Happy Wednesday everyone! I hope you have enjoyed your day and ready for the downhill to the weekend! This is a very good article on MarketWatch.com that I had to share with my readers...
WASHINGTON (MarketWatch) — Question: My elderly father is interested in co-signing the first loan for my daughter and her husband but is nervous about actually lending them any money. My daughter and her husband are stably employed and plan to make all the payments. The homes they are looking at are in the $200,000 range. Their combined annual income is around $85,000, but with a bunch of student loans on the negative side. If my father does co-sign, then passes away, how does that affect the loan relationship with the bank? —D.A., Littleton, Colo.
Answer: As a co-signer, your dad is legally responsible if your daughter and son-in-law fail to make the payments. As the other co-signers, she and her husband would be responsible for the mortgage even if he should pass. His death would neither wipe out the loan nor cause the lender to call the mortgage due and payable. So they would go on making the payments as if nothing happened.
But here’s a suggestion for Pops: He should consider purchasing term life insurance — or perhaps mortgage life insurance — that would pay off the loan in case of his demise. Since he’s up there in years, this idea might be too expensive. But if not, it could be a great way to protect the kids when he is no longer around to act as their backstop.
If he chooses to use a life company directly, the amount of the policy should coincide with the loan amount, the term should be the same as the mortgage’s and the policy’s value should decline as the outstanding principal declines.
If he opts for mortgage insurance through the lender instead of life insurance from an insurance agent, he needs to make absolutely certain that the loan will be paid in full if any one of the co-borrowers should pass. If all must die for the coverage to kick in, it is not very useful in this situation.
Question: Do you know if the new real-estate tax will apply only to residential transactions or will it also apply to commercial real estate as well? —T.B., Wayne, Pa.
Answer: You are referring to the new so-called Medicare tax Congress adopted as part of the health-care legislation. And yes, the 3.8% levy that takes effect in 2013 applies to any capital gain, residential or commercial. But it will not be imposed on all real-estate deals, so it is not a real-estate tax per se.
The tax will apply to individuals with adjusted gross incomes above $200,000 and couples filing jointly with more than a $250,000 AGI. If you and your spouse choose to file separately, the AGI threshold is $125,000 for each of you.
The Medicare tax, so named because the proceeds are to be dedicated to the Medicare Trust Fund, will be on interest dividends, rents less expenses, and capital gains less capital losses. But the key thing to remember is that the tax is based on whichever is less, the gain you made on the sale of the house or the amount your income exceeds the AGI threshold.
Since the tax is based on a formula, it’s difficult to predict exactly how it will apply to any particular transaction unless you know the taxpayer’s entire income picture for a particular year. So I suggest you consult with a tax professional.
But if a commercial property has a gain, part of it could be subject to the tax. If a principal residence had a capital gains above the $250,000/$500,000 exclusion, the taxable portion could be subject to the tax. Similarly, if you have capital gains on stock sales, or the sale of valuable art or anything else that’s a capital asset, then you could be subject to the tax.
Question: Nice article on the new consumer protection bureau ( Realty Q&A, Dec. 16, 2011 ). The one thing I failed to notice is an email address or telephone number for contact. —R.G.
Answer: We included the Consumer Financial Protection Bureau’s website, at cfpb.gov in that column but didn’t include email and phones. Here’s the contact page for the CFPB, which includes an email form, phone numbers for inquiries, complaints and whistleblowers. See the CFPB contact page.
Also, consumers with a gripe about a lender or the company which services their mortgages can contact the Consumer Financial Protection Bureau by mail at P.O. Box 4503, Iowa City IA 52244; by fax at 855-237-2392, or by telephone at 855-411-2372.
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read more on Marketwatch.com http://www.marketwatch.com/story/co-signing-a-mortgage-for-a-grandchild-2012-01-06
Needless to say, I have accepted the honor of sitting the Chair for the Education Committee. I look forward to bringing my passion for technology and Real Estate education to my fellow REALTORS! We are looking forward to having the trainers from the 
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