Ilyce's Blog

You get divorced. You refinance your home. Your ex-spouse gives you a quit claim deed. End of story? Maybe Not.

Ilyce Glink (Think Glink Publishing) — Thu, 05 Nov 2009 16:04:09 -0600

Q: In 1995, the court dissolved our marriage. The dissolution of marriage stated our house would be sold as soon as possible, and both parties would share in cost to sell and profit equally. In October of that year, my ex-husband signed a quit claim deed removing his name from the mortgage to allow me to refinance. No money was exchanged between us.

After 13 years and $69,000 of repairs and improvements I finally sold the house. My ex husband is now laying claim to half of the amount I would now get on the basis of today’s selling price and the amount owed on the mortgage at the time I refinanced 13 years ago.

Here’s what I don’t understand: Does the quit claim deed trump the dissolution decree? If the dissolution is the winner, then, in my mind, the answer would be half of the difference between the value of the house at the time of the quit claim deed less the amount I spent making repairs and improvements to the home.

I have a lawyer and he is stumped and tells me to settle. We went to mediation and tried to resolve it, but my ex-husband wanted too much money. We’re due in court soon. Who is right?

A: I can see why your divorce attorney might be a bit perplexed. In theory, when you refinanced the home, you should have settled up with your ex-husband. That would have been the easy time to do it.

Divorce settlements can be difficult in the best of times, but determining values and apportioning expenses can be a bit more complicated. Let’s start at the time of the refinancing. If you had settled at that time, your ex-husband would have been entitled to half of the value of the home.

Let’s assume the value of your home when you refinanced of about $80,000. But you would have been entitled to deduct from that amount his half of the costs that he would have incurred had you and he sold the home. These expenses would have included real estate broker fees, title company and settlement attorney expenses along with any other costs customary in your area. If you were to determine that the amount you owed him at that time was almost nothing, let’s say, $2,500, you have a starting point.

To continue reading, logon to ThinkGlink.com.

Questions and Answers: $8000 First Time Home Buyer Tax Credit Extended and Expanded

Ilyce Glink (Think Glink Publishing) — Thu, 05 Nov 2009 15:41:45 -0600

With the extension and expansion of the $8000 first time home buyer tax credit, lots of our readers are happy. But some are rather angry. Some of the people that would have benefited from the expansion of the tax credit have purchased homes and won't get the benefit of the tax credit. Others want clarification to see if they will qualify for the "new and improved" home buyer tax credit.

Since Senate negotiators announced they had reached an agreement on extending and slightly expanding the $8,000 first-time home buyer tax credit, my inbox has been filling up with questions about the credit and who will qualify for it. I’m also getting lots of comments from people irritated that they purchased this past year and would have qualified but now get nothing.

Q: Love your advice column. When is the compromise bill going up for vote? We could sure use the $6500 credit.

A: The vote happened this week. Senator Johnny Isakson (R-Ga.) was able to attach his legislation as an amendment to S.1699, the Unemployment Compensation Extension Act of 2009.

Since the current $8000 first-time home buyer tax credit expires on November 30, 2009, real estate industry professionals felt it would be helpful to know the extension and expansion is in place before then. If people believe the tax credit is coming, but don’t know when, they might push back their closing, or decide not to bother shopping for a home at all. At least that’s what real estate agents think.

Q: When my husband and I married in 2007, he owned a home in which I lived, but my name was never put on the deed. In July 2009, a mobile home was purchased and the title is in my name. Do I still qualify as a "first time home owner"? I have not owned a home in the last 3 years.

A: Do you own the land on which the mobile home sits? Is it permanently attached? Is it titled as real estate or a vehicle. The answer to your question depends in part on how you answer my questions.

As far as buying a home because your home isn’t in your name, the answer is no. The IRS means test treats a husband and wife as one unit, even if one spouse has never owned property.

To read the complete article, logon to ThinkGlink.com.

Low Appraisal Caused By Declining Home Values Results In Change To Loan Refinance Terms

Ilyce Glink (Think Glink Publishing) — Thu, 05 Nov 2009 15:30:33 -0600

Q: I applied for a refinance with my current lender. I did my application over the phone and was then told the rates and options. I was told I would most likely not need an appraisal, but if I did need one, the lender would pay for it.

I locked in the rate and terms and paid the $395 application fee by credit card. Three weeks later I was told the lender did want an appraisal - but not to worry as I would not be responsible for payment of the appraisal fee.

My home appraised $50,000 less than my mortgage balance and so the rates and terms changed drastically. I was sent an email that my initial terms and rate could not be given to me and if I didn’t take the new terms and fees, I would lose my $395 application fee.

This does not sound legal or ethical to me since the terms I was offered after the appraisal were different than what I was quoted. Am I stuck with the higher rates and points and will I lose my $395 if I don’t go through with the refinance?

A: I don't have good news for you. You told the lender on the phone what your property was worth. The lender priced the loan based on that information. Unfortunately, your estimate of what your property was worth was $50,000 short. Because you don't have the home equity that the lender requires, you cannot get the loan you were hoping to get.

The lender isn't trying to scam you. It's that the government is now backing about 90 percent of loans out there and Uncle Sam is extremely strict about what kind of home equity you have during a refinance.

In fact, the U.S. government is not only backing about 90 percent of the home loans being done right now, but it has been purchasing more than $1 trillion of U.S. housing-backed securities. If the government wasn’t buying these securities, mortgage interest rates would be far higher than they are.

If you feel that the appraiser was in error in determining the value of your property, you might want to research what homes have recently sold in your area. If homes are selling for prices that approach what you thought was the value of your home, you might be able to go back to the lender

To read the complete article, logon to ThinkGlink.com.

What If Unpaid Property Taxes Are Found One Year After The Land Contract Is Signed?

Ilyce Glink (Think Glink Publishing) — Thu, 05 Nov 2009 15:14:26 -0600

Land contract -- also known as installment contracts for deed -- are complicated documents. If you are not careful, you could end up in a mess. Some issues that can lead to problems in a land contract are title issues, including unpaid real estate and property taxes. But unpaid taxes could be the lesser of some of the title problems you can encounter using a land contract. This reader found unpaid property taxes from years earlier about a year after entering into the land contract.

Q: We purchased our property in 2008 with a land contract. The contract states that the property that is sold to us be “unencumbered.”

Now we’ve discovered that there is a lien for unpaid county property taxes from 2001. The title search did not find the lien. We’d like to know who is responsible for paying the tax bill. And, is the contract void since the property is not unencumbered?

A: When you buy a property under a land contract, you are buying the home over time. You make your payments and when you have completed making all of the payments, the seller transfers legal title to the home to you. If you worked with a real estate attorney to help you through the land contract purchase process, the attorney would have recommended that purchase (or receive from the seller) a title insurance policy for a contract purchase of a home.

If you bought an owner’s title insurance policy, then the title insurance company would pay the tax and make you whole in this situation because the title company didn’t find that the taxes were unpaid.

If you didn't buy an owner’s policy, you would likely owe the tax but could sue the seller for failure to give you unencumbered title. In any event, it’s unlikely that the land contract to purchase the property would be void, but rather that the seller breached his or her obligation to give you unencumbered title to the property. If you are still making payments to the seller under the land contract, you may be entitled to deduct from those payments an amount necessary to pay the amount owed for taxes.

To read the complete article, or for more information an property taxes and land contracts, logon to ThinkGlink.com.

Short Sale Process Problems Arise When Contractor Liens Home

Ilyce Glink (Think Glink Publishing) — Thu, 05 Nov 2009 14:53:07 -0600

Short sales, foreclosures and other purchases of real estate can always lead to problems. One risk in buying a home in foreclosure or from a seller in a short sale is that the seller or the bank owner had work done on the property and the contractor never gets paid. The contractor, in this case a painter, then files a contractor lien on the home and the subsequent buyer may get stuck with the bill.

Q: I purchased a house that was a short sale at the end of August and have since received a claim of lien letter from a painter. The builder must not have paid the painter. Am I responsible for the debt owe by the builder?

A: You may be responsible for the lien because it wasn't settled at the closing and paid out of the closing proceeds. This is one of the problems with doing a short sale as opposed to a foreclosure where all liens are usually wiped out.

In many states, buyers purchase title insurance to guard against liens and other title issues that may surface after the closing. The title company in turn protects itself by obtaining a statement from the seller of the home representing that all work performed on the home during the previous months has been paid in full. Once it has the statement, the title company can then issues an owner’s title insurance policy to the buyer covering the buyer for any liens that could pop up once the sale has gone through.

Did you buy an owner’s title insurance policy for the property or did you just buy a lender’s title insurance policy? And if you did obtain title insurance, does the title insurance policy include coverage over mechanics liens?

If so the title company should defend you from the lien or pay the lien holder off to remove it from your title.

To read the complete article, logon to ThinkGlink.com.

Thinking Of Becoming A Real Estate Agent In A Down Real Estate Market?

Ilyce Glink (Think Glink Publishing) — Thu, 05 Nov 2009 10:26:25 -0600

How do you pursue a career in real estate? Where should you start your search when looking to become a real estate agent? A reader wants some job advice in this area.

Q: I graduated with an associated degree in real estate, but I haven't taken the big test, yet. I would love to work with a broker or a salesperson and see what it’s like to work in a residential brokerage company. That would be the best experience. How can I make that happen?

A: You do not need a real estate license to do some jobs in a real estate office. For instance, you could be a receptionist, work as part of the staff that helps get paperwork and documents ready for closing, or be an assistant to a top-selling real estate agent with limited ability to deal with buyers and sellers and probably without showing properties.

But having your salesperson's license will be a huge asset because it will tell everyone that you’re serious about pursuing a career in real estate. It will also allow you to do things like show property (which you typically cannot do if you don't have a salesperson's license) which will make you more valuable to a top agent.

The big problem is that times are tough for real estate agents, and many firms have cut the number of people who were doing jobs like these. They simply don't have enough business to pay for them.

You should make an appointment to talk to the hiring manager at some of the bigger firms in your area and see if there are any openings that will at least help you get your foot in the door, and hopefully pay you while you're taking the salesperson's license.

Even if you can't get a paying job, you should offer to intern with an agent for free, just for the experience.

For more tips and advice on real estate, logon to ThinkGlink.com.

Why Are Lenders Slow To Provide Loan Modifications?

Ilyce Glink (Think Glink Publishing) — Thu, 05 Nov 2009 09:53:51 -0600

Millions of Americans have applied with their banks to obtain a loan modification. They desperately need loan modification help. The loan modification process is taking an extremely long time. Now homeowners want to know how they can get a loan modification -- whether under the Obama Making Home Affordable Plan or not -- and why the lenders are slow to provide loan modifications. A new study is revealing some answers.

Mortgage servicers –- including many large banks – have found it cheaper to foreclose on homeowners than to offer loan modifications that would benefit homeowners and investors, according to “Why Servicers Foreclose, When They Should Modify, and Other Puzzles of Servicer Behavior,” a new report from the National Consumer Law Center (NCLC).

And as every good investor knows, net profit isn’t just about the rate of return. It’s also about how well you hold down the expenses associated with that investment.

Most homeowners assume that foreclosure is a money-losing proposition for lenders and investors. There’s a lot of talk that with a short sale, a lender might only lose 10 to 20 percent of an investment. But with foreclosures, lenders might settle for 20 to 30 cents on the dollar or more.

These numbers would seem to point mortgage servicers toward doing more loan modifications. But as the recent RealtyTrac foreclosures number showed, the third quarter had the highest number of foreclosures on record.

“The country is in the midst of a foreclosure crisis of unprecedented proportions. Millions of families have lost their homes and millions more are expected to lose their homes in the next few years,” noted Diane E. Thompson, an attorney with NCLC and author of the study.

To read the complete article, logon to ThinkGlink.com.

$8,000 First Time Home Buyer Tax Credit: Trying to Buy and Inherit a Home At The Same Time

Ilyce Glink (Think Glink Publishing) — Thu, 05 Nov 2009 09:40:04 -0600

Q: The closing on my house will occur at the end of October or the beginning of November. I should be eligible for the $8,000 first-time home buyer tax credit.

But here’s the wrinkle: I will be inheriting a house in November when my father's estate comes out of probate. Will that make me ine

ligible for the $8,000 first-time home buyer tax credit? I plan to live in the house that I am purchasing.

A: The rules relating to the $8,000 first-time home buyer tax credit require you to be a first-time home buyer by the date of the closing. If you close on your home at the end of October and at that time qualify for the $8,000 first time home buyer tax credit, you shouldn’t have to worry about whether you’re inheriting a house the following month. You need only comply with the other requirements of the tax credit.

To qualify for the $8,000 first-time home buyer tax credit, you must not have owned a home during the three years prior to the closing. You must live in the home you purchase for three years and must use it as your primary residence.

Your modified adjusted gross income may not exceed $75,000 for single people and $150,000 for married couples. Above those numbers, the tax credit phases out. (Your adjusted gross income is basically what you would see at the bottom of the first page of your federal income tax return.)

To get the full benefit of the $8,000 first-time home buyer tax credit, the sales price of the home must be at least $80,000. The way the tax credit works is that you get a credit of 10 percent on the purchase price of the home up to a maximum of $8,000.

Read the full article at ThinkGlink.com, or find more advice and tips on home buying and inheritance.

$8,000 First Time Home Buyer Tax Credit: Buying A Partially Inherited Home

Ilyce Glink (Think Glink Publishing) — Thu, 05 Nov 2009 09:24:34 -0600

The first time home buyer has restrictions on income. The first time home buyer tax credit requires you to live in the home for 3 years. Also, you can't have owned a home for the last 36 months. In addition, the first time home buyer tax credit has restrictions on who can sell you the home. If you are buying a home from a close relative, you won't qualify for the tax credit. But what if you inherit the home?

Q: My sisters and I recently inherited our mother's house. The sister that is executor of the will also wants to buy the house. The house has to be taken out of Mom's name before it can be sold, and the bank wants to put it in my sister’s name. That way she would refinance the house to pay us off.

She would like to take advantage of the $8,000 first-time home buyer tax credit, because she hasn't bought a house yet. But if she refinances instead of buying the home, she can’t.

Is there a way for her to get a loan and then buy the house using the 1st time home buyer tax credit? Thanks for your time.

A: There are some IRS rules regarding the “purchase” of a home that is being inherited from an estate. But your question raised other interesting tax issues including your question on the $8,000 first time home buyer tax credit, so I tapped the knowledge of Bill Nemeth, an enrolled agent based in Atlanta.

Nemeth started by noting that your sister (who is the executor of your mom’s estate) is a part-owner of the home, since she inherited a portion of the home along with her siblings.

“The traditional way to view the inheritance of her mom’s house is to call it investment property, as there is no intent to have anyone of the sisters inheriting the home use it as her principal residence,” Nemeth explained.

When real estate is inherited, the cost “basis” in the property becomes the “fair market value on the date of the owner’s death or at any time within 6 months after the owner’s death. “The executor gets to pick the better date,” Nemeth added.

To continue reading the article, logon to ThinkGlink.com.

Worried About Contractor's Liens and Foreclosures?

Ilyce Glink (Think Glink Publishing) — Thu, 05 Nov 2009 09:03:57 -0600

When you buy a foreclosure, check to see if there are any contractor's liens against the property that have survived the foreclosure. Often, the lender will wipe out all other subordinate liens, including contractor's liens, in the foreclosure process. But in some cases, those liens may still exist and be valid. If you suspect there might be other liens that will be filed against the property even after you close, be sure to purchase a title insurance policy with coverage over contractor's liens. You will want to have this insurance in place to have a title company cover the costs of litigation and the costs to remove the contractor's liens with the purchase of the title insurance even if you bought the property after a foreclosure.

Q: I am in the process of buying a new home. It’s a foreclosure. The lender foreclosed on the developer.

In doing my due diligence on the purchase, I noticed some contractors were not paid. Will these contractors be able to put liens on the house after I close on it?

A: The short answer is yes. Most contractors can put a lien on a home -- a contractor's lien -- when they have been hired to perform work on a home and they are not paid. In some states, contractors have a certain amount of time to put a lien on a home. Some states even require contractors to give the owner notice of the lien before the lien can be effective. Each state has its own contractor’s liens statutes and they can be quite complex.

Now that you know that contractors can lien your property, you also need to know a bit more about liens and the lien holder’s rights.

To read the full article, logon to ThinkGlink.com.

Buying A Home Seven Years After A Chapter 7 Bankruptcy? It May Still Affect Your Credit

Ilyce Glink (Think Glink Publishing) — Wed, 04 Nov 2009 15:49:43 -0600

Q: I am buying a house as a co-borrower. I declared Chapter 7 bankruptcy more than eight years ago. I have provided my lender with a copy of the petition and the discharge along with 180 billion other documents he requested.

It has been more than seven years after the bankruptcy filing, do lenders still have the right to ask for the copy of my bankruptcy paperwork?

A: Probably. First, a bankruptcy filing can stay on your credit history for up to 10 years. So at eight years, it probably hasn’t fallen off of your credit history, which is why your lender asked about it.

Meanwhile, just because you declared bankruptcy more than eight years ago doesn’t mean the bankruptcy was finalized within a year of the filing. You (or other borrowers in your situation) may have had an active bankruptcy for a year or more after the initial filing.

In some bankruptcy filings, you might have still had obligations under the bankruptcy that were resolved or finalized at a later time. If you agreed to pay off a debt at a later time, the current lenders want to know what those debts were and whether they were settled at a later date.

If everything was settled and discharged seven years or more ago, you will find that as time goes by less and less lenders will need to review the documentation from your bankruptcy.

As you probably know, your credit history and credit score were hurt significantly by your bankruptcy filing. If you have paid your bills on time and have managed your credit wisely since then, you should have seen your credit score rise significantly.

To read the complete article, logon to ThinkGlink.com.

Have You Heard The News? $8,000 First Time Home Buyer Tax Credit To Be Extended and Expanded

Ilyce Glink (Think Glink Publishing) — Wed, 04 Nov 2009 13:53:08 -0600

First time home buyers and others can celebrate soon. There's movement to extend and expand the first time home buyer tax credit. But wait, there's more. The new and improved home buyer's tax credit will be expanded to include higher income earners and existing home owners. The fragile real estate may have hit a jackpot as the expanded and improved tax credit was surely supported by the real estate industry and residential mortgage brokers. It's the new and improved home buyer tax credit.

Senate negotiators announced during the last week of October that they had come to an agreement on extending and slightly expanding the extremely popular $8,000 first time home buyer tax credit.

The existing $8,000 first time home buyer tax credit will be extended until June 30, 2010, for contracts that are finalized by April 30. Homeowners who lived in their homes for five consecutive years over the past eight years, will get a tax credit of up to $6,500 as long as they finalize their home purchase contract by April 30 and close by June 30.

Members of the Armed Forces who are on active duty for at least 90 days in 2008 or 2009 have until April 30, 2011 to claim the tax credit as either first-time buyers or trade-up buyers.

To protect against fraud, you must be 18 years of age or older to claim the credit (a 4-year old had claimed the credit as a first-time buyer because her parents already owned a home), and a HUD-1 settlement statement must be attached to the tax filing. Finally, the IRS will have greater oversight during the processing of forms, rather than waiting to audit them.

The income limits for the tax credit have been raised to $125,000 for individuals and up to $225,000 for married couples.

To read the complete article, logon to ThinkGlink.com.

What's Considered The Difference Between A Short Sale Or A Full Price Offer?

Ilyce Glink (Think Glink Publishing) — Wed, 04 Nov 2009 13:43:43 -0600

If you receive a full price offer for the sale of your home, can the lender still consider the sale a short sale? What if the full price offer covers all expenses and covers the entire amount owed to the lender, would the sale still be a short sale?

Q: My house payments are six months behind and a sheriff's sale is scheduled. My home is also currently on the market. Out of the blue, a full price offer for my home came in. The mortgage company is telling me that although I have a full price offer on my home, the transaction would still be considered a short-sale due to my delinquent payments. They've also told me the only way to delay the sheriff's sale is to submit my full price offer as a short-sale. Is this true? Why would they want to consider an offer that would cover my debt to them as a short-sale?

A: While it’s great that you got a full price offer on your home, the amount that the buyer is willing to pay you for your home is not necessarily related to the amount you owe the lender. If you originally purchased the home for $200,000 and obtained a loan for $180,000 and you have now received an offer to sell your home for $180,000, you are probably short on funds to pay off the lender.

To know for sure that you have a short sale, you need to compare what the lender says you owe them with the amount you will receive from the sale of the home. Remember, even if your sales price at a full offer price, you’ll have other costs involved in the sale of your home: the listing agent’s commission, local transfer taxes, title and escrow company fees, and other costs and fees.

To read the complete article, logon to ThinkGlink.com.

Title Insurance May Solve Issues Like Encroachment

Ilyce Glink (Think Glink Publishing) — Tue, 03 Nov 2009 13:06:47 -0600

If you are buying a home and find out you may have a title problem, you should talk to the title insurance company to determine if the title problem can be insured over by the title insurance company. Many real estate properties have minor title insurance problems that are small enough that the title insurance company may be willing to give you peace of mind with coverage under the title insurance policy.

Q: We are thinking about buying a single family home in Chicago that was originally built over 100 years ago. Since then, the home was elevated (after the Chicago fire) to accommodate the change in the level of the streets, and also underwent a rehab about 10 years ago. Because of the raising of the home, the front door was elevated above street level and front steps were installed. It is my understanding that the city, at any point in time, can ask that the stairs be torn down because of the encroachment. Is there any way to protect ourselves from the city should they actually want us to remove the steps?

A: For those without knowledge of Chicago history, Chicago suffered a massive fire in 1871 that destroyed much of the city. Up until that time, most of the city had been built with wood, and the area had suffered a drought which left most of these wood homes dried out.

Some municipalities will issue letters to homeowners approving of and permitting the encroachment. You may find that you can’t get that from the City of Chicago. However, you may be able to get the title company to give you some protection on this issue. When you close on your home, you should obtain an owner’s title insurance commitment. The title insurance commitment is a document given to you by a title insurance company that details the ownership of the home, whether there are any taxes outstanding on the home, whether there are any liens against the home, including mortgages, and any other matter that affects title.

To read the full article, or for more information on Title Insurance, logon to ThinkGlink.com.

Have We Really Hit The Bottom Of The Real Estate Housing Market?

Ilyce Glink (Think Glink Publishing) — Tue, 03 Nov 2009 11:06:54 -0600

Everyone’s so anxious to call the “bottom” of the real estate housing crisis.

Why? There’s no accolade for being right. It’s not as if we’re going to see a 65 percent surge in housing prices over the next six months (and watch out for that kind of momentum in the stock market - it just feels wrong when the real unemployment rate is approaching 16 percent nationally).

All there is at the bottom of the real estate housing market is pain for millions of homeowners who have lost their homes to foreclosure, even as they’ve lost their jobs and whatever few thousand bucks they had left in their 401(k)s. And for those who are still in their homes, their net worth has fallen as their home prices have dropped 30 to 40 percent.

The truth is that the U.S. housing market is still on life support - with the federal government supplying the Dopamine. Whether you’re looking at the $8,000 first-time home buyer tax credit, or the fact that the federal government is backing 85 percent (or more) of first mortgages through Fannie Mae, Freddie Mac, FHA, VA, or USDA, or that Uncle Sam is spending more than a $1 trillion to buy U.S. housing-backed securities to keep mortgage rates artificially low, or that the number of low-down payment FHA loans going bad is surging.

If you’re going to be a real estate investor, it comes down to price and income. Can the income the property will generate support the price you’re going to pay? If not, how do you plan to keep from going broke?

To read Ilyce's complete article, logon to CBS Money Watch.

Borrowers Save Billions By Refinancing Their Mortgages

Ilyce Glink (Think Glink Publishing) — Tue, 03 Nov 2009 10:49:21 -0600

According to Freddie Mac’s quarterly Refinance Report, one-half of borrowers who refinanced their conventional loans lowered their annual mortgage interest rate by at least 17 percent, or about 1.1 percentage points below the old interest rate. (See my post on the Refinance Report from 1Q 2009 here.)

In the aggregate, the interest rate reductions add up to about $3 billion that these borrowers will save over the first 12 months of the new loan.

Low interest rates would ordinarily spur a tremendous amount of refinancing activity. But the collapse of home values during the housing crisis meant few homeowners could refinance under traditional guidelines. Freddie Mac vice president and chief economist Frank Nothalf says from April through the end of August, more than 94,000 borrowers were able to refinance because of the Homeownership Affordability Refinance Program (HARP), according to the Federal Housing Finance Agency, with “the bulk of those occurring in July and August.”

Refinancing is more than a water cooler discussion about who got the lowest interest rate. The Rule of Thumb has changed for mortgage refinance. You have to consider the following:

1. Can you lower your interest rate?

2. Can you lower your monthly payment?

3. Can you shorten the term of your loan? Shaving years off of your loan is worth doing, even if you can’t lower your monthly payment.

4. How much will the refinance cost you? Lenders are changing a few hundred to a few thousands bucks to do a refinance. Shopping around will pay off big-time.

To read Ilyce's complete article, logon to CBS MoneyWatch.

$8,000/$6,500 Tax Credits Are A Done Deal. What’s Next?

Ilyce Glink (Think Glink Publishing) — Tue, 03 Nov 2009 09:59:27 -0600

With the Thanksgiving Recess just three weeks away, Senators burned the midnight oil last night to clear the way for the $8,000/$6,500 tax credit extension and expansion. Voting 85 to 2, the Senate cut off debate on a package of amendments and legislation. President Obama is expected to sign the tax credits into law later this week.

The $8,000 first-time home buyer tax credit has certainly done the job, boosting home sales by 9.4 percent to an annualized 5.57 million home sales pace, according to the National Association of Realtors.

But those numbers are a bit misleading.

Sales are about where they were in 1995. Just as the Great Recession has more than wiped out all jobs created since the turn of the century, the housing crisis has brought the U.S. housing market to a place it hasn’t seen since in a long time.

Senator Kit Bond (R-Mo.) voted against the extension and expansion of the $8,000 tax credit, saying “We’re kidding ourselves if we can prevent more fraud, more taxpayer losses.” The measure, as agreed to by Senate negotiators earlier, gives the IRS more power to catch tax credit fraud.

Some balked at the nearly $17 billion price tag. But what’s another $17 billion between taxpayers, right?

Seriously, one tax credit can easily lead to another stimulus, and the talk seems to be about what we do next to get the economy moving again. President Obama is asking for creative ideas on how to create jobs, which readers of this blog know I think is a top priority for fixing what’s wrong.

The tax credit is going to feel great. But a band-aid isn’t a substitute for major surgery.

To read Ilyce's complete article, logon to CBS Money Watch.

I Can Get A Tax Credit When I Update My Home to Save Energy?

Ilyce Glink (Think Glink Publishing) — Thu, 29 Oct 2009 12:12:53 -0500

The IRS just released this information on how you can weatherize your home and take advantage of a tax credit:

WASHINGTON — People can now weatherize their homes and be rewarded for their efforts. According to the Internal Revenue Service, homeowners making energy-saving improvements this fall can cut their winter heating bills and lower their 2009 tax bill as well.

The American Recovery and Reinvestment Act (Recovery Act), enacted earlier this year, expanded two home energy tax credits: the nonbusiness energy property credit and the residential energy efficient property credit.

Eligible homeowners can claim both of these credits when they file their 2009 federal income tax return. Because these are credits, not deductions, they increase a taxpayer’s refund or reduce the tax he or she owes. An eligible taxpayer can claim these credits, regardless of whether he or she itemizes deductions on Schedule A. Use Form 5695, Residential Energy Credits, to figure and claim these credits. A draft version of this form is available now on IRS.gov.

To read the full article, logon to ThinkGlink.com.

Here's What You Need To Know: $8,000 Tax Credit Extension and Expansion Details

Ilyce Glink (Think Glink Publishing) — Thu, 29 Oct 2009 11:36:57 -0500

Here's what you need to know about the extension and expansion of the $8,000 tax credit as of October 29, 2009:

The tax credit would be $8,000 for first-time home buyers and $6,500 for move-up buyers (from December 1, 2009 to April 30, 2010). Move-up buyers will be eligible, so long as the home they are leaving has been used as their principal residence for 5 years or more. The tax credit would sunset on April 30, 2010. However, there would a binding contract rule that will permit those with contracts as of April 30th to qualify for the credit so long as they complete the transaction within 60 days. The income limits for both first-time home buyers and move-up buyers would be $125,000 for single return and $225,000 joint return. Cost of the home may not exceed $800,000 to be eligible. For purchases made in 2010, taxpayers would be able to claim the credit on their 2009 income tax return.

Home buyers would not have to repay the credit, provided the home remains their principal residence for 36 months after the purchase date. The amendment includes a military waiver provision, meaning the recapture provision would not apply in the case of a member of the Armed Forces, military intelligence or Foreign Service who is on qualified official extended duty. In addition, members of the military who have been deployed overseas for 90 days or more in 2008 or 2009 would have until April 30, 2011, to claim the home buyer tax credit.

To read the complete article, logon to ThinkGlink.com

New Details For First-Time Home Buyer Tax Credit: Administration Calls Congress To Pass $8,000 Tax Credit And Other Pro-Housing Measures

Ilyce Glink (Think Glink Publishing) — Thu, 29 Oct 2009 11:15:05 -0500

WASHINGTON, DC – Treasury Secretary Tim Geithner and HUD Secretary Shaun Donovan called on Congress to approve three important measures to improve housing and the housing market for Americans:

Extend the First Time Homebuyer Credit, with strong anti-fraud measures

Extend Loan Limits for Mortgage Loans

Secure Financing for the Housing Trust Fund

The Administration supports a limited extension of the First Time Homebuyers Tax Credit, which is currently set to expire on December 1. This credit has made the difference in bringing new families into the housing market. Those buyers, in turn, have reduced the inventory of unsold homes and contributed to three months in a row of increases in home prices nationwide.

A stronger housing market benefits homeowners and strengthens the financial system. In order to reinforce the progress already made this year, the Administration urges Congress to extend the Credit for a limited period. In doing so, we urge the Congress to include effective measures to combat tax fraud, including setting a minimum age for home purchase and requiring documentary proof of the purchase in order to receive the credit.

To read the complete article, logon to ThinkGlink.com.

$8,000 Tax Credit: New Deal?

Ilyce Glink (Think Glink Publishing) — Thu, 29 Oct 2009 09:09:16 -0500

According to news reports this morning, Senate negotiators reached a tentative deal on extending and slightly expanding the $8,000 first-time home buyer tax credit. Here’s the tax credit new deal Senate negotiators apparently reached:

* The current $8,000 first time home buyer tax credit would be extended for contracts that are finalized by April 30, 2010 and close by June 30, 2010.

* A new $6,500 tax credit will be available to some existing homeowners who lived in a home for a “consecutive” 5 years out of the past 8 years.

* The income limits will be raised, so both tax credits will be available to those individuals earning up to $125,000, or up to $250,000 for married couples.

So what’s really going on? Yesterday’s perfectly awful and surprising housing numbers finally tilted the axis toward extending and expanding the credit. The Commerce Department reported that new home sales fell an unexpected 3.6 percent to an average annual pace of 402,000 sales. Economists and industry observers had been expecting sales to rise 5 percent.

Realtors, mortgage lenders and home builders said that the fall in home sales would mirror what would happen if the tax credit wasn’t extended - countering HUD secretary Shaun Donovan’s contention that nothing bad would happen if the tax credit was allowed to expire on schedule. They point to last month’s housing numbers as a sign of things to come if the tax credit died on November 30.

To read the complete article, logon to Ilyce Glink's column at CBSMoneyWatch.com

Recession Over? Not With 21 Percent Unemployment.

Ilyce Glink (Think Glink Publishing) — Wed, 28 Oct 2009 12:26:54 -0500

How bad is the economy? Despite what you see going on with the stock market, and the continuing talk about profits and green shoots, it’s pretty bad.

According to the official unemployment numbers, not quite 10 percent of the U.S. population is unemployed. But that unemployment number doesn’t include everyone who doesn’t have a job but wishes they had one.

The Bureau of Labor Statistics (BLS) surveys only 60,000 households every month and asks them if they “have a job, are looking for a job, or have given up, or have gone back to school, or retired,” writes MSNBC.com senior producer John W. Schoen.

The government also surveys 150,000 businesses and government payrolls to find out how many jobs there are compared to prior months. When all is going well with the economy, these surveys can be somewhat accurate. But with what’s been going on, they may be way off. At least, that’s what some labor economists suspect. In September, Schoen reports that payroll data showed a loss of 263,000 jobs. The household survey showed a loss of 710,000 jobs.

According to the BLS, the September 2009 U-6 measure of unemployment stood at 17 percent. A year ago, it was at 10.6 percent.

If that wasn’t bad enough, some analysts and economists factor in long-term unemployed, the so-called “discouraged jobless,” who have been unemployed for more than a year and have fallen out of the BLS calculations. That’s how these economists get to 21.4 percent true unemployment.

Is the recession over? I’m not sure how it could be, not with 21 percent unemployment.

To read Ilyce's entire article, logon to CBSMoneyWatch.

Taylor Bean and Whitaker Trouble: Continued Mortgage Bankruptcy Hearing Update

Ilyce Glink (Think Glink Publishing) — Fri, 23 Oct 2009 09:24:55 -0500

We’ve learned that hundreds of thousands of mortgage borrowers are scrambling as their funds have been frozen; we were told that Taylor Bean Whitaker loans were to be ported over to Bank of America's Home Loan Services group and performing Freddie Mac loans were supposed to go to Cenlar, a legitimate loan servicing company.

What do you do if you receive letters from two different mortgage servicing companies claiming that each one of them is going to service your Taylor Bean and Whitaker loan? While the problems persist, we’ve just received news that the next Taylor Bean Whitaker hearing is scheduled for November 5th. For more information, you can take a look at the past hearing documents from the United States Bankruptcy Court.

To read the full article and to view the documents from the United States Bankruptcy Court, logon to ThinkGlink.com.

If You Can't Refinance, Should You File for Bankruptcy Or Let The Home Go Into Foreclosure?

Ilyce Glink (Think Glink Publishing) — Tue, 20 Oct 2009 12:20:02 -0500

Q: I've been divorced for almost 2 years. My ex-husband was awarded the house and subsequently took over the payments. He has been laid off several times over the last two year, failed to qualify for unemployment, and still has not refinanced the house to remove my name from both mortgages. Because of this, my credit has been shot. Today, he called and offered me the house. He's officially four months behind on payments and received a letter from the mortgage company saying he has 30 days to seek counseling or they will foreclose. I have told him I cannot afford to take over the payments and refinance the mortgages in my name. Should he file for bankruptcy or just let the house get foreclosed upon? What will happen to me?

A: It's unfortunate that your ex-husband didn't refinance the property immediately as a condition of the divorce. If your name is on the mortgage, you are legally responsible for the entire debt, not just half. While the divorce decree does give you some cover, the loan documents with the lender are still in your name. Since your husband is four months delinquent in his mortgage payments, your credit history will look as though you are four months behind in paying the mortgage.

I'm sure you don't want this property, but you should figure out if you can rent it to bring in enough cash to cover the mortgage payments. If not, then you should expect the property to go into foreclosure, whether or not your ex-spouse files for bankruptcy. Your credit will then reflect a foreclosure, which will mean that you will not be able to get a Fannie Mae, Freddie Mac or FHA loan for between 2 to 5 years, depending on the circumstances.

Finally, because you are named on the mortgage, the lender will consider you legally and financially responsible for the debt. If you have assets, the lender may go after those assets to repay the balance owed.

To read the full article, or for more advice and information on foreclosures, logon to ThinkGlink.com.

What If Your Second Home Loan Modification Is Denied By Lender?

Ilyce Glink (Think Glink Publishing) — Tue, 20 Oct 2009 11:56:59 -0500

More and more people are finding that they have fallen into a trap. They bought a second home or moved to get a job and left their primary home, now when they call their lender to request a loan modification, the lender refuses to give them a loan modification because the home is no longer a primary residence. With that logic, the home will be lost to foreclosure and the lender may end up taking a bath on the loan.

Q: We have a first mortgage of approximately $160,000 and a second mortgage that is about $25,000. The monthly payment on the first mortgage is $1,450 and $360 per month for the second. Due to a job loss, my wife and I could not pay the first mortgage payment. We relocated from North Carolina to another state for a new job and rented out the house. We submitted paperwork for a loan modification because the amount of monthly rent that was paid to us wasn’t enough to cover both mortgages. However, the first lender told us that since we moved, the house was no longer considered our primary residence. We gave them nothing and the primary foreclosed.

Now the second lender is coming after us for their part of the money. We cannot afford to pay on a house that we are no longer living in. Shouldn’t the second lender get money when the first lender sells the house? Is there anything that we can do to settle with the second lender?

A: First, to qualify for a loan modification, the property in question needs to be a primary residence. When you moved to North Carolina to get another job, you forfeited the opportunity to get a loan modification on your former residence under those loan modification plans that require you to live in the home as a primary residence. At this point, your credit is in the toilet. So, there’s no need to worry about that while you negotiate with the second lender. But it would be nice to have all the bad news hit your credit score now, so you can move forward and improve it over the next few years.

One way to do that is to declare bankruptcy. If you file for bankruptcy, the second loan will likely be discharged. Again, consult with a real estate attorney to explore your legal options. It’s also possible, that the second lender has sent your debt to collections and they are trying to get what they can from you. They’re entitled to get money from the debt you owe the second lender, but if you can’t afford to make a payment to them, the second lender will have to decide whether to write the debt off or continue to pursue you.

To read the full article and for more reader questions, as well as Ilyce's advice on loan modifications, logon to ThinkGlink.com.