The Professional Development Institute presents:

Free Continuing Education on 1031 Exchanges Made Simple (3 Free Credit Hours)

Learn all of the fundamentals and guidelines in 1031 Tax Deferred Exchange; Time lines, restrictions, and how to manage your clients engaged in a 1031 transaction.

Taught by Chris Breck of

Date: Tuesday August 5^th, 2008

Time: 10:00AM - 1:00PM

Location: Cummings & Co. Realtors - 2929 O'Donnell Street/ Canton, MD 21224 

Cost: FREE courtesy of Advantage Title/ First Home Mortgage/ Cummings & Co. Realtors

Giveaways: $50 Gift card to Coburn's Tavern

To sign up please call or email Chris Breck at 443-695-2090 or cbreck@advantitle.com by July 31st.

The Prince George's County Office of Finance has issued a notice increasing the State Recordation Tax Rate from $2.20 per $500 to $2.50 per $500 on documents executed after July 5^th 2008.  Documents executed prior to July 5^th will be accepted at the previous rate of $2.20 per $500 until August 31^st 2008. 

Beginning on September 1^st 2008 all documents will be taxed at the new rate of $2.50 per $500.

*Make sure you and any borrower debating on closing before or after their 4^th of July vacation is aware of the cost difference.

Also, effective July 1^st 2008 all documents claiming a principle residence exemption must have a copy of a valid driver's license submitted with document, as proof of residency.

*Make sure you and your title company have a copy of all borrowers drivers license prior to settlement to verify their address.  If the address on the license does not match the property address, you borrower will not receive the principle residence exemption.

Treasury Management has attempted to implement this in the past but has been met with strong opposition. Let us hope they withdraw this proposal as they did last year. I will update you as to any other changes.

Please be advised that recent changes to the top margin State income tax rate for individuals have the effect of increasing the withholding required for sales of property by nonresident individuals.  

Effective July 1st 2008, withholding for nonresident individuals has been increased from 6.75% to 7.5% in the state of Maryland. (The rate remains at 8.25% for nonresident entity withholdings.)  

Deeds dated and fully acknowledged prior to July 1st but recorded after July 1st will be subject to the current 6.75% rate.

So if you have a listing with a seller that is not a resident of the state of Maryland, make sure they get to settlement prior to July 1st!!! Advantage Title is experienced in nonresident sellers and will guarantee a timely closing.

Call me if you need help or have any questions: 800-609-8707.  

I recently attended a Maryland Association of Mortgage Brokers Town Hall Meeting to review new laws affecting those of us in the mortgage business.  These three bills are considered Emergency Legislation and will take effect in Maryland very soon.  

SB216 alters the recordation requirements for Mortgages/ Deeds of Trust to include the loan originators license number.  Going forward this will allow the source of loans in foreclosure to be traced back to the individual loan originator. Those loan originators that are are the source of to many "bad loans" will be open to investigation.  

For more information on Senate Bill 216 visit: http://mlis.state.md.us/2008rs/fnotes/bil_0006/sb0216.pdf  

SB217 pertains to mortgage fraud and the new penalties for loan originators and borrowers.  This includes the maximum penalty of a person involved in multiple incidents of mortgage fraud to a $100,000 fine and 20 years imprisonment.  

For more information on Senate Bill 217 visit: http://mlis.state.md.us/2008rs/fnotes/bil_0007/sb0217.pdf  

SB218 alters several provisions protecting homeowners facing foreclosure. The bill prohibits foreclosure consultants from engaging in rescue transactions.  

For more information on Senate Bill 218 visit: http://mlis.state.md.us/2008rs/fnotes/bil_0008/sb0218.pdf

Please contact me if you have any questions.

Christopher Breck

Senate makes headway on housing fix

I know, I know.. another boring post about politics! I am sorry, this stuff intrigues me:

Last Thursday the Senate began debate on a $15 billion bipartisan housing relief package. Democrat and Republican lawmakers have been facing "election year pressure" to respond to the foreclosure crisis. The package could get a final vote this week.

There is a need for haste as housing experts agree the bill must be signed into law by July to prevent a substantial number of foreclosures in 2008.  1.5 Million  subprime ARMs will reset this year with May and July being the peak months. Borrowers that can not handle the payment increase could see the foreclosure process start as early as September and lose their home by the end of 2008.

To help move the bill along, Democrats have removed the provision that would allow judges to adjust the terms of loans on principle residences for borrowers facing bankruptcy.  Last month Republicans blocked a bill with this bankruptcy prevision, contending the additional risk taken on by lenders would force them to increase mortgage costs for everyone. ( http://activerain.com/blogsview/404910/Housing-Relief-Bill-HR ) This is a small victory for opponents such as the Mortgage Bankers Association that refer to this provision as "the cram down".  However, there has been mention of yet another compromise that would allow judges to alter the interest rate but not the principle amount due.

So what is in the new housing relief package?

• FHA Modernization

1. The bill would raise FHA loan limits for 95% of an area's median home price to 110%.
2. The new FHA loan limit (temporarily at $729,950 until December 31st) would be permanently raised from the old $417,000 to $550,000.
3. Increase down payment requirements from 3% to 3.5%

• $10 billion in tax-free bonds to help troubled borrowers, proceeds of which would be used to subsidized mortgage refinancing subprime borrowers. The current law only helps first-time homebuyers.

• $7,000 tax credit for homebuyers of foreclosed properties.

• Property tax deductions of $1,000 for couples and $500 for singles in addition to the standard deduction on their federal tax return.  The current law allows only homeowners that itemize their deductions to deduct their property tax.

• $4 Billion in grants to state and local governments to buy and rehabilitate foreclosed homes.

• $100 Million to fund counseling for homeowners at risk of foreclosure.

• $4,000 per violation for lenders that do not properly provide truth-in-lending disclosures to borrowers 7 days prior to closing.

• Protection for veterans. For soldiers returning from service, the bill would lengthen the time a lender must wait before starting the foreclosure process from 3 to 9 months. Also, one year relief from any increase in mortgage interest rates from an Adjustable Rate Mortgage.

• $6 Billion tax benefit for home builders. Extending the time builders are allowed to write off net operating losses from 2 to 4 years. Many say this is too generous to homebuilders, but this is also projected to help save thousands of jobs.

For more information on the $15 billion mortgage fix please visit:

http://realtytimes.com/rtpages/20080407_washingtonreport.htm

http://www.inmannews.com/news/2008/04/4/foreclosure-relief-bill-debated-senate-floor

Bush Vetoes Changes to FHA Guidelines, April 1 2008

Despite the potential relief for thousands of home owners, President Bush announced yesterday that they will not make changes to the current FHA guidelines.  He sited many reasons including an "over correction" of the Housing Market that will create another build and bust of house values. Market analysts believe this late change will destroy consumer optimism and send rates on a roller coaster ride for the next few months. 

FED Chairman Ben Bernanke was quoted as saying "April Fools!"

Ha Ha! I am sure that paragraph made a few of your stomachs drop. On a large scale that would make a pretty good prank. Here is a list of my four favorite pranks of all time:

The Left-Handed Whopper

In 1998 Burger King published a full page advertisement in USA Today announcing the introduction of a new item to their menu: a "Left-Handed Whopper" specially designed for the 32 million left-handed Americans. According to the advertisement, the new whopper included the same ingredients as the original Whopper (lettuce, tomato, hamburger patty, etc.), but all the condiments were rotated 180 degrees for the benefit of their left-handed customers. The following day Burger King issued a follow-up release revealing that although the Left-Handed Whopper was a hoax, thousands of customers had gone into restaurants to request the new sandwich. Simultaneously, according to the press release, "many others requested their own 'right handed' version."

The Taco Liberty Bell

In 1996 the Taco Bell Corporation announced that it had bought the Liberty Bell and was renaming it the Taco Liberty Bell. Hundreds of outraged citizens called the National Historic Park in Philadelphia where the bell was housed to express their anger. Their nerves were only calmed when Taco Bell revealed, a few hours later, that it was all a practical joke. The best line of the day came when White House press secretary Mike McCurry was asked about the sale. Thinking on his feet, he responded that the Lincoln Memorial had also been sold. It would now be known as the Ford Lincoln Mercury Memorial.

The Incredible Sidd Finch

In its April 1985 edition, Sports Illustratedpublished a story about a new rookie pitcher who planned to play for the Mets. His name was Sidd Finch, and he could reportedly throw a baseball at 168 mph with pinpoint accuracy. This was 65 mph faster than the previous record. Surprisingly, Sidd Finch had never even played the game before. Instead, he had mastered the "art of the pitch" in a Tibetan monastery under the guidance of the "great poet-saint Lama Milaraspa." Mets fans celebrated their teams' amazing luck at having found such a gifted player, and Sports Illustratedwas flooded with requests for more information. But in reality this legendary player only existed in the imagination of the author of the article, George Plimpton.

The Swiss Spaghetti Harvest

 In 1957 the respected BBC news show Panorama announced that thanks to a very mild winter and the virtual elimination of the dreaded spaghetti weevil, Swiss farmers were enjoying a bumper spaghetti crop. It accompanied this announcement with footage of Swiss peasants pulling strands of spaghetti down from trees. Huge numbers of viewers were taken in. Many called the BBC wanting to know how they could grow their own spaghetti tree. To this the BBC diplomatically replied that they should "place a sprig of spaghetti in a tin of tomato sauce and hope for the best."

Here is the Museum of Hoaxes Top 100: http://www.museumofhoaxes.com/hoax/aprilfool/P0/

My Personal Best April Fools Prank

In college, late on March 31st/ early April 1st my roommates and I decided to play a joke on our neighbors.  They were 3 girls that also attended the university. We walked around the neighborhood collecting every lawn ornament we could find. We filled the girl's tiny front yard with fake geese, squirrels, flamingos, frogs, turtles, gnomes. We promptly hung signs throughout the neighborhood that read "Free Petting Zoo" and listed the girls address. The girls awoke to find nearly a hundred plastic creatures had taken over their small 15ft X 15ft yard. Neighbors stopped as they drove by to see this magnificent site and take a few pictures. Once we had returned the animals later that afternoon we all shared a good laugh as we explained to many where their lawn ornaments had been.

Please share with me your best April Fools prank.

Did you know you can write-off your cable bill?

Do you know a trick that can allow you to write-off 100% of the gifts you give your clients?

Does your spouse need new eye glasses (because you can write that off too!!)?

It is tax time again as the IRS 2008 deadline is quickly approaching. 2008 Brings many new tax laws that will effect you! Before you file your taxes join us for a Free Tax Seminar & Luncheon for Realtors. With our special guest Linda de Marlor, President of Tax Masters, Inc.

Contact me to reserve your seat today: Chris Breck 443-695-2090/ cbreck@advantitle.com

HUD released a new RESPA reform proposal which includes a standardized Good Faith Estimate.

Technically this is an old reform proposal as they attempted the introduction of the 3-page GFE in 2002, but where met with heavy resistance.  They estimate this could save borrowers an average of $668 at settlement or $8.35 billion per year.

The new GFE would include: the interest rate, monthly payment, loan terms, origination charges, settlement charges, and disclosure of any yield spread premiums. Here is a sample of the new GFE:

http://www.hud.gov/offices/hsg/sfh/res/200803/5180HUD1.pdf

HUD believes the new GFE would make it easier for borrowers to shop around. The savings that borrowers will receive will come at a cost of $5.88 billion per year to loan originators and $1.79 billion per year to title companies. Also, Loan originators and settlement service providers will have to pay $570 million to become compliant with the rule changes up front, and expect reoccurring compliance costs of $1.2 billion per year. This includes software, training, and legal advice.

I believe that all consumers have the right to shop for the best possible deal. Some lenders, brokers, and title companies are indeed overpriced. But, the educated consumer already knows how to shop around and we all know that cheaper is not always better. Many loan originators and title companies (such as Advantage Title) compete based on service and not on price. Putting loans in the hands of discount lenders and settlement service providers could make the problem worse. From a title companies perspective, would you rather have a $50 notary present at settlement that has no loan closing experience, or a $150 licensed settlement agent that brings with them knowledge and expertise. Sure, the borrower saved $100, but tell me how that is supposed to help borrowers better understand their loan...

The bottom line is the current mortgage mess was not caused nor will be solved by any piece of paper.  It was caused by a general lack of common sense, blindly optimistic expectations of the market, and over ambitious lenders and borrowers.

What do you think of HUD's RESPA reform? Do you think making it easier to shop around will solve anything?

1031 Exchange - Sail your Second Home in a Safe Harbor

Effective March 10^th the IRS is now allowing Second Homes to qualify for a Section 1031 tax-free exchange; even if you take pleasure in personal use of the property.  The IRS is clear in that buying a second home in the hopes that it will one day appreciate in value does not qualify the property as an investment. However, many use their second homes as an investment property as they rent them out a majority of the year.

To be sure a second home will pass the 1031 Exchange Tax-Free Test follow these rules:

1) Personal use can not exceed 14 days in a 12-month period.

2) Rent or attempt to rent the property at fair market value.

3) Do not claim interest deductions as home mortgage interest.

4) Claim tax deductions for maintenance expenses and depreciation.

5) Don't be a fool! Talk to a real estate tax specialist first!

If you would like to learn more about 1031 Tax Free Exchanges fell free to email me or sign up for one of Advantage Title's free classes (good for 3 continuing education classes for Realtors in Maryland) cbreck@advantitle.com.

Here is a letter sent out Monday March 3 by Scott Syphax, President & CEO of Nehemiah Corporation of America:

Dear Colleague,

I am pleased to announce that Nehemiah was victorious in its litigation against HUD!

Judge Lawrence K. Karlton of the United States District Court for the Eastern District of California upheld Nehemiah's motion for summary judgment. The Court Clerk's Office is directed to enter judgment and close the case.

To be clear, the U.S. Department of Housing and Urban Development's (HUD) rule to ban private downpayment assistance as proposed in the "Standards for Mortgagor's Investment in Mortgaged Property" regulation published October 1, 2007, is permanently set aside.

We are thrilled with the Court's decision to support low-to-moderate income families across the country by ruling against HUD's attempt to ban private downpayment assistance. This is a major and conclusive judgment, leaving no uncertainty that downpayment assistance is a life line to the families that Nehemiah serves. It is heartening to see that the Court's arguments echo our sentiments and concerns. This decision preserves access and supports the use of sensible and reasonable approaches to homeownership for millions of working class families. It is a privilege to continue providing a helping hand to America's underserved families by building both safer communities and financial strength through homeownership. As we have said before, we look forward to working with HUD to support deserving families across the country.

Since May 2007, Nehemiah has led the fight against this controversial rule. Since it was announced, there has been confusion throughout the industry regarding the potential impact of this rule. As the DPA industry leader, Nehemiah took seriously our responsibility to provide you with timely, accurate and responsible information about the events and activities surrounding this issue.

We took action by educating influential people and organizations regarding the truth about downpayment assistance. We asked for our homebuyers and industry partners to help us by voicing their support and the response has been overwhelming. I want to thank each of you for your letters, phone calls and spoken support of Nehemiah throughout this unfortunate situation. Your support has helped raise awareness in Washington D.C. which has increased the dialogue regarding DPA regulation though legislation. We hope to see some positive congressional developments aimed preserving the option of private downpayment assistance for homebuyers. Currently, the Senate is contemplating FHA Reform legislation that will determine the fate of private downpayment assistance programs. Please help us one more time by contacting your Senators to convey your support for downpayment assistance; a very important vote is expected in the next few weeks.

As a reminder, we provide a section on our website called Regulatory Updates where we detail significant issues relating to DPA regulatory and legislative events. Check back for new postings or sign-up to have accurate and timely information delivered to you.

On behalf of the entire Nehemiah team, we look forward to providing you with the same unmatched quality you have come to expect from us for years to come.

Sincerely,

Scott Syphax
President & CEO
Nehemiah Corporation of America