HUD secretary: Tax credit can be used as a down payment

The $8,000 first-time home buyer tax credit keeps getting better. On May 11, the secretary of the U.S. Department of Housing and Urban Development, Shaun Donovan, announced to attendees of the National Association of REALTORS® Midyear conference that HUD will provide short-term bridge loans that will allow first-time home buyers to use the federal government's $8,000 tax credit as part of their down payment and closing costs.

The step essentially allows purchasers to get their $8,000 home-buying tax credit at closing rather than waiting until after filing their 2009 taxes. For many potential buyers, the fact that the tax credit couldn't be received until 2010 made it difficult to make a purchase before the Nov. 30 deadline - especially if they planned on using the tax credit as part of their down payment. Under this new program, the $8,000 can be used right at closing.

The short-term loan program would be available to buyers using FHA mortgages. It is expected the loans could be made by FHA-approved lenders, HUD-approved nonprofits, and state and local entities.

HUD officials say more details on the program will be published shortly. When that happens, more information will be available on www.Realtor.org.

Foreclosure scams are destructive, deceptive, and devastating to families who are fighting to survive. We have families on the edge of foreclosure that are being offered relief too good to be true, and we at HUD will take every possible measure to educate and protect consumers and homeowners, bring these scams to light, and prevent con artists from exploiting the housing crisis. There are legitimate people, places, and agencies that American families can turn to when they are facing foreclosure, and many of you are working on these efforts.

I would like to make the attached flyer available to you for distribution to your clients.  It is a printable, easy-to-copy one pager detailing how consumers can access President Obama's housing plan for FREE.  We are distributing the flyer nationwide today to all of our housing partners-our HUD field offices and staff, housing authorities, state and local agencies, and non-profit organizations. This and other targeted outreach efforts will help us reach out directly to communities hard-hit by foreclosure about the legitimate foreclosure assistance available to them.

For the homeowners fighting hard to make their mortgage payments and stay in their homes, our housing plan-the Making Home Affordable Plan-will help up to 9 million Americans. Making Home Affordable will work in concert with the President's Recovery Act and support a recovery in the housing market. Our plan is helping families in three ways. First, we are protecting housing opportunities for all Americans by taking action Administration-wide to reduce interest rates, which are now at historic lows. Second, we will assist 4 to 5 million homeowners who can't otherwise take advantage of today's historically low mortgage interest rates. Lastly, we have committed up to $75 billion to help an additional 3 to 4 million homeowners who are at risk of foreclosure modify their unaffordable mortgages into affordable ones. These three planks of our housing plan will keep American families in their homes and prevent the falling home prices that result from nearby foreclosures. These three planks of our housing plan will keep American families in their homes and prevent the falling home prices that result from nearby foreclosures.

Homeowners NEVER have to pay to participate in the President's Making Home Affordable program. I encourage anyone trying to modify or refinance their loans to a monthly mortgage payment that is affordable to visit the Making Home Affordable website at makinghomeaffordable.gov.  Homeowners can also call the Homeowner's HOPE Hotline at 1-888-995-HOPE for free foreclosure counseling assistance. 

April is National Fair Housing Month. It's important, in that context, to recognize that the economic and housing crises, including foreclosure scams, have disproportionately impacted minority populations across the country. Unscrupulous financial institutions, brokers, and others have broken their trust as lenders, cheating and lying to families fighting to make their way through this crisis. I will renew our commitment at HUD to fair housing enforcement, particularly for lending violations that target minority communities. As part of our broader effort to combat abuse and fraud, HUD is using new tools, including the SAFE Act and RESPA, to protect American families. We at HUD will ensure that all Americans, particularly those in areas previously victimized by unscrupulous practices, are protected and will enforce our laws against those who prey upon them.

I hope that you will find the attached flyer useful in your outreach to consumers about the President's Making Home Affordable plan.

Shaun Donavon

Secretary

U.S. Department of Housing and Urban Development

The Utah State Legislature passed a bill last week that will provide $6000 grants to buyers of newly constructed, never-occupied homes. The program, called "Home Run," will be immediately available to buyers who finance a recently constructed home with a 30-year fixed rate mortgage and meet other qualifications.

            Please note that Senate Bill 260 has not yet been signed by the Governor, we anticipate that will occur in the next week or so.  Once signed by the Governor Senate Bill 260 will create a fund that will use federal stimulus dollars to provide 1,666 grants that will be distributed through Utah Housing Corporation to Utah buyers on a first-come, first-served basis.

            Unlike the federal home-buyer tax credit which is available until Dec. 1, the Home Run program will only be in effect while grants are still available.  We expect the grants will go quickly, so we encourage anyone interested in taking advantage of this program to start acting immediately.

            To apply for the grant, home buyers should work through any lender qualified to make mortgage loans under Utah law. Lenders will work directly with Utah Housing Corporation to apply for the grant money. At closing, the $6,000 will be credited toward the buyer's down payment or closing costs. Buyers can use any type of traditional 30-year fixed-rate mortgage to qualify, including conventional, FHA, VA, USDA and Utah Housing loans.

            Consumers do not have to be first-time buyers to qualify for the program but incomes cannot exceed $75,000 for singles and $150,000 for married couples. Buyers who qualify can take advantage of both the $8,000 federal home-buyer tax credit as well as a Home Run grant.

            The Home Run program aims to clear the excess supply of unoccupied real estate inventory on the market.  This is expected to stabilize housing as well as create new jobs and revenue in the state.

The Utah State Senate OK'd a bill that would allow buyers of new construction homes to get a $6,000 grant towards the purchase of a New Construction home. There is a surplus of homes for sale in Utah, and a good portion of these are new construction. The idea is to help get rid of this inventory to aid struggling builders.

The money used for the grant program would be provided from the funds Utah was given as part of the Obama federal stimulus money. There is only enough of this money for 1,600 buyers, so it would be granted at a first come first serve situation. Great incentive to buy now. The other stipulation for the grant program is only available for people making less than $75,000 a year. Non first time buyers will qualify for this program if it is implemented.

The Utah Senate has approved a proposal to give buyers of newly built homes a $6,000 down-payment grant using funds from the federal economic stimulus package. Senate Bill 260, sponsored by Sen. Scott Jenkins, R-Plain City, aims to stimulate sales from an excess inventory of new homes on the market left over from a building boom that came to a halt about two years ago. The funding would come from the $10 million Utah is slated to receive for housing assistance from the American Recovery and Reinvestment Act signed into law last month. Funds would be used to help more than 1,600 buyers on a first-come, first serve basis. Existing homeowners would be eligible as well as first-time buyers. "The goal is for people to buy the existing inventory out there," said Sen. Greg Bell, R-Fruit Heights. "We don't care if it's their first time, as long they're buying a new home that's already on the market." Grants would be awarded through the nonprofit Utah Housing Corp., the entity created by the state to administer housing assistance programs. The grants would only be available to buyers obtaining 30-year, fixed-rate mortgages. Individuals making more than $75,000 annually, or married couples making more than $150,000, would not be eligible. Sen. Jon Greiner, R-Ogden, said a recent tightening of lending standards has prompted lenders to raise their required down payments, and few houses can currently be purchased with a $6,000 down payment. But when combined with other incentives, the grants could be a powerful tool for reducing excess inventory, said Mike Ostermiller, chief executive of the Northern Wasatch Association of Realtors. "You can debate the effect of $6,000 by itself, but when you combine it with the $8,000 federal tax credit, record-low mortgage rates and ridiculously low prices, this could have a big impact," Ostermiller said. The University of Utah's Bureau of Economic and Business Research estimates that such a program would create 8,000 jobs in Utah's housing sector and add $27 million in income tax revenue to state coffers. While the proposal doesn't directly address the inventory of unsold, previously occupied homes on the market, Ostermiller said it will stimulate activity that will be good for the market in general. "The most important thing is getting some movement in the market," he said. "Your chances of selling your home are much better if this eats into the new inventory." The Senate voted 22-to-5 Monday in favor of SB 260, which Jenkins said could go a long way toward fixing the Utah housing market. "We hope it has a positive effect. We will see where it takes us."

The "American Recovery and Reinvestment Act of 2009," passed the House and Senate on Friday, February 13,2009
(edited)The President did sign this bill on Feb. 17th.   The new bill provides for a $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. 

Enhanced tax credit provides $8,000 incentive to first-time buyers

$8,000 Home Buyer Tax Credit at a Glance

• The tax credit is for first-time home buyers only.
• The tax credit does not have to be repaid.
• The tax credit is equal to 10 percent of the home's purchase price up to a maximum of $8,000.
• The credit is available for homes purchased on or after January 1, 2009 and before December 1, 2009.
• Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.

 The National Association of REALTORS® estimates there will be an additional 300,000 home sales because of the credit, which NAR Chief Economist Lawrence Yun says will help reduce inventory levels and stabilize prices in many parts of the country. To learn more about the home buyer tax credit and eligibility requirements, visit www.FederalHousingTaxCredit.com.  

One of the biggest wins for first-time home buyers in last week's economic stimulus bill is a tax credit up to $8,000 for qualified purchases of a primary residence. Increased from last year's original $7,500 home buyer tax credit, this new incentive does not have to be repaid, making it a true tax credit rather than an interest-free loan.

FHAUTAH.com

AlpineContractors.com

Wasatch Mortgage is proud to annouce that FHAUTAH.COM is now online!

We feel like it is important to provide Utah with all FHA updates that apply directly to our community.  Now there is one site that will post any applicable FHA updates! 

What you will find:

1. New FHA Limits.
2. New FHA lending guidelines.
3. New FHA programs.
4. New FHA requirements.
5. New FHA grants.

FHAUTAH.com

AlpineContractors.com

You've made up your mind that you are definitely moving to Costa Rica...you are sitting in a coffee shop and a young Costa Rican man approaches you , and , in broken English, informs you that his Uncle is selling a property "with a gorgeous view' and at "a really low price." He then explains that you will be able to save "much dollars" because you are buying direct from the family and will not have to pay a commission.

Too good to be true? Try telling this story to any "gringo" living in Costa Rica and you will get knowing smiles and nodding heads
.
This scenario and countless similar variations are played out everyday in Costa Rica ...and the saddest part of the story is that most buyers don't know until sometimes years later how much they have overpaid for their property.

The above example can almost be laughable because who among us would not try and get as much as he or she could for their property if a group of rich aliens descended upon their neighborhood?
Nearly all reading this will know that there are no governmental or local regulations regarding the sale or purchase of real estate in Costa Rica. In other words, it is CAVEAT EMPTOR (let the buyer beware) and"anything goes". You are truly on your own.

This is not meant to imply that there are not honest real estate people in Costa Rica...there are... but how do you find an honest real estate person AND get the best value for your purchase? Despite the fact that Costa Rican real estate can be among the most beautiful in the world, none of us likes to feel as if we were taken advantage of.

Most "gringos" , when shopping for real estate in Costa Rica assume:

1. The real estate system in Costa Rica is VERY similar to that in the States or Canada.

2. Houses are readily available for purchase in Costa Rica, and , while they may be slightly different, can be easily remodelled.

3. How different from the States and Canada can the real estate system be if there are real estate firms such as ReMax and Century21 in Costa Rica?

4. The internet is a true and valid representation of real estate and pricing in Costa Rica.

5. The entire array of services, such as electric, telephone, internet and water are readily available almost everywhere in Costa Rica.

6. Title insurance and protection against fraud is easily obtained. The SAD truth to all of the above is that all are false!

The reality:

1. The real estate system in Costa Rica is "wide open"

2. There are no "comparables" here of any kind so you never really know if you are paying a fair price

3. There is virtually no protection against fraud and misrepresentation in Costa Rica.

4. It is more expensive to remodel an existing home than to build...and there is really not much protection against builder fraud...unless you take certain steps.

5. Real estate franchises here mean nothing as they are not bound by strict rules and regulations as in the States or Canada. They are used purely as a marketing tool here.

6. Utilities and all auxiliary services and common infrastructure services are not readily available in all areas of the country. Even in some of the more affluent areas of Costa Rica it is common for power
and water to be "out" for several hours three or four times weekly. Phones in some areas may take literally years to be available. Building permits in some areas are being denied because the local
infrastructure cannot support the increased population. In some beach areas, the issuance of building permits may NEVER resume as the infrastructure simply cannot support the number of incoming
"gringos". DO NOT ASSUME ANYTHING IS THE SAME....TAKE NOTHING FOR GRANTED!

7. Approximately 40% of all gringos who settle in Costa Rica return "home" within five years... and well over 55% of gringos who settle on beach areas year round return in the same time frame.

8. Real estate fraud is common, even with title insurance. Assume that you will need an attorney to check on your first attorney! (Seriously...)

"OK, you have my attention. How can I tell if I am not overpaying for real estate?"

Sadly , it is impossible to know if you are getting a good price or not. The vast majority of real estate firms show their listings at the price that the owner asks. But the most important item to know about Costa Rican real estate is: Costa Rican real estate is a two tiered market: one price for Ticos (locals) and one price for Gringos (foreigners).

So...the question then becomes "how do I, a gringo, obtain Tico pricing?" .... OR... "Why should I believe you ? You're just trying to get more business for yourself?"

Let's address the last question first. My company operates in a very very small geographical area of Costa Rica... probably less than 5% of the country. We have more business than we can handle .
Our firm has several Tico "scouts" that talk to potential sellers of property in our area daily. We do not list every property we find for sale because 90% of the properties or homes we preview are overpriced. Remember, the old cliche of "almost everything in Costa Rica is for sale at the right price" really does have some validity. ( look at it this way: if someone offered you twice what your home was worth you would probably consider selling and buying another and pocketing the difference, right?). Because we see so many properties we are aware of what is a value and a fair price. Most people , including locals, are not.

If you take a look at the many advertised websites selling real estate in Costa Rica you will often find literally hundreds of homes and properties for sale AND will refer to an MLS that exists in Costa Rica.
TRANSLATION: this means that these listings are compiled from other websites and claimed as their own. There are virtually no exclusive listings in Costa Rica. These firms categorically have not
talked to all of these listings and are claiming them as their own. In point of fact, 99% of all real estate transactions in Costa Rica take place exactly as they have for decades...primarily through word of
mouth.

"SO...what next? How do I find my ideal property...and at a fair price?"

In my opinion, your initial assumption should be : " all real estate in Costa Rica is overpriced."
Then step two: spend time finding an area or town that you absolutely love and that "feels right". Spend time there. Talk to the local gringos about prices, utilities, infrastructure...all of the items on your "check
list". These people live there. They should be able to tell you the pros and cons about life there.

Now comes the difficult part... WHAT and WHERE and at WHAT PRICE?
There will most likely be areas within your personal "chosen area" which will be more expensive than others...Grecia, for example, has a specific area ( San Isidro de Grecia ) which has a preponderance of gringos and is at least priced 50% higher than surrounding properties? Why?...

who can say. In my opinion, it is not worth it. But the point here is :
make sure that you see ALL surrounding areas not just one or your decision making will be affected.
In many areas there are simply no "well known" real estate firms or firms that advertise on the internet OR who even speak English. ( keep in mind that "everyone" is a realtor in Costa Rica , or at the very least, knows someone that is selling property ). But it is imperative that in order to find the best pricing you need SOMEONE who knows the area and can at least ferret out good prices.

Several important points:
1. Ticos prefer to live on a main road. They do not all have cars and generally prefer to purchase something smaller and on a bus line. ( smaller properties, i.e., those under 5000 sq. meters, can only be legally purchased if on a main or principle road ).

2. The average Tico family makes perhaps between $500 and 700 per month. Most Ticos cannot afford the same properties that gringos can. This should be self explanatory except that most gringos do not
even consider it when thinking about purchasing.

3. 95% of gringos prefer properties that offer privacy, and yet still offer convenience and security...and of course , we all want a view AND a river! And certainly at least an acre or two. Be specific with your
WANT list. Make sure that you know exactly how much a new road will cost or new power lines to your dream property. It has to be factored in.
When my wife and I were looking for property and made the discovery that it was going to be nearly impossible to find an existing house to buy...we utilized the services of a local tour guide to help find property. We did not find out until later that we overpaid for our property by almost double. We are still not sure who pocketed the difference between the sales price and what the actual price SHOULD have
been...and at this point it does not matter except to serve as an illustration and a warning to others in the same position.

4. Do not be in a hurry to buy. Rent if possible and get to know the area.

5. Ultimately you will have to hire someone to help you find property. But... ( and this is crucial ) be sure to let this person know that you are aware that the seller will most likely be giving "your employee" a
commission and that you will expect to be able to verify the exact sales price. You may even tell this person that your attorney will need to verify the price. It is imperative that your employee know that you
know exactly how the system works . It will not ensure that games will not be played but it will help.

6. Talk to local gringos and ask for help. Seek out a local attorney or two and do the same. Talk to the local bank president. You will slowly get an idea of the local pricing structure. Unless you are fortunate enough to find a real estate firm in which you have total confidence...you definitely will need to utilize locals to be your "scouts". And it is crucial that you instruct them that the sellers NOT know that a gringo is interested in buying. ( if you use more than one "scout" you will quickly see the gap between gringo and Tico pricing and the disparity which is always here . And if you do not see it...then something is wrong with your scouts' findings. )

A few more observations.....
-if you are planning on living in a predominantly Gringo community or in a popular beach area...it will become even more difficult to find good pricing and value. Demand and prices have become nearly
stratospheric. It will take either luck or perseverance to obtain a true"value" near the ocean or in a more expensive gated community. The above is primarily for the purchase of raw land. The following
should be used as a rough guideline when purchasing land with an existing home:

Construction costs ( inc. architect fees, utilities, landscaping and all extras):
Central Valley: between $38 AND 42 per sq. foot.
Ocean or beach: between $48 and 60 per sq. foot
Gated or development areas: sky is the limit
You will be the only one to determine how much of a premium you are willing to pay. And remember in figuring replacement value, Ticos include ALL tiled area in their size estimates. You should not. ( for
example, a tiled outside porch area does not cost as much as an inside portion of the house...figure roughly a third as much ). If , when your search is complete, you end up with your "perfect" property... Do NOT FORGET YOUR CHECKLIST!. And lastly...make sure that you obtain the services of a good attorney ( and ensure that he or she is bilingual and that you have all documents translated ). Ask local gringos for referrals or other Tico professionals. And , if you are still worried about fraud or accuracy... hire another attorney to check on the work of the first. It may be well worth the extra $50 or so that it will cost.

For sure it is safer to buy and own property in Costa Rica than in other Central American countries. And the legal system offers a great foundation to property owners. Big or small problem, reality does not allow to wave away that fraud exists.

Here's a summary of what I found in the Nacion:

The somewhat alarming article states that the National Registry has it's hands tied in trying to protect real estate ownership rights. The institute can't control nor prevent fraud. Actually they don't have a system to prevent fraud as it does not take place within the Registry. This crime appears when a person is robbed illicitly of his/her property and presents a serious problem affecting the Registry. Since 2004 over 250 of these fraud reports have been filed.

How can a property illegally pass to another owner? In most fraudulent cases, a public notary, already deceived or part of the scam, modifies the registry data of a property by presenting false testimonies to modify a registered title. The property changes hands and the "new" owner can sell the property to a third party in good faith or, mortgage the property.

The National Registry claims that the real problem is the fraudulent notaries. The Registry only checks that paperwork is properly forwarded.

The National Direction of Notary Professionals is responsible for monitoring the 9,000 Notaries that work in Costa Rica however, they do not have the tools, the resources nor the logistical support to carry out this work.

This situation was the subject of an inter-institutional commission in which the Ministry of Justice, The National Direction of Notaries, the Costa Rican Institute of Notarial law, the college of lawyers, the College of Topographical engineers and the National Registry are seated.

The commission checks the "modus operandi" of various scams and measurements are taken to resolve the fraud problem. One of the actions taken is to check if registered property owners are among the living. Another one is that a property will be frozen when fraud is detected.

Taken measurements are not enough and if changes are dependent on politicians, fraud in real estate will be problem to deal with for quite some more years.

What Can You Do To Prevent a Real Estate Nightmare?

As a property owner you can do a simple title check online yourself at the National Registry website here.

Check this information regularly and consult your lawyer/notary whenever you notice a change in data.

When you are looking to buy a property, please take extra precautions dealing with following property characteristics (have property history thoroughly checked):

1. When the property is located in zones with high appreciation in real estate like Escazú, Curridabat, Santa Ana and coastal areas in Guanacaste.
2. Properties completely free of liens.
3. Properties with a very long clean history; p.e. belonging to the same person for decades
4. When a property looks abandoned or not taken care of. These properties would be "attractive" for fraud as the owners are not checking their property situation.

When you are victim of a scam, find a lawyer with experience in fraud cases. To file a lawsuit correctly is essential.