Ilyce's Blog

Are Government Bonds Safe Today?

Ilyce Glink (Think Glink Publishing) — Thu, 19 Nov 2009 12:08:59 -0600

Q: My wife and I are both happily and comfortably retired. During our younger years, we were both heavily invested in stock and mutual funds. But, after accumulating a nice little nest-egg, over the past ten years we have been very conservative and have very little in stock and mutual funds. The majority of our investments are in laddered fixed-income, such as some corporate bonds, government agency bonds and most in broker CD's. At one point, some funds were transferred to my credit union in one year CD's paying 3.25%. As a result, we have maintained our principal and have not been impacted too much by the recession so far.

As stated, a large portion of our investments are in CD's that are paying 5% or better and a few government agency bonds also paying 5% or better, both maturing as far out as 15 years.

I would like to know your thoughts on purchasing new government agency bonds at this time? (Fed Hm Ln Mtg Notes, Fed Hm Ln Bk Notes, Fed Farm Cr Bk Notes, Fed Natl Mtg Notes, etc) Are they reasonably safe in light of the economy?

A: I think government bonds are safe. I don't think the US government is going out of business any time soon. You just won't get a great interest rate. So, safe, but you won't get rich off of it. Still, not losing principal - as so many of us have - feels pretty good too.

For more personal finance and real estate advice from Ilyce, visit ThinkGlink.com.

Getting Answers About Your Income Account

Ilyce Glink (Think Glink Publishing) — Thu, 19 Nov 2009 11:46:55 -0600

Q: I have had an account with Schwab for some time now. It is an income account and the broker keeps asking me to take less from it as he says the stocks go down. My wife and I live from the income from this account so I am wondering if the returns could be somehow manipulated, like the Madoff thing?

How can I know how much comes from the 19 closed-end fund stocks that I have in my account? Can I believe the broker who tells me that he gets his figures from Schwab and that he has no control over them? I have asked for exact figures on the percentage of dividends coming from each stock and my broker doesn't seem to want to give them to me. Am I to assume that he has something to hide?

A: You should be able to confirm the information about the companies held in your portfolio or fund elsewhere. Try Morningstar.com. You should be able to look up the firm and it's top 10 holdings. You should also be able to call the Schwab 800 number and speak to a different representative who isn't connected to your account.

To your larger question, it is possible that your broker is cheating you - but unlikely. Most probably, your broker (I assume this is someone hired by Schwab to help you?) isn't that smart and isn't that knowledgeable. Maybe it's his first year in the business. He's probably asking you to spend less since many companies have cut their dividends in order to conserve cash in this deep recession. If you're trying to live on that money, it would make things tighter.

To read the rest of this Q&A and get more personal finance advice from Ilyce, visit ThinkGlink.com.

Surprise! October Housing Starts Collapse

Ilyce Glink (Think Glink Publishing) — Thu, 19 Nov 2009 11:20:21 -0600

Guess the economists are wrong again.

According to this morning’s Wall Street Journal, economists estimated that U.S. housing starts rose to an annualized pace of 600,000 units from 590,000 in September.

Wouldn’t that be nice.

Instead, housing starts collapsed according to the latest government figures. According to the Census Bureau and U.S. Department of Housing and Urban Development, U.S. housing starts in October fell 10.6 percent from September, and were down 30.7 percent below the October 2008 level.

Building permits declined 4 percent from the revised September numbers, and more than 24 percent from a year ago.

But hey - the recession is over. Just ask Wall Street, where the stock market is up around 70 percent from the low on March 9, 2009. Is the economy 70 percent better than it was? Are you feeling 70 percent better about your own financial prospects? Hardly. And even if you argue that the stock market projects where the economy will be 9 months to a year from now, are we really going to be 70 percent better at the end of 2010?

It’s difficult to imagine that with unemployment rising higher than almost any economist predicted (let alone the Obama administration’s projections) that everything is going to be fine anytime soon.How can it be, with millions of Americans delinquent in their mortgage payments, and millions more afraid they’re going to lose their jobs?

According to the Mark Gongloff’s “Ahead of the Tape” column, within six months after hitting the last steep housing decline trough, the annualized pace of housing starts was back to one million units. If the trough of the current housing crisis was in March, when the stock market hit its lows, we should be at one million units right about now.

Only we’re at half that number

To finish reading this story and other related articles, visit my blog on CBS Moneywatch.

Goldman Sachs Says Sorry For The Housing and Credit Crisis

Ilyce Glink (Think Glink Publishing) — Thu, 19 Nov 2009 11:06:27 -0600

Yesterday, something remarkable happened. Someone on Wall Street apologized to everyone on Main Street.

Goldman Sachs CEO Lloyd Blankfein said he was sorry for the role Goldman Sachs played in the housing crisis:

“We participated in things that were clearly wrong and have reason to regret,” Blankfein reportedly said, adding “we apologize.”

Presumably, Blankfein is sorry for the role Goldman Sachs played in “cycling cheap credit.” In 2006 and 2007, Goldman Sachs sold $40 billion in securities backed by 200,000 risky, exotic, and sub-prime mortgages. The company promoted the securities as triple-A rated investments - the safest kind of investing except for government bonds and T-Bills.

So, maybe Blankfein is sorry that his company is so good at wrapping up garbage and selling it as a birthday present.

Or, maybe he’s sorry he didn’t tell everyone (or even the company’s clients) that while Goldman Sachs was selling $40 billion in securities backed by housing junk, the company secretly made a bet against the housing market. When the housing market started to collapse, Goldman Sachs’ profits soared. The company managed to avoid a total meltdown with good timing and excellent salesmanship.

There are those who believe that if you’re peddling junk you should buy some yourself. Of course, that isn’t the way Wall Street thinks.

But I can tell you that on Main Street, the most successful small business owners would be dead in the water if they sold their customers burgers, but bought lunch for themselves at Chipotle down the street.

In other words, if you sell access to the trough for $40 billion, but don’t drink from it because you think it’s poison, some folks might call that fraud.

Meanwhile, Goldman Sachs is ready to kiss and make up. It’s offered to put up a total $100 million per year over five years to help give small business owners better access to capital and business education. The company will contribute $200 million (over five years) for business and management education and $300 million (again, over five years) to provide loans and philanthropic support to increase access to capital for small business owners. Berkshire Hathaway CEO Warren Buffet will sit on the committee overseeing the disbursement of the cash.

To read the rest of this story and other related articles, visit my blog on CBS Moneywatch.

Bad Neighbors Fight Over Access To Yard

Ilyce Glink (Think Glink Publishing) — Tue, 17 Nov 2009 11:38:45 -0600

Q: My neighbors do not want to give me access to their fenced in yard to perform maintenance on my house, gutters etc. They also have a dog house against my house and have attached a fence against it to make a "pen" to house their pit bulls. Is there a city ordinance against all of this? What city bureau would I contact?

A: Many cities have ordinances that regulate the ability of homeowners to use adjacent lands to maintain their homes. In your case, it’s in the neighborhood’s best interest that you should be able to maintain your home. If you can only do that by obtaining access through your neighbor’s yard, you may have a right under your city ordinances to have limited access for that purpose.

You should call the city and find out what agency you can talk to determine whether you have that right or not. You might find that your local alderman’s office or other local municipal governmental office may have information available for you.

In some towns and cities, you can now go to that town or city’s website and research your question.

After you have done some of this research, if you still have not found your answer, you might have to ask a good contractor in your area the question or ask a real estate attorney. The contractor might have experience with this issue, having fixed buildings and homes in your area. That contractor might even be able to quote you the law that allows neighbors to have limited access on other people’s property to make repairs to their own properties.

The attorney might have that information as well for you.

Read more questions and answers with Ilyce at ThinkGlink.com.

Home Buyer Tax Credit Cut-Off Dates: Do I Qualify?

Ilyce Glink (Think Glink Publishing) — Tue, 17 Nov 2009 11:33:30 -0600

Q: I have heard about the new tax credit for first-time buyers and was wondering if I would be eligible under the new law that was just passed.

I purchased my home on March 17, 2008. That was about 20 days before the tax credit was announced.

This was my first house that I purchased and with the new law passed I’m curious to know if I now qualify for some sort of tax credit. Thanks.

A: The federal government offered a $7,500 tax credit for first-time buyers who purchased a home after April 8, 2008 through December 31, 2008. This tax credit functioned more like a zero interest loan, since you have to pay the tax credit back at a rate of $500 per year for 15 years.

If you move out of the home before the tax credit was fully repaid (also known as “recapture”), you would have to repay whatever portion of the tax credit remained with your taxes the following April 15th.

This tax credit could have been claimed by filling an amended 2008 return or when you file your 2009 tax return.

First-time home buyer who purchased a home at any time in 2009 will qualify for a tax credit of up to $8,000 that does not have to be repaid. Trade-up buyers, who lived in their home for 5 consecutive years over the past 8 years, who earn less than $125,000 as individuals (or up to $225,000 as couples), who buy a home that costs less than $800,000 and close between November 6, 2009 and June 30, 2010, will qualify for a tax credit of up to $6,500.

To read the rest of Ilyce's answer to this question and more, visit ThinkGlink.com.

Should I Refinance My Mortgage?

Ilyce Glink (Think Glink Publishing) — Tue, 17 Nov 2009 11:25:12 -0600

Mortgage interest rates fell below 5 percent again last week, and this week dropped further, according to Freddie Mac’s Primary Mortgage Market Survey.

“Mortgage rates eased further over the week, helping to promote an affordable home-purchase market and stimulate refinance,” said Frank Nothaft, Freddie Mac vice president and chief economist. “This comes at a time when house price declines are moderating and consumer demand for prime mortgages at commercial banks has picked up.”

Having mortgage interest rates drop below 5 percent combined with the recent extension and expansion of the home buyer tax credits gives buyers a unique opportunity to purchase a home with interest rates at nearly 50-year lows.

But if you have enough equity in your property, it may also be a great time to lock in a lower interest rate and refinance your loan’s existing balance.

Here’s how to think through a refinance:

1. Will you qualify for a refinance? Before you put in any time and energy into working out the details of your refinance, try to assess your property’s current value. Contact a local real estate agent to discuss what homes in your neighborhood are selling for – not what they’re listed for. Try to figure out whether there are a lot of foreclosures in your neighborhood, or just a few. Neighborhoods that are awash with foreclosures tend to have steeper price drops than those that have fewer homes for sale.

2. How much equity do you have in your home? If you have at least 20 percent equity based on the current market value, then you should be able to do a conventional refinance. Today, conventional lenders won’t do a refinance unless you have at least 20 percent equity in your property and have verifiable income. FHA loans are available for less than 20 percent down loans and their guidelines differ somewhat from most Fannie Mae and Freddie Mac lenders, but these FHA loans are generally available for new purchases of homes and not for homeowners who want to refinance.

3. Can you qualify for “underwater” mortgage programs? If the value of your house is less than what you owe on the mortgage, then you are considered to be “underwater.” If your loan is owned or securitized by Fannie Mae or Freddie Mac, you might still be able to refinance your mortgage even if you are underwater. Under some federal programs, you may be able to refinance even if the loan balance is 125 percent of what the house is worth.

To read the rest of this article, visit ThinkGlink.com.

Loan Modification Help: Get Some Answers From The Bank CEO

Ilyce Glink (Think Glink Publishing) — Mon, 16 Nov 2009 11:26:05 -0600

Q: I am really angry about what’s going on with my loan modification – or I should say, my non-loan modification. I have been going back and forth with my big box lender and first they say I can get a loan modification and then I can’t.

I know you’ve been encouraging people to tell their loan modification hell stories. Mine is too long to go into in an email. But I want to do something to get my lender to pay attention to me. What do you recommend?

A: I’m sorry to hear that you’ve had so much trouble getting a loan modification from your lender. Perhaps it will help to know that there are literally hundreds of thousands of folks having the same confusing and frustrating experience you are.

After consulting with some sources at the Treasury Dept., someone suggested that if you’re in loan modification hell, you should write a concise letter that clearly details what has happened to you. Organize your thoughts into a timeline of events. And, be sure to include any information you have that identifies which employee you spoke with (the employee’s identification number, office or location would be helpful), the date of the contact and even the time of the call. If you’ve received a letter or emails, include a copy of them with your letter.

You’ll want to address your letter to the president or chief executive officer of the bank. If you don’t know who that is, go to Yahoo.com finance page. Under the “investing” tag, use the search box to type in the name of your lender. A bunch of company names will pop up. Choose the company you’re interested it. On the company page, choose the “profile” tab on the left navigation bar. That will take you to a page with the company headquarters and the names (and salaries) of key employees, including the CEO.

Once you have the CEOs name and address, you’ll want to write a letter that roughly follows this format:

To continue reading this story, and for more questions and answers with Ilyce Glink, visit ThinkGlink.com.

$8000 First Time Home Buyer Tax Credit and Closing On New Construction

Ilyce Glink (Think Glink Publishing) — Mon, 16 Nov 2009 10:59:53 -0600

Q: I have lived in my home more than 32 years. I signed a contract to build a new home on my lot for $400,000. It will be ready next September. I’ll move out into a rental during construction. Do I qualify for the new $6,500 home buyer tax credit? Please let me know. I expect to close on the construction loan by December 5, 2009.

A: If you’re tearing down your existing home and building a new home on your own lot, you will not qualify for the first-time home buyer tax credit.

If you’ve purchased a lot and are building a home on that lot that won’t be completed until September, 2010, you are still out of luck. You must close and move into your newly-constructed home by June 30, 2010 to qualify for the trade-up tax credit.

Purchasing a lot and closing on a construction loan aren’t enough to qualify you for the tax credit. Your home won’t be habitable until after the tax credit has expired. You'd not only have to move into the home by that time but you might also have to have an occupancy permit issued by the appropriate local authorities as evidence that the home was complete on a certain date.

Ilyce Glink answers more of your questions at ThinkGlink.com.

Short Sale vs Foreclosure: Which One Can You Get To Close Faster

Ilyce Glink (Think Glink Publishing) — Mon, 16 Nov 2009 10:14:47 -0600

Q: I went under contract to buy a house on six months ago. This is a short sale, and I understand that multiple lenders are involved. But I have been more than patient. What can I do? I can’t seem to get anyone to listen to me. Don’t the banks want this to work out?

A: I’m sure that someone besides you wants this sale to work out – the seller! The problem is that each lender has to agree to the short sale and lenders are drowning with the numbers of short sales, foreclosures, and loan modifications that are stacked up.

For a short sale, the lender will require quite a bit of documentation from the seller to determine whether the short sale is legitimate and whether the seller has the ability to make up any deficiency. The lender also would want to determine if it would get more money if the seller simply defaulted on the purchase and the lender foreclosed on the property and sold it off.

While these are some of the considerations a bank may have, the underlying problem with lenders and short sales is time.

Banks have too few people on staff to handle the load of short sales and other requests being made since the start of the housing and credit crisis. The bank takes in the requests and then must evaluate each request to figure out how much of a hit the investors will take on the loan in a short sale. The lender also tries to figure out who else is losing money on the deal, like other lenders.

To read the rest of this story, and others, visit ThinkGlink.com.

Phantom Income

Ilyce Glink (Think Glink Publishing) — Sun, 15 Nov 2009 21:04:56 -0600

When an investment property is sold as a short sale, it generates what is known as "phantom income."

When an owner sells a property through a short sale, the lender will send a 1099 for the difference between what was owed and the amount accepted on the loan.

The release of indebtedness by that lender – what you should have paid back the lender – is considered a “gift” from the lender to you. The IRS considers that amount to be taxable income. That’s why the amount that is forgiven is taxed.

Some people refer to the release of indebtedness as "phantom" income because evern though you don't have any more money in your pocket, you owe tax on this phantom cash.

Homeowners who are selling their primary residences and are underwater with their mortgage do not have to pay tax on the forgiven debt thanks to legislation that passed last year.

Real estate investors who sell a property that is underwater, however, would owe federal income taxes on the difference between the sales price and the amount owed on the loan. And, yes, the lender should send you a 1099 for you to use when you file your income tax return.

Taylor Bean & Whitaker Customers Still Waiting for Answers

Ilyce Glink (Think Glink Publishing) — Thu, 12 Nov 2009 17:13:54 -0600

Think Glink has reported for weeks now that former Taylor Bean & Whitaker customers would get answers after the Oct. 31 deadline, by which new loan servicers were to have sorted out who would take what TB&W loans. While there has been some progress made, customers are still waiting for many answers.

Sandra Sheley, director of mortgage supervision for the Georgia Department of Banking and Finance, said she’s waiting to hear if the bankruptcy judge has approved those final negotiations between the new servicers. The upside is that all loans should have been assigned to new servicers by now, and TB&W customers should know who is now handling their loan. If you still haven’t heard from a new company, Sheley said the judge’s approval and next orders should indicate what next steps you’ll need to take.

A large part of frustration for borrowers has been getting their mortgage accounts reconciled—anything from a TB&W bounced check for escrow funds, to unfounded late payment notices to payments that have been frozen by TB&W or a third party, such as Equity Accelerator. Sheley says these reconciliations are still being worked out by the new servicers, starting with getting escrow taxes and insurance payments made first. Sheley also said most of the new servicers have said they will be responsible for any late fees for taxes due to the situation.

To finish reading this article, visit ThinkGlink.com.

Majority of Property Owners Experiencing Higher Vacancy Rates

Ilyce Glink (Think Glink Publishing) — Thu, 12 Nov 2009 17:00:26 -0600

With vacancy rates holding steady at an historic high, Rent.com recently conducted a survey to better understand what properly management companies and owners are experiencing during the recession. The survey, which found that over 70 percent of property owners are experiencing higher vacancy rates this year, also sought to highlight how property owners are and can cope with a vacancy rate that is currently above 10 percent. The wide-reaching “Property Owner Survey” collected data from nearly one million units in 3,900 communities to gauge the current state of the rental sector of the residential real estate industry. This data gives property owners a sense of what their peers are doing to stay afloat in a tough market.

The Rent.com survey found that vacancies are on the rise across the country, in both urban and suburban markets. With unemployment at a 25-year-high of over 10 percent, these vacancies are being attributed largely to job loss; 90 percent of respondents considered it a contributing factor. More than half of those surveyed noted that tenants moved to save money on rent, with many moving to a cheaper apartment (35 percent of respondents) or doubling-up with a roommate or roommates (43 percent of respondents).

The survey results are consistent with publicly-available data. Vacancy rates were at an historic high of 10.6 percent for the quarter ending June 2009, according to the U.S. Census Bureau. RealtyTrac, the largest foreclosure database, which collects data from more than 2,000 counties, reports that the high of 10.6 percent has held steady since the second quarter, with a year-over-year foreclosure increase of nearly 20 percent since last August.

To continue reading this story, and for more information about managing your own investment properties, visit ThinkGlink.com.

FHA Cash Reserves Fall To Lowest In History

Ilyce Glink (Think Glink Publishing) — Thu, 12 Nov 2009 15:55:11 -0600

The Federal Housing Administration's mortgage insurance cash reserves fell to the lowest levels in recorded history, 0.53 percent. The FHA announced today FHA cash reserve levels have fallen below the congressionally mandated threshold. The annual independent accounting survey of the FHA came with the assessment that additional action needed to be taken to manage risk to prevent further losses.

The losses are attributed to a record drop in the housing market. FHA has stepped in to provide additional sources of funding for mortgage finance as private sources of funding have dried up. In the second quarter of 2009, nearly 50 percent of all first-time buyers in the entire housing market used FHA-insured loans.

While FHA cash reserves have dropped below the 2 percent threshold mandated by Congress, HUD Secretary Shaun Donovan said at a press conference today, "This is a temporary role which FHA has played in previous economic downturns. The Administration is committed to ensuring that the FHA steps back as private capital returns to the market. With this temporary increased role comes increased risk and responsibility. That's why we are committed to closely monitoring market behavior patterns and economic risks so that we are prepared to enact reforms that ensure the FHA's financial health moving forward."

To read the rest of this article, or to find out more about the FHA's recent financial disclosure, visit ThinkGlink.com.

Customer Service Will Be Key In Real Living, GMAC Merger

Ilyce Glink (Think Glink Publishing) — Wed, 11 Nov 2009 16:42:54 -0600

Today's housing market is continually being stretched to match buyers and sellers, adapt to the frequently changing tax credits and mortgage regulations, and cope with falling home values. The role of the real estate agent is always one of service, but can be put to even more of a test in a flagging market. Real Living and GMAC hope to step to the forefront of the real estate market with a merger that aims to provide high levels of customer service to a female target audience.

Kaira Sturdivant Rouda, the founder of Real Living, says the merger with GMAC Real Estate will provide Real Living an opportunity to extend across a network that understands customer service. Rouda says that Real Living wasn't organized as GMAC at customer service and they look forward to extending that across Real Living.

Real estate agents must also compete or learn to work with new technologies that their customers will almost certainly be using. Rouda says that today's consumers spend a lot of time online researching their communities, looking for homes and exploring neighborhoods before even contacting a real estate agent. Real Living provides a tool called My Real Living 2.0 that allows customers to register, research, share photos and contacts, keep a calendar, track events, and maintain communication with an agent. Instead of the agent chasing down a potential client, the consumer will decide when they want to be contacted by an agent, and reach out through the My Real Living tool.

According to Rouda, this tool is a consumer portal that helps provide a two-way dialog between the consumer and the agent. "We want to make sure customers are empowered to go through home buying process the way they want to," Rouda says.

Real Living was founded in 2002. The merger of GMAC and Real Living comes after Brookfield Residential Property Services acquired Real Living Network Services, a subsidiary of Real Living Inc., and as a result will now rebrand GMAC Real Estate as Real Living.

What do you think about the Real Living merger? How will this affect the agents and the clients? What do you do to provide the best customer service to your clients?

For more details about the merger, read the full story at ThinkGlink.com

What Kind Of Landscaping Will Add Value To Your Home?

Ilyce Glink (Think Glink Publishing) — Tue, 10 Nov 2009 15:03:10 -0600

Studies have shown that adding rich landscaping to your property can add value to your home. It doesn't mean you have to spend a lot - you just have to spend wisely. If you should find your dream home, you might want to consider investing in a pool and landscape to go along with it.

We recently had the opportunity to shoot two new pool videos showcasing dream pools designed and built by Rosebrook Custom Inground Pools. Take a look at the videos and let us know what you think.

These pools (which are high-end) feature custom-design amenities, including Italian glass tile, all natural materials, grottos with fiber optic lights (for a romantic night under the stars) and waterfalls. The company can even create a custom waterslide for your kids.

Video is an amazing way to tell the story of your business and highlight your expertise. If you'd like to talk about how video can grow your business and help you reach new customers, email me. For more videos and information, check out our YouTube Channel, Expert Real Estate Tips.

Know The Fannie Mae Deed For Lease Program Rules?

Ilyce Glink (Think Glink Publishing) — Tue, 10 Nov 2009 11:33:18 -0600

Fannie Mae announced an innovative program to help keep families from falling into foreclosure. The program, called Deed For Lease (D4L) allows struggling homeowners who are unable to qualify for a loan modification to essentially hand their keys over to Fannie Mae, and then rent back their house at current market rental rates.

Here are the Fannie Mae Deed for Lease Program Rules:

1. The mortgage loan is a first lien mortgage loan secured by a one- to four-unit property. All property types are eligible. Second lien mortgage loans are not eligible.

2. The mortgage loan is not guaranteed or insured by a federal agency (FHA, HUD, VA, or Rural Development).

3. The borrower resides in the property as a primary residence or has leased the property to a tenant who uses the property as a primary residence. Second homes or vacation homes are not eligible.

4. At least three payments have been made since origination or since the last modification.

5. At the time of the referral to Fannie Mae for the D4L, the borrower is not 12 or more payments past due on the mortgage loan.

6. The borrower is not involved in an active bankruptcy proceeding and is not a party to litigation involving the subject property or the mortgage loan.

7. Marketable title is able to be conveyed (a title insurance policy is required).

8. If there are subordinate liens secured against the subject, lien releases can be obtained.

9. The occupant of the property (i.e., the borrower or the borrower’s tenant) has verifiable income. Occupants with no source of income are not eligible.

There is additional Eligibility Criteria to be Determined by Fannie Mae, which includes Deed for Lease Property Eligibility as well as Deed for Lease Occupant Eligibility. To read the additional criteria, logon to ThinkGlink.com.

Home Buyer Tax Credit Extended and Expanded: Questions and Answers

Ilyce Glink (Think Glink Publishing) — Tue, 10 Nov 2009 11:23:06 -0600

UPDATE: (11/9/09) The new $6,500 tax credit for trade up buyers is effective as of the day the bill was signed, November 6, 2009, according to Sen. Isakson's office.

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.

Last week, the Senate voted 98 to 0 to extend and expand the tax credit. Here’s a sample of the questions I’ve received:

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.

The question for the real estate industry now is whether pushing the tax credit expiration date back to April 30, 2010 (if you have a completed contract you have to close by June 30, 2010) will give buyers the impetus they need to purchase a home sooner rather than later.

Q: I need your urgent feedback. I’m preparing to close on a house on November 10, 2009. If the new tax credit legislation passes, would I qualify for the $6500 credit? If not, I am going to need to postpone my closing somehow.

A: If you’re a first-time buyer, you’re good to go. The new $6,500 tax credit for trade up buyers is effective as of the day the bill was signed, November 6, 2009, according to Sen. Isakson's office.

What are your thoughts on the expanded home buyer tax credit? How will this affect the housing market? For more questions and answers about the home buyer tax credits, please read the full story at ThinkGlink.com

New Fannie Mae Rental Program Will Allow Homeowners To Avoid Foreclosure For A Year

Ilyce Glink (Think Glink Publishing) — Tue, 10 Nov 2009 11:14:17 -0600

Fannie Mae's rental program or "Deed to Lease" program will allow homeowners who haven't qualified for a home loan modification or for the Making Home Affordable Act to avoid foreclosure for a year.

The Fannie Mae Rental Program has specific criteria that the homeowners must qualify for, including they must live in the home as their primary residence and they can't be more than 12 months past due.

The program, lets homeowners who haven’t been able to negotiate a workout with their lender sign a lease, voluntarily transferring the property deed back to the lender with a deed in lieu of foreclosure. The borrower would then lease the house back for the market rate in rent, which in many areas is significantly different from the cost of owning. Homeowners will then be able to stay in their homes for up to 12 months, at which time the lease may be able to be extended on a month-to-month basis.

"The Deed for Lease Program provides an additional option for qualifying homeowners who are facing foreclosure and are not eligible for modifications," said Jay Ryan, Vice President of Fannie Mae. "This new program helps eliminate some of the uncertainty of foreclosure, keeps families and tenants in their homes during a transitional period, and helps to stabilize neighborhoods and communities."

Other criteria to qualify for the Deed for Lease program includes:

* The borrower must live in the home as their primary residence or lease it to residents who use it as their primary residence (Tenants may be able to take advantage of the program as well).

* The borrower must have made at least three payments since the loan began or was last modified.

* The borrower cannot be more than 12 or more months past due on their mortgage loan.

* The borrower cannot be involved in an active bankruptcy proceeding or involved in litigation over the property.

* The borrower must have a title insurance policy.

* The occupant of the property (borrower or tenant) must have an income and be able to prove that the market rental rate is no more than 31 percent of their gross income.

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

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.

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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.

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.

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.

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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

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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.

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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.

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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.