Archive for June, 2009
Tax Credit for New Home Purchase
June 24th, 2009 categories: Our Market
Important update (06/12/09):
As shown in the numbers below, we will soon reach $100 million in new home credit applications. Because many of these are duplicates, revised, or invalid, we plan to receive 12,000 applications. This will ensure we have more than enough valid applications to allocate the full $100 million. These additional applications will be subject to the availability of remaining credits.
Once we receive 11,000 applications, we will update this page each business day with the total number of applications received. We will no longer accept applications once we have received 12,000, and the fax service will be disconnected.
We will continue to report certificates issued on a weekly basis until the full $100 million has been allocated. We expect to complete processing all certificates in August. We will send a notification in response to all applications received, indicating the amount of credit allocated or denied.
In order to expedite the processing of applications, submit only one application per new home purchase. Do not send in applications before escrow closes. Applications cannot be accepted if escrow has not yet closed. Complete the application carefully and accurately.
We will update this information frequently. Please check this page often.
This tax credit is available for qualified buyers who on or after March 1, 2009, and before March 1, 2010, purchase a qualified principal residence that has never been occupied. The buyer must reside in the new home for a minimum of two years immediately following the purchase date.
We began accepting applications for allocation of credit by fax only (916.845.9754), on March 1, 2009. We began processing the applications on a first-come, first-served basis, on May 1, 2009. The processing delay was necessary to allow us time to develop a system to capture and verify the application information, allocate the credits, and send the credit allocation letters. We expect it will take until August to process all the applications we received and mail credit allocation letters. Please be patient and do not send an application more than once. (Updated 06/12/2009)
Tax credit amounts
California allocated $100,000,000 for this tax credit. Buyers must apply for credit allocation from us. We will review applications and allocate credit on a first-come, first-served basis. Once $100,000,000 has been allocated, the tax credit will no longer be available. We began issuing certificates of credit allocation on May 1, 2009. Please check this page for updates on the allocated and remaining credits available.
Certificates issued for New Home Credit through 06/17/09:
| As of | Total certificates issued: | Total credit allocated: | Remaining credit available: |
|---|---|---|---|
| 5/13/09 | 331 | $ 3,246,532 | $ 96,753,468 |
| 5/20/09 | 1,023 | $ 9,942,884 | $ 90,057,116 |
| 5/27/09 | 1,749 | $ 16,699,924 | $ 83,300,076 |
| 6/3/09 | 2,502 | $ 23,822,657 | $ 76,177,343 |
| 6/10/09 | 3,219 | $ 30,465,953 | $ 69,534,047 |
| 6/17/09 | 3,943 | $ 36,857,428 | $ 63,142,572 |
The amounts below reflect applications received, which include both processed and unprocessed applications.
Applications for New Home Credit received through 06/17/09:
| As of | Total Applications received: | Total Credit claimed: |
|---|---|---|
| 3/4/09 | 173 | $ 1,715,826 |
| 3/11/09 | 711 | $ 6,987,515 |
| 3/18/09 | 1,188 | $ 11,599,825 |
| 3/25/09 | 1,710 | $ 16,647,498 |
| 4/1/09 | 2,624 | $ 25,578,709 |
| 4/8/09 | 3,135 | $ 30,559,124 |
| 4/15/09 | 3,589 | $ 34,939,035 |
| 4/22/09 | 4,199 | $ 40,879,872 |
| 4/29/09 | 4,880 | $ 47,353,795 |
| 5/6/09 | 5,668 | $ 54,928,875 |
| 5/13/09 | 6,162 | $ 59,579,591 |
| 5/20/09 | 6,816 | $ 65,749,498 |
| 5/27/09 | 7,517 | $ 72,511,587 |
| 6/3/09 | 8,522 | $ 82,548,424 |
| 6/10/09 | 9,145 | $ 88,252,190 |
| 6/17/09 | 9,848 | $ 94,735,430 |
This reflects the total amount of credit reported on applications received as of the date indicated. This amount has not yet been verified and may include duplicate, incomplete, and invalid applications. This amount is provided for informational purposes and does not reflect the actual amount to be allocated. We will update the amount received on this webpage each Friday. Keep in mind that all applications will be processed on a first-come, first-served basis, based on the date received by fax only.
California allows qualified new home buyers a total tax credit amount equal to either five percent of the purchase price or $10,000, whichever is less. Taxpayers must apply the total tax credit in equal amounts over three successive taxable years (maximum of $3,333 per year) beginning with the taxable year (2009 or 2010) in which the new home is purchased.
How to apply
- Within one week (seven calendar days) after the close of escrow:
- The seller must complete Part I of Form 3528-A, Application for New Home Credit, certifying that the home has never been occupied, and provide a copy to the buyer or escrow person.
- The buyer will complete Parts II & III of Form 3528-A.
- The escrow person on behalf of the seller and buyer will fax the completed Form 3528-A to FTB at 916.845.9754, and provide a copy to the buyer.
- Fax is the only delivery method that will be accepted and considered for credit allocation by FTB, as the date and time stamp on the fax will determine the order in which credits are allocated.
- Fax only one completed application per residence with all qualified buyers listed. Do not include information on nonqualified buyers. An incomplete application may delay or prevent credit allocation.
- Do not fax the application to FTB before escrow closes.
- Do not fax the application to FTB more than once. We will process the applications in the order received as quickly as possible.
- Escrow companies should only send one application per fax transmission.
- The buyer keeps a copy of the completed Form 3528-A for their records.
- The Form 3528-A is now available online as a fillable form. Simply fill in all required information, print the form, and sign. If you fill out the form by hand, please print numbers as clearly and neatly as possible using CAPITAL LETTERS and staying between the lines. The faxes can be very hard to read.
Application processing
- The buyer will receive notification of credit allocation from us.
- An allocation of credit will not be issued if:
- The home has been previously occupied.
- The application is not received within one week after the close of escrow.
- The application is received after the total credits available ($100,000,000) have been allocated.
Requirements of the credit
- The home must be a “qualified principal residence” as defined under California Revenue and Taxation Code Section 17059(b)(1). The home must:
- Be a single-family residence, whether detached or attached.
- Never have been previously occupied.
- Be occupied by the taxpayer for a minimum of two years.
- Be eligible for the property tax homeowner’s exemption under California Revenue and Taxation Code Section 218.
- For over three successive taxable years, the total credit allocated among owners that occupy the home must not exceed $10,000. (Multiple qualified buyers that occupy the home will be allocated credit based on the amount paid and their percentage of ownership.)
- Any credit that reduced tax on a tax return must be repaid if the buyer does not occupy the home for at least two years immediately following the purchase date.
- FTB may request documentation to ensure buyers have complied with the requirements of the credit.
Claiming the credit
- The buyer must receive an allocation of credit from us to claim the credit. The credit allocation letter will state the amount they can claim listed by tax year.
- The buyer should refer to Publication 3528 (available by 12/2009) for instructions on claiming the credit.
- The buyer must claim the credit on an original timely filed return, including returns filed on an extension.
- Special rules apply to married/RDP (Registered Domestic Partners) taxpayers filing separately, in which case each spouse is entitled to one-half of the credit, even if their ownership percentages are not equal. For two or more taxpayers who are not married/RDP, the credit amount will have already been allocated to each taxpayer occupying the residence on their respective credit allocation letter.
- If the available credit exceeds the current year net tax, the unused credit may not be carried over to the following year.
- The credit is not refundable.
Definitions
- Purchase date:
- The date escrow closes.
- Qualified buyer:
- A taxpayer who purchases a single-family residence, whether detached or attached, that has never been occupied, that is purchased to be the principal residence of the taxpayer for a minimum of two years, and that is eligible for the homeowner’s exemption under California Revenue and Taxation Code Section 218.
- Qualified Principal Residence/New Home:
- A qualified principal residence means a single-family residence, whether detached or attached, that has never been occupied and is purchased to be the principal residence of the taxpayer for a minimum of two years and is eligible for the property tax homeowner’s exemption.
- Types of residence: Any of the following can qualify if it is your principal residence and is subject to property tax, whether real or personal property: a single family residence, a condominium, a unit in a cooperative project, a houseboat, a manufactured home, or a mobile home.
- Owner-built property: A home constructed by an owner -taxpayer is not eligible for the New Home Credit because the home has not been “purchased.”
Contact us
Phone:
- 888.792.4900 (press 5)
- 916.845.4900 (not toll-free)
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Median Home Price Hits $295,000 in May- SDBJ Excerpt
June 17th, 2009 categories: Our Market
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Posted date: 6/17/2009
Median home prices increased again in May continuing the modest recovery that began in January, according to MDA DataQuick of La Jolla.
Median prices of all homes and condos increased $5,000 in May — and $15,000 since January — to $295,000 countywide. Most of May’s gains were reflected in higher valued condo sales, which increased from $182,000 in April to $199,000 last month. Prices of existing homes stayed flat on the month at $325,000, and prices on new homes and condos increased from $438,000 to $476,000. Yet median prices are still 22.6 percent below May 2008 levels. The number of homes sold decreased, indicating fewer of those fire sale bargains. The number of all homes and condos sold fell from 3,375 in April to 3,242 in May. The number of new homes and condos sold actually increased from 181 to 200. DataQuick analysts suggested that home prices may have bottomed out, but caution that price depreciation may be hitting more affluent neighborhoods because of mortgage defaults and impatient owners of higher-end homes who need to sell in the current market. The percentage of homes sold at prices greater than $500,000 increased from 18.8 percent in March to 20.5 percent in April to 23.1 percent in May. Foreclosures overall declined in May, accounting for 43.1 percent of all resales, compared with 47.3 percent in April and 51.1 percent in March. However, many analysts say the drop in foreclosures may be temporary as banks attempt to modify loans and interest rates increase. Complicating matters is a temporary moratorium on foreclosures that took effect June 15. — Ned Randolph
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Secretaries Geithner, Donovan Announce new Details of
June 14th, 2009 categories: Our Market
May 14, 2009
Just Over Two Months after Release of Program Guidelines, Homeowners Realizing Relief under Administration Plan Join Secretaries to Share Personal Stories
To view the Program Update Fact Sheet: Foreclosure Alternatives and Home Price Decline Protection Incentives, please visit link.
To view the Making Home Affordable Progress Report Fact Sheet, please visit link.
To read biographical sketches of homeowners attending today’s event, please visit link.
WASHINGTON – With the Making Home Affordable (MHA) program delivering much-needed relief to homeowners and to our economy just over two months after the release of program guidelines, Treasury Secretary Tim Geithner and Housing and Urban Development (HUD) Secretary Shaun Donovan today provided an update on the program’s impact on stemming the housing crisis and keeping families in their homes and announced new options for homeowners facing foreclosure. The announcement and update came following a meeting with housing counselors from the National Community Reinvestment Coalition (NCRC) and with homeowners Nicholas Tekpertey of Reston, VA, and Warren Rohn of Lewiston, CA, who shared their success stories since participating in the Home Affordable Modification program.
“In just over two months, the Making Home Affordable program is up and running, helping our economy recover and making a difference in the lives and livelihoods of thousands of American homeowners. Historically low interest rates are allowing Americans to refinance and save money, and modifications are helping homeowners avoid foreclosure,” said Secretary Geithner. “Today we are announcing a new program component to help homeowners obtain modifications in areas suffering from home price declines. If a modification is not possible, we are also announcing steps to encourage the quick private sale or voluntary transfer of property, which will save homeowners money and protect their financial f uture. These are critical steps in stemming the foreclosure crisis and stabilizing the housing market, both of which are critical to our economic recovery.”
“I can’t stress enough how important our HUD-approved counseling agencies are to the success of the Making Home Affordable program, and ultimately, to helping to keep American families in their homes,” Secretary Donovan said. “That’s why HUD has requested a $100 million investment in our Housing Counseling Assistance Program for fiscal year 2010, a $35 million increase from our 2009 budget. This investment will help further support the work of our 2,600 HUD-approved housing counselors across the nation, just like those at NCRC, who play a key role in ensuring that borrowers can take part in the modification and refinancing options made available through Making Home Affordable.”
The Secretaries announced new details on the Making Home Affordable program:
Foreclosure Alternatives provide incentives for servicers and borrowers to pursue short sales and deeds-in-lieu (DIL) of foreclosure in cases where the borrower is generally eligible for a MHA modification but does not qualify or is unable to complete the process, which helps prevent costly foreclosures and minimizes the damage that foreclosures impose on borrowers, financial institutions and communities. The new details will simplify and streamline the process of pursuing short sales and deeds-in-lieu, which will facilitate the ability of more servicers and borrowers to utilize the program. The program provides a standard process flow, minimum performance timeframes and standard documentation, and it offers financial incentives to servicers and borrowers to pursue these alternatives to foreclosure.
Home Price Decline Protection Incentives will provide lenders additional incentives for modifications where home price declines have been most severe and lenders fear these declines may persist. To encourage the modification of more mortgages and enable more families to keep their homes, the Administration, building on insights pioneered by Chairman Bair and the FDIC, has developed an innovative payment that provides compensation based on recent home price declines. Together the incentive payments on all modified homes will help cover the incremental collateral loss on those modifications that do not succeed. HPD P payments will be linked to the rate of recent home price decline in a local housing market, as well as the average cost of a home in that ma rket.
Since the launch of Making Home Affordable, more than one million Americans have now refinanced, due to historically low interest rates, and thousands of underwater borrowers have refinanced under the Home Affordable Refinance Program. Fannie Mae has had over 233,000 eligible refinance applications through its refinancing program, with more than 51,000 of these having loan-to-value ratios between 80% and 105%. More than 55,000 Home Affordable Modification offers have been extended to qualifying borrowers. Additionally, servicers have mailed more than 300,000 letters to homeowners who are potential candidates for the program. The refinance application volumes and modifications underway make clear the desire of homeowners to take advantage of the Admin istration’s program.
Homeowners Nicholas Tekpertey and Warren Rohn have already seen the impact of the MHA modification program. In March, Tekpertey heard about the Home Affordable Modification from a friend, called his lender, faxed in his documents, and was qualified with relative ease. With this modification, he saves almost $600 per month and his payment is now affordable, with an annual total savings of $7,154. Warren Rohn received a Home Affordable Modification offer from his lender and was able to modify his loan with a 2% interest rate for five years.
“In February, I was facing foreclosure,” Tekpertey said. “Making Home Affordable changed my situation, and gave me my home back. All homeowners who are worried about their mortgage payments should do what I did. Go to the website like I did. See if you qualify. This program is real, and this program works.”
“This program saved my bacon,” Rohn said. “Losing my trucking business was tough enough, but I’m not sure what I would have done if I lost my home. I want to say something to all the homeowners out there — this program has made a real difference in my life. It’s given me and my wife the security to know we’re not going anywhere.”
Making Home Affordable, a comprehensive plan to stabilize the U.S. housing market, was first announced by the Administration on February 18. The three part program includes aggressive measures to support low mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac; a Home Affordable Refinance Program, which will provide new access to refinancing for up to 4 to 5 million homeowners; and a Home Affordable Modification Program, which will reduce monthly payments on existing first lien mortgages for up to 3 to 4 million at-risk homeowners. Two weeks later, the Administration published detailed guidelines for the Home Affordable Modification Program and authorized servicers to begin modifications under the plan immediately. Fourteen servicers, including th e five largest, have now signed contracts and begun modifications under the program. Between loans covered by these servicers and loans owned or securitized by Fannie Mae or Freddie Mac, Home Affordable Modification participants now account for more than 75 percent of all loans in the country.
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Pending Home Sales Up for Three Months in a Row
June 5th, 2009 categories: Our Market
WASHINGTON, June 02, 2009
Record low mortgage interest rates boosted pending home sales for the third consecutive month, with some benefit now from the first-time buyer tax credit, according to the National Association of Realtors®.
The Pending Home Sales Index,1 a forward-looking indicator based on contracts signed in April, rose 6.7 percent to 90.3 from a reading of 84.6 in March, and is 3.2 percent above April 2008 when it was 87.5.
Lawrence Yun, NAR chief economist, said buyers are responding to very favorable market conditions. “Housing affordability conditions have been at historic highs, but now the $8,000 first-time buyer tax credit is beginning to impact the market,” he said. “Since first-time buyers must finalize their purchase by November 30 to get the credit, we expect greater activity in the months ahead, and that should spark more sales by repeat buyers.”
The Pending Home Sales Index in the Northeast shot up 32.6 percent to 78.9 in April and is 0.8 percent above a year ago. In the Midwest the index rose 9.8 percent to 90.4 and is 11.1 percent above April 2008. The index in the South slipped 0.2 percent to 93.0 in April but is 3.5 percent higher than a year ago. In the West the index rose 1.8 percent to 94.8 but is 2.9 percent below April 2008.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said there are numerous buyer assistance programs around the country. “Some states are offering bridge loans that allow first-time buyers to use the tax credit for downpayment and closing costs, but there are many other local government and nonprofit programs available to buyers, depending on location,” he said.
“Just last week, HUD announced that qualifying buyers can use the tax credit for closing costs on FHA loans, to buy down the interest rate or make a larger downpayment. Buyers who are wondering about their options should contact a Realtor®, who can advise consumers on the housing assistance programs and resources available in a given area.”
NAR’s Housing Affordability Index2 is in record territory. The affordability index rose to 174.8 in April from an upwardly revised 171.9 in March, and was the second highest monthly reading on record after peaking at 176.9 in January of this year. The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income; tracking began in 1970.
A median-income family, earning $60,900, could afford a home costing $296,800 in April with a 20 percent downpayment, assuming 25 percent of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small downpayments are roughly 80 percent of that amount. The affordable price was well above the median existing single-family home price in April, which was $169,800.
Yun cautions that the reporting sample for pending home sales is smaller than that of existing-home sales, so it is subject to greater variability. “In addition, the relationship between contracts on pending home sales and closings on existing-home sales is taking longer than in the past for several reasons,” he said. “Mortgage processing time has increased, it is taking many months to close on those homes requiring short sales with lender approval, and some sales are falling through at the last moment.”
The total number of existing-home sales is expected to improve but with dramatic local market variation in the timing of recovery. “The market has already bottomed in some areas, but this is an unusual housing cycle with some areas improving rapidly while others languish or decline,” Yun said.
1The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.
The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity from 2001 through 2004 parallels the level of closed existing-home sales in the following two months. There is a closer relationship between annual index changes (from the same month a year earlier) and year-ago changes in sales performance than with month-to-month comparisons.
An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales.
2The Housing Affordability Index is a relative index where a value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced existing single-family home, taking into account the relationship between median home price, average effective interest rate for loans closed on existing homes, and median family income. The higher the index, the better housing affordability is for buyers.
The calculation assumes a downpayment of 20 percent and a qualifying ratio of 25 percent of gross income for mortgage principle and interest payments. The index is a general gauge with conditions varying widely around the country. Affordability conditions are lower for first-time buyers with smaller downpayments and less income.
Monthly publication of the index began in 1981 with annual data calculated back to 1970.
Existing-home sales for May will be released June 23; the next Pending Home Sales Index will be on July 1.
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