Infinite Luxury Just for You

Relief appears imminent for thousands of Sacramento homeowners hit with state tax bills for mortgage debts forgiven in 2009.

State lawmakers said Monday they plan to cancel the state tax obligations with a vote Thursday.The legislation will go before the Assembly Revenue and Tax Committee today and theppropriations Committee on Wednesday, and will receive a full vote Thursday.

A similar Senate floor vote planned Thursday would send the bill immediately to Gov. Arnold Schwarzenegger, who has repeatedly stated his support. The new bill is similar to one he vetoed on March 25. But this time it omits a part he opposed – financial penalties for businesses that routinely seek state tax refunds. Democrats removed the section despite their contention that some firms “fish” for refunds whether or not they’re owed.

The new movement means that Californians who got unexpected tax bills of $10,000 or more in recent weeks could soon be off the hook. Most are borrowers who received loan modifications last year or lost their houses in short sales, in which banks accept prices below what they’re owed. In both cases, lenders forgave some of the debts owed them, a process that exposes borrowers afterward to taxes.Many across the state have anxiously waited for the state to resolve the issue before the tax filing deadline – or have filed extensions.

Typically the state and federal governments view forgiven home loan debt as additional income and tax it. But both have backed off amid the housing crash. The federal government has suspended taxes on forgiven mortgage debt from 2007 through 2012. California suspended it for the 2007 and 2008 tax years. But disagreements over the business tax refunds stalled a bill extending it to 2009.

The bill being considered this week, Senate Bill 401, would cancel state tax obligations for forgiven mortgage debt through the 2012 tax year.

I have had some people ask me about the rules relating to flipping property and through

a newsletter I recieve on a monthly basis I came across an article which listed what you

should do if you are considering flipping houses for investment purposes.  I hope this

answers some of your questions but if I were you I would suggess you do some

research as well on your own.

A.                  Transaction must be arms-length:

a.        Seller can be an LLC, Corporation or Trust as long as it was established  in              accordance with applicable state/federal law

 
i.        Multiple title transfers in the past 12 months require additional review and may require additional documentation and/or may not be eligible for FHA financing. (Deeding the property to or from an individual(s) and an LLC, corp or trust may be allowed if the owners of the LLC, corp or trust are the same as the individual(s) that deeded it)
b.        Property has to have been marketed openly and fairly.  
i.        Properties listed on MLS meet this requirement.

B.        If sales price is less than 20% or more over seller’s acquisition cost then:
a.        Normal appraisal underwriting policy applies

C.        If sales price is 20% or more over seller’s acquisition cost and:

a.        The increase in value is due to improvements/renovation:
i.        Appraiser to verify what renovation, repair or work was done to the property to substantiate the increase in value.  Dollar for dollar improvements are not required, however, the underwriter should review and analyze if the scope of work performed to the property would justify the increase in value; OR if appraiser cannot warrant that legitimate work was done to the property to substantiate the increase in value, a second appraisal supporting the value is required. (lower of the two will be used)
ii.        In addition to the above appraisal requirements, the broker/borrower must obtain a home inspection report prior to loan approval.  Until further guidance or a mortgagee letter is issued from FHA, additional requirements may apply.

b.        The increase in value is not due to any significant improvements/renovation:
i.        Appraiser to provide appropriate explanation of the increase in property value and provide sales comparables to support that value since the prior title transfer; OR if the appraiser cannot justify the increase in value, a second appraisal supporting value is required lower of the two will be used)

“Cherish your yesterdays, dream your tomorrows, but live your today’s. Tomorrow belongs to those who fully use today!”* – Unknown

 

 

 

 

 

 

The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is not without errors.  .

 

Per the Market Composite Index, a measure of mortgage loan application volume, increased 14.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 15.5 percent compared with the same time a year ago.

 

“Mortgage applications rebounded last week, particularly in regards to refinance transactions, as rates dropped back below five percent,” said Michael Fratantoni, MBA’s vice president of research and economics. “Purchase activity remains subdued, with application volume’s remaining within the narrow range seen in the last few months.”

 

 

The Refinance Index increased 17.2 percent from the previous week and the seasonally adjusted Purchase Index increased nine percent from one week earlier. The unadjusted Purchase Index increased 11.7 percent compared with the previous week, and was 9.8 percent lower than the same week one year ago.

 

 

The refinance share of mortgage activity increased to 69.1 percent of total applications from 68.1 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 4.8 percent from 4.7 percent of total applications from the previous week.

 

 

 

 

Ability for Lenders to Foreclose in Florida Just got Tougher

 

A pair of Florida court rulings will now make foreclosures much more painful for lenders.

 

The state Supreme Court said last month that before foreclosing, a lender must verify that it has all the proper documents, including proof it owns the mortgage in question  !!!.

 

This isn’t as easy as it may sound, since during the securitization boom of the last decade, mortgages were typically sold several times over. If, when pressed by the borrower, a lender cannot produce such papers, the institution could be fined for perjury, the court said.

 

I should note that attempted foreclosures in other states have been dismissed for lack of such proof, ergo the ‘would be’ borrower owns the home free-and-clear.

 

On top of the above documentation that is now required, the same court said all Florida foreclosure cases must go through mediation, a process that has been gaining popularity in other states and that bankers say makes foreclosures expensive for them.

 

I will note here that according to RealtyTrac Inc., one in every 187 homes in Florida received a foreclosure filing in January of this year.

 

 “Cherish your yesterdays, dream your tomorrows, but live your today’s. Tomorrow belongs to those who fully use today!”* – Unknown

 

 

 

 

 

 

The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is not without errors.  .