by CRESTICO | Aug 1, 2011 | CRESTICO
The National Association of Home Builders ("NAHB") recently reported that Americans still believe in home ownership.
Americans still believe that a strong housing industry means more jobs and more money to keep local economies growing, and that the government should continue to promote homeownership through tax incentives.
A new survey found that nearly three out of four American voters—73 percent—believe that it is reasonable and appropriate for the federal government to provide tax incentives to promote homeownership.
And 81 percent of voters are convinced we should do more to improve the housing finance system because we need policies that encourage homeownership if we want to rebuild the middle class.
"Every new single-family home built creates three full-time jobs and increases the property tax base that supports local schools," said National Association of Home Builders (NAHB) Chairman Bob Nielsen, a home builder from Reno, Nev. "The American public recognizes that to restore the health of the economy, we need policies that support opportunities for homeownership."
The poll, which was conducted on behalf of NAHB, also found that an overwhelming majority of respondents oppose eliminating the mortgage interest deduction and would be less likely to support a candidate for Congress who wants to do away with this vital tax incentive.
"Despite the current housing downturn, Americans still see homeownership as a key building block of being in the middle class and creating strong jobs in their communities," said Celinda Lake, president of Lake Research Partners, which conducted the survey along with Public Opinion Strategies.
Other key survey findings include:
•75 percent of voters say that owning a home is the best long term investment they can make.
•73 percent of voters who do not now own a home say that it is a goal of theirs to eventually buy a home.
•Among voters who are aware of proposals under consideration by Washington policymakers to raise the down payment requirements for a home loan, 92 percent believe it will make it more difficult to buy a home.
Neil Newhouse, partner and co-founder of Public Opinion Strategies, said, "The administration and some in Congress are floating plans to curtail or even abolish the mortgage interest deduction and impose changes that would make it much more difficult and expensive to get a home loan. This is in direct opposition to the views of most Americans, who want the government to encourage growth in the housing market and to maintain tax incentives to keep housing affordable."
http://www.nahb.org/generic.aspx?sectionID=1047&genericContentID=162180
by CRESTICO | Jul 20, 2011 | CRESTICO
Are you struggling with your monthly mortgage payments? If answered yes, you must try your best to refinance your home loan as this is the best way to get back on your current monthly mortgage payments. Most mortgage loans carry high interest rates and with the unemployment rate touching a record level, an increasingly large number of homeowners are not being able to cope up with their monthly mortgage installments. Refinancing is just taking out yet another home loan with favorable interest rates and terms so that you can repay the previous loan with ease. While there are many homeowners who want to refinance their Home Loans, they all love to know the ways in which they can get the best refinance rates in the market. Have a look at the ways in which you may secure low rates on the refinance loan.
1.Check your credit score: As you know that the lenders will always check your credit sore before lending you with a new line of credit, you must try your best to boost your credit score in order to get the best rate in the market. As the credit score is the best way to track the financial history of a person, you must take good care about the financial habits that can drop down your score. Most financial experts often say that one must initially go for credit repair before applying for a home loan so as to grab reasonable interest rates.
2.Shop around among different lenders: Refinancing can be done from your previous lender and from any other lender too. If you want to change the lender from whom you want to take out a mortgage refinance loan, you must shop around extensively so as to make sure that you get the most competitive rate in the market. The lenders are waiting to offer you the loans of their companies and thus you need to make sure that you’re choosing a loan that has the perfect interest rate that can help you save your dollars on the mortgage loan.
3.Pay points on the refinance loan: Even if your credit score is not enough for you to secure a loan with an affordable rate, you can still get the lowest refinance rates. This is possible by paying points while taking out the new refinance loan. A point is1% of the loan amount that has to be paid in cash during the closing. This can lower the rates.
4.Choose a different term:If you refinance your mortgage loan at a 15 year term mortgage loan, you can get low rates on the loan. However, a 15 year term mortgage loan will require high monthly payments but will also ensure low rates at the same time.
Therefore, if you want to refinance your mortgage loans at a lower rate, you can easily follow the tips mentioned above. Get a loan at a low rate and repay the loan with ease, thereby retaining your home ownership rights.
by CRESTICO | Jun 22, 2011 | CRESTICO
You have a right to know! When you turn over your personal financial information to a loan officer, make sure you know who you are giving your information to. There are new laws regulating Mortgage Loan Brokers.
The new law, 12 CFR Part 226 (Reg Z Docket No. R-1366) (eff. April 1, 2011) states that mortgage loan originators may not receive compensation based on the interest rate or other loan terms.
The Federal Reserve Board (Board) has published final rules amending Regulation Z, which implements the Truth in Lending Act and Home Ownership and Equity Protection Act. The purpose of the final rule is to protect consumers in the mortgage market from unfair or abusive lending practices that can arise from certain loan originator compensation practices, while preserving responsible lending and sustainable homeownership. The final rule prohibits payments to loan originators, which includes Mortgage Brokers and loan officers, based on the terms or conditions of the transaction other than the amount of credit extended. The final rule further prohibits any person other than the consumer from paying compensation to a loan originator in a transaction where the consumer pays the loan originator directly.
The Board is also finalizing the rule that prohibits loan originators from steering consumers to consummate a loan not in their interest based on the fact that the loan originator will receive greater compensation for such loan. The final rules apply to closed-end transactions secured by a dwelling where the creditor receives a loan application on or after April 1, 2011.
Another law, SB 1137 (eff. Jan. 1, 2011 which amends Sections 10137, 10139, 10166.01, and 10166.02 and adds Section 10166.051 of the CA Business and Professions Code; Amends Sections 22104, 22107, 22109.1, 22109.4, 22112, 50002, 50141, 50144, and 50700 of the CA Financial Code) regulates mortgage loan originators and their license endorsements.
Among other provisions, this law makes it unlawful for a Real Estate broker to employ or compensate, directly or indirectly, any licensee for engaging in any activity for which a mortgage loan originator license endorsement is required if that licensee does not hold a mortgage loan originator license endorsement. It is a crime for a person to act as a mortgage loan originator without a license endorsement or to advertise using words indicating the person is a real estate salesperson or a mortgage loan originator without having a license or license endorsement. It also authorizes the DRE Commissioner to deny, suspend, revoke, restrict, condition, or decline to renew a mortgage loan originator license endorsement, or take other actions, after notice and opportunity for a hearing, under specified conditions. See the DRE Web page for all the details at http://www.dre.ca.gov/lic_sb36_safe.html.
In addition, this law requires a licensed finance lender or broker that employs one or more mortgage loan originators that makes residential mortgage loans to maintain a net worth of $250,000 and if only arranging but not making such loans to maintain a net worth of $50,000.
For more information visit: www.crestico.com
by CRESTICO | Apr 13, 2010 | CRESTICO
California state income tax on forgiven debt resulting from a short sale, foreclosure, or loan modification will no longer be imposed on homeowners in California. Senate Bill 401 makes California’s tax treatment of mortgage debt relief income the same as federal law. Be advised, however, that only the debt stemming from the loan secured by a "qualified principal residence," will be exempt from both federal and state income tax consequences. While the federal exemption amount is up to $2 million, the California exemption is up to $800,000 and forgiven debt up to $500,000.
Now, I know you’re thinking … what is a "Qualified principal residence." This means that only the debt incurred in connection with acquiring, constructing, or substantially improving a principal residence is the subject of this legislation. Principal residences are where you actually reside, receive mail and inhabit for all intents and purposes. This new debt forgiveness exemption will include first and second trust deeds, as well as debt incurred in connection with a refinance loan to the extent that that fund from said loan were used to payoff a previous loan that would have also qualified under Senate Bill 401’s guidelines.
These "tax breaks" are applicable to debts that are discharged from 2009 through 2012. Californians who have already filed their 2009 tax returns may claim the exemption by filing a Form 540X amendment. Taxpayers who do not qualify for the exemptions (for example, those homeowners with second or third homes and/or rental property or properties) may potentially also claim an exemption, through other provisions in the law, however.
A very important thing to note is that taxpayers who are bankrupt are exempt from debt relief income tax. This means, that they have no liability. Also, taxpayers who are insolvent and have no assets may also claim exemption from debt relief income tax to the extent their current liabilities exceed current assets.
For more information about mortgage forgiveness tax consequences, go to California Franchise Tax Board’s Mortgage Forgiveness Debt Relief Extended webpage and the Internal Revenue Service’s Mortgage Forgiveness Debt Relief Act and Debt Cancellation webpage. The full text of Senate Bill 401 is available at www.leginfo.ca.gov. Also, remember to consult with an attorney before taking any steps that may impact your tax and/or legal liability.
by CRESTICO | Mar 11, 2010 | CRESTICO
In December, I wrote to you about the Home Affordable Foreclosure Alternatives ("HAFA") program under the Home Affordable Modification Program ("HAMP"). In March 2009, President Obama introduced the Home Affordable Modification Program in connection with his Making Home Affordable ("MHA") plan. These plans and programs represented the Obama Administration’s efforts to allow borrowers who are eligible (according a specific set of standards and guidelines) to avoid foreclosure by modifying their loans to a level that is affordable and sustainable for the long-term.
Now, I write to you again to bring you some more information about this program and the potential benefits and pitfalls of this new HAFA program set to roll out in April. HAFA intends to help the homeowners that HAMP could not. Basically, if you did not qualify for assistance under HAMP, you may now use HAFA to attempt to avoid foreclosure. How? Through a short sale or Deed-In-Lieu ("DIL") of foreclosure. Seems easy enough, right? Since you can no longer pay your mortgage, the government is now incentivizing it for a buyer to come along and make an offer on your house allowing you out of your mortgage obligations while still recovering some money for the bank that owns your house. The DIL basically allows you to present a Deed to the bank in lieu of foreclosure, that means, instead of the bank foreclosing, kind of like a surrender. Now, you still lose your home, but under these circumstances, your credit will be less adversely affected and you may remain eligible to potentially purchase another home. It has been reported that of the almost 1 million borrowers who were given HAMP assistance (essentially, loan modifications) only about 67,000 (about 6.5%) were provided with a permanent solution to their problem. So that means that about 93% of the people who received loan modifications are STILL struggling with their mortgages.
HAFA is seen as a potential solution to this problem. Read the next few paragraphs and decide for yourself.
Eligibility – the eligibility requirements for HAFA are extremely similar to HAMP in that the home must be a primary owner-occupied residence with the lien originating before 2009 provided that default is reasonably foreseeable and that the owed balance is not more than $729,750 (for single family residences). Additionally, the borrower’s total monthly payment must exceeds 31% of his/her gross income.
Proponents of the program are saying that it is intended to streamline the short sale process by creating an alternative situation for homeowners that HAMP could not help (even though, technically if you were not eligible for HAMP, you probably won’t be eligible for HAFA since the requirements for eligibility are substantially similar). Also, this program is meant to streamline the process of a short sale in that it hopes to use the documentation submitted under HAMP (again running into eligibility questions) and also hopes to create an environment where short sales will be pre-approved prior to listing the property for sale.
Now, there are some benefits, as I see them, in the HAFA program. One certain benefit is that HAFA works to ensure that the homeowner is fully released from liability from their first mortgage and sometimes even their second mortgage (depending on the acceptance of initiatives). Also, HAFA will aim to standardize the short sale process, which anyone who ever tries to work with the government knows is not a small task. The Federalist nature of our government creates a lack of uniformity by its nature.
Also, HAFA will provide monetary incentives like relocation assistance for the homeowner, recoupment of loan servicer costs, and up to a $1,000 match for investors for allowing a total of up to $3,000 in short sale proceeds to be distributed to subordinate lien holders (on a one-for-three matching basis; up to 3% of the unpaid principal balance of each subordinate loan).
However, as a homeowner considering assistance through this program, there are things you should know. First, the property that is being listed can not be listed or sold to anyone that the borrower has a personal or business relationship with. The new owner can not sell the home for at least 90 days, the surrendering homeowner will have to list the forgiven debt as INCOME on his/her tax return, and the loan servicer will report to the credit reporting agencies that the mortgage was settled for less than full payment, which will have a negative impact on the homeowner’s credit score.
All in all, make sure you consult with your tax and Real Estate professionals when considering any major decisions with regard to your home. We are professionals and take your needs into consideration and may be able to provide you with insight and information that is not readily available to you.
