Ilyce's Blog

Who Wants To Buy A Foreclosure? Real Estate Investors, Trade-Up Buyers, and Renters

Ilyce Glink (Think Glink Publishing) — Wed, 16 Dec 2009 14:48:08 -0600

Who wants to buy a foreclosure? Fewer people than you might imagine.

RealtyTrac, an online marketplace for foreclosures, and Trulia, a search engine for real estate listings, said that overall interest in buying a foreclosure declined to 43 percent from 55 percent, according to the results of a new survey.

But interest in foreclosures among real estate investors, trade-up buyers and renters remains strong.

Nearly a quarter of all adults would buy a second home, and of those 92 percent said they would buy a foreclosure.
About 24 percent of homeowners are at least “somewhat likely” to trade up to a larger home. Of that group, 88 percent would consider buying a foreclosure.
Fifty-seven percent of renters said they are at least somewhat likely to buy a distressed property. But younger renters feel even better about foreclosures: 61 percent of renters aged 18 to 34 and 65 percent of renters aged 35 to 44 would consider buying a foreclosure. Just 40 percent of renters aged 55 and older would consider a foreclosure.

Why do you think investors, trade-up buyers and renters are the buyers most interested in foreclosure properties? What kind of people do you see looking at distressed properties?

For more information about the RealtyTrac survey and my analysis, read my CBS MoneyWatch blog.

Does Death Of Spouse Affect Your Mortgage?

Ilyce Glink (Think Glink Publishing) — Mon, 14 Dec 2009 20:17:00 -0600

How does the death of your spouse affect your mortgage?

When your spouse dies, if you are also listed on the mortgage, you are still the borrower and continue to own the home. Your spouse's death should not affect your mortgage if you are listed as a borrower or held title jointly.

If you want to change the mortgage to be in your name only, you can refinance your mortgage. In the case of the death of your spouse, as long as you continue to make the mortgage payments, your mortgage should not be affected.

When your spouse dies and you are on the mortgage, you continue to be the borrower under the loan and continue to own the home.

While the lender might see your spouse’s death as a transfer of title, there are federal laws that prevent the lender from calling the loan due to his death. You could talk to a real estate attorney about the issue, but unless you are refinancing your loan and need to apply for a new loan, your loan should remain in place.

You should know that if you held title to the home jointly, you inherited your husband’s half of the home automatically and probably don’t need to anything to change the title to the home.

If you refinance the loan in the future and want to make sure that the only name that shows up on the title to the home is yours, you can work with the title company or settlement agent to take care of any paperwork to do that.

Is Land A Good Investment?

Ilyce Glink (Think Glink Publishing) — Fri, 11 Dec 2009 12:16:26 -0600

Buying Land From A Neighbor And Holding It As An Investment

Q: I own 5 acres (about half of which is usable) and am thinking about buying a one-acre lot adjacent to my property. Is this a good investment?

We may use the land eventually, but what do you think the chances are of making a profit if we decide instead to sell it in the future? I would love your input.

A: If you paid less for your land than what the developer is now trying to get for a lot that is far smaller than yours, you might find that the purchase isn’t such a great investment.

If you love your home and feel that the addition of the land to your home enhances its value, you might buy it for that purpose. But you already have five acres of land and the addition of one more acre may not add too much to the value of your home.

Regardless, you won't make any money on this lot until the real estate market improves and homes in your community are selling.

You might want to have a discussion with the real estate agent who helped you buy the property to learn what other properties are selling for in the area and to get a better idea as to the value of the land.

Here are some other article that may be helpful in giving an overview of the housing market and whether you should buy a property as an investment or whether you are better off buying a dream home:

Appraisal Report: How to Know When the Housing Market is Recovering

Housing Market Data Shows Housing Crisis Ongoing

Some Tips On Buying Investment Property vs Buying a Dream Home

Read the full story on evaluating buying investment property at ThinkGlink.com

4 Reasons Why Foreclosures Might Increase In 2010

Ilyce Glink (Think Glink Publishing) — Thu, 10 Dec 2009 14:20:52 -0600

According to today' RealtyTrac numbers, the number of foreclosures in November 2009 declined 8 percent from October. Unfortunately, the total number of foreclosures is up 20 percent from a year ago. As we count down the days to 2010, I’m wondering just how many foreclosures we’ll see next year.

There are (at least) four reasons why foreclosures might increase in 2010):

People are still losing jobs.
Lenders are being forced to make trial loan modification permanent - or end them.
The number of loans in default is at an all-time high.
Property values could start falling after the home buyer tax credits expires.

Wall Street might be stabilizing, but on Main Street, we could be headed for another record year of foreclosures - and that’s one record I’d rather not break.

Visit my MoneyWatch blog to read the full story and see my analysis of these reasons why foreclosures might continue to rise in 2010.

6 Ways FHA Loan Requirements Are Changing

Ilyce Glink (Think Glink Publishing) — Thu, 10 Dec 2009 11:15:55 -0600

The real estate market is still in crisis. FHA reserves are falling and the FHA needs for determine how to handle its loan portfolio and future loans. With the continuing high unemployment rate, more homeowners are at risk of losing their homes. With more homes going into foreclosure, FHA stands to lose more money. What will FHA do to in the ever changing real estate market?

The Federal Housing Administration (FHA) isn’t broke – but its reserves aren’t quite where they’re supposed to be either.

FHA’s capital reserves are supposed to be 2 percent of the outstanding loans. According to the actuarial review for fiscal year 2009, the reserves are just a half percent. By the time you read this, FHA’s capital reserves might have disappeared entirely, thanks to the increasing number of FHA foreclosures.

Unlike the Federal Deposit Insurance Corporation (FDIC), which recently proposed that banks pay three years of insurance premiums at once in order to replenish the FDIC’s reserves, FHA can’t require current borrowers to pay more.

But, it can change the rules going forward that will make it more difficult to qualify for an FHA loan.

According to a senior HUD official, conversations are ongoing to determine what will make the most sense.

There are at least six specific ways HUD is looking at stabilizing FHA:

Upping the minimum required down payment.
Changing mortgage insurance premiums.
Raising the minimum credit score required for an FHA loan.
Dialing back how much money sellers can give FHA buyers.
Requiring FHA lenders to have more cash on hand.
Eliminating abusive lenders.

For the full article and more details about the changes FHA might make to stabilize lending, read the full article at ThinkGlink.com

Still in Loan Modification Hell? Here's How To Find Your Mortgage Lender Or Bank CEO & Get Heard

Ilyce Glink (Think Glink Publishing) — Wed, 09 Dec 2009 17:47:02 -0600

If you’ve been following the comments on my “Are You In Loan Modification Hell? Join The Club” post, you know that borrowers are truly frustrated with the customer no-service they’ve been getting from their mortgage lenders.

While I speak regularly with folks in the executive suite of some of the major loan servicing companies, there are a bunch of layers of middle management between the good (I hope) intentions of those folks earning the big bucks and the ones who answer your calls to the toll-free number listed on your monthly mortgage statement.

If you feel as though you’re not being heard, you’ll want to kick it up several notches to your lender’s main office. Address a well-written letter that details the dates, details and who you spoke with to the CEO or President of the company.

To get you started, follow this link to article i have on CBS MoneyWatch. It includes the main “big box lender” CEOs and their company’s main offices.

Also, all of the big box lenders are regulated by the Office of the Comptroller of the Currency (OCC).

All of your letters should be copied to the OCC and sent by overnight mail or return receipt requested. Be sure to include copies of your documents and any other part of your paper trail. Be sure to include your loan number, name and complete contact information.

Loan Refinance Options Limited On A Low Balance Loan

Ilyce Glink (Think Glink Publishing) — Wed, 09 Dec 2009 09:43:42 -0600

Q: My house is worth about $130,000 and I owe $48,000 on my home loan. I have a balloon payment coming due in February. I don’t have the cash, so I’ll have to refinance. I have been approved for a rate of 4.3 percent, but I will have closing costs of $2,800. What are my options?

A: I'm confused by your question. Are you asking why your closing costs are so high relative to the amount you're borrowing? That could be a function of the state in which you live or the fact that you are borrowing so little money. Loans under $50,000 are just as expensive for lenders to do as loans that are for $100,000 or more.

Or, if you don’t have a high credit score, you might have to pay more in fees in order to keep the interest rate low.

You need to have an understanding of the fees involved in refinancing a loan. Some of your closing fees will be paid to the lender; other fees will be paid to the settlement agent, while other fees will be paid for the appraisal and credit report for your property. Once you understand the fees and who gets paid for what, you can shop around to determine which lender can give you the loan for the lowest cost.

If you have a low balance left on your loan, you may find that the costs of refinancing the loan may be too high to justify refinancing.

For more details on the story and advice for shopping around for a loan, read the full story at ThinkGlink.com

Short Sale Process Halted Due To Tax Lien

Ilyce Glink (Think Glink Publishing) — Tue, 08 Dec 2009 14:29:28 -0600

Q: I hope you can help us. We received written approvals from both lenders for the short sale of a home we are trying to purchase. We opened escrow and we signed our loan documents earlier in the week.

Yesterday, however, the short sale agent told our agent that a government lien was placed on the home. He is going to try to discharge it, but as of right now, everything's on hold.

I didn't receive much more information after that, so I did my own research. I discovered that the seller pleaded guilty to a conspiracy charge and received three years of probation. He must make restitution to all his victims.

Since he claimed extreme economic hardship, he was allowed to pay a small amount per month starting this past June. Is there any way the lien can be taken off the property since it is a short sale and the seller is not profiting from the sale? Is this going to be a lengthy process?

A: More likely than not, the process of getting the lien removed will be a lengthy process. If the lien is due to a federal case, you would need to contract the federal prosecutor in that case to determine whether they would be willing to remove the lien. If the lien is as result of a state criminal case, you would need to contact the state’s attorney to determine if they would be willing to release the lien.

While you are right that the seller will get nothing in the short sale, the government has nothing to lose by filing the lien and delaying things. The government may not get anything by going through the short sale and will get nothing if the home goes into foreclosure.

However, as long as the seller and owner of the property is still in the home and making payments to the government, the government is getting more than it otherwise would get. From the government’s perspective, waiting and receiving payments while the case is ongoing is a better choice than releasing lien and receiving nothing.

Sam recently dealt with a similar case in his practice and in that instance, the buyers decided not to wait for the seller to figure out what to do and they moved on to a different property.

For more short sale questions and answers, and the full answer to the tax lien question, read the entire story at ThinkGlink.com

Mortgage Loan Modification Hell? Here's What The Obama Administration Is Doing To Help You

Ilyce Glink (Think Glink Publishing) — Mon, 07 Dec 2009 16:49:46 -0600

Mortgage Loan Modification Hell? Here's What The Obama Administration Is Doing To Help You. The Obama Administration kicked off its nationwide campaign to help borrowers who are in the trial phase of mortgage modification get their loans converted to permanent modification status. The goal is to have at least 375,000 borrowers converted to permanent loan modification status by the end of the year. HUD will introduce new tools and outreach to get borrowers to send in complete mortgage loan documentation.

The Mortgage Modification Conversion Drive will include:

Mortgage Loan Servicer Accountability
Web Tools For Mortgage Loan Borrowers

Read the full story at ThinkGlink.com about how the new campaign will attempt to get more loan modifications approved.

8000 Tax Credit First Time Home Buyer Requirements: Buying From A Relative

Ilyce Glink (Think Glink Publishing) — Wed, 02 Dec 2009 16:43:50 -0600

Q: I am in the process of purchasing my first home and have a question about buying from a "relative." The house belonged to my Father's aunt who has passed away. I will be purchasing it from her estate and the executor of her estate is my Grandmother. Will I still qualify for the first-time buyer tax credit?

A: You can probably purchase the home from your great aunt’s estate and still qualify for the $8,000 first-time home buyer tax credit.

The IRS rules state you cannot purchase a home from a close relative, and the regulations specifically mention a parent, parent-in-law, grandparent, child or grandchild. IRS rules also state that you would not qualify for the tax credit if you inherited the home.

While much of the documentation prepared by the IRS says that you won’t qualify for the tax credit if you buy from a close relative, there is other information that the IRS uses in determining who is a relative for other purposes of the tax code and those IRS documents include ancestors.

Talk to an enrolled agent or call the IRS and see if they can give you further clarification. And remember to keep the name and employment identification number of the person you speak with as part of a paper trail.

Get more details about the $8000 home buyer tax credit and buying from a relative by reading the full story at ThinkGlink.com

Getting Financial Help On A Budget

Ilyce Glink (Think Glink Publishing) — Wed, 02 Dec 2009 14:50:58 -0600

Q: My husband is a teacher and I am a stay at home mom to our 3 sons. We are pretty much winging it when it comes to making decisions regarding our finances and could really use some advice in getting a better game plan for our future. Our budget is very limited though and we just can't afford to see a financial planner. What can we do to get some help?

If you have budgeting questions, you can set up a free budget counseling session with Credability.com, which is a network comprised of the top consumer credit counseling services organizations. They'll go through how much you earn, what you spend, and make recommendations on ways to save money.
Get a copy of my book 50 Simple Steps You Can Take To Disaster-Proof Your Finances. It's free (you pay shipping and handling). If you follow each of the 50 steps, it will take you a long way toward where you want to be. You will become much more organized and thoughtful about your money.
Take advantage of the 5,000 articles available at ThinkGlink.com. Look at the suggestions we've made to other readers. I think you'll find them helpful. Check out some of these other articles for more free advice that will help you plan for your financial future:

100 Questions You Should Ask About Your Personal Finances

50 Simple Steps You Can Take To Disaster-Proof Your Finances

50 Simple Things You Can Do To Improve Your Personal Finances

How Much Should I Save Each Month and For Retirement

Treasury Tells Mortgage Lenders To Do More For Homeowners

Ilyce Glink (Think Glink Publishing) — Mon, 30 Nov 2009 15:10:15 -0600

There’s a meeting of the Mortgage Lenders Club going on at Treasury early this morning.

I don’t think bagels and cookies are being served.

Mortgage lenders are being told that they’re not doing enough to help homeowners who are underwater with their mortgages or who have lost their jobs and can no longer afford their payments.

Really? Lenders aren’t doing enough to help? Whatever gave Treasury that idea?

Could it be that of the 650,000 so-called trial loan modifications only 2 percent have been made permanent? My email inbox is filled with questions from homeowners who want to know why their permanent loan modifications have higher monthly payments and the same interest rate as their original loan? Take a look at my “Are You In Loan Modification Hell” post and the nearly 100 comments that have continued the conversation.

Are mortgage lenders doing enough to help homeowners facing foreclosure?

What would you like to see change?

Read the full story at my CBS MoneyWatch blog.

Underwater? Maybe You Should Walk Away From Your Mortgage?

Ilyce Glink (Think Glink Publishing) — Mon, 30 Nov 2009 13:44:21 -0600

According to the latest figures, some 23 percent of Americans are underwater with their mortgage. That means their home is worth less than the amount they owe to their lender.

If you have a job, and can afford your payments, being underwater may not cause anything other than a really bad headache. But if you’ve lost your job, you’re probably running through all of your available cash plus anything you can beg, borrow and perhaps steal in order to keep making your mortgage payments.

The question on Brent T. White’s mind is “Why?”

White is a professor at The University of Arizona James E Rogers College of Law. His latest paper is called “Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis.”

In the paper, White writes that despite reports that Americans are “walking away” from their mortgages, most homeowners are continuing to make payments even though they would be far better off by “strategically defaulting.”

White suggests there are two reasons homeowners don’t default, even though they are seriously underwater with their mortgage:

The desire to avoid the shame and guilt of foreclosure; and,
Exaggerated anxiety over foreclosure’s perceived consequences.

White’s entire paper seems to boil down to this point: Send a message to Wall Street and default in mass.

It would feel good to stick it to Wall Street. Which is what would happen initially if this country saw 15 million defaults. But then the housing system would collapse again, leaving taxpayers to clean up a very expensive mess. Housing prices would decline another 20, 30 or 40 percent from where they are and suddenly 60 to 70 percent of Americans would be underwater with their mortgages.

What do you think? Should 15 million Americans default on their mortgages to send a message to Wall Street?

Read the full story with more of my opinions and see what Washington Post columnist Ken Harney had to say.

Refinancing? Here’s The Mortgage Deal I Choose

Ilyce Glink (Think Glink Publishing) — Mon, 30 Nov 2009 13:07:45 -0600

Yesterday, we started shopping around to refinance our loan. Right now, we have an adjustable rate mortgage (ARM) that’s gone down to 3.35 percent. We also have a home equity line of credit that’s clocking in around 2 percent.

We called three lenders to compare deals. Here’s what they initially offered us on a 15-year fixed-rate loan:

Lender #1: 4.25 percent, around $1,500 in fees/costs
Lender #2: 4.35 percent, no costs
Lender #3: 4.50 percent, around $1,500 in fees/costs

We eliminated Lender #3, because the other deals were better and focused on whether it was better for us to pay the $1,500 and take the lower interest rate or do no fees and take a slightly higher interest rate.

For the amount of our loan, going with the lower interest rate would save us about $600 per year. So, in three years, we will have paid off the costs of the refinance compared to taking the deal with no costs. I fully expect to have this mortgage until we pay it off or sell the house, whichever comes first. So, paying the fees makes sense to me.

All three lenders require a tax escrow, which we didn't really want to do. My husband managed to negotiate no tax escrow, in case we can earn some interest on our cash if interest rates go up over the next few years.

I think we worked out a pretty good deal for our mortgage. Are you thinking about refinancing? Please share your refinancing tale (hopefully not of woe) here, along with the interest rate and deal you’ve found.

Read the full story with more details about my refinancing options.

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.