MeredithMortgageTeam's Blog

June 28, 2010  

Up to 180,000 home buyers will lose their tax credit through no fault of their own if Congress fails to pass an extension to the home buyer tax credit by June 30 when the closing deadline expires.

Included in that number are thousands of home buyers in every state of the union, from 390 in Wyoming to 17,700 in California, according to estimates by the National Association of REALTORS®.Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz.NAR issued the following state-by-state estimate of the number of home sales that would be delayed beyond the June 30 deadline; numbers are rounded to the nearest 10:

“We are strongly urging the Senate and the House to act quickly to pass this legislation and ease the minds and pocketbooks of these home buyers,” said NAR President

. “It would be a tragedy for them not to be able to complete the purchase in time to claim the credit.”Golder“These are not buyers who just entered into the market. These are buyers who previously met all the qualifications for the tax credit, but find themselves at the mercy of a workflow jam with lenders or other delays such as lapses in the National Flood Insurance Program, Rural Housing Service, and new home construction, and might not be able to complete the purchase of their homes by the current deadline,” said

Alabama, 2,590; Alaska, 830; Arizona, 5,440; Arkansas, 2,090; California, 17,700; Colorado, 3,390; Connecticut, 1,770; Delaware, 400; District of Columbia, 300; Florida, 14,830; Georgia, 6,270; Hawaii, 710; Idaho, 1,270; Illinois, 7,030; Indiana, 3,560; Iowa, 2, 030; Kansas, 1,840; Kentucky, 2,540; Louisiana,1,800; Maine, 840; Maryland, 2,630; Massachusetts, 3,930; Michigan, 6,470; Minnesota, 3,760; Mississippi, 1,530; Missouri, 3,600; Montana, 760; Nebraska, 1,110; Nevada, 3,800; New Hampshire, 690; New Jersey, 4,300; New Mexico, 1,160; New York, 9,190; North Carolina, 4,890; North Dakota, 460; Ohio, 8,510; Oklahoma, 2,760; Oregon, 2,090; Pennsylvania, 5,830; Rhode Island, 500; South Carolina, 2,460; South Dakota, 500; Tennessee, 3,910; Texas, 15,340; Utah, 1,130; Vermont, 400; Virginia, 3,890; Washington, 3,190; West Virginia, 940; Wisconsin, 2,690; and Wyoming, 390.

Source: NAR

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The home buyer credit provided a federal tax credit of up to $8,000 for first-time home buyers for tax year 2008, the subject of the report. The credit, created to revive the housing market, was later extended to repeat home buyers. The latest credit expired with sale contracts signed as of April 30.  

In response to earlier reports of widespread fraud, the IRS tightened reporting requirements for taxpayers who claimed the credit. But additional controls are needed, the inspector general said. Among the report’s findings:  

•1,295 prisoners, including 241 serving life sentences, received $9.1 million in credits, even though they were incarcerated at the time they reported that they purchased their home. These prisoners didn’t file joint returns, so their claims could not have been the result of purchases made with or by their spouses, the report said.  

•2,555 taxpayers received $17.6 million in credits for homes purchased before the dates allowed by law.  

•10,282 taxpayers received credits for homes that were also used by other taxpayers to claim the credit. In one case, 67 taxpayers used the same home to claim the credit.  

“This is very troubling,” J. Russell George, the Treasury Inspector General for Tax Administration, said. “Congress created and modified the home buyer credit to stimulate the economy and help taxpayers achieve the American dream, not to line the pockets of wrongdoers.”  

Taxpayers who fraudulently claim the home buyer credit face civil penalties along with criminal prosecution, the IRS said. In October, a Florida tax preparer was sentenced to 30 months in prison for falsely claiming the credit on clients’ tax returns.  

The IRS is moving quickly to block fraudulent claims and recapture credits paid to prisoners, IRS spokesman Frank Keith said. He added that it’s not always easy for the IRS to identify a tax return filed by a prison inmate. Some prisoners use the address of a family member or a post office box, he said.  

And some prisoners have a legitimate reason to file a tax return, Keith added. For example, they may be owed refunds from income earned before they were incarcerated. The IRS is working with state and local governments to obtain information about taxpayers who are incarcerated, Keith said.  

In a statement, Assistant Treasury Secretary Michael Mundaca said the fraudulent claims identified by the inspector general represented less than one-half of 1% of the credits paid out under the program. “As with all new and expanded programs, we are constantly working to improve implementation, and the IRS has already begun to take additional steps to prevent fraud in this program.”  

NAR Hails House Vote on Flood Bill Extension

A bill to extend the authority for the National Flood Insurance Program, strongly supported by the NATIONAL ASSOCIATION OF REALTORS®, was passed by the House today. The bill would extend the program to September 30, 2010.

“We greatly appreciate that the members of House were sensitive to the plight of thousands of home buyers whose loans were being held up since this program expired earlier this year. The passage of H.R. 5569 is a first step toward helping home buyers to the closing table. We strongly urge the Senate to speed passage of this important bill,” said NAR President Vicki Cox Golder, owner of Vicki L. Cox Real Estate in Tucson, Ariz.

Lenders have refused to close loans on properties that required flood insurance, since the insurance program expired May 31. The bill would make flood insurance coverage retroactive and would include all approved applications since that date. The bill now goes to the Senate for consideration.

Source: NAR

Fannie Mae Cracking Down on Strategic Defaults

Fannie Mae announced plans Wednesday to get tough with strategic defaults.

Fannie said that borrowers who default when they are able to pay won’t be able to get another Fannie Mae mortgage for seven years. The current wait is five years. While that might sound like an empty threat, in an environment where Fannie Mae and Freddie Mac are providing most home financing, it may have some teeth.

Fannie also threatened to sue home owners who walk away from their mortgages in states where such deficiency judgments are legal.

The announcement attracted some criticism because of Fannie Mae’s refusal so far to allow hard-pressed borrowers to negotiate a lowering of their principal amount, which is something lenders are now agreeing to after prodding by the federal government. Critics contend the company should try principal write-downs before it penalizes borrowers for choosing to walk away.

Source: CNNMoney.com, Tami Luhby (06/23/2010)

Five Charities Win NAR Recognition

REALTOR® Magazine and the Good Neighbor Society have announced the winning applicants of the second Volunteering Works, an annual program that matches REALTORS® who work on small-scale charitable efforts with mentors and awards them grant money.

The five winning REALTORS® will receive a $1,000 grant and a year of one-on-one mentoring from a member of the Good Neighbor Society, past recipients of the annual REALTOR® Magazine Good Neighbor Award for volunteer service.

“REALTORS® play an important leadership role in building our communities,” said National Association of REALTORS® President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz. “Volunteering Works gives an extra boost to new nonprofits and helps them maximize their impact in the community, which benefits all of us.”

Volunteering Works recipients were selected based on their dedication to the community through volunteer work and the potential for their charitable work to be expanded or improved with the help of an expert mentor.

“Volunteering Works has given me incredible recognition and credibility throughout the community,” said REALTOR® Ellen Kiss, of Kiss Properties in Del Mar, Calif., and a 2009 Volunteering Works winner who founded Adopt-A-Classroom. Her mentor, REALTOR® Craig Conant, Elsberry Realty, Warrensburg, Mo., helped her brainstorm creative fundraisers like a cookbook and a casino night and encouraged her to ask a local college to create her charity website for free. “I’d like to turn the $1,000 grant into $100,000,” said Kiss.

Conant, a Good Neighbor Society Advisory Council chair and 2001 winner of REALTOR® Magazine’s Good Neighbor Award, says mentors are essential for sharing their insights and motivating other REALTORS® to action. “Mentors provide guidance and advice on things like establishing a board of directors, obtaining the appropriate nonprofit status, improving fundraising success, and recruiting volunteers,” said Conant.

“Past Good Neighbor Award winners have spent upwards of 20 hours a week volunteering and have built and led some of the most effective charitable organizations in the country,” said Frank Sibley, REALTOR® Magazine publisher. “With advice and guidance from REALTOR® mentors, we hope the five winners will be able to take their charitable efforts to the next level and help even more people in their communities.”

The 2010 recipients of the Volunteering Works grant and mentoring are:

Cynthia M. Dwyer, Weichert REALTORS®, Vienna, Va.
Dwyer provides clothing to families of wounded soldiers recovering at Walter Reed Army Medical Center. Many of these wounded warriors’ spouses rush to Walter Reed with only an overnight bag only to find out they will spend months or years there while their loved one recovers. Dwyer sets up clothing distributions to provide gently used clothing for men, women and children, including warm clothes for winter and even formal wear for special events. Dwyer’s mentor will be 2002 Good Neighbor Cynthia Shafer, Lahaina Realty Inc., Fort Myers Beach, Fla., founder of Beds for Kidz (part of Voices of Kids of Southwest Florida). Dwyer plans to use her mentor’s guidance to increase clothing donations.

Leslie Heath, Century 21 Service Realty Inc., Paducah, Ky.
Heath started the Oscar Cross Legacy Committee to restore the historic home of the founder of the Paducah Boys and Girls Club chapter to house an after-school homework and meal center for children in the community. Heath’s mentor will be 2009 Good Neighbor and high school teacher Regina Ragon, Prudential Realty Center, Flintstone, Ga., founder of Latin American Community Development. Heath will ask her mentor to help her find new ways to network with local businesses, market her cause to the community, and balance her volunteer work with her real estate career.

Joyce R. Long, Prudential Shimmering Sands Realty, Panama City Beach, Fla.
Long founded Acton Up with Downs to increase awareness, acceptance and inclusion for people with Down Syndrome, their families and caregivers. Long mentors parents of young children with Downs, runs support groups, and sends New Parent Packets to doctor’s offices, hospitals and clinics. Long’s mentor will be 2001 Good Neighbor Claudette Bruck, Multiple Choice Realty Investments, Tamarac, Fla., with Broward Partnership for the Homeless. Long hopes her mentor will help her recruit and keep community leaders on her board of directors and increase volunteers.

Sarah J. Sorenson, Whale’s Trail Realty Inc., Kahului, Hawaii
Sorenson founded REALTORS^® Wishing Well…for Maui Students to support the area’s 32 budget-crunched public schools by coordinating donations of goods, services, and funds. She appoints coordinators to identify each school’s needs; locates individual and corporate donors of furniture, office equipment, materials and services; and then facilitates transportation of the goods to the schools. Her mentor will be 2008 Good Neighbor Victor Kee, Pete Anderson Realty Inc., Astoria, Ore., of Sunday Supper and Sunday Meals on Wheels. Sorenson would like her mentor to help her recruit volunteers and enhance communication with school administrators, teachers and students.

Donna Whiskeman, RE/MAX Cimarron Realty LLC, Ridgway, Colo.
Whiskeman founded Neighbor to Neighbor in 2006 to serve seniors and adults who are homebound or disabled. In her rural county in southwestern Colorado, it’s not easy for seniors to get to doctor appointments or access other services in the nearest metropolitan area, which is 35 miles away. Whiskeman and her volunteers deliver meals, host weekly lunches, take neighbors shopping, and provide handyman services. Whiskeman’s mentor is 2003 Good Neighbor Silvia S. Rodriguez, with Silvia International Realty in Rockville, Md., and a volunteer leader with Centro Catolico Hispano. Rodriguez will help with fundraising ideas, improving the effectiveness of the board of directors and keeping volunteers motivated.

Volunteering Works is funded by The Stuart & Jill Siegel Charitable Foundation. To learn more about Volunteering Works or the Good Neighbor Awards, go to www.REALTOR.org/gna.

Fed: Interest Rates to Stay at Record Low Levels

In the wake of a slowing real estate market, the Federal Reserve said Wednesday that the economy is “proceeding” and pledged to hold interest rates at record low, near zero rates.

One piece of good news, released simultaneously with the Fed’s report, was a survey of CEOs of large U.S. companies, 39 percent of whom said they expect to increase the number of people on their payrolls in the second half of 2010.

Source: Associated Press, Alan Zibel (06/23/2010)

Housing Expert: ‘The Suburban Century Is Over’

At a recent meeting of the Urban Land Institute of Minnesota, Senior Fellow John McIlwain said “a new normal” will be created in the housing market over the next 10 years, and he marked the end of “the suburban century.”

He noted that markets offering “a vibrant 24/7 lifestyle” will see the most robust activity, “net-zero-energy” units will become the norm, and the rental market will expand as homeownership rates fall to more historic levels.

Suburban town centers will gain popularity among those wanting an urban lifestyle without living in a big city.

Over the next decade, McIlwain said four demographic groups will fuel the housing market. He said older baby boomers increasingly are moving back to the central city, while younger baby boomers are finding it more difficult to relocate for jobs because they cannot sell their suburban houses. Meanwhile, millennials are more environmentally aware and will seek urban lifestyles, and immigrants who cannot afford large suburban houses to shelter multiple generations will increase demand for rentals.

With 1.5 million housing units per year needed to accommodate the shift to normal levels of household formation, McIlwain said zoning, financing, and regulations need to be rethought to meet housing demand.

Source: minnpost.com, Brad Allen (06/21/2010)