Doug's Blog

How does a Short Sale, Foreclosure or Bankruptcy effect you in the future?

Doug Reynolds (Prudential) — Wed, 16 Dec 2009 10:45:17 -0600

The information below was provided by Erick Perpich of Prospect Mortgage. This is the latest time periods for being eligible to get a new home loan after a Short Sale, Foreclosure or Bankruptcy. Make sure to read all of each category as there are exceptions to most. As you can see it is quite beneficial for most to do a Short Sale over a foreclosure. Especially with lenders slowly improving their short sale systems, a distressed seller in most cases should strongly consider a short sale if they are at risk of losing their home to foreclosure. I hold the SFR designation. Call or email today if you need help with a short sale. I'm here to help. www.SellWithDoug.com

General Information

The presence of significant derogatory credit information dramatically increases the likelihood of a future default and represents a significantly higher level of default risk. Examples of significant derogatory credit include bankruptcies, judgments, collection accounts, foreclosures, deeds-in-lieu, or a consistent pattern of delinquent accounts. The lender must determine the cause and significance of the derogatory information, verify that sufficient time has elapsed since the date of the last derogatory information, and confirm that the borrower has reestablished acceptable credit history. The lender must make the final decision about the acceptability of a borrower's credit history when significant derogatory credit information exists. If not clearly identified in the credit report, the lender must obtain copies of appropriate documentation for foreclosures, deeds-in-lieu, and bankruptcies. The documentation must establish the date of a previous foreclosure or deed-in-lieu, confirm the bankruptcy discharge or dismissal date, and identify debts that were not satisfied by the bankruptcy. Debts that were not satisfied by a bankruptcy must be paid off or have an acceptable, established repayment schedule.

The following topics describe the amount of time that must elapse after a significant derogatory event before the borrower is eligible to re-establish credit:

Foreclosure

A five-year period is required to re-establish credit, measured from the completion date of the foreclosure action as reported on the credit report or other foreclosure documents provided by the borrower.

Additional requirements apply after five years up to seven years following the completion date:

Exceptions for Extenuating Circumstances

A three-year period is required to re-establish credit, measured from the completion date of the foreclosure action.

The additional requirements listed above apply after three years and up to seven years following the completion date, except the minimum credit score of 680 is not required.

• two years from the discharge date, or

• four years from the dismissal date.

• The purchase of a principal residence is permitted with a minimum 10% down payment and minimum representative credit score of 680.

• The purchase of a second home or investment property is not permitted.

• Limited cash-out refinances are permitted for all occupancy types pursuant to the eligibility requirements in effect at that time.

• Cash-out refinances are not permitted for any occupancy type.

Deed in Lieu of Foreclosure

A four-year period is required to re-establish credit, measured from the completion date (the date the deed-in lieu was executed).

Additional requirements that apply after four years and up to seven years following the completion date:

Exceptions for Extenuating Circumstances

A two-year period is required to re-establish credit, measured from the completion date.

The additional requirements listed above apply after two years and up to seven years following the completion date.

Preforeclosure Sale (Short Sale)

A two-year period is required to re-establish credit, measured from the completion date.

Exceptions for Extenuating Circumstances

None.

Bankruptcy (Chapter 7 or Chapter 11)

A four-year period is required to re-establish credit, measured from the discharge or dismissal date of the bankruptcy action.

Exceptions for Extenuating Circumstances

A two-year period is required to re-establish credit, measured from the discharge or dismissal date of the bankruptcy action.

Bankruptcy (Chapter 13)

A distinction is made between Chapter 13 bankruptcies that were discharged and those that were dismissed. The time period required to re-establish credit for Chapter 13 bankruptcy actions is measured as follows:

This policy recognizes that borrowers have reestablished credit through the successful completion of a Chapter 13 plan and subsequent discharge by requiring only a two-year time period to elapse.

A borrower who was unable to complete the Chapter 13 plan and received a dismissal will be held to a four year time period for reestablishing credit.

Exceptions for Extenuating Circumstances

No exceptions are permitted to the two-year time period after a Chapter 13 discharge.

Multiple Bankruptcy Filings

For a borrower with more than one bankruptcy filing within the past seven years, a five-year period is required to re-establish credit, measured from the most recent dismissal or discharge date.

Note: The presence of multiple bankruptcies in the borrower's credit history is evidence of significant derogatory credit and increases the likelihood of future default.

Exceptions for Extenuating Circumstances

A three-year time period is required to re-establish credit, measured from the most recent discharge or dismissal date. The most recent bankruptcy filing must have been the result of extenuating circumstances.

Short-sale plan from Obama administration holds promise, especially for homeowners

Doug Reynolds (Prudential) — Tue, 15 Dec 2009 19:13:26 -0600

Second-lien holders may not be happy with proposal's cap on payouts

From chicagotribune.com, By Kenneth R. Harney, December 13, 2009

If you're in trouble on your mortgage and you can't get a loan modification, check out the Obama administration's new standardized short-sale plan that's scheduled to roll out in coming months.

The program, outlined Dec. 1 by the Treasury Department, is an attempt to streamline what has traditionally been a contentious, time-consuming process by requiring lenders and others to use nationally uniform documents, timelines and financial incentives.

A short sale involves a lender or investor agreeing to collect less than the balance owed on a mortgage debt out of the proceeds of a negotiated sale of the property. Often a short sale is the last alternative to foreclosure available to distressed homeowners and banks.

Your best move may be to see if your lender will accept a short sale. Though the idea sounds straightforward, in practice it is not. First, the bank needs to be convinced a short sale will yield it more money at the bottom line than a foreclosure.

This usually means you need to bring in a real estate agent who knows the ropes and can pull together the key information needed by the bank: recent comparables on closed sales, local market trends and the likely selling price of your house.

Plus, you'll need a buyer for the house, one who will pay a price acceptable to the bank and has financing to close the deal. If you happen to have a second mortgage or home-equity credit line on the property, you'll also need to negotiate how much that lender will receive from the sale proceeds.

That can be tricky. In depressed real estate markets, the second-lien lender may be holding a note that's worthless in a foreclosure because plummeting property values have wiped out the collateral. Yet that same bank is in a pivotal position: It has the legal power to block the short sale by refusing to sign on to the deal.

Equally troublesome in short sales is the fact that banks, mortgage servicers and bond investors often have conflicting requirements for documentation and financial yields that can complicate and drag out the haggling for months.

Enter the Obama administration's new streamlining plan. Besides requiring lenders and servicers to use uniform documentation, preapproved short-sale terms and accelerated turnaround times, the plan also provides financial incentives for key players:

--Homeowners who successfully complete a short sale under the program receive $1,500 to defray relocation costs. --Mortgage servicers can receive $1,000 per case.

--Investors get $1,000.

--Second-lien holders receive up to $3,000 from the sale proceeds.

Even real estate agents get something: The rules prohibit banks from forcing them to cut their commissions from the listing agreement as part of the final deal.

Sounds like a formula for encouraging a lot more short sales, right? The jury will be out on that for months, and most major lenders are still studying the fine print of the Obama program. But early reactions from big banks appear to be positive.

Dave Sunlin, a senior vice president for Bank of America, said, "We're very pleased. We welcome any effort to reach standardization for all parties" involved in short sales.

Faith Schwartz, executive director of Hope Now, a Washington, D.C.-based group representing the country's largest banks, mortgage servicers, bond investors and consumer counseling organizations, said the plan should bring "uniformity and standards" to a process usually characterized by "mayhem" among the negotiating parties.

Scott Brinkley, a senior vice president for First American Corp., a firm that provides market data for banks, said "you're going to see a lot of cooperation" by lenders and investors.

But there could be a major pothole: The Obama plan tilts to consumers by requiring second-lien holders to drop all financial claims against short-selling borrowers beyond the $3,000 they take out of the deal.

Travis Hamel Olsen, chief operating officer of Loan Resolution Corp., a Scottsdale, Ariz., consulting firm, said the $3,000 payment won't be enough for many second-mortgage lenders.

Today, they frequently obtain additional short-sale compensation, in cash or through promissory notes, from sellers as the price of their participation.

"I'm concerned that that could limit participation" by second-lien holders, he said.

Doug's Take: This is great news for distressed homeowners and the real estate market in general. Granted this is only good news as long as this is all implemented correctly and works properly. Unlike, some recent government programs/interventions which haven't turned out so well, i have higher hopes for this program. for some reason. Maybe because it's more relevant to me? I'm not sure but i'll stay positive about it and say this is good news. One major "issue" with short sales is the unknown of time line and the varying degrees of difference each deal has. Many buyers don't really want to have to deal with a short sale because they are left in the dark for so long while the bank is making a decision. If there were a set amount of time for each bank it would remove that question mark and worry of approaching a short sale. This would allow more inventory onto the market as well which is greatly needed in Sacramento. Any buyer over the last six months can tell you how crazy the below 300k market is right now. I don't know why it has taken this long to come up with the idea of standardized short sales but if it can be pulled off it would be a great success for real estate. But can it be done? What do you think? I guess time will tell...

clear skies,

_doug

www.BuyWithDoug.com

November 2009 Sacramento County Housing Statistics

Doug Reynolds (Prudential) — Sun, 13 Dec 2009 16:53:50 -0600

From BuyWithDoug.com's Blog

Doug's Take: Mostly more of the same for the County. We are still seeing a gradual increase in the median price. The median bottomed out in February 2009 and has been on an upward trend since then. This will continue as long as demand stays high and inventory stays low. We are up to 3.5 months of inventory, still considered a seller's market. Multiple offers, over list price, within a few days will remain common through the next couple of months while the Home buyer tax credit is still available. Remember, you need a signed offer by the end of April and need to close escrow by the end of June. We should expect more of the same at least through April.

clear skies,

doug

www.BuyWithDoug.com

Definition of First Time Home Buyer

Doug Reynolds (Prudential) — Fri, 11 Dec 2009 11:16:53 -0600

What is the definition of a first-time home buyer?

The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.

For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, IRS Notice 2009-12 allows unmarried joint purchasers to allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.

Many buyers, who had owned a home previously but not within the last three years, are typically surprised to find out that they once again considered a "First Time Home Buyer." I recently had a client of mine purchase a home. She was in her sixties and had owned many homes in the past but had been renting out of the area for the past five years. She was so excited to find out that even at her age and even though she had owned many properties before, she would be receiving the tax credit. Did you know that is how it works? My guess would be most people don't. Get the word out.

^^Great Location along American River^^3 bed, 1.5 bath Condo^^

Doug Reynolds (Prudential) — Thu, 10 Dec 2009 23:58:52 -0600

College Greens Condo

8243 La Riviera Dr., Sacramento, CA 95826 View Map

Great location provides it all for this 3 bedroom, 1.5 bath condo. Enjoy beautiful American River access all year long, only a few footsteps away. Close to Sac State, shopping, easy freeway access. Downstairs is an open living area. A large private patio in the back gives access to covered parking space. Upstairs provides 3 bedrooms & a full bath with two private sink areas. Lots of storage space. Extremely energy efficient with solar tubes & full dual pane windows providing a quiet atmosphere.

Details

Asking Price:

$140,000

MLS:

90092364

Sq. Feet:

1,326

Lot Size:

.02 acres

Bedrooms:

Bathrooms:

1.5

# of Floors:

HOA/Maintenance Fees:

165

Garage Size:

1 covered

Subdivision:

College Greens

Year Built:

1972

Property Amenities

Community Amenities

Contact Info

Doug Reynolds
Realtor

Cell 916-494-8441
Email | Website

Erick T. Perpich
Sr. Loan Consultant
The Home Loan Group (MetroCities JV)
2998 Douglas Blvd Ste. 230
Roseville, CA 95661
916.549.3577
Email | Website

All information is deemed reliable but is not guaranteed.

Rosemont and College Greens 2 year review

Doug Reynolds (Prudential) — Mon, 07 Dec 2009 15:04:06 -0600

Here is a statistical 2 year review of the 95826 (Rosemont, College Greens, Glenbrook). The first graph show the number of homes for sale vs. the number of sold homes and also indicates the pending (in escrow) homes as well. This next graph shows how the average Cumulative Days on Market have decreased while the percentage of sales price has increased in relation to the list price. Many homes right now, due to the lack of inventory are selling in a few days, for over list price with multiple offers. As you can see, the number of homes for sale has dramatically decreased over the last two years. This show how the neighborhood has transformed from a buyers market to a sellers market in that time period. The number of sales have been increasing during that time as buyers realize the market has bottomed out. This next graph shows how the inventory has gone from buyers market to sellers market. Traditionally, a “normal” market is defined by Six months of inventory. Anything above a buyers market, below a sellers market. Well, as you can see we are down to 3 months of inventory. Definitely a sellers market in the neighborhood right now.

Holiday Energy Saving Tips for the Oven/Range

Doug Reynolds (Prudential) — Mon, 07 Dec 2009 13:31:25 -0600

● Cook with the right size pot on the right size burner. Energy is lost up the sides of a small pot on a large burner and adds unnecessary heat to the kitchen.

● Open the oven door as little as possible. Your oven loses 25 to 50º F each time you open the door, making it work harder to maintain its temperature.

● Cover pans to reduce the cooking time and amount of heat needed.

● If you cook with electricity, turn the stovetop burners and oven off several minutes before the allotted cooking time.

● Use smaller appliances such as crock pots, toaster ovens and electric skillets whenever possible to save energy.

● Try to do most of your cooking in the microwave or on top of the range instead of in the oven.

● You can lower your oven temperature by 25ºF when baking with glass or ceramic dishes.

● Cook with aluminum or copper bottom pans for even heat conduction. Pans with straight sides and flat bottoms reduce cooking time and heat loss.

● Preheat ovens only when necessary. Unless you're baking breads or pastries, you may not need to preheat the oven at all.

● Keep range-top burner and reflectors clean; they will reflect the heat better and save energy.

95826 Sales Data - November 2009 (Rosemont, College Greens/Glenbrook)

Doug Reynolds (Prudential) — Fri, 04 Dec 2009 15:59:12 -0600

Here is sales data information for that area for closed sales in November 2009:

All of the 95826:

27 Sold Single Family Homes.

Median Square footage: 1,405

Median Listing Price: $175,000

Median Sales Price: $180,000

Average Days on Market: 12 days

Rosemont:

21 Sold SFR's

Median Sq. feet: 1,405

Median List: $175,000

Median SOLD: $180,000

Avg. DOM: 11

College Greens/Glenbrook:

6 Sold SFR's

Median Sq. feet:1,325

Median List: $210,000

Median SOLD: $210,000

Avg. DOM: 28

As of Today (December 4th, 2009) here's a snapshot of both markets:

Rosemont: 17 Active listings, 45 Active Short Sale/Contingent, 27 Pending.

College Greens/Glenbrook: 22 Active listings, 12 Active Short Sale/Contingent, 14 Pending.

Doug's Take: There are some great listings on the market in both neighborhoods right now. Let me know if you would like more info on any of them. As typical, Rosemont had more sales and a lower median sales price. The average days on the Market continues to drop for the 95826. This is due to lack of inventory (only 3 months for Sacramento County, considered a sellers market). As long as the inventory continues to stay low we will see homes selling for over with price within a few days.

clear skies,

doug

www.BuyWithDoug.com

Go Green this Christmas

Doug Reynolds (Prudential) — Thu, 03 Dec 2009 10:56:36 -0600

‘Tis the season to recycle so why not give the environment the best present of all this Christmas and put your waste to good use?

Easy ways to enjoy a greener Christmas:

● When shopping take a reusable bag and say no to plastic ones.

● Check the packaging. For example buy drinks in bigger bottles as they generate less waste.

● Stick with tradition and put presents in a stocking that can be reused.

● For toys and electrical gadgets buy rechargeable batteries-for every 500 charges you'll save 499 batteries being thrown away.

● Cardboard from bulky present packaging can be recycled.

● Got new glad rags for Christmas? Why not donate old clothing you no longer wear to charity?

● Recycle wrapping paper from Christmas morning as well as Christmas cards.

● When it's time to take your real tree down remember to chop it up and place it in on your curb, ready for recycling.

● Don't forget you can also take any extra waste or recycling to your nearest household waste recycling center which will be happy to take it off your hands.

First-time homebuyers leading market back

Doug Reynolds (Prudential) — Wed, 02 Dec 2009 18:21:45 -0600

Housing recovery is being propelled by affordability, bringing entry-level buyers back into the market.

NEW YORK (CNNMoney.com) By Les Christie, staff writer -- Propelled by the first-time homebuyers tax credit, nearly half of home sales are now being made by first-time purchasers, according to an industry report released Friday.

In fact, 47% of all Americans who purchased homes this year had not owned one during the previous three years, according to a press release Friday from the National Association of Realtors (NAR). That was up from 41% of sales in 2008 and 36% in 2006.

The tax credit boosted markets by giving first-time buyers a credit of up to $8,000 they could deduct from their income taxes. The credit is fully refundable: Even a buyer who pays less than $8,000 in income tax gets the full amount of the credit back.

The credit was recently extended through the middle of 2010 and expanded to include many existing homeowners. That has the industry buzzing.

"The credit is working better than first projected -- it now looks like we'll have 2.3 to 2.4 million first-time buyers this year," said Lawrence Yun, chief economist for NAR. "With expansion of the tax credit to additional buyers through the middle of next year, and no major unforeseen events impacting the economy, home prices should rise between 3% and 5% in 2010."

NAR forecasts that existing-home sales will total slightly over 5 million in 2009, a 2% increase compared with 2008. Next year, they predict a gain of 13.6% to 5.69 million units. That should draw down inventory and prop up home prices, according to Yun, but, he cautioned: "Risks, such as unemployment, remain."

Critics of the tax credit call it a poorly targeted method of boosting sales. The credit added, by nearly the most positive evaluations -- including NAR's -- fewer than 400,000 sales to the total this year, about 20% of all first-time purchases.

Since all first-timers get the credit, whether it persuaded them to buy or not, that would mean about $40,000 was spent by the government for every extra sale, critics say.

Most affordable housing in years

Indeed, many in the industry trace the improvement in the housing market to much better affordability, rather than the tax credit.

Not only have home prices fallen more than 30% from their peak, according to the S&P/Case-Shiller Home Price index, but mortgage rates have remained extremely low all year, keeping monthly payments low.

Most sales have been of existing homes. New home sales, as well as new home construction, have remained mired in the doldrums.

NAR predicts total new home sales will total a mere 397,000 this year, rising to 549,000 in 2010. During the housing boom, new home sales were far higher, more than 1.35 million in 2005, for example.

While new home sales are still very low, the inventory of new homes for sale has been dropping. That's because very few new homes are being built. Existing home inventory has also fallen a bit.

"We've seen a steady downtrend in housing inventory for well over a year," said Yun.

Any home price rise will also have a healthy impact on the foreclosure plague. Falling prices are a major contributing factor driving foreclosures. As home values fall, homeowners are less able and less likely to continue to make monthly payments.

Doug's Take: I felt this was a well written article for a "big picture", nationwide scale. Our market in Sacramento is ahead of much of the rest of the country in terms of housing recovery. One major factor is our housing inventory has remained extremely low, near 3 months. That is considered a sellers market. Also, i felt the estimation of 3-5% appreciation might be a bit high. I'm planning on writing about my 2010 market predictions soon, so i'll have to decide my final answer on that. Anyway, i thought it was just a good read.

clear skies,

doug

www.BuyWithDoug.com

‘Tis the Season for Safety

Doug Reynolds (Prudential) — Mon, 30 Nov 2009 13:55:22 -0600

Hello All,

I hope everyone had a wonderful Thanksgiving filled with food, family and friends. In my family, it's tradition to put up the lights the day after thanksgiving. Thankfully no-one fell off the ladder this year. So in light of being safe, here's a few Safety Tips for the holidays. I'll have a few more Holiday "Tips" throughout the month. Enjoy and be safe!

During the holiday hustle and bustle, people often overlook simple safety precautions. No matter where you're decorating or what you're buying, it is important to remember some important safety tips. CSA International, a global certification and testing organization, recommends that you follow these smart shopping tips, as well as indoor and outdoor decorating safety guidelines, to help ensure everyone has a safe holiday season:

Indoors

● Inspect lights each year and discard those that are frayed or broken.

● Never tack or staple lights or extension cords to any surface.

● Never run electrical cords through doorways or under carpets and rugs.

Outdoors

● Before working with outdoor wiring, turn off the electricity and unplug connection.

● Ensure that lights are certified for outdoor use.

● When hanging lights outdoors, keep electrical connectors above ground, out of water and away from metal gutters.

Is your home Ready for Winter?

Doug Reynolds (Prudential) — Wed, 25 Nov 2009 15:06:58 -0600

The following is a check list of home maintenance tips to get your home ready for winter. Minor repairs and weather proofing can save you big money on heating bills this winter. Comfort, safety, and saving money can be achieved by following these tips.

Maintenance Tips

•· Check all window and door locks for proper operation

•· Check your home for water leaks

•· Review your fire escape plan with your family

•· Make sure there are working nightlights at the top and bottom of all stairs

•· Have a heating professional check your heating system every year

•· Protect your home from frozen pipes

•· Replace your furnace filter

•· Run all gas-powered lawn equipment until the fuel is gone

•· Test your emergency generator

•· Have a certified chimney sweep inspect and clean the flues and check your fireplace damper

•· Remove bird nests from chimney flues and outdoor electrical fixtures

•· Inspect and clean dust from the covers of your smoke and carbon monoxide alarms

•· Make sure the caulking around doors and windows is adequate to reduce heat/cooling loss

•· Make sure that the caulking around your bathroom fixtures is adequate to prevent water from seeping into the sub-flooring

Check all window and door locks for proper operation.

•· Windows that can be opened by breaking the glass and unlocking them, are less effective deterrents to criminals. Check with the hardware store for window lock alternatives.

•· All exterior doors should have deadbolt locks.

Check your home for water leaks.

Check roof, siding, exterior doors and windows for possible water entry locations and repair as necessary..

Make sure there are working nightlights at the top and bottom of all stairs.

Other safety ideas for stairs:

•· Tile and painted wood or concrete stairs can be slippery when wet or when a person's shoes are wet. Resurface the treads with slip-resistant strips near the stair nosing.

•· All stairs of at least three risers should have a handrail.

•· Do not store items on the stairs.

Have a heating professional check your heating system every year.

Wood burning stove connector pipes and chimneys should be inspected by a certified chimney sweep at least annually.

Protect your home from frozen pipes.

A look at Real Estate History

Doug Reynolds (Prudential) — Tue, 24 Nov 2009 13:37:52 -0600

According to a June 2009 report by the Federal Housing Finance Agency, the typical housing downturn, from peak to valley, lasts 3¾ years historically speaking. However, the same report found that the typical housing upswing, from valley to peak, lasts 6½ years.

Doug's Take: I found this very interesting and reflected on our latest downturn. In Sacramento County, we statistically peaked in August 2005 @ a median price of $392,750. 3.75 years would come out to May 2009. Well, as i've been saying for months now, we statistically bottomed out in Sacramento County in February 2009. Amazingly close to 3.75 years of a downturn. Granted this one was much steeper than a typical downturn but our upswing before it was much sharper than normal. My personal opinion is Sacramento has bottomed out and we will see very slow and steady growth over the next few years. Yes, we might bounce around when you look at month to month numbers but overall, slow and steady growth.

clear skies,

doug

www.BuyWithDoug.com

Don't Get Scammed. Protect Yourself

Doug Reynolds (Prudential) — Mon, 23 Nov 2009 16:22:09 -0600

From BuyWithDoug.com's Blog

FHA 90 Day Anti-Flipping Rule Issues Summary

Doug Reynolds (Prudential) — Wed, 18 Nov 2009 18:57:49 -0600

information provided by California Association of Realtors

Status/Summary:
Currently, FHA will not insure a loan for any property where title was transferred within 90 days. There are some exceptions to this rule, including GSE REOs, HUD REOs, state and federally chartered financial institution REOs, and properties where local and state governments have taken possession. What is not exempted from the rule are properties that were bought by investors and/or developers looking to do quick fixes and then flip the property.

California's housing market has evolved throughout 2009, and with mortgage rates still at all time lows and home prices in the lower-end markets back to pre-bubble levels, demand for this market in California has skyrocketed. Multiple offers have become the norm for appropriately priced homes. Many of these offers are from investors looking to take advantage of low REO prices and turn them quickly for a profit. These investors are now discovering that FHA homebuyers, who make up a substantially large portion of today's buyers, are not eligible to purchase the flipped property.

Background:
In 2001, HUD issued a proposed rule that would have barred the FHA from insuring mortgages for buyers purchasing properties six-months after the property changed hands. The purpose of this was to protect the FHA and its tax-payer guaranteed reserve funds from a rash of flipping scams that were preying upon both the FHA rules and homebuyers.

While there were many scams going on, they would often involved in one form or another collusion between investors, appraisers, agents, and/or lenders. Investors would purchase properties at rock-bottom prices, often in poorer neighborhoods and/or neighborhoods that had been hit hard by foreclosures. The investor may or may not perform some cosmetic improvements and then would resell the home after a few days or weeks at an artificially inflated price. Appraisers in on the deal would support the inflated price and a lender or mortgage broker would lie on the homebuyer application. Sometime there were homebuyers who bought a home not worth what they paid, and sometimes the buyers were fictitious (straw buyers). FHA buyers may be more vulnerable to predatory loans as they are usually first-time homebuyers and/or have little to no financial education. In the end FHA was left holding the bill.

The 90 day rule was a compromise between HUD and industry parties. The purpose of the 90 day anti-flipping rule was to garner support from both business interests and consumer groups. Many lenders at the time had implemented this practice prior to FHA making it official, so when the anti-flipping rule went into effect there was little to no change for some lenders.

Changing the 90 day anti-flipping rule is a recognition of how market conditions have changed since 2001. Throughout 2009 investors have purchased many properties helping to maintain a low inventory and high demand throughout the year. Changing this law is necessary so as not to discourage investors and drive them from the market.

The problem of participating parties colluding to defraud consumers and the FHA is not as big of a concern now that Congress has passed the SAFE Act requiring minimum requirement for mortgage originators and their national registration, and the tougher appraisal standards that have removed the ability to choose an appraiser from mortgage brokers and lender employees whose compensation is determined by the completion of the transaction.

Doug's Take: I agree with removing the 90 day Flip rule. With new laws in place, the original need for the rule is no longer valid. Also, with the way inventory is so low, many properties are not available to FHA buyers because of the rule. Flips have come back into the market very strong in the last 6 months here in Sacramento. Most of the good flippers have the property back on the market for sale within a few weeks. These properties cannot be purchased by FHA buyers. We already have enough of an inventory issue. I think removing the rule will help the market by still incouraging investors who want to flip properties and for buyers that would like to purchase those nicely remodeled homes but have little to put down and can only get FHA financing.

clear skies,

doug

www.BuyWithDoug.com

Google Maps Expands Real Estate Info

Doug Reynolds (Prudential) — Tue, 17 Nov 2009 12:41:27 -0600

Google has been improving the usability of real estate information in its Google Maps function.

Users can now select the "real estate" option from the "more" button on the top right of any Google Map. They'll automatically see balloons on the maps of listings, as well as a pop-up real estate refinement panel on the left.

From there, they can refine what they are searching for by checking the boxes for renting or buying, apartment or house, as well as price range, square footage, numbers of bedrooms and bathrooms, and foreclosure listings.

Doug's Take: I played around with this new feature for a little while today. It is user friendly and simple, however the information was not the most accurate and/or up to date in comparison to the MLS data. Knowing how great Google is, i'm sure the information will begin to be more accurate and more reliable as time goes by and this new feature catches on. Kind of cool though.

clear skies,

doug

www.BuyWithDoug.com

October 2009 Sacramento County Real Estate Statistics

Doug Reynolds (Prudential) — Mon, 16 Nov 2009 23:07:48 -0600

From BuyWithDoug.com's Blog

Change in sales volume and median sales price small but positive

Sacramento sales volume and median sales price both increased for October, showing a continued trend of a flat local market. Single family home sales increased 5.2% from 1,631 to 1,716 total units in October. Year-to-year, the current figure is 18.4% below the 2,103 sales of October 2008. Of the 1,716 sales this month, REO sales made up 41.6% of the total sales while short sales and conventional sales made up the remainder of sales at 20.7% and 37.7%, respectively. When compared with last month, REO sales decreased slightly while short sales and conventional sales showed slight increases.

After a month of decline, the median sales price increased 1.1% in October from $183,000 to $185,000. Compared to the previous year, the current figure is 5.2% below the $195,100 of October 2008. The Total Listing Inventory increased 2.3% from 5,273 to 5,392. The current Total Listing Inventory is 26.2% below the 7,304 listings reported in October last year. The Housing Market Supply figure changed slightly month-to-month from 3.2 months to 3.1 months. Compared with last year, this figure is down 11.4% from the 3.5 months of inventory of October 2008. This figure represents the amount of time - in months - it would take to deplete the total listing inventory given the current rate of sales. According to MetroList® MLS data, the average home spent 49 days on market (from the time it was listed to the time escrow was opened) and was 1,692 square feet. Of the 1,716 sales this month, 160 (9.3%) had 2 bedrooms or fewer, 956 (55.7%) had 3 bedrooms, 468(27.2%) were 4 bedroom properties and 132 (7.6%) boasted 5+ bedrooms.

A lackluster Sacramento market does have a positive side: market stability. In the last six months the median sales prices has remained between $180,000 and $190,000. This makes for a less volatile market than Sacramento had previously encountered. Also, the recent extension of the $8,000 tax credit for first time homebuyers has relieved many trying to close before the original November 30th deadline. The new deadline has been set for April 30th, with a 60-day extension if a binding contract is placed prior to the April deadline. A less publicized $6,500 tax credit for "move up" buyers also went into effect following the vote. For more information on the tax credit, view my older blog posts. Also available to first-time homebuyers represented by a REALTOR® is theMortgage Protection Program (MPP). This program is offered through the C.A.R. Housing Affordability Fund and it provides involuntary unemployment protection to buyers, increasing buyer confidence and reducing the possibility of foreclosure.

November/December 2009 Sacramento Real Estate Update

Doug Reynolds (Prudential) — Mon, 16 Nov 2009 14:28:55 -0600

clear skies,

doug

www.BuyWithDoug.com

Is this a safe neighborhood?

Doug Reynolds (Prudential) — Thu, 12 Nov 2009 17:50:00 -0600

Is this neighborhood safe? A question i get asked on a regular basis as a Realtor. Well, over the years i've found some good resources to find out the answer to that question. If you are every looking for a home in an unfamiliar neighborhood, it's always a good idea to check out the crime and school statistics in the area. That information will effect your comfort level in your new home and your resale value later on.

Some resources include NeighborhoodScout or SpotCrime. One particularly important point to note is the issue of sexual predators. CrimeReports.com allows you to enter your address to locate crime statistics plus identify whether registered sexual predators are living nearby. Please note that unless your local policing authority is reporting crimes to these online sources, there may not be accurate or complete data.

clear skies,

Doug

www.BuyWithDoug.com

Sacramento County, 3rd Quarter Market Report

Doug Reynolds (Prudential) — Tue, 10 Nov 2009 13:45:19 -0600

From BuyWithDoug.com's Blog

Part 2: Credit After Foreclosure, Bankruptcy, or Short Sale

Doug Reynolds (Prudential) — Mon, 09 Nov 2009 15:07:14 -0600

...continued from Part 1. All informtation provided by California Association of Realtors (C.A.R.)

Q 20. What is a FICO® Score?

A A FICO® score is a number representing the creditworthiness of a person or the likelihood that person will pay his or her debts. The three credit reporting agencies, Equifax, Experian, and TransUnion, collect data about consumers in order to compile credit reports. The credit agencies use FICO® software to generate FICO® scores, which are then sold to lenders. Actually FICO® is just one of the several credit scoring systems available. The Fair Isaac Corporation (known as FICO®) created the first credit scoring system in 1958. Others are NextGen, VantageScore, and the CE Score. They all evaluate the creditworthiness of a borrower. However, FICO appears to be the most-used credit scoring system. A FICO® score is between 300 and 850. The higher the better the credit.

Each consumer has three credit scores at any given time for any given scoring model because the three credit agencies have their own databases, gather reports from different creditors, and receive information from creditors at different times.

Q 21. What factors go into determining a FICO® score?

A Credit scores are designed to measure the risk of default by taking into account various factors in a person's financial history. Although the exact formulas for calculating credit scores are closely-guarded secrets, FICO® has disclosed the following components and the approximate weighted contribution of each:

35% - Payment History - Late payments on bills, such as a mortgage, credit card or automobile loan, can cause a consumer's FICO® score to drop. Paying bills as agreed over time will improve a consumer's FICO® score.

30% - Credit Utilization - The ratio of current revolving debt (such as credit card balances) to the total available revolving credit (credit limits). Consumers can improve their FICO® scores by paying off debt and lowering their utilization ratio. The closing of existing revolving accounts will typically adversely affect this ratio and therefore have a negative impact on the FICO® score.

15% - Length of Credit History - As a consumer's credit history ages, assuming the consumer pays his or her bills, it can have a positive impact on the FICO® score.

10% - Types of Credit Used (installment, revolving, consumer finance) - Consumers can benefit by having a history of managing different types of credit.

10% - Recent search for credit and/or amount of credit obtained recently - Multiple credit inquiries for a consumer seeking to open new credit, such as credit cards, retail store accounts, and personal loans, can hurt an individual's score. Applying for lots of new credit in a short period of time is also viewed as risky and can cause a drop in an individual's score. However, individuals shopping for a mortgage or auto loan over a short period will likely not experience a decrease in their scores as a result of these types of inquiries.

(Source: http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx)

Q 22. How does a mortgage modification affect my FICO® score?

A FICO® credit scores are calculated from the information in consumer credit reports. Whether a loan modification affects the borrower's FICO® score depends on whether and how the lender chooses to report the event to the credit bureau, as well as on the person's overall credit profile. If a lender indicates to a credit bureau that the consumer has not made payments on a mortgage as originally agreed, that information on the consumer's credit report could cause the consumer's FICO® score to decrease or it could have little to no impact on the score.

(Source: http://www.myfico.com/crediteducation/questions/Mortgage_Modification.aspx)

Q 23. How does a bankruptcy affect my FICO® score?

A A bankruptcy is considered a very negative event regardless of the type. A bankruptcy is factored into your FICO® score until it is removed from your credit report. As long as the bankruptcy is listed on your credit report, it will be factored into your score. If you are considering bankruptcy as an alternative to foreclosure, keep in mind that it may have a greater impact on your FICO® score.

Typically, you can expect bankruptcies to remain on your credit report, from the date filed, as follows:

(1) Chapter 11 and Chapter 7 bankruptcies up to 10 years.

(2) Completed Chapter 13 bankruptcies up to 7 years.

These time periods refer to the public record item associated with filing for bankruptcy. All of the individual accounts included in the bankruptcy should be removed from your credit report after 7 years. (Source: http://www.myfico.com/crediteducation/Questions/Bankruptcy-Types.aspx)

If you plan to file a bankruptcy, here are some things you should do to make sure your creditors are accurately reporting the bankruptcy filing:

(1) Check your credit report to ensure that accounts that were not part of the bankruptcy filing are not being reported with a bankruptcy status.

(2) Make sure your bankruptcy is removed as soon as it is eligible to be "purged" from your credit report.

After a bankruptcy has been filed, the sooner you begin re-establishing credit in good standing, the sooner you can expect your FICO® score to rebound. A good practice is to obtain a secured credit card and continually make all of your payments on time. As time passes and the impact of the bankruptcy lessens, you might apply for a traditional credit card and also continually make all of your payments on time.

(Source: http://www.myfico.com/crediteducation/questions/Bankruptcy-Reach.aspx)

Q 24. How does a short sale, deed-in-lieu-of foreclosure. or a foreclosure affect my FICO® score?

A The alternatives to foreclosure, such as a deed-in-lieu of foreclosure or a short sale, aren't any better as far as a FICO® score is concerned.

The common alternatives to foreclosure, such as short sales, and deeds-in-lieu of foreclosure are all "not paid as agreed" accounts, and considered the same by your FICO® score. This is not to say that these may not be better options for you from a financial or tax perspective, just that they will be considered no better or worse for your FICO® score.

If you are considering bankruptcy as an alternative to foreclosure, that may have a greater impact on your FICO® score. While a foreclosure is a single account that you default on, declaring bankruptcy has the opportunity to affect multiple accounts and therefore has potential to have a greater negative impact on your FICO® score.

(Source: http://www.myfico.com/CreditEducation/Questions/foreclosure-alternatives-fico-score.aspx)

Q 25. What won't affect my FICO® score?

A The following information is not considered by the FICO® scoring formula:

^. Your race, color, religion, national origin, sex, or marital status
^. Your age
^. Your salary, occupation, title, employer, date employed, or employment history
^. Where you live
^. Any interest rate being charged on a particular credit card or other account
^. Certain types of inquiries (such as promotional, account review, insurance or employment-related inquiries)
^. Credit counseling
^. Any information not found in your credit report
^. Any information that is not proven to be predictive of future credit performance

(Source: http://myfico.custhelp.com/cgi-bin/myfico.cfg/php/enduser/std_adp.php?p_faqid=55)

Credit After Foreclosure, Bankruptcy, or Short Sale

Doug Reynolds (Prudential) — Sun, 08 Nov 2009 18:05:53 -0600

Information provided by California Association of Realtors (C.A.R.):

One of the concerns a consumer has after experiencing a bankruptcy, foreclosure, or short sale (referred to as a "preforeclosure sale" by Fannie Mae) is the ability to obtain credit to purchase another home. Fannie Mae has updated its credit guidelines. This legal article summarizes those guidelines in Part I. In addition, since lenders use FICO scores in order to determine the creditworthiness of a borrower, this article covers the impact of a bankruptcy, foreclosure or short sale on FICO scores in Part II.

I. Fannie Mae Credit Guidelines

Q 1. How long is the time period after a foreclosure before a consumer can be eligible to obtain credit to purchase a home?

A Five years from the date the foreclosure sale was completed.

Additional requirements that apply after 5 years and up to 7 years following the completion date are as follows:

^. The purchase of a principal residence is permitted with a minimum 10 percent down payment and minimum representative credit score of 680.

^. Purchase of a second home or investment property is not permitted.

^. Limited cash-out refinances are permitted for all occupancy types pursuant to the eligibility requirements in effect at that time.

^. Cash-out refinances are not permitted for any occupancy type.

(Source: FNMA Announcement 08-16, 6-25-08 )

Q 2. Why do the additional requirements for foreclosures in Question 1 only apply from 5 to 7 years following the foreclosure completion date?

A According to Fannie Mae policy in Part X, Section 103 of the Selling Guide, Fannie Mae requires only a 7-year history to be reviewed for all credit and public record information. The 7-year timeframe also aligns with the information provided by the borrower on the loan application relative to disclosure of a past foreclosure action. (Source: FNMA Selling Guide, 4-1-09. )

Q 3. Does a shorter time period apply if the borrower has "extenuating circumstances" that led to the foreclosure?

A Yes. Three years from the date the foreclosure sale was completed. The same additional requirements apply as listed in Question 1 except the minimum credit score of 680 is not required. (Source: FNMA Announcement 08-16, 6-25-08. )

Q 4. What are"extenuating circumstances" ?

A Fannie Mae describes "extenuating circumstances" as follows:

Extenuating circumstances are nonrecurring events that are beyond the borrower's control that result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations.

If a borrower claims that derogatory information is the result of extenuating circumstances, the lender must substantiate the borrower's claim. Examples of documentation that can be used to support extenuating circumstances include documents that confirm the event (such as a copy of a divorce decree, medical bills, notice of job layoff, job severance papers, etc.) and documents that illustrate factors that contributed to the borrower's inability to resolve the problems that resulted from the event (such as a copy of insurance papers or claim settlements, listing agreements, lease agreements, tax returns (e.g., covering the periods prior to, during, and after a loss of employment).

The lender must obtain a letter from the borrower explaining the relevance of the documentation. The letter must support the claims of extenuating circumstances, confirm the nature of the event that led to the bankruptcy or foreclosure-related action, and illustrate the borrower had no reasonable options other than to default on his or her financial obligations.

(Source: FNMA Selling Guide, 4-1-09 at 391. )

Q 5. How long is the time period after a deed-in-lieu of foreclosure before a consumer can be eligible to obtain credit to purchase a property?

A Four years from the date the deed-in-lieu was executed.

Additional requirements that apply after 4 years and up to 7 years following the completion date are as follows:

^. Borrower may purchase a property secured by a principal residence, second home, or investment property with the greater of 10 percent minimum down payment or the minimum down payment required for the transaction.

^. Limited-cash-out and cash-out refinance transactions secured by a principal residence, second home, or investment property are permitted pursuant to the eligibility requirements in effect at that time.

(Source: FNMA Announcement 08-16, 6-25-08. )

Q 6. Does a shorter time period apply if the borrower has "extenuating circumstances" that led to the deed-in-lieu of foreclosure?

A Yes. Two years from the date the deed-in-lieu was executed. The same additional requirements apply as listed in Question 4 after 2 years up to 7 years. (Source: FNMA Announcement 08-16, 6-25-08. )

See Question 4 for the definition of "extenuating circumstances."

Q 7. How long is the time period after a "preforeclosure sale" before a consumer can be eligible to obtain credit to purchase a property?

A Two years from the completion date. No exceptions are permitted to the 2-year period due to extenuating circumstances. (Source: FNMA Announcement 08-16, 6-25-08. )

Q 8. What is a "preforeclosure sale" mentioned in Question 6 and is that the same as a short sale?

A "A preforeclosure sale involves the sale of the property by the borrower to a third party for less than the amount owed to satify the delinquent mortgage, as agreed to by the lender, investor, and mortgage insurer" (Source: FNMA Announcement 08-16, 6-25-08 ).

Although the terms preforeclosure sale and short sale have been used interchangeably, there is a significant difference for purposes of obtaining credit. For Fannie Mae purposes, a preforeclosure assumes that the borrower has been delinquent in paying his or her mortgage and the lender agrees to accept a lesser amount to avoid the time and expense of a foreclousre action. A short-sale, however, can also refer to situations in which the lender of the mortgage agrees to a payoff of a lesser amount than is actually owed, even on a current mortgage, to facilitate the sale of the property to a third party. (Source: FNMA Announcement 08-16 Q&A, 8-13-08. )

Q 9. Does a shorter time period apply if the borrower has "extenuating circumstances" that led to the preforeclosure (short) sale?

A No. There are no exceptions to the 2-year time period. (Source: FNMA Announcement 08-16, 6-25-08. )

Q 10. If a borrower sold his or her property as a short sale but was never delinquent on that mortgage and is now attempting to purchase a new primary residence, will Fannie Mae purchase the loan?

A The loan will be eligible for delivery to Fannie Mae provided that the borrower's previous mortgage history complies with Fannie Mae's excessive prior mortgage delinquency policy--that is the borrower does not have one or more 60-, 90-, 120-, or 150-day delinquencies reported within the 12 months prior to the credit report date--and the borrower has not entered into any agreement with the short sale lender to repay any amounts associated with the short sale, including a deficiency judgment. (Source: FNMA Announcement 08-16 Q&A, 8-13-08 ; FNMA Selling Guide, Part X, Chapter 3, Section 302.09. .)

Q 11. Are preforeclosure (short) sales and deed-in-lieu of foreclosure actions identified on a credit report?

A Preforeclosure sales may be reported as "paid in full" with a "settled for less than owed" remarks code, and the mortgage tradeline would indicate any recent delinquency. A deed-in-lieu may be reported by a remarks code indicating a deed-in-lieu. (Source: FNMA Announcement 08-16 Q&A, 8-13-08. )

Q 12. How long is the time period after a bankruptcy (all except Chapter 13) before a consumer can be eligible to obtain credit to purchase a property?

A Four years from the discharge or dismissal date of the bankruptcy action (Source: FNMA Announcement 08-16, 6-25-08 ).

Q 13. How long is the time period after a Chapter 13 bankruptcy before a consumer can be eligible to obtain credit to purchase a property?

A Two years from the discharge date and four years from the dismissal date (Source: FNMA Announcement 08-16, 6-25-08 ).

Q 14. Does a shorter time period apply if the borrower has "extenuating circumstances" that led to the bankruptcy (all actions)?

A Yes. Two years from the discharge or dismissal; however, no exceptions are permitted to the 2-year time period after a Chapter 13 discharge (Source: FNMA Announcement 08-16, 6-25-08 ).

See Question 4 for the definition of "extenuating circumstances."

Q 15. How long is the time period after multiple bankruptcy filings before a consumer can be eligible to obtain credit to purchase a property?

A Five years from the most recent dismissal or discharge date for borrowers with more than one bankruptcy filing within the past 7 years (Source: FNMA Announcement 08-16, 6-25-08 ).

Q 16. Does a shorter time period apply if the borrower has "extenuating circumstances" that led to the multiple bankruptcies?

A Yes. Three years from the most recent discharge or dismissal date. The most recent bankruptcy filing must have been the result of extenuating circumstances. (Source: FNMA Announcement 08-16, 6-25-08. )

See Question 4 for the definition of "extenuating circumstances."

Q 17. What is the difference between a Chapter 13 bankruptcy and a Chapter 7 bankruptcy?

A Chapter 13 permits a borrower with a regular income to propose a plan to repay some or all of his or her obligations over a period of up to five years. A borrower who files a Chapter 7 is permitted to retain exempt assets and receive a discharge of the borrower's debts. Chapter 7 is a relatively quick liquidation process that is generally completed within 120 days. Chapter 7 cases are rarely dismissed. (Source: FNMA Announcement 08-16 Q&A, 8-13-08. )

Q 18. What is the difference between a Chapter 13 dismissal and a Chapter 13 discharge?

A A borrower who files a Chapter 13 can dismiss the case at any time (voluntary dismissal) or the case may be dismissed by the court based on the borrower's failure to comply with the requirements of the Bankruptcy Code or to make the required payments. If the borrower who files a Chapter 13 case makes all of the payments required by the plan, the borrower receives a discharge at the end of the plan. A borrower who doesn't make all the payment required by the plan may still receive a discharge if the court finds, among other things, that the borrower made a certain amount of the payments and the borrower's failure to make all of the payments was due to circumstances beyond the borrower's control. (Source: FNMA Announcement 08-16 Q&A, 8-13-08. )

Q 19. What are the requirements to re-establish a credit history?

A After a bankruptcy or foreclosure-related action, a credit history must meet the following rquirements to be considered re-established:

^. It must meet the requirements for elapsed time (as discussed in this article).

^. It must reflect that all accounts are current as of the date of the mortgage application.

^. it must include a minimum of four credit references. At least one of the references must be a traditional credit reference, and one of the references must be housing-related.

(1) A housing-related reference must cover the period following the bankruptcy discharge or dismissal, foreclosure, or deed-in-lieu, and can be in the form of mortgage payments or rental payments.

(2) If rental payments wre not reported to the credit repositories, the lender must obtain copies of bank statements, money orders, or canceled checks for the most recent 12-month period as a supplement to the rent verification.

^. It must reflect three of the four credit references, including rental housing references, as active in the 24 months preceding the date of the mortgage application.

^. It must include no more than two installment or revolving debt payments 30 days past due in the last 24 months.

^. It must include no installment or revolving debt payments 60 or more days past due since the discharge or dismissal of the bankruptcy or the completion of the foreclosure-related action.

^. It must include no housing debt payments past due since the discharge or dismissal of the bankruptcy or the completion of the foreclosure-related action.

^. It must include no new public records since the discharge or dismissal of the bankruptcy or the completion of the foreclousre-related action. Public records include bankruptcies, foreclosures, deeds-in-lieu, preforeclosure sales, unpaid judgments or collections, garnishments, liens, etc.

Obama Extends Homebuyer Tax Credit

Doug Reynolds (Prudential) — Fri, 06 Nov 2009 16:19:55 -0600

Feel free to email or call me with any additional questions. I'm here to help you or any of your referrals that want to take advantage of this extended opportunity.

clear skies,

doug

www.BuyWithDoug.com

Extra Tax Credit Info

Doug Reynolds (Prudential) — Fri, 06 Nov 2009 14:49:28 -0600

Can a Taxpayer Claim a Credit if the Property is Purchased from a Seller with Seller Financing and the Seller Retains Title to the Property?

Yes. In situations where the buyer purchases the property, even though the seller retains legal title, the taxpayer may file for the credit. Some examples of this would include a land contract or a contract for deed.

According to the IRS, factors that would demonstrate the ownership of the property would include:

1. Right of possession,
2. Right to obtain legal title upon full payment of the purchase price,
3. Right to construct improvements,
4. Obligation to pay property taxes,
5. Risk of loss,
6. Responsibility to insure the property, and
7. Duty to maintain the property.

Are There Other Restrictions to Taking the FTHB Credit?

Yes. According to the IRS, if any of the following describe a homebuyer's situation, a credit would not be due:

They buy the home from a close relative. This includes a spouse, parent, grandparent, child or grandchild. (Please see the question below for details regarding purchases from "step-relatives.")
They do not use the home as your principal residence.
They sell their home before the end of the year.
They are a nonresident alien.
They are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. (This does not apply for a home purchased in 2009.)
Their home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)
They owned a principal residence at any time during the three years prior to the date of purchase of your new home. For example, if you bought a home on July 1, 2008, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2005, through July 1, 2008.

Can Homebuyers Purchase a Home from a Step-Relative and Still be Eligible for the Credit?

Yes. As long as the person they buy the home from is not a direct blood relative, the purchase would be allowed.

If a Parent (Who Will Not Live In The Property) Cosigns for a Mortgage, Will Their Child Still be Eligible for the Credit?

Yes, provided that the child meets the other requirements for the tax credit.

Breaking News: Obama Extends Tax Credit

Doug Reynolds (Prudential) — Fri, 06 Nov 2009 14:37:08 -0600

Homebuyer Tax Credit Update!

Today, President Obama signed a bill to extend the tax credit for first-time homebuyers (FTHBs) through June 30, 2010. The bill also opens up opportunities for others who are not buying a home for the first time.

TAX CREDIT OVERVIEW

Who Gets What?

First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Current Owners: The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What are the New Deadlines?

In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

What are the Income Caps?

The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible

Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

What is the Maximum Purchase Price?

Qualifying buyers may purchase a property with a maximum sale price of $800,000.

What is a Tax Credit?

A tax credit is a direct reduction in tax liability owed by an individual to the Internal Revenue Service (IRS). In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual is owed. Unlike the tax credit that existed in 2008, this credit does not require repayment unless the home, at any time in the first 36 months of ownership, is no longer an individual's primary residence.

How Much are First-Time Homebuyers (FTHB) Eligible to Receive?

An eligible homebuyer may request from the IRS a tax credit of up to $8,000 or 10% of the purchase price for a home. If the amount of the home purchased is $75,000, the maximum amount the credit can be is $7,500. If the amount of the home purchased is $100,000, the amount of the credit may not exceed $8,000.

Who is Eligible for FTHB Tax Credit?

Anyone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title, is eligible.

This applies both to single taxpayers and married couples. In the case where there is a married couple, if either spouse has owned a primary residence in the last 36 months, neither would qualify. In the case where an individual has owned property that has not been a primary residence, such as a second home or investment property, that individual would be eligible.

As mentioned above, the tax credit has been expanded so that existing homeowners who have owned and occupied a primary residence for a period of five consecutive years during the last eight years are now eligible for a tax credit of up to $6,500.