Making FHA Loan Limits Permanent Crucial to Housing Recovery

Making the current FHA loan limits permanent would ensure liquidity in the housing market and make mortgages more affordable for qualified buyers at a time when the market is showing signs of a fragile recovery, the National Association of Realtors® testified to the House Subcommittee on Housing and Community Opportunity today.

Current FHA loan limits are as high as $729,750 in high cost areas, and are set to expire at the end of the year and revert to lower amounts, greatly hindering the housing recovery process. FHA is more important than ever to homebuyers in the present market. In the wake of the collapsing private mortgage market, FHA has played a critical role in removing inventory from the market and stabilizing home prices,  Present FHA housing market share is approaching 25 percent, significantly up from 3 percent two years ago.

NAR said that FHA has performed remarkably well through the housing crisis, compared to Fannie and Freddie, because FHA has never strayed from the sound underwriting and appropriate appraisals that have traditionally backed up their loans.

 The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries

Time is of the essence!

Take advantage of the federal tax credit worth up to $8,000. Buyers need to be moving now to find a home, secure financing and close the transaction before the November 30 deadline if they want to use the tax credit.

The same deadline applies to the Illinois Home Start Tax Credit Advance Loan Program, which allows qualifying buyers to use the tax credit toward their down payment.

What You Should Know:

The American Recovery and Reinvestment Act of 2009 features $8,000 first-time buyer tax credit for first-time buyers who purchase a home on or after Jan. 1, 2009 and before Dec. 1, 2009.

NEW! The Illinois Housing Development Authority Home Start Loan Program offers first-time homebuyers a 30-year FHA insured mortgage and an advance loan in anticipation of their first-time buyer federal tax credit.

Contact me Now for help with your new home purchase: 800-998-4950

IRS Says 1.4 Million Taxpayers Have Used Tax Credit

The IRS has released IR-2009-083 reporting that about 1.4 million taxpayers have filed (or amended) their 2008 income tax returns claiming the $8000 first-time homebuyer tax credit. This is roughly consistent with NAR’s projections that about 1.8 million taxpayers will claim the credit. NAR also estimates that at least 355,000 of eligible sales would not have occurred without the credit.

The IRS release also reminds taxpayers of the importance of getting to closing before the December 1 expiration of the credit and publicizes a YouTube video it has prepared to help taxpayers understand the basics of the credit.

NAR continues its full court press to extend the credit into 2010. This intense campaign will have major grassroots components to secure an extension of the credit as soon as possible to avert a slowdown in the market.

New protected class under Illinois Human Rights Act

According to IAR legal counsel, REALTORS® need to be aware of Public Act 96-0447 which adds a new protected class to the Illinois Human Rights Act. The new protected class is “order of protection status.” What this means for housing is that housing can’t be denied to a person based on the fact that the person is covered by an order of protection in Illinois or any other state. In addition this could affect employers where employers may not refuse to hire or make other employment decisions based on an employee’s status as being covered under an order of protection in Illinois or any other state. This amendment becomes effective on January 1, 2010.

The Illinois HOME START Loan Program

The Illinois HOME START Loan Program for first time homebuyers Purpose/General Description:

The Illinois HOME START Loan Program is designed to help first time homebuyers achieve the dream of homeownership affordably. The HOME START program offers homebuyers two loans: the HOME START 30 Year Fixed Rate Loan and an optional HOME START Tax Credit Advance Loan.

HOME START 30 Year Fixed Rate Loan

As the name suggests, the first loan under the HOME START program is a 30 year fixed rate amortizing loan insured by the Federal Housing Administration (FHA) and serviced by U.S. Bank Home Mortgage. As of July 17, 2009, the interest rate is 6 percent and is subject to change in market conditions.

Homebuyers have the option to utilize the HOME START 30 Year Fixed Rate Loan in conjunction with the HOME START Tax Credit Advance Loan, or use the first mortgage on its own.

HOME START Tax Credit Advance Loan

The second loan under the HOME START program is the HOME START Tax Credit Advance Loan which allows Illinois first time homebuyers in need of down payment assistance to access funds on a short-term basis in anticipation of the federal income tax credit for first time homebuyers.

The American Recovery and Reinvestment Act (ARRA) of 2009 provides eligible first time homebuyers with a one-time tax credit of up to $8,000 that will enable them to save on their federal tax bill. Only homebuyers who are purchasing a home before November 30, 2009 are eligible for the tax credit.  The HOME START Tax Credit Advance Loan helps first time homebuyers take advantage of the $8,000 federal tax credit refund in advance to use as a down payment on their first home. However, the maximum loan amount under the HOME START Tax Credit Advance Loan program is $6,000 or 3.5 percent of the purchase price, whichever is greater.

Within the initial period, the homebuyer will file their tax return requesting the federal tax credit. This tax credit can be used to repay the tax advance loan. If the loan is not repaid by June 30, 2010, then the remaining loan amount becomes a ten year amortizing loan at 0.5% above the rate on the Home Start 30 Year Fixed Rate Loan.

If you have any questions about this program contact: Rcolon@NewHomeExecutives.com

Homebuyer Tax Credit 2009

The bill provides for a $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. 

The credit does not require repayment.  Most of the mechanics of the credit will be the same as under the 2008 rules:  the credit will be claimed on a tax return to reduce the purchaser’s income tax liability.  If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.
FIRST-TIME HOMEBUYER TAX CREDIT
As Modified in the American Recovery and Reinvestment Act
Major Modifications Italicized
February 2009
FEATURE CREDIT AS CREATED JULY 2008 APPLIES TO ALL QUALIFIED PURCHASES ON OR AFTER APRIL 9, 2008 REVISED CREDIT – EFFECTIVE FOR PURCHASES ON OR AFTER JANUARY 1, 2009 AND BEFORE DECEMBER 1, 2009
Amount of Credit
Lesser of 10 percent of cost of home or $7500 Maximum credit amount increased to $8000
Eligible Property
Any single family residence (including condos, co-ops, townhouses) that will be used as a principal residence.
No change
All principal residences eligible.
Refundable
Yes. Reduces (or can eliminate) income tax liability for the year of purchase. Any unused amount of tax credit refunded to purchaser.
No change
Purchasers will continue to receive refund for unused amount when tax return is filed.
Income Limit
Yes. Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). Phases out above those caps ($95,000 and $170,000).
No change
Same income limits continue to apply.
First-time Homebuyer Only
Yes. Purchaser (and purchaser’s spouse) may not have owned a principal residence in 3 years previous to p

Mortgage Debt Forgiveness

IRS TAX TIP 2009-44

If your mortgage debt is partly or entirely forgiven during tax years 2007 – 2012, you may be able to claim special tax relief and exclude the debt forgiveness income.

Normally, debt forgiveness results in taxable income. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude up to $2 million of debt forgiven on your principal residence. The limit is $1 million for a married person filing a separate return.

Taxpayers may exclude debt reduced through mortgage restructuring, as well as mortgage debt forgiven in a foreclosure. To qualify, the debt must have been used to buy, build or substantially improve your principal residence and be secured by that residence. Refinanced debt proceeds used for the purpose of substantially improving your principal residence also qualify for the exclusion.
However, proceeds of refinanced debt used for other purposes (for example, to pay off credit card debt) do not qualify for the exclusion.

If you qualify, you claim the special exclusion by filling out Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, and attaching it to your federal income tax return for the year.

Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the new tax-relief provision. In some cases, however, other tax relief provisions, (for example, insolvency), may be available. See Form 982 for details.

If your debt is reduced or eliminated you will receive a year-end statement, Form 1099-C, from your lender. By law, this form must show the amount of debt forgiven and the fair market value of any property foreclosed.

The IRS urges borrowers to examine the Form 1099-C carefully. Notify the lender immediately if any of the information shown is incorrect. You should pay particular attention to the amount of debt forgiven (Box 2) and the value listed for your home (Box 7).

For more information about the Mortgage Forgiveness Debt Relief Act of 2007, visit the IRS Web site at IRS.gov. A good resource is IRS Publication 4681, Canceled Debts, Foreclosures, Repossessions and Abandonments. Taxpayers may obtain a copy of this publication and Form 982 either by downloading from IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Homebuyer Tax Credit 2009

The bill provides for a $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. 

The credit does not require repayment.  Most of the mechanics of the credit will be the same as under the 2008 rules:  the credit will be claimed on a tax return to reduce the purchaser’s income tax liability.  If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.

First-Time Homebuyer Tax Credit

The Housing and Economic Recovery Act (H.R. 3221) was signed into law by President Bush on July 30. IAR President Kay Wirth said:This legislation and particularly the tax credit will help first-time homebuyers who have been on the sidelines waiting for the economy to improve to take that important step up to homeownership.

The significant provisions of this bill should bring some stability back to the housing market in Illinois and across the country. Below are links to FAQs on the tax credit and information about the new law’s provisions prepared by NAR Government Affairs.

FAQs for the First-Time Homebuyer Tax Credit

Key Provisions of H.R. 3221

If you have questions about this topic or any other real estate topic, send your question to: info@NewHomeExecutives.com

HomePerks Emerges from Private Beta Testing

The new version of the site, which has just emerged from private beta testing, allows real estate agent members to feed property listings information to the site and “basically use it as a calling card of existing and previous inventory,” said Brian Columbus, founder and CEO of HomePerks LLC, based in Oak Brook, Ill.

The site also has added business networking components, and allows users to connect with other professionals. “In some ways it is similar to Facebook but more business-related,” Columbus said.

Sabrina Simpson, a Realtor for Prudential California Realty in Moorpark, Calif., said she decided to sign up for a HomePerks membership and she has invited other agents from her office. “I personally like the program. I think it has a lot of potential,” she said, noting that she can use the rewards as an incentive for visitors to open houses, and as an incentive for other agents to refer business to her.

Read The Full Story At Inman News

If you have questions about this topic or any other real estate topic, send your question to: info@NewHomeExecutives.com