’s no such thing as “normal” in a short sale.
Some of the most frequently asked questions at www.OnlineRealtyNY.com include things like:
Despite the recent goverment “streamlining” efforts that promised to impose a set of standards most banks would follow in processing short sales, it’s still a black box experience for most buyers and sellers. Buyers submit their offers, sellers sign them and hand over all their financials to their listing agent who submits it all to the bank – and then often no one hears anything back for a few months, if ever. Other times, the whole thing is approved in a matter of weeks (though this is much less rare).
The bank is in the power position, and can respond to your offer however they want. They may counter at a much higher price and demand a cash payment from the seller. Or not. They may take weeks, or they make take six months. They may approve a way-below asking offer, or require a hundred thousand over the asking price. Forget the idea of standard, when it comes to a short sale.
Hint: short sale listing agents who have done a lot of recent, successful short sales with the same bank do often have insider knowledge that is the closest thing to a rule of thumb over what any individual bank’s practices are. If you’re a buyer, prioritize short sales that are listed by short sale masters – your agent will know who they are. If you’re a seller, ask prospective listing agents for a list of short sales they recently closed, including which bank(s) were involved.
Myth #2: It’s smarter for homeowners to walk away than to short sell their homes.
Fact: Increasingly, I’m hearing those who own upside down homes ask why they would bother with a short sale, when they could just walk away with much less effort and drama. The reality is that walking away and letting your home go to foreclosure is an extremely serious, personal decision – the wisdom of which varies dramatically owner to owner and state-to-state. Some states allow lenders to sue homeowners who default on their mortgages, and impose state taxes on the mortgage debt cancelled out in a foreclosure, sometimes totalling tens of thousands of dollars.
Other homeowners’ family and financial plans would be impaired much less by a short sale than by a foreclosure. For still others, it’s pretty much a wash. For everyone, though, it is faster to recover your credit and ability to take out another mortgage on a new home after a short sale than after a foreclosure.
Given that a short sale costs a seller little or nothing except some time and effort, in many instances it is smarter to make the effort to short sale than it is to walk away.
Myth #3: A short sale is the same as a pre-foreclosure.
Fact: A short sale is a home being sold for less than what is owed on it. A pre-foreclosure is a home that is in some stage of the foreclosure process because the owners are behind on the mortgage payments. Many short sales are pre-foreclosures, because the owners stopped making payments when they put the home on the market, either because they can’t afford them, they are simply done with the property and don’t see a need to continue paying on it, or because they feel the bank is more likely to approve their short sale application if they are in default on their loan (a position many experienced short sale agents argue is true).
But not all. Remember, nothing is standard when it comes to short sales. Short sales are closed every day on which the seller is still in good standing on their loan – these are mostly the short sales of owners who elect this strategy out of a desire to maintain their credit as much as possible, but have to move for work or family reasons.
Buyers should not assume that every short sale will come on the market later as a foreclosure; they should inquire as to any foreclosure notices against the property, and keep track of those time frames. Many a buyer has been surprised when the bank auctions a property they are in contract to buy.
Myth #4: The the buyer’s broker – or even the buyer’s offer – has much to do with getting a short sale approved.
Fact: Writing a clean, well-qualified offer is important to getting a short sale seller to believe that a buyer will hang into the short sale for the duration so they will sign the contract. However, the buyer’s offer and agent have little, if anything, to do with whether the seller’s bank green lights the deal, as needed to close it.
While the bank obviously cares about the price you offer, even that’s not as important as several other factors, including:
Myth #5. That the bank “can’t” do X or “has to” do Y.
Fact: The seller’s bank in a short sale is being asked to waive debt that they are legally owed. They have the absolute right to simply refuse entirely to accomodate this debt forgiveness request. However, if they do choose to waive some or all of the shortfall, they also have the right to place whatever conditions on that waiver. They can ask for more money from the seller – or the buyer (and often do). They can ask the agents to reduce their commissions (and often do that, too). They can refuse to pay various closing costs, if they want. And the buyer or seller can counter, accept or refuse any or all of the bank’s demands, too, but know that the banks do have the right to place whatever conditions on the short sale they want. After all – he, she or it who has the cash (or the mortgage, in this case!) makes the rules!
So, why buy a short sale? With all the hassle, there are still some great deals to be had. In many cities, most homes on the market are short sales, so if you rule them out, you may never find a home.