Portland Parks and Recreation wants your input on the 2010 budget!
Filed Under Community, Real Estate Advice · Tagged: home buyer portland, home seller portland, homes portland oregon, portland oregon bank owned, portland oregon homes for sale, portland oregon politics, portland oregon public budget, portland parks and recreation, real estate portland
Portland Parks & Recreation
503.823.5300 (office); 503.823.6634 (cell)
beth.sorensen@ci.portland.or.us
portlandparks.org
Portland Housing Bureau wants your input on 2010 budget
Filed Under Community, Real Estate Advice · Tagged: home buyer portland, landlord advice, landlordstudyhall, landlordstudyhall.com, portland home buyer, portland home seller, portland housing bureau budget, portland oregon real estate
The Portland Housing Bureau is preparing its budget, and wants to know what YOU think its priorities should be for the next fiscal year. Please take 5 minutes to complete our survey at fmrsurvey.com/DHM/BHC2/BHC2logn.htm. Feel free to forward this email to other interested parties, and please excuse any duplicate distributions! Thank you!
For more on the Portland Housing Bureau’s FY 2010-11 budget process, please visit portlandonline.com/phb/budget
Home buyer tax credit extends to repeat buyers. Here is how the credit is working!
Filed Under Real Estate Advice · Tagged: first time home buyer, first time home buyer tax credit, home buyer, landlord study hall, move down home buyer, move down home seller, move up home buyer, move up home seller, portland real estate, portland real estate broker, real estate home buyer, www.landlordstudyhall.com
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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. 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 fort 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. How Much are Current Home Owners Eligible to Receive? The tax credit program includes 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. Can Homebuyers Claim the Tax Credit in Advance of Purchasing a Property? No. The IRS has recently begun prosecuting people who have claimed credits where a purchase had not taken place. 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, 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:
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. |
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This information was provided courtesy of Cecelia Kern of Mortgage Trust in Portland, Oregon. If you or someone you know would like help buying or selling a home, please be in touch with me at Kathryn@kjkproperties.com or call direct at 503-997-9035.
What is “seasoning,” anyway?
Filed Under Real Estate Advice · Tagged: first time home buyer, first time home buyer tax credit, portland bank owned oregon, portland real estate, Real estate agent, real estate bank owned, real estate buyer, real estate oregon, real estate portland oregon
Seasoning, sometimes called flipping means that the common guy like you and me cannot enter in to a contract to sell a property without a given amount of time passing.
This is a requirement of lending. Lenders do not like to see “flipping,” and require that the title “season” before they will loan on the property. Without seasoning, the lender cannot package the loan for sale on the secondary mortgage market.
The secondary mortgage market is what we commonly hear called “Fannie Mae” or “Freddie Mac,” two of the largest buyer’s of mortgages in these times.
Recently I learned that this even includes an investor who transfers a title in and out of their LLC for lending or liability purposes. Doing so renders a buyer unable to obtain a loan, no matter how long the “real seller” has been a constructive owner. The law only cares that the title transferred. This is a serious point to consider.
Why would this matter?
If the loan cannot meet underwriting guidelines the lending fails. The lender won’t loan, the mortgage insurance company won’t insure the mortgage, the lender can’t sell the loan. All around it makes selling a property impossible unless it is a contract sale, a loan that doesn’t require mortgage insurance (such as a 20% down mortgage), or a cash offer.
For a lenders description of this, I obtained the following explanation from Cecelia Kern, of Mortgage Trust:
“Purchase transaction require the subject property be owned by the seller for at least 90 days from the date of the purchase agreement unless the seller meets one of the following conditions:
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State and Federally chartered financial institutions and government sponsored enterprises (Fannie and Freddie) |
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Sales by HUD of its real estate owned |
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Local and State government agencies |
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Non-profits approved to purchase HUD REO properties |
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Sales of properties located in presidentially-declared disaster areas. |
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Sales of properties acquired through inheritance – Must document seller’s inheritance of the property |
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Sales of properties acquired by employers or relocation agencies in connection with relocations of employees (Must provide relocation agreement indicating the seller acquired the property as a result of company transfer of the previous owner)
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Individuals, companies or investors who purchase foreclosed properties and sell them are not eligible for this exemption.”
Tax credit extended! Breaking News: President Signs Tax Credit Extension & Expansion
Filed Under Real Estate Advice · Tagged: first time home buyer tax credit, landlord study hall, landlords, landlordstudyhall.com, real estate, Real Estate Advice, Real estate agent, real estate bank owned, real estate investors, real estate oregon, real estate portland metro, real estate portland oregon, real estate tax credit
Breaking News: President Signs Tax Credit Extension & Expansion
Short Sales explained by Oregon Association of Realtors
Filed Under Real Estate Advice · Tagged: bank owned, bank owned portland oregon, Real Estate Advice, Real estate agent, real estate bank owned, real estate boring oregon, real estate lake oswego, real estate northeast portland, real estate oregon, real estate southeast portland, real estate west linn, short sale homes, short sales
Short Sale Single Offer Clause
Q. Can a buyer have a provision in their offer on a short sale that says the seller cannot submit other offers to the lender until the lender has decided on the buyer’s offer? What happens if the seller gets three such offers, each with the same clause?
A. Sure the buyer can have such a clause. The question is what will happen if they do? Short sales are seriously misunderstood and difficult transactions. There is tremendous ambiguity and uncertainty for both the seller and the buyer in a short sale. The seller wants to avoid foreclosure and may not care much about price. The buyer wants a deal. Neither needs the uncertainty associated with an ongoing bidding war conducted by serial offers being presented to some distant, unresponsive, disinterested, overworked employee of a troubled lending institution. The clause you reference is just the kind of thing you’d expect a buyer seeking to reduce uncertainty would come up with in such a dysfunctional market.
Whether a seller can or should accept an offer with such a clause depends on the situation. In a short sale, offers are going to be contingent on the seller getting the lender’s consent sufficient to clear title. That means two agreements. One is the real estate deal between buyer and seller. The other is the agreement between the lender and the seller regarding the seller’s debt to the lender. Making the real estate deal contingent on the seller/lender agreement doesn’t make the lender a party to the real estate deal itself. The seller therefore retains the right to accept or reject any offer on any terms. Retaining a right doesn’t, however, mean the seller can do whatever they please.
Whether a particular seller should (normative question) accept an offer with such a clause depends first on the seller’s position. If there is a chance the lender will demand a personal note for the deficiency, or the seller’s taxes will vary with the deficiency, the seller may have no reason to accept such an offer. On the other hand, if time is short and the size of the deficiency doesn’t matter that much to the seller, they may like the idea of one offer. It is, in the first instance, their call. The concern, of course, is that accepting such an offer may somehow defraud the lender or involve the agents in misrepresentation. Everyone is, and ought to be, a little paranoid about lender fraud after it brought down the whole real estate market.
Fraud and misrepresentation by silence require hiding material information. A seller negotiating with a lender regarding the seller’s debt to the lender owes the lender the duties of good faith and fair dealing. They cannot hide information from the lender that would be material to the lender’s decision regarding the debt. Here, that means they could not deliberately hide subsequent better offers without the lender’s knowledge. In this case, however, that is not a problem. If the seller accepts the offer, the single offer submission term will be contained in the offer forwarded for the lender’s approval. If the lender doesn’t like that approach all they have to do is say no. Of course, that may take a month or two and by that time the seller may be foreclosed, but that just takes us back to the normative question of “should” the seller accept such an offer.
The “two agreement” nature of short sales means the seller must consider both their own needs and their duty of good faith and fair dealing to the lender. Their own “needs” means answering a context-specific normative “should” question. Once the seller has that answer, the issue becomes their obligation to deal honestly and fairly with the lender. That can be done just by submitting the offer with the “one offer clause.” It could be done by working with the lender ahead of time to determine how to handle such things. That can be done by phone and confirmed by email. Remember, on the seller/lender side we are talking about disclosure of material facts relevant to the seller’s debt to the lender. All that means is not hiding important things from the lender. The single offer presentation clause is actually an easy one because the disclosure issue is taken care of by the provision being presented to the lender in the offer. It is secret procedures like unilaterally deciding to take backup offers and submit them serially to the lender without the lender’s knowledge that may cause real problems.
Alright, so what about the multiple offers all with the same single offer presentation clause? It’s the same thing. First the seller deals with the offers as offers. A seller with multiple simultaneous offers will normally reject all offers and ask each buyer to make their last best offer. It doesn’t matter if the buyers come back with last best offers that all contain the single offer presentation clause. At that point, the seller will (assuming it is in their interest to accept any offer with such a clause) simply accept the best offer and forward it; just like they would had they received only one offer. It is just an application of how to deal with multiple offers coupled with how to deal with short sale negotiations. For more information, you should read the new “Dealing with Multiple Offers in Short Sale” section of the Oregon REALTORS® Risk Management Toolkit from OAR. Contact me for a copy at kathryn@kjkproperties.com.
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