First-Time Buyers…Your Time To Qualify For The $8,000 Tax Credit Ends Sooner Than You May Think

In speaking with buyers, I realize that the Tax Credit qualifications put out by the government seem confusing to some (as government matters often are).

The Florida Association of Realtors, in conjunction with others, has put together this video which provides a  lot of detail regarding this tax credit.  Some of the more important points discussed are:

• Who qualifies
• Who DOES NOT qualify
• How to claim it (even if you already claimed the $7,500 credit for 2008) and
• When is the deadline?

Please take some time to carefully listen and watch throughout the presentation and prepare your questions for your tax advisor/preparer on how You can qualify.

CLICK HERE TO PLAY VIDEO IN A NEW WINDOW

What if I tell my bank that I can no longer keep my condo and I would like a deed-in-lieu of foreclosure?

This is a question that comes up often in this market. Obviously, there are several things to consider…

First of all…have you spoken to your lender yet?  What did they say?

Depending on where you are in the foreclosure process (haven’t missed a payment vs. facing a sale date), there are a number of options you may still have.

It is imperative you don’t just do nothing and that instead, you speak with your lender everytime they call. You must realize that, at first, some lenders may still employ escalating tactics to try to collect a debt. Other lenders are much more proactive and make every effort to help their borrowers.

Whatever you do, you must consult at least four people through this process (of course, you must do due dilligence and ask/interview several – even when referred, so you can find one that can meet your needs):

1) Your Lender – This is your first line of defense. See how amicable they are, how proactive and helpfull they seem and what can they offer you as a solution. Know however, that they want to help…but have their (and their investor’s) interest at heart first. Their solutions may not offer you much relief but you must get through this before moving forward.

2) Realtor – Realize that not all real estate agents are Realtors (members of a local board and the National Association of Realtors, who adhere to a strict Code of Ethics). In addition, not all Realtors have received proper training on how to handle distressed property transactions. Seek one with the CDPE designation or Certified Distressed Property Expert(www.CDPE.com). They are over 7500 strong nationwide and you are sure to find one that can help you with your real estate needs while understanding your options and how to handle the sale.

3) Attorney – Just like in all professions, find a specialist in real estate and bankruptcy matters. Preferably one who is also able to file suit in federal court if need be (most bankruptcy attorneys should fall in this category). The reason is simple. You may have heard of doing a “loan modification”. Well, I don’t typically feel a “voluntary” modification (one in which your lender would voluntarily negotiate the terms of the loan with you), is of much use and have found that typically, what the lenders offer in this scenario is of not much help to the borrower. A competent attorney who thoroughly understands mortgage laws (predetory practices, RESPA, Usury and interstate laws, etc), can perform a forensic review of all your loan documents and see if you can turn the tables around in your favor. WARNING: find an attorney that can offer you free or fee-based advise and work. There are many who want to charge you a monthly stippend and will not give you a time frame potentially costing you thousands more over time (a scam if you ask me).

In addition, you may have other legal rights including bankruptcy and you need to know all your angles so that you understand and choose among the best options to you, including how to handle any deficiency judgement if any (a court order in favor of the lender giving the lender a judgement against you for the unpaid balance – which they may choose to collect or sell to collection agencies. They in turn could hound you for years while it still shows up on your credit report, making it almost impossible for your score to ever get better).

Finally, even if you attempt a voluntary modification with your lender and it gets denied, a competent bankruptcy attorney may be able to help you get the loan modified in bankruptcy court if you choose this route.

4) Tax Professional/CPA – This individual will (or should) have a handle on how the “shortage” or deficiency with the IRS. Once the shortage amount is known and with your financial information at hand, they can punch in the numbers with the formula the IRS has created (unless you can be saved by HR3648), to not have to pay (or minimize) your tax obligation if any.

If you are on the verge of a foreclosure sale, you MAY still be able to postpone (stay) the sale but you must ACT. The judge will only empathize when they see you’re trully taking matters into your hands and trying to remedy the situation. Otherwise, they’ll agree to a speedy process and cut you no slack.

One of your options is in fact doing what you asked about here: to give the property back. This is called giving your lender the deed-in-lieu of foreclosure (or giving them back the deed in exchange for not pursuing the foreclosure). This alternative is better than a full blown foreclosure but arguably more damaging than pursuing a Short Sale (selling the property for less than what you owe).

Each process is different and requires a unique approach. Speaking with these experts in their respective fields (instead of uncle Lou or cousin Mary), about your specific situation details will highly improve the chances of success for you.

There may still be several options available to you, but you must take control and ACT now and remember…Luck, is when Preparation Meets Opportunity.

Miami Beach Art Exhibit with food and drinks

New Miami-Dade County Rule for Sellers of Foreclosed Property

In 2008, the Board of County Commissioners of Miami-Dade County, Florida adopted Ordinance #08-133 (effective December 12, 2008), requiring the issuance of a Certificate of Use or “CU” for residential properties in unincorporated Miami-Dade County.

This CU applies to properties acquired through foreclosure procedings and Judgments through a Certificate of Title (per FS, Chapter 45).

The new ordinance requires individuals and institutions to obtain a CU BEFORE offering the property for sale or transfer meaning, “prior to making or accepting offers for sale from a potential buyer of such property”.

Enforcement of the new Certificate of Use ordinance began April 1, 2009.  For more information, you may contact the Planning and Zoning Department at 786-315-2660 or by visiting their website at www.MiamiDade.Gov/PlanZone.

Miami-Dade County – Transit

Starting this Sunday, June 14, 2009, many bus routes in Miami-Dade county will be changed, improved, or eliminated. Find out what changes may affect you if you use Metro bus, rail or mover services in Miami by cliking the link below.

Miami-Dade County – Transit

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Investors: House Bill May Kill Creative Real Estate

Hi Friends -

THIS HAS COME TO MY ATTENTION - PLEASE READ IT -

I don’t know if you’ve heard about HR 1728, but this sounds like a heinous infringement on private property rights that is likely to shut down the creative real estate market. I’m told IT HAS ALREADY PASSED THE HOUSE AND IS UNDER CONSIDERATION BY THE SENATE NOW. I have attached an article written by Vena Jones-Cox about it that you should read and send to everyone you know ASAP, massive action is needed on this immediately to stop it.

House Bill 1787—Why it’s Death to Your Business and What to Do About it.

The U.S. Senate is considering a bill that would severely limit the way you do business as a creative investor and, more importantly, is an inexcusable infringement of the property rights of all Americans.

The bill as written basically REMOVES YOUR RIGHT TO SELL HOUSES and carry back payments

IMAGINE this:  you find and buy an investment property for $50,000.00.  A potential buyer contacts you and wants to buy it for $70,000.00, but has no downpayment, or can’t get bank financing for whatever reason.  You like the person and know she will be a great homeowner, so you owner finance the house for her.

- Did you make a “reasonable” (whatever that means) determination as to her ability to repay?

- Is your loan “fully” amortizing over 30 years? 

- Did you give the buyer full disclosure under federal Truth-in-Lending laws?

If not, you may have violated federal law.  And these are just a few of the new, tough, lending standards trying to be imposed on YOU!

 Do you think this law is fair?

 That’s what I thought.

 But this federal law is close to passage.  It has already passed in the House and soon to be addressed in the Senate.  If we act in large enough numbers, we have a shot at getting  the law properly amended.

 We must act urgently if we want to defeat it.

 Please take the time right now to review the information below and then, PLEASE, contact your Senator. You can get your senator’s contact information here: http://www.senate.gov/general/contact_information/senators_cfm.cfm

 We think it is important enough to not only send to you, but also ask you to send it to every single person in your database that is involved with real estate.  For that matter, anyone who owns his or her own home and wants to consider using creative financing to buy or sell real estate should get a copy of this and make his or her voice heard.

 Thank you for taking the time to act.  I think all of us are in favor of “good” housing and mortgage reform, but there are times when our government goes too far and we, as citizens, need to act.

Read on for more detail…

HR 1728, which you can view in its entirety here: http://www.govtrack.us/congress/bill.xpd?bill=h111-1728 deals with a plethora of mortgage-related issues, mostly around limited terms and fees on residential loans. But the heinous piece of the legislation is in section 101(3)(e), which defines the affected principals as:

‘(E) does not include, with respect to a residential mortgage loan, a person, estate, or trust that provides mortgage financing for the sale of 1 property in any 36-month period, provided that such loan—

(i) is fully amortizing;

(ii) is with respect to a sale for which the seller determines in good faith and documents that the buyer has a reasonable ability to repay the loan;

(iii) has a fixed rate or an adjustable rate that is adjustable after 5 or more years, subject to reasonable annual and lifetime limitations on interest rate increases; and

            (iv) meets any other criteria the Federal banking agencies may prescribe; and

             Yeah, I know, confusing. But here’s what it says: you are NOT subject to the law as long as you DON’T sell more than 1 property with owner financing every 3 years! Or, to put it another way, you ARE subject to the limitations of the law if you DO sell more than one property every 3 years via a land contract, owner-held mortgage or wrap-around mortgage—and who knows if they’ll define lease/options as owner financing, too?

So what does it mean to be “subject to the law”? Well, at the very least, it means that you will have to comply with a long, confusing, and penalty-filled piece of national legislation. Here are the types of transactions that you would be restricted from doing more than once every 36 months:

 o       Selling YOUR OWN HOME using a land contract or owner-held mortgage so that you can get a quicker sale, higher sale price, or better rate of interest than is available in other investments

o       Carrying back owner-held second mortgages on investment properties that you sell

 o       Doing any kind of installment sale on residential properties including homes, condos, mobile homes, and even raw land that is zoned residential.

Yes, there will undoubtedly by ways to “get around it”—some have suggested that getting a mortgage broker’s license and then learning and following the vast new set of regulations would circumvent the “problem”. But bottom line is, this law has to be stopped and it has to be stopped NOW. Here’s why:

 1.                          Congress is trying to regulate the wrong thing. The deals we make are not “loans”—they don’t involve the transfer of money, or points or closing costs or adjustable rates or any of the other things that caused the mortgage crisis to begin with. They are INSTALLMENT SALES. We don’t give money to the “borrower” and wait for it to be paid back: we give a property to the borrower and wait for it to be paid off. Regulating this will have no effect on the foreclosure crisis

 2.                          It is a completely unacceptable infringement on private property rights. When I own a piece of property and find a ready, willing, and able purchaser, I should be able to control the sale of that property within the existing laws of my state, which already regulate the interest rate that I am able to charge and some of the terms of the sale. The government does not have the right to tell us that we need special licensing to sell our own properties; nor do they have the right to further regulate the terms under which we can sell or burden small investors with a new set of rules that we can’t comply with.

Not only will this new law, if passed as written, effectively choke off owner financing as an exit strategy for you, it will also take away housing choice for your buyers. The millions of Americans who’ve been through foreclosure in the last 3 years can’t buy a house in any way OTHER THAN to negotiate owner financing with a seller—and HR 1728 would greatly reduce the number of properties available in this way. Millions of potential home owners who would otherwise be able to re-start the process of paying off a home, and get the tax advantages of ownership, will be reduced to renting until they are able to qualify for bank financing.

 What to Do Right Now

This bill has already passed the house and is waiting for Senate approval. Please contact your senator via email and snail mail to let him know that this law MUST NOT PASS in its current form. You can get your senator’s contact information here: http://www.senate.gov/general/contact_information/senators_cfm.cfm

As always in cases like this, you have an automatic handicap to overcome—the fact that you are a real estate investor and are therefore viewed as part of the problem. So when you write, don’t emphasize the nature of your business, just that you and your buyers would be greatly aversely affected by the new law. 

We need THOUSANDS of these communications to go out in the next few days to have a CHANCE of stopping this in its tracks. So whether you’re a new or experienced investor, PLEASE take the time right now to write your elected representative!

Here are some sample letters or emails.

IF YOU HAVE A REAL ESTATE LICENSE

Dear Senator [name];

 My name is ________________ and I am a life-long resident of __________.

I am writing you to encourage you to vote NO on HR 1728, the “Mortgage Reform and Anti-Predatory Lending Act”.

 While many of the provisions of the act are positive steps toward mortgage reform, the inclusion of private owners in the act (see section 101(3)(e)) will enormously reduce the housing choice of Americans and the ability of home owners to sell properties in this already-slow market.

 As a real estate broker, I have seen several dozen cases in the  past year of home sellers and buyers coming to an agreement for an installment sale on a property that the owner desperately needed to sell (often to avoid foreclosure) and the buyer desperately wanted to buy, but could not raise the downpayment needed for conventional financing.

 In all cases, these sales turned out to be win-win deals for the buyer and seller; the seller was able to get rid of an unwanted property to a buyer who loved it, and the buyer was able to get his new home at an affordable payment and interest rates with none of the usual costs (points, application fees etc) inherent in more conventional mortgage transactions.

 In my state, these transactions are already regulated by state law: a low maximum interest rate is already in place, and both the buyer and seller are protected by other regulations at the state level.

 In defense of private property rights, owners should be exempted from the burdensome and unnecessary rules that this law foists upon them. In its current form, it would all but shut off the “owner financing” market that is the only way that many sellers can sell and many buyers can buy right now.

PLEASE DO NOT LET THIS RESTRICTION ON PRIVATE PROPERTY RIGHTS PASS THE SENATE. It is unnecessary to stop private buyers and sellers from transacting business that is beneficial to both of them—they are not the problem that the bill seeks to solve. HR 1728 would be extremely harmful to thousands of your constituents. 

It will exacerbate the problem OF foreclosure, as fewer sellers will be able to sell their homes so they can avoid foreclosure, and fewer buyers who have recently experienced foreclosure will be able to re-start the process of home ownership inexpensively and easily by negotiating owner financing.

 Thank you for your consideration;

 YOUR NAME

Licensed Real Estate Broker license #

Phone #

email

*** 

IF YOU SELL HOUSES WITH OWNER FINANCING

Dear Senator [name];

My name is ________________ and I am a life-long resident of ___________.

 I am writing you to encourage you to vote NO on HR 1728, the “Mortgage Reform and Anti-Predatory Lending Act”.

 While many of the provisions of the act are positive steps toward mortgage reform, the inclusion of private owners in the act (see section 101(3)(e)) will enormously reduce the housing choice of Americans and the ability of home owners to sell properties in this already-slow market.

 As a professional housing provider, I sell several houses each year to home buyers on installment sale [or, if you have not purchased a property, add here: “I had planned to sell several houses this year on installment sale]—a practice that would become impossible under this law in its current form.

I find that in today’s slow market, the best way for me to help buyers who desperately want to become homeowners, but who cannot raise the downpayment or meet the other terms needed for conventional financing, is to allow them to make payments directly to me.

 These sales are win-win deals for both the buyer and myself; I am able to turn over homes that I’ve bought and rehabbed (often from foreclosures) to buyers who love and can afford them, and the buyer can get his new home at an affordable payment and interest rates with none of the usual costs (points, application fees etc) inherent in more conventional mortgage transactions.

 In most states, these transactions are already regulated by state law: a low maximum interest rate is already in place, and both the buyer and seller are protected by other regulations at the state level.

 Without the ability to sell homes in this way, I will no longer be able to invest in and renovate any of the tens of thousands of vacant, ugly houses placed on the market by the foreclosure crisis, and my small-but-beneficial business will literally be in ruins. Perhaps more importantly, the homeowner-buyers that I serve will be forced to rent rather than moving toward the American dream of home ownership.

In defense of private property rights, owners should be exempted from the burdensome and unnecessary rules that this law foists upon them. In its current form, it would all but shut off the “owner financing” market that is the only way that many sellers can sell and many buyers can buy right now.

PLEASE DO NOT LET THIS RESTRICTION ON PRIVATE PROPERTY RIGHTS PASS THE SENATE. It is unnecessary to stop private buyers and sellers from transacting business that is beneficial to both of them—they are not the problem that the bill seeks to solve. HR 1728 would be extremely harmful to thousands of your constituents. 

It will exacerbate the problem of foreclosures, as fewer sellers will be able to sell their homes so they can avoid foreclosure, and fewer buyers who have recently experienced foreclosure will be able to re-start the process of home ownership inexpensively and easily by negotiating owner financing.

 Thank you for your consideration;

INVESTOR

 +++

THIS IS SERIOUS…PLEASE TAKE ACTION…

What can $200,000 buy in Miami or Miami Beach?

For $200K, you could buy a cool car like a Lamborghini Gallardo, pay for a four year degree at a private university or a buy place you can call “home” that can last you a lifetime (then, even bequest to your children and your children’s children – it has happened, you know).

This may sound too good to be true, but not these days. Check out a few statistics from our MLS (Multiple Listing Service) and ask yourself…is this the right time to buy?

In Miami-Dade County, there are approximately 11,470 Single Family Houses (SFH), actively for sale (all figures are as of the time of this publishing), of which, approximately 7500 (or about 65% of all SFH in the MLS) are for sale at or below  $400,000 (within FNMA guidelines and the only price group considered for this posting), while there are approximately 3400 SFH for sale at or below $200,000! The breakdown looks like this:

Price Range	Quantity	Average DOM	Summary	List Price
$149,999 or under	1,813	99.67	High	$400,000
$150,000 –  $199,999	1,547	99.25	Low	$9,900*
$200,000 – $249,999	1,257	157.75	Average	$222,681
$250,000 – $299,999	1,283	55.33	Median	$219,900
$300,000 – $349,999	787	102.38
$350,000 – $399,999	826	63.5
$400,000	40	0

*May be an error such as a rental incorrectly indicated for sale

In Miami Beach however, there are very few homes in this price range. In fact, there are less than 30 homes for sale below $400,000 in zip codes 33139, 33140 and 33141.  However, the same can’t be said for condominiums.  Out of a total of about 2300 condo units actively for sale at or below $400,000, the breakdown looks like this:

Price Range	Quantity	Average DOM	Summary	List Price
$149,999 or under	555	124.75	High	$400,000
$150,000 – $199,999	472	167.33	Low	$950*
$200,000 – $249,999	321	135	Average	$229,156
$250,000 – $299,999	374	0	Median	$220,000
$300,000 – $349,999	247	93.8
$350,000 – $399,999	321	0
$400,000	12	0

*Again, maybe a rental.

In this market, you can get a lot of bang for fewer bucks.  In fact, there are approximately 3000 SFH in Miami plus about 470 condos under contract pending in the Miami Beach area.

In addition, there have been approximately 4270 closed SFH transactions (again, all numbers are for properties at or below $400,000),  in the last 6 months (about 730 closed in May).  This is in contrast to the approximately 6400 SFH transactions closed by Realtors in all of 2008 so that, we should be able to easily beat 2008 closed sales in 2009.

Meanwhile we’ve had 712 closed Condo transactions in the Miami Beach area in the last 6 months (about 138 closed in May). Again, this is in contrast to the approximately 1428 Condo transactions closed by Realtors in all of 2008 so that, we should be able to also beat 2008 Condo closed sales in 2009.

Of all the inventory in Miami Beach, about 56 Condo units are REO (Real Estate Owned  typically taken back by lenders at auction after foreclosure) and about 790 are Short Sales (pre-foreclosures which are being sold for less than it is owed to the lenders).

In Miami, there are about 722 REO Single Family Houses and about 4100 SFH being offered as Short Sale in the MLS.

This leads to my final analysis.  Of all the SFH Pending contract, about 1200 are Short Sales and another 1358 are REO properties, while about 2600 REO Single Family Houses Closed in the last 6 months in Miami and another 433 Short Sales closed in the same time period.

In Miami Beach, there are about 100 Pending REO Condo sales while there are about 170 Condo Short Sales pending contract. Meanwhile, there were about 90 closed Short Sale and another 200 closed REO condos deals sold in the last 6 months.

For those looking for opportunities, fret no more because in Miami Beach, there are still about 50 REO and about 790 Short Sale Condominiums available for sale while there are about 720 REO and about 4200 Short Sale Single Family Houses available for sale to those ready to act today.

In the end, only those who prepare will get to cherry pick. Yet, buyers must understand that in this market, buying distressed properties requires different processes than that of regular sales and so, buyers must know how to present their offers so they get accepted.

This is no time to go it alone. Have a competent Realtor (member of a local board and the National Association of Realtors who adhere to a strict Code of Ethics) represent you (after all, the seller has one representing them), and preferably, one who is also a Certified Distressed Property Expert. There about 7500 of these nationwide and you can find one near you at www.CDPE.com.

Remember always…Luck is when Preparation Meets Opportunity.

Should I throw down the towel and give the property back? Deed-in-Lieu?

You know, depending on where you are in the foreclosure process (haven’t missed a payment vs. facing a sale date), there are a number of options you may still have.

It is imperative you don’t just do nothing and that instead, you speak with your lender everytime they call. You must realize that, at first, some lenders may still employ escalating tactics to try to collect a debt. Other lenders are much more proactive and make every effort to help their borrowers.

Whatever you do, you must consult at least four people through this process (of course, you must do due dilligence and ask/interview several – even when referred, so you can find one that can meet your needs):

1) Your Lender – This is your first line of defense. See how amicable they are, how proactive and helpfull they seem and what can they offer you as a solution. Know however, that they want to help…but have their (and their investor’s) interest at heart first. Their solutions may not offer you much relief but you must get through this before moving forward.

2) Realtor – Realize that not all real estate agents are Realtors (members of a local board and the National Association of Realtors, who adhere to a strict Code of Ethics). In addition, not all Realtors have received proper training on how to handle distressed property transactions. Seek one with the CDPE designation or Certified Distressed Property Expert (www.CDPE.com). They are over 7500 strong nationwide and you are sure to find one that can help you with your real estate needs while understanding your options and how to handle the sale.

3) Attorney – Just like in all professions, find a specialist in real estate and bankruptcy matters. Preferably one who is also able to file suit in federal court if need be (most bankruptcy attorneys should fall in this category). The reason is simple. You may have heard of doing a “loan modification”. Well, I don’t typically feel a “voluntary” modification (one in which your lender would voluntarily negotiate the terms of the loan with you), is of much use and have found that typically, what the lenders offer in this scenario is of not much help to the borrower. A competent attorney who thoroughly understands mortgage laws (predetory practices, RESPA, Usury and interstate laws, etc), can perform a forensic review of all your loan documents and see if you can turn the tables around in your favor. WARNING: find an attorney that can offer you free or fee-based advise and work. There are many who want to charge you a monthly stippend and will not give you a time frame potentially costing you thousands more over time (a scam if you ask me). In addition, you may have other legal rights including bankruptcy and you need to know all your angles so that you understand and choose among the best options to you, including how to handle any deficiency judgement if any (a court order in favor of the lender giving the lender a judgement against you for the unpaid balance – which they may choose to collect or sell to collection agencies which could hound you for years while it still shows up on your credit report, making it almost impossible for your score to every get better). Finally, even if you attempt a voluntary modification with your lender and it gets denied, a competent bankruptcy attorney may be able to help you get the loan modified in bankruptcy court if you choose this route.

4) Tax Professional/CPA – This individual will (or should) have a handle on how the “shortage” or deficiency with the IRS. Once the shortage amount is known and with your financial information at hand, they can punch in the numbers with the formula the IRS has created (unless you can be saved by HR3648), to not have to pay (or minimize) your tax obligation if any.

If you are on the verge of a foreclosure sale, you MAY still be able to postpone (stay) the sale but you must ACT. The judge will only empathize when they see you’re trully taking matters into your hands and trying to remedy the situation. Otherwise, they’ll agree to a speedy process and cut you no slack.

One of your options is in fact doing what you asked about here: to give the property back. This is called giving your lender the deed-in-lieu of foreclosure (or giving them back the deed in exchange for not pursuing the foreclosure). This alternative is better than a full blown foreclosure but arguably more damaging than pursuing a Short Sale (selling the property for less than what you owe).

Each process is different and requires a unique approach. Speaking with these experts in their respective fields (instead of uncle Lou or cousin Mary), about your specific situation details will highly improve the chances of success for you.

There may still be several options available to you, but you must take control and ACT now.

All the best and remember: Luck is When Preparation Meets Opportunity