Tom Griffey Real Estate, Foreclosure And Short Sale News
The IRS has recently issued a helpful list of 10 tax tips all homeowners should keep in mind when selling a home:
1. You are usually eligible to exclude the gain from income if you have owned and used your home as your main home for two years out of the five years prior to the date of its sale.
2. If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases).
3. You are not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home.
4. If you can exclude all of the gain, you do not need to report the sale on your tax return.
5. If you have a gain that cannot be excluded, it is taxable. You must report it on Form 1040, Schedule D, Capital Gains and Losses.
6. You cannot deduct a loss from the sale of your main home.
7. Worksheets are included in Publication 523, Selling Your Home, to help you figure the adjusted basis of the home you sold, the gain (or loss) on the sale, and the gain that you can exclude.
8. If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time.
9. If you received the first-time homebuyer credit and within 36 months of the date of purchase the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full credit is due with the income tax return for the year the home ceased to be your principal residence, using Form 5405, First-Time Homebuyer Credit and Repayment of the Credit. The full amount of the credit is reflected as additional tax on that year's tax return.
10. When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive refunds or correspondence from the IRS. Use Form 8822, Change of Address, to notify the IRS of your address change.
By Stephen Fishman, Friday, September 7, 2012.
Consumer Financial Protection Bureau proposes rules to bring greater accountability to mortgage market
Rules Would Help Consumers Understand Mortgage Costs and Comparison Shop
WASHINGTON, D.C. — Today the Consumer Financial Protection Bureau (CFPB) proposed rules that would bring greater accountability to the mortgage loan origination market. These rules, which the CFPB is seeking comment on and will finalize by January 2013, would make it easier for consumers to understand mortgage costs and compare loans so they can choose the best deal.
“Consumers have a hard time comparing loans when they are dealing with a bewildering array of points and fees,” said CFPB Director Richard Cordray. “We want to provide consumers with clearer options and enable them to choose the loan that they believe is right for them.”
The Dodd-Frank Wall Street Reform and Consumer Protection Act places certain restrictions on the points and fees offered with most mortgages and the qualification and compensation of loan originators. Most notably, without this rulemaking, the Dodd-Frank Act would prohibit payment of upfront points and fees for most mortgages even where a consumer prefers a loan with a lower interest rate and some upfront costs. The CFPB is seeking public comment on a proposal that would:
•Require Lenders to Make a No-Point, No-Fee Loan Option Available: It is often difficult for consumers to compare loans that have different combinations of points, fees, and interest rates. Under the proposed rule, creditors would have to make available to consumers a loan without discount points or origination points or fees, unless the consumers are unlikely to qualify for such a loan. These options would enable a consumer buying or refinancing a home to better compare competing offers from different creditors, better able to compare loan offers from a particular creditor, and decide whether they would receive an adequate reduction in monthly loan payments in exchange for the choice of making upfront payments.
•Require an Interest-Rate Reduction When Consumers Elect to Pay Upfront Points or Fees: Consumers can pay points, which are expressed as a percentage of the loan amount, and fees to covers costs associated with origination or prepaid interest charges. While these points and fees come in many different names and combinations, they all should function similarly to reduce the interest rate and thus a consumer’s monthly loan payments. The CFPB is seeking comment on proposals to require that any upfront payment, whether it is a point or a fee, must be “bona fide,” which means that consumers must receive at least a certain minimum reduction of the interest rate in return for paying the point or fee.
In addition to regulating upfront points and fees, the CFPB is proposing changes to existing rules governing mortgage loan originators’ qualifications and compensation. Mortgage loan originators, who take mortgage loan applications from consumers seeking to buy a home or refinance a mortgage, include mortgage brokers and loan officers. The rules the CFPB is proposing would:
•Set Qualification and Screening Standards: Under state law and the federal Secure and Fair Enforcement for Mortgage Licensing Act, loan originators currently have to meet different sets of standards, depending on whether they work for a bank, thrift, mortgage brokerage, or nonprofit organization. The CFPB is proposing rules to implement Dodd-Frank Act requirements that all loan originators be qualified. The proposal would help level the playing field for different types of loan originators so consumers could be confident that originators are ethical and knowledgeable. The proposed rule includes:
?Character and Fitness Requirements: All loan originators would be subject to the same standards for character, fitness, and financial responsibility;
?Criminal Background Checks: Loan originators would be screened for felony convictions; and
?Training Requirements: Loan originators would be required to undertake training to ensure they have the knowledge necessary for the types of loans they originate.
•Prohibit Payment of Steering Incentives to Mortgage Loan Originators: In 2010, the Federal Reserve Board issued a rule that was designed to curtail the practice of loan originators directing consumers into higher priced loans based not on the consumer’s interest, but on the possibility that the loan originator could earn more money. The Dodd-Frank Act included a similar provision banning the practice of varying loan originator compensation based on interest rates or other loan terms. The CFPB’s rule would implement the Dodd-Frank Act provision and clarify certain issues in the existing rule that have created industry confusion.
•Place Restrictions on Arbitration Clauses and Financing of Credit Insurance: The proposal implements Dodd-Frank Act provisions that, for both mortgage and home equity loans, prohibit including mandatory arbitration clauses in loan documents and increasing loan amounts to cover credit insurance premiums.
The CFPB has engaged with consumers and industry, including through a Small Business Review Panel, and used this feedback in developing the proposed rules. The Bureau believes that today’s proposal, if adopted, would promote stability in the mortgage market, which would otherwise face radical restructuring of the current pricing structure in order to comply with Dodd-Frank.
The public will have 60 days, until October 16, 2012, to review and provide comments on the proposed rules. The CFPB will review and analyze the comments before issuing final rules in January 2013.
An overview of the proposal is available at: http://files.consumerfinance.gov/f/201208_cfpb_detailed_summary_of_proposed_loan_originator_rules.pdf
Negative equity declined in the second quarter, with 30.9 percent of U.S. homeowners with mortgages – or 15.3 million – underwater, according to the second quarter Zillow Negative Equity Report. That was down from 31.4 percent of homeowners with mortgages, or 15.7 million, underwater in the first quarter.
The total amount of negative equity in the country declined by $42 billion in the second quarter to $1.15 trillion.
Among age groups, young people are more affected by negative equity than other groups, with nearly half (48 percent) of all borrowers under the age of 40 underwater. However, younger borrowers are less likely than older populations to be delinquent on their mortgages. Underwater borrowers between the ages of 20 and 24 are the least likely to be delinquent, with 5.9 percent more than 90 days late, compared with a 9.2-percent delinquency rate for all underwater borrowers.
Of the 30 largest markets tracked by Zillow, negative equity fell the most from the first to the second quarter in the Phoenix metro (from 55.5 percent to 51.6 percent) and the Miami-Ft. Lauderdale metro (from 46.4 percent to 43.7 percent). The Las Vegas metro continues to see the highest negative equity rate, with 68.5 percent of borrowers underwater. That was down from 71 percent in the first quarter.
New law from Governor Brown…Part of the California Homeowner Bill of Rights
California Gov. Jerry Brown signed a bill Monday forcing owners of foreclosed and vacant homes to maintain the property or face up to a $1,000 fine per day of violation.
The bill, A.B. 2314, is part of the Homeowner Bill of Rights, a slew of new legislation drafted and introduced through state lawmakers with the assistance of California Attorney General Kamala Harris.
The latest enacted bill gives local governments the ability to impose up to a $1,000 fine for code violations. It must give owners, including banks, at least 14 days to start fixing the alleged violation and 30 days to complete the correction before issuing the fine.
One of the violations includes “not failing to take action to prevent mosquito larvae from growing in standing water or other conditions that create a public nuisance.” A woman in Studio City, Calif. recently diagnosed with the West Nile virus traced the contraction to mosquitoes breeding in a nearby foreclosure’s neglected swimming pool.
The new bill could be costly for careless owners of these homes.Fannie Mae, for example, owned more than 10,000 REO properties in California as of June 30, according to its latest financial filing.
If an investor or homeowner buys a property that was foreclosed on at any point since Jan. 1, 2008, the local government must give at least 60 days to remedy any violations found since taking title. The law does give room to provide less time “if deemed necessary.”
The gross vacancy rate in California was above 10% in California, down a full percentage point since the foreclosure crisis struck, according to the latest Census Bureau figures. It’s still above the 8.6% rate at the start of the housing bubble in 2005.
“We need solutions to the problem of blight which threatens the health and safety of California communities hit hardest by the mortgage crisis,” said Assembly member Wilmer Amina Carter, D-Rialto, who introduced the bill. “AB 2314 will ensure that local jurisdictions continue to have the tools to prevent and fight neighborhood blight due to foreclosures.”
The state passed each of the Homeowner Bill of Rights legislation this summer. Gov. Brown signed two into law in July, giving new protections for borrowers and prohibiting the practice of robo-signing and foreclosing on borrowers being considered for a modification.
“The foreclosure crisis has had a devastating impact on many families and communities,” AG Harris said in a statement Monday. “This legislation will help victims of the crisis who remain in their homes, but have been forced to endure the negative economic, health and safety consequences of blight in their neighborhoods.”
Thanks Jon Prior and Housing Wire.com
Late last week, the Senate Finance Committee crafted and sent to the full Senate a package that would extend the mortgage relief provision for an additional year, through Dec. 31, 2013.
The Senate was unable to act on the bill before adjourning for its August break and the party conventions. The Senate reconvenes Sept. 10. Chairman Baucus (D-MT) had hoped to finish this package before the election in order to provide certainty about the extension (or not) of more than 50 provisions. Nonetheless, it is not known if the package also would be considered in the House before the election.
In addition to the mortgage cancellation relief provision, the package also includes a relief provision to limit the impact of the Alternative Minimum Tax (AMT) in 2012 and 2013. The 15-year cost recovery for leasehold improvements is renewed (it had expired Dec. 31, 2011) and extended through Dec. 31, 2013. The provision that permits the costs associated with brownfields environmental cleanup was NOT included in this extender legislation.