Hello Elite Real Estate Professionals,

As promised I want to continue to provide you with Real Estate industry updates and information that will be helpful to you and your clients.

The following is a great warning with property tax links that can be shared with all Real Estate Professionals and their clients.

I want to be a source of industry related information you can count on as well as your Fidelity National Home Warranty and Disclosure Source representative.

Please continue to ask for a Fidelity National Home Warranty and Disclosure Source NHD report for all of your transactions.

Yvonne Nelson 

Fidelity National National Home Warranty &

Disclosure Source 

800-308-1424 ext 3518        

www.homewarranty.com

www.disclosuresource.com

*****************************************

Property Tax Reduction Scams Spreading, California Warns
Scam targets homeowners with declining property values
February 13, 2009
       
California Attorney General Edmund G. Brown Jr. is warning consumers about a “blatant and costly scam” targeting homeowners with declining property values.

“This blatant and costly scam holds out hope to homeowners that their property taxes will be reduced if they pay hundreds of dollars to a middleman to have their property re-evaluated,” Brown said. “In point of fact, homeowners can seek relief directly from their county assessor free of charge. Homeowners should be on high alert.”

Companies are sending deceptive mailers to homeowners offering help in reducing property tax assessments, if the homeowner pays the company hundreds of dollars in fees.

The companies use official-sounding names such as “Tax Adjusters,” “Tax Readjustment” or “Tax Review” to make victims believe the company is a government agency.

Property tax reassessment is a free service provided by county tax assessors. If homeowners believe their property value has declined and they are paying too much in property taxes, the local tax assessor will review the property value for free for a possible downward assessment.

To avoid becoming a victim, homeowners should:

• Never pay money for something they did not ask for.

• Avoid a middleman; they should contact their local tax assessor’s office for property value reassessment.

Q. If I bought a home and used the $7,500 home buyer tax credit, can I retroactively receive $15,000 credit if it becomes law?

A. No.

Q. Are there any income restrictions on the tax credit?

A. The Senate version currently has no income limits. The current $7,500 tax credit phases out on buyers with incomes exceeding $75,000 for individuals and $150,000 for married couples.

Q. When will the new tax credit go into effect?

A. The Senate version would take effect when the bill is signed by the president into law, and it would last for one year.

Q. Can I take the tax credit this year?

A. Yes. The Senate proposal would allow buyers — even those who purchase in 2009 — to claim the credit on their 2008 taxes.

Q. The proposed tax credit is nonrefundable. What does that mean?

A. You can only receive the credit to the extent that you owe federal income taxes. The Senate proposal would give home buyers two years to claim the credit, so buyers could claim a $7,500 credit in 2009 and a $7,500 credit in 2010. A family of four that makes less than $82,000, for example, could have a tax liability of less than $7,500 and they would not receive the full value of the credit.

Q. Are there any repayment requirements on the tax credit?

A. No. The Senate proposal does not require the credit to be paid back. The House proposal eliminates a 15-year repayment provision on the existing $7,500 tax credit.

Q. If I am eligible for the current $7,500 credit, am I also eligible for the $15,000 credit?

A. While the $15,000 credit has fewer restrictions than the existing credit, there is one big difference: because the credit is nonrefundable, if you have a low federal income tax liability, you could end up receiving more money with the current credit than the larger, proposed credit.

Q. Are there any increased down payment requirements on the proposed tax credit?

A. No. A separate measure has been introduced in the House that would expand the tax credit to $15,000 but would require a 5% down payment on mortgages. The Federal Housing Administration currently requires a minimum 3.5% down payment.

Q. Can I use the tax credit to buy a second home?

A. No.

Q. How long do I have to live in my home after I purchase it with the tax credit?

A. The Senate version requires buyers to pay back the credit if they sell the house less than two years after they buy it.

Keeping you updated on the market!

For the week of February 9, 2009

Welcome to the Market Matters Advisory, your weekly guide to responding to the market.

Real Estate Market Update:

Housing Stimulus is the Key to Unlocking America’s Economy

· Home buyers purchasing fixer-uppers, or homeowners looking to update their house with new tile, fresh paint, or modern lighting fixtures may be able to save money by performing some of the work themselves. Some community colleges and most big-box home improvement stores offer do-it-yourself classes to help homeowners save money and improve the look of their homes. Interested participants should check with their local education centers and home improvement stores to verify the types of classes offered and associated prices.

· When selling a home, first impressions are extremely important. Neglecting to maintain a lawn by letting it turn brown or become overgrown may discourage a buyer. To prevent this, homeowners should cut back or remove trees and bushes that are overgrown, especially if they are hazardous. Weeding and laying fresh bark in planter beds also can contribute to a favorable first impression.

Home price plunge helping buyers
Lower home prices, coupled with low interest rates are making this an ideal time for many to purchase a home. According to the Standard & Poor’s/Case-Shiller Index, home prices in 20 metropolitan areas were down 18.2 percent in November compared with the same month a year ago. Phoenix , with a 33 percent drop, posted the steepest decline, followed by Las Vegas at 32 percent.

MAKING SENSE OF THE STORY FOR CONSUMERS

· With homes in the 20-city index losing nearly a quarter of their value since their peak in July 2006, more renters can now afford to buy a home for the first time in many years. According to the NATIONAL ASSOCIATION OF REALTORS® (NAR), the median home price nationwide in December was down 15 percent to $175,400. With current interest rates at or near historic lows, borrowers with a 10 percent down payment could save $254 per month on a median-priced home compared with a year ago.

· The percentage of households that could afford to buy an entry-level home in California stood at 53 percent in the third quarter of 2008, compared with 24 percent for the same period a year ago, according to the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.). The minimum household income needed to purchase an entry-level home at $287,760 in California in the third quarter of 2008 was $56,100, based on an adjustable interest rate of 5.91 percent and assuming a 10 percent down payment. The monthly payment including taxes and insurance was $1,870 for the third quarter of 2008.

Mortgage News:

Fed adopts program to stem foreclosures
The Federal Reserve recently announced it will seek to renegotiate mortgages it owns that might otherwise enter foreclosure, according to Federal Reserve Chairman Ben S. Bernanke. Under the program, the Fed could reduce what a homeowner owes on a mortgage; lower the interest rate; lengthen the term of a loan; or take other steps to prevent a loan from defaulting.

The Federal Reserve’s program will focus on reducing the amount of principal owed by those at risk of foreclosure, especially those with loan balances exceeding 125 percent of the estimated value of their property.

Subject: Obama’s stimulus plan regarding foreclosures

In addition to taking important steps to prevent mortgage fraud from occurring in the future and to prevent credit cards from turning into the next subprime housing crisis, Barack Obama has called for establishing short and long-term programs to help responsible homeowners facing foreclosure. Obama’s plan will help people stay in their homes and renegotiate with their lenders. It will not help speculators, people buying vacation homes or people that falsely represented their incomes. It is meant to help responsible homeowners through this difficult period. Given the downturn in the economy, Obama is calling for immediate creation of his Foreclosure Prevention Fund that will dramatically increase emergency pre-foreclosure counseling, and will work through the Federal Housing Administration, Fannie Mae and Freddie Mac to allow families facing foreclosure to responsibly refinance their mortgages or sell their homes. By helping families avoid losing their homes and preventing a further decline in property values, this measure will help lessen the impact of a national foreclosure crisis on state, local and family budgets. Obama was one of the first to speak out about the risks of fraudulent and deceptive lending practices. He will build off of that experience and his work with community based organizations to bring American homeowners and housing markets effective relief when he is president.

My comments:
Lately, investors have snapped up discounted distressed properties (Short Sales & REO/Foreclosure Sales). We saw pending home sales increase to 6.3% nationwide in December. January also experienced increased activity in the short sale & foreclosure market. If Obama’s plan carries out in the near future, the possibility of far less foreclosures exists.. thus pricing may go up sooner.

Keeping you updated on the market!

For the week of
January 19, 2008

· The percentage of households that could afford to buy an entry-level home in California stood at 53 percent in the third quarter of 2008, compared with 24 percent for the same period a year ago, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) First-Time Buyer Housing Affordability Index (FTB-HAI). The FTB-HAI measures the percentage of households that can afford to purchase an entry-level home in California.

· First-time home buyers also can take advantage of the federal tax credit for primary residences purchased by July 1, 2009. The credit reduces the borrower’s income tax dollar for dollars as much as $7,500 and serves as an interest-free loan. The amount of the tax credit varies depending on the home’s purchase price.

· In California , the median price of an existing home declined to $285,680 in November 2008, down 41.8 percent from November 2007 when the median price of an existing, single-family home was $490,511.

· The average rate for 30-year, fixed-rate mortgages was 5.01 percent for the week ending Jan. 8, according to Freddie Mac. Lower interest rates coupled with lower home prices can lead to more affordable mortgage payments, enabling some homeowners to move up, and first-time home buyers to enter the market.

· To qualify for the record-low interest rates, borrowers will need a down payment of at least 20 percent and a FICO score of 700 or higher. In California , a 20 percent down payment on a median-priced home would be $57,136. Additionally, home buyers will need to pay for any closing costs not paid by the seller.

· The large number of foreclosures on the market also is presenting an opportunity to purchase a home at a favorable price. However, some foreclosed homes may be in disrepair and may require additional work to make the property livable. A program offered by the Federal Housing Administration, 203K Streamline, allows home buyers to borrow as much as $35,000 more than the mortgage to pay for certain renovations, such as new paint, carpeting and appliances that a foreclosed home may need.

· To calculate how much house is affordable, consumers should follow the general principle of dedicating no more than 28 percent of their gross monthly income to covering the monthly mortgage payment, including property taxes and homeowners insurance. All debt payments combined, including mortgage, credit cards, car payments, student loans, etc., should be less than 35 percent of the gross monthly income.

· Using a home-loan calculator also can be helpful to determine how much house is affordable based on a borrower’s income. Many Web sites offer home-loan calculators including www.ginniemae.gov, www.bankrate.com, and www.fhainfo.com/calculators.htm.

Will loan limits rise?
Congressional leaders from both parties have been lobbying President-elect Obama to increase the limits of conforming loans – mortgages eligible to be purchased by Government Sponsored Enterprises (GSEs), like Fannie Mae and Freddie Mac – in high cost areas from $625,500 to $729,750 as part of an economic stimulus package. Qualified borrowers with conforming loans receive the best interest rates, because many in the financial industry believe conforming loans carry less risk.

Last year, as part of the federal government’s economic stimulus package, the conforming loan limit was temporarily increased to $729,750 in high-cost areas. Beginning Jan. 1, 2009, the conforming loan limit was lowered to its original level of $625,500 for high-cost areas.

In California , the new conforming loan limits for metropolitan areas range from $474,950 in the Sacramento-Arden-Arcade-Roseville metropolitan area, covering El Dorado , Placer, Sacramento , and Yolo counties to $625,500 in the Los Angeles-Long Beach-Santa Ana metropolitan area.

Paying down mortgage faster can make sense – sometimes
Homeowners who find themselves with extra cash may be considering paying down their mortgage. While this can help some people in certain situations, like seniors close to retirement age or those with adjustable-rate mortgages, it may not be the best choice for all homeowners. Paying down the mortgage more quickly can save homeowners a significant amount in interest in the long run. However, some financial experts advise clients, especially those with fixed-rate loans at favorable interest rates, to use extra money to pay down high-interest debt and build up an emergency fund.

Mortgage rate relief might not last long
The Federal Reserve’s announcement that it’s purchasing up to $500 billion of securities backed by Fannie Mae, Freddie Mac, and Ginnie Mae, has contributed to a reduction in mortgage rates to record lows. However, some mortgage experts warn that the low rates may not last long and could actually rise as early as this summer.

According to Celia Chen, senior director of housing economics at Moody’s Economy.com, in the second half of this year, the Federal Reserve’s program will have run its course and other issues will move to the forefront, which could push mortgage rates higher.

Lenders backlogged by refinancing rush
Lower mortgage rates have led to a flurry of homeowners seeking to refinance, but limited staff at many banks has resulted in processing and approval delays. Due to the large number of applications to refinance, Wells Fargo no longer is allowing its loan offers to lock in rates for less than 90 days. The 90-day lock is designed to allow enough time to close the loans.

The record-low rates that have led many homeowners to refinance are typically for 30-year, fixed-rate mortgages that meet the purchase requirements of Fannie Mae and Freddie Mac. Because so many factors determine the interest rate a borrower is actually offered, some banks may not post rates on their Web sites.

It is important to note that a lower rate accompanied by higher points and/or fees may not be the best option. Many times, a slightly higher rate with no points and/or fees is the better choice.

U.S. banks offer mortgages below 5% after Fed action
After the government started purchasing mortgage-backed securities, interest rates at some of the nation’s top banks started falling below 5 percent. On Jan. 8, JPMorgan Chase & Co. was offering 30-year mortgages as low as 4.75 percent on its Web site; Wells Fargo & Co. was advertising rates of 4.875 percent; and Bank of America Corp. at 5 percent. All posted offers were for borrowers with excellent credit – FICO scores of 720 and higher – and with a 20 percent down payment.

Fixed-mortgage rates fall below 5%
The average interest rate on 30-year, fixed-rate mortgages for the week ending Jan. 9, decreased to 4.89 percent from 5.07 percent, according to the most-recent survey from the Mortgage Bankers Association.

Credit restrictions, negative or minimal amounts of home equity, and high levels of outstanding debt have resulted in the denial of nearly 70 percent of borrowers’ applications to refinance.

Fewer apply for home loans; credit line delinquencies increase
A report by the American Bankers Association (ABA) said record numbers of borrowers missed payments on home equity lines of credit (HELOC) during the third quarter. Delinquencies on car loans that banks made indirectly through auto dealers reached the highest levels ever recorded by the ABA . However, according to the same report from ABA , fewer consumers missed payments on credit cards.

Mortgage giants extend suspensions of foreclosures
Fannie Mae and Freddie Mac last week announced they will extend the suspension of foreclosure sales and evictions from single-family homes through the end of January. The extension will allow borrowers facing foreclosure to remain in their homes while the companies work with mortgage servicers to find options for troubled mortgage holders under the Streamlined Modification Program.

This week (Jan. 15 - Jan. 21) the experts say: Rates are likely to remain flat.

Jan. 15 - Jan. 21

This week, almost half of the panelists believe mortgage rates will remain relatively unchanged (plus or minus 2 basis points) over the next 35 to 45 days. Another 31 percent think rates will fall, and the rest believe rates will rise. Panel: Up: 23% Down: 31% Unchanged: 46% Experts’ comments and Bankrate analysts Experts’ comments Panel After a volatile few weeks, mortgage bonds seem to be taking a breather. Continued negative economic data and the Fed purchases of mortgage-backed securities should keep rates in the sub-5 percent range for the near term. My advice to clients is to take advantage of the low rates today, rather than wait. If rates increase, you made a great decision. If they continue to decrease, it is simple and cheap (sometimes at no cost) to refinance again. David Kuiper, mortgage planner, First Place Bank, Holland, Mich. unchanged With retail numbers coming in low, consumer confidence still low, unemployment rising, we should see slightly lower rates. However, to make financial decisions based on speculation may prove costly. If it is cost-effective to buy or refinance, do it now. Don’t miss a great opportunity when it presents itself. Steve Levitt, vice president of mortgage lending, Guaranteed Rate, Chicago unchanged The 10-year Treasury is trading at 2.19 percent with almost no inflation component left in the equation. It is clear that the incoming administration will do everything in its power to keep rates low, including bringing 30-year-fixed rates to 4.5 percent or lower by purchasing securities and keeping liquidity in the market. There is also talk that Fannie and Freddie will increase their loan amounts to as much as $1 million. Mitch Ohlbaum, president, Legend Mortgage, Los Angeles unchanged I think we are at the bottom. Rates should stay flat for the next two months. Bob Moulton, president, Americana Mortgage, Manhasset, N.Y. unchanged The Fed and Treasury are continuing to buy Fannie Mae and Freddie Mac paper in an effort to drive mortgage rates lower. Despite those efforts, 30-year rates appear to have stabilized in the 5 percent range for borrowers with the best credit. I expect that will continue. Mike Larson, interest rate and real estate analyst, MoneyandMarkets.com, Jupiter, Fla. unchanged All economic reports indicate that rates should be going lower. However, lenders are managing volume by keeping rates artificially higher than where they should be priced and people continue to make application. Even with rates being propped up, they are still very attractive and near all time lows. If it makes sense to do something now, don’t wait as volatility remains a risk. If you are looking to refinance, do not risk taking a 30-day lock, take a 60-day lock and be safe. Jim Sahnger, mortgage consultant, Palm Beach Financial Network, Stuart, Fla. unchanged The Fed is deploying its $500 billion to manage mortgage markets. Dan Green, Mobium Mortgage, author of TheMortgageReports.com, Cincinnati unchanged Conforming mortgage rates are still too high. It is in the best interests of the U.S. economy if the Fed gets more aggressive about buying FHLMC/FNMA paper and drives the rate down and actually parks it at a fixed rate for several months. I would suggest two options: 1) peg the 30 year conforming at 4.5 percent with no points (retail) or 2) create the stimulus mortgage I suggested a couple of weeks ago which I will repeat: fixed at 3 percent for 2 years; then 4 percent for next two years; 5 percent for the remaining 26 years. This creates stimulus on the front end because homeowners would have more discretionary spending. If this were Fed-funded with increased money supply, the payments could go to reduce money supply. The eventual rate of 5 percent is designed to make this stuff marketable so it can get off the books of the government. Dick Lepre, senior loan officer, Residential Pacific Mortgage, San Francisco down Bankrate’s analysts Panel The 30-year fixed is at a record low in Bankrate’s 23-year-old survey. It’s never been lower, and that’s why I believe it will end up higher. Holden Lewis, senior reporter, Bankrate.com up Bernanke is intent on pushing mortgage rates down, and he is getting his way. Greg McBride, CFA, senior financial analyst, Bankrate.com

FIRST?TIME HOMEBUYER TAX CREDIT

Frequently Asked Questions

On July 30, 2008, President Bush signed a major housing bill (H.R. 3221) into law. As part of the housing bill, Congress has created a new, temporary tax credit to provide an incentive for first?time homebuyers.
The $7500 credit will be available for the purchase of a principal residence on or after April 9, 2008 and
before July 1, 2009.

CAVEAT: THIS INFORMATION IS ACCURATE BASED ON INFORMATION AVAILABLE AS OF JULY
30, 2008. AS WITH ANY TAX LAW CHANGE,
CHECK WITH A TAX ADVISOR IF THERE ARE
QUESTIONS ABOUT USING THIS PROVISION.

The Basics

1. How does a tax credit work?

Tax credits are special provisions that reduce income tax liability on a dollar for dollar basis. Credits are
claimed on an individual’s income tax return. In this case, Congress has created a tax credit for first?time
homebuyers. The maximum credit amount is $7500. Thus, if after figuring out all the income items and
exemptions and making all the required additions, subtractions, deductions and other items on a tax
return a person had total tax liability of $8000, a $7500 credit would wipe out all but $500 of the tax
due.

2. So in the case of this new homebuyer tax credit, what happens if the purchaser is eligible for
a $7500 credit but their entire income tax liability for the year is less than $7500?

This new tax credit is a so?called “refundable” credit. Thus, if the actual tax liability was $6000, the
purchaser would receive a tax credit refund of $1500. The refundable amount is the difference between
$7500 credit amount and the amount of tax liability. (The term “tax liability” refers to the actual
amount of tax computed on the tax return once all the computations are complete. The individual may
already have “paid” their tax liability through withholding, by means of estimated taxes or simply by a
check that makes up the difference when there is a shortfall of withholding or estimated tax payments.
Most taxpayers determine their tax liability by referring to tables that the IRS prepares each year.)

3. Who can use the new tax credit?
Only first?time homebuyers are eligible to use the credit. A first?time homebuyer is defined as an
individual who has not had an ownership interest in a principal residence in the previous three years.
The 3?year period is measured as of the date of the purchase of the eligible principal residence.

4. Is there an income restriction?

Yes. The income restriction is based on the tax filing status the purchaser claims when filing his/her
income tax return. Individuals whose Form 1040 filing status is Single (or Head of Household) are
eligible for the credit if their income is no more than $75,000. Individuals who file a Joint return may
have income of no more than $150,000.

5. Do individuals with incomes higher than the $75,000 or $150,000 limits lose all the benefit of
the credit?

Not always. The credit has a phase?out so that the closer a buyer comes to the maximum phase?out
amount, the smaller the credit will be. For this new credit, the credit amount is gradually reduced as an
individual’s income reaches $95,000 (single return) or $170,000 (joint return). Individuals with income
above $95,000 ($170,000 joint return) will receive no tax credit.

For example, if a married couple had income of $165,000, their credit would be reduced by 75% as
shown:

Couple’s income $165,000
Income limit $150,000
Excess income $15,000

The excess income amount ($15,000 in this example) is used to form a fraction. The numerator of the
fraction is the excess income amount. The denominator is $20,000 (specified by the statute).

In this example, the disallowed portion of the credit is 75% of $7500, or $5625.
($15,000/$20,000 = 75% x $7500 = $5625)

Stated another way, only 25% of the credit would be allowed.
In this example, the allowable credit would be $1875. (25% x 7500 = $1875)

6. Is the amount of the credit tied to the price of the home?

Yes. The credit is for 10 percent of the cost of the home, up to a maximum credit of $7,500. If a home
cost $65,000, the allowable credit would be $6,500. If a home cost $120,000, the allowable credit would
be $7,500. The amount of the credit is the same for all taxpayers, married or single.

7. What’s the definition of “principal residence?”

Generally, a principal residence is the home where an individual spends most of his/her time (generally
defined as more than 50%). The term includes single?family detached housing, condos or co?ops,
townhouses or any similar type of new or existing dwelling.

8. Are there restrictions on the location of the property?

Yes. Eligible property must be located in the United States. Property outside the US is not eligible for
the credit.

9. Are there restrictions related to the financing for the mortgage on the property?

Yes. If the financing is obtained by means of mortgage revenue bonds (i.e., through a tax?exempt bond?
related financing program offered by a state housing agency), then the purchaser is not eligible for the
tax credit.

10. Why do some news reports call the credit an interest?free loan?

Unlike most other tax credits, this tax incentive must be paid back. All eligible purchasers who claim the
credit will be required to repay it over 15 years. The statute specifies that the repayment amount will
be 6.67% of the credit amount each year. Thus, a buyer who qualifies for the full $7500 credit will repay
$502.50 each year. There will be no interest charge on outstanding balances. (See “Repaying the
Credit” below.)

Some Practical Questions

11. How do I apply for the credit?

There is no pre?purchase authorization, application or similar approval process. Eligible purchasers will
simply claim the credit on the appropriate IRS Form 1040 tax return and/or on any special forms the IRS
might devise. In many, if not most cases, the IRS will be on notice that a purchase has occurred because
the settlement officer at the time of purchase is required to report the transaction.

12. So I can’t use the credit amount as part of my downpayment?

Presently, there is no mechanism available for claiming the credit any earlier than the 2008 tax return
that will be filed in 2009. Congress tried to devise a mechanism that would allow pre?funding of the
credit, but found that pre?funding would require cumbersome processes that would, in effect, bring the
IRS into the purchase and settlement phase of the transaction.

13. So there’s no way to get any cash flow benefits before I file my 2008 tax return?

Any first?time homebuyers who believe they would be eligible for all or part of the credit may wish to
modify their income tax withholding (through their employers) or to adjust their quarterly estimated tax
payments. Individuals subject to income tax withholding would get an IRS Form W?4 from their
employer, follow the instructions on the schedules provided and give the completed Form W?4 back to
the employer. In many cases their withholding would decrease and their take?home pay would
increase. Those who make estimated tax payments would make similar adjustments.

14. I made an offer on a home that was accepted on March 27, 2008. We went to settlement on
April 12, 2008. Do I qualify for the credit (assuming I meet all the other requirements)?

Yes. A home is considered as “purchased” when all events have occurred that transfer the title from the
seller to the new purchaser. If a property goes to settlement on or after April 9, 2008, then an
otherwise qualified buyer would be eligible for the credit. Similarly, closings must occur before July 1,
2009 for purchases to be eligible for the credit.

15. If I don’t make an eligible purchase until 2009, do I claim the credit when I file my 2009 tax
return in 2010?

You’ll have a choice. Qualified first?time homebuyers who make their purchase between January 1,
2009 and before July 1, 2009 are permitted to make an election to treat the purchase as if it had
occurred on December 31, 2008. This election allows them (depending on the timing of the sale) to
claim the credit on their 2008 tax return that is due on April 15, 2009. They may also elect to file their
2008 tax return after April 15 by filing for an automatic extension and claim the credit on the extended
2008 return. If they file their 2008 return before they have purchased the home, they may utilize this
election and file an amended 2008 tax return. Of course they will always have the option of claiming the
credit for the 2009 purchase on their 2009 return filed in 2010.

16. My sister and I are both single and want to purchase a home together. Will we each receive a
$7500 credit?

No. The purchase of a residence will generate a tax credit amount that will total up to no more than
$7500, no matter how many unmarried purchasers are buying the house.

17. My fiancé and I bought a house on June 1, 2008. We’ll get married in 2009. I owned a home
in 2006. He’s never owned a home. Will we get a credit? For 2008? For 2009?

It’s pretty clear that you will not qualify for the credit for the 2008 purchase because you owned a home
after June 1, 2005 (three years before the date of purchase). But since you and your fiancé were single
when you made the purchase, he may qualify for the credit since he didn’t own a home after June 1,
2005. If he’s otherwise eligible, then he may be able to take the credit because you’ll both file your tax
return as Single for 2008. If you got married in 2008, neither of you could claim the credit. When
purchasers file a joint tax return (as you would if you got married in 2008), both must be first?time
homebuyers. Your 2009 marriage isn’t relevant for this purpose.

18. My sister and I wish to purchase a home together. She previously owned a principal residence
but sold it 2 years ago. I’ve never owned a residence. Can I qualify for a partial credit?

Possibly. The statute is somewhat ambiguous. Note though, that Treasury will no doubt provide
guidance to clarify this ambiguity. As it presently stands, the statute specifically provides that for a
married couple to be eligible for the credit, both must be first?time homebuyers. Similarly, the statute
provides that if a married couple files their tax return as Married Filing Separate, then the credit is
limited to $3750 each. By contrast, the statute directs the IRS to determine how the credit can be
shared when two or more unrelated individuals purchase a home. In that case, the statute does not
specify whether all the unrelated purchasers must be first?time homebuyers. You’ll want to check with
a tax advisor.

19. I made an eligible purchase of a principal residence in May 2008. My brother, also a first?time
homebuyer, wishes to move in with me next year and purchase a partial interest in the home
in before July 1, 2009. Will he qualify for the credit, as well?

No. Any purchase of a principal residence (or interest in a principal residence) from a related party such
as a sibling, parent, grandparent, aunt or uncle is ineligible for the tax credit. Since you and your brother
are related in this way, he cannot qualify for the credit on any portion of the home that he purchases
from you, even if he is a first?time homebuyer. If you, as the first?time homebuyer, had bought the
property from, for example, your grandparents, you would also be disqualified from using the credit.

20. I’m working outside the US for part of 2008, so part of my income will be excluded from tax.
I’m single and want to buy a home when I come back (also in 2008). Can I disregard my non?
taxable overseas income when figuring whether I am eligible for the credit?

No. To determine whether you are eligible for the tax credit, you are required to combine your non?
taxable overseas income with any US income you earn in 2008. Thus, for example, if you are single and
had $45,000 of non?taxable overseas income and $55,000 of US income, you would be ineligible for the
tax credit because your 2008 income ($100,000) exceeded even the $95,000 phase?out amount. If you
had $45,000 of non?taxable overseas income and $40,000 US income, you would qualify for a partial
credit because your total income of $80,000 would be within the phase?out amount. If you had $45,000
non?taxable overseas income and $20,000 US income, you would qualify for the full credit (assuming
you met all of the other requirements) because your income was less than $75,000. Similar rules would
apply if you had non?taxable overseas income in 2009 and wished to purchase then.

21. I live in the District of Columbia and am eligible for the DC Homebuyer Tax Credit. Can I use
both credits?

No. You must choose one or the other. Note that the $5000 DC credit has no repayment feature, while
the new $7500 credit must be repaid as an interest?free loan. (See “Repaying the Credit” below)

Repaying the Credit

22. What is the repayment feature of the credit?

The repayment feature of the credit is similar to a recapture provision: in some circumstances the tax
system takes back all or part of a tax benefit. In this case, there is no precedent for repayment of a tax
credit created for individuals, so not much is known about how the repayment will occur, how it will be
reflected at settlement (or on sales forms) or how the IRS will collect and enforce the payments. The
repayment is the equivalent of converting the tax credit into an interest?free loan.

23. What are the terms for repayment?

The credit amount is repaid in increments of 6.67% of the credit amount over 15 years. For individuals
who take the full $7500 credit, the repayment will be about $502.50 a year. Individuals who claim a
credit of less than $7500 will also have a 15?year repayment period and will pay 6.67% of their credit
each year. For example, an individual who claims a credit of $6000 will repay $400.20 a year ($6000 x
.0667). There is no interest charge applied to outstanding balances.

24. When do I make the payment?

The mechanics are not specified. Repayments for credits claimed on 2008 tax returns will go into effect
for the 2010 tax year. As a practical matter, then, repayments of credits taken in 2008 will not actually
start until 2010 returns are filed in 2011. Repayments for credits claimed on 2009 returns will go into
effect for the 2011 tax year and reflected on 2011 returns filed in 2012.

25. Will the IRS put a lien on my property for the amount of the credit repayment?

The statute does not grant the IRS that authority. The rules for tax liens are quite specific about when
the IRS can put a lien on property. It is not yet known how the IRS will identify and stake its claim to the
repayment.

26. What if I sell my house before the 15?year repayment period is complete?

When the person who used the credit sells the home, any amount of tax credit that has not been repaid
will be due in the year of sale. For example, if an individual still “owed” $4000 in repayments and
realized $25,000 of proceeds from the sale, the $25,000 of seller proceeds would be reduced to $21,000
and $4000 will be remitted to the IRS. Again, the mechanics are unknown.

27. What if there’s very little gain (or even a loss) on the sale and the proceeds won’t cover the
repayment amount?

If the gain on the sale is less than the amount that must be repaid, part of the liability is forgiven. For
example, if the individual still “owed” $4000 but the gain on the sale was only $3500, then the seller
would not be required to repay the IRS the $500 shortfall. If there was no gain or even a loss, then the
remaining $4000 would not be repaid.

28. Are there any other exceptions to the repayment rules?

Yes. If the person who utilized the credit dies before the full credit amount has been repaid, then any
balance that remains unpaid is disregarded. Special rules make adjustments for people who sell homes
as part of a divorce before the credit has been fully repaid. Similarly, adjustments are made in the case
of a home that is part of an involuntary conversion (property is destroyed in a natural disaster or subject
to condemnation by eminent domain by an authorized agency).

29. If I received a refund of a portion of the tax credit because my total tax liability was less than
the amount of my tax credit, do I have to repay the amount of the refund?

Yes. You would have received the maximum economic benefit of the any credit amount when you
reduced your tax to zero and also received a refund of the balance. Thus, you would repay the full
amount of the credit for which you were eligible. Again, there are no details that specify the mechanics
for tracking those amounts.

As a result of Senate Bill 1461 (Negrete McLeod), effective July 1, 2009, California real estate licensees will have to have their license number displayed on “all solicitation materials intended to be the first point of contact with consumers…”.

This includes “business cards, stationery, advertising flyers, and other materials designed to solicit the creation of a professional relationship between the licensee and a consumer… .” It will not include “an advertisement in print or electronic media and ‘for sale’ signs.”

There are various reasons a person might want to know an agent’s license number. For one thing, it is against the law to pay an unlicensed person for performing real estate services.

SB 1461 also requires that the agent’s license number must appear “on real property purchase agreements” when the person is acting as an agent in the transaction. This will generally be easy to do, as the standard purchase agreement that is produced by the California Association of Realtors® (CAR) already contains a place for such information, even though it is not currently mandatory.

Requiring that the agent’s license number be on the contract will make it easier on escrow companies to fulfill their duty to make sure that they don’t issue commission checks to unlicensed persons.

All agents must order new business cards with their DRE License # by July 1, 2009. Please also include your license # on any advertising and flyers, and also make sure page 3 of your 1003 in Calyx Point has your license # listed when you fill out a 1003 loan application and page #8 of the Residential Purchase Agreement on all purchase contracts have your license # listed.

Hi,

A Valero gas station is available for sale with property in Sacramento.

Highlights:

* Asking price: $2.2 million. With around $50,000 down payment, seller will finance the balance.
* Inside store sales: $85,000 to $90,000 per month.
* Has full liquor license.
* Outside volumes: 150,000 gallons per month.
* Great Arden area location.

If you or anybody you know is looking for a high volume gas station, this is the one. Clean site, seller financing and awesome location. Please contact me right away. Thank you for your time.

Rick Lahkar
916.821.8886 :Cell
916.437.2505 :Direct
916.669.8076 :Fax
www.adbusinessgroup.com

For the week of
December 1, 2008

 
Did You Know?… The latest consumer survey of home buyers and sellers shows first-time buyers have risen in market share and plan to own their homes longer than buyers in the past. According to the 2008 Profile of Home Buyers and Sellers, the number of first-time buyers rose to 41 percent from 39 percent of transactions in last year’s survey and 36 percent in 2006.
 
Lawrence Yun, NAR chief economist, said a higher share of first-time buyers makes perfect sense, and it’s a trend he expects to grow. “First-time buyers are much more flexible in entering the market because they aren’t concerned about selling an existing home,” he said. “Given low home prices, plentiful supply and affordable interest rates, it’s been an optimal time for entry-level buyers with a long-term view.
 
The number of first-time buyers rose to 41 percent from 39 percent of transactions in last year’s survey and 36 percent in 2006. “Although modest, this is a meaningful gain for the 12-month period ending at the close of June, and more recent independent data show a stronger uptrend in first-time buyers who are helping to reduce excess inventory,” Yun said.*
 
According to the NAR study, the median age of first-time buyers was 30, down from 31 in 2007, and the median income was $60,600. The typical first-time buyer purchased a home costing $165,000 and plans to stay in that home for 10 years, up from seven years in 2007.
 
The median downpayment by first-time buyers was 4 percent, up from 2 percent in 2007; the number purchasing with no money down fell from 45 percent in 2007 to 34 percent in the current survey. “The study covers transactions through the middle of 2008, so we can assume the downpayment numbers have shifted recently because credit tightened and no-downpayment loans all but disappeared around the close of the survey,” Yun explained.
 
Of first-time buyers who made a downpayment, 69 percent used savings and 26 percent received a gift from a friend or relative, typically from their parents. Another 7 percent received a loan from a relative or friend, while 16 percent tapped into a 401(k) fund, stocks or bonds. Ninety-two percent chose a fixed-rate mortgage.
 
The Real Estate Report Mortgage Rate Outlook

The overall cost of mortgage money, as gauged by HSH’s Fixed-Rate Mortgage Indicator (FRMI), spiked 34 basis points (.34%) higher, making it the third consecutive week of at least a 30- basis-point movement in rates. However, the swings from week to week are becoming somewhat smaller; they’ve moved 40 basis points up, then 37 down, and now 34 up again. Five-one Hybrid ARMs jumped 11 BP, leaving the most popular alternative to the traditional 30-year fixed rate at 6.80%.

The price of a conforming 30-year fixed-rate mortgage nudged 33 basis points higher, while privatemarket 30-year Jumbo fixed rates finished the week at 7.90%. There’s plenty of negativity to go around these days, and October will finish as one of the most difficult months ever for financial markets.

That said, the sheer volume of new programs put in place by regulators, as well as the attempts to re-liquify the financial markets by the Treasury and Federal Reserve, means that we may just be enduring the worst period at the moment, with better things to come. If nothing else, the passing of the election cycle, with its unending repetitions of negative messages, should produce a level of quiet not enjoyed for many, many months.

That’s not to say there’s all that much to cheer about, given all the troubles which face the economy. Still, there are encouraging signs here and there which get pushed out of the headlines, downplayed, or outright ignored. Take home sales, for example: last week, Existing Home Sales popped much higher than expected, only to have detractors claim that they would have fallen if not for discounted prices for foreclosures. That’s equivalent of saying "That store would have closed except for that big half-off sale!" The point here is that even good news — in this case, that home sales are rising — is too often treated with scorn.

Such was the case this week for sales of New Homes. The unexpected lift in sales to an annualized 464,000 in September was, in part, explained away by the 9% yearover-

year decline in the cost of a new house. We prefer to focus on the fact that despite challenging financing conditions and a troubled economy, homes are being sold. Better yet, inventory levels are now well below the present rate of sale, and this in turn suggests that at least some life in the building trades may be coming before long.

The Real Estate Report

With credit tight and standards even tighter, finding the money to buy a home in today’s market can be a challenge. In today’s market, the best place to find a mortgage might just be your local credit union. Credit unions never got involved with sub-prime mortgages, and are, therefore, very solvent and have the money to loan.

Of course, their lending is more along the lines of Jimmy Stewart’s “it’s a Wonderful Life”, which means youDll have to document everything. The interesting thing about credit unions is they are non-profit. That means loans are not only competitive with banks that sell their loans on Wall Street, but are usually lower than bank mortgages.

Credit unions use their own money to lend and then keep the loans in house and return the “profit”, the interest payments, to their members. Credit unions serve their members who pool their money together with the expectation they’ll get a return on their investment.

According to the National Credit Union Administration, credit unions, through September, saw an increase of 15.1% in the number of ix-rate mortgages outstanding comparedto the same period in 2007. Adjustable rate mortgages were up 11.8%.

Membership Eligibility. By current federal statute, credit unions cannot serve the general public. People qualify for a credit union membership through their employer, organizational

qaffiliations like churches or social groups, or a communitychartered credit union. To find a credit union, go here: http://www.findacreditunion.com/

Another place to find a mortgage is a local bank. As with credit unions, local banks will look long and hard at your application. You will need to have a down payment. Local banks are not going to give a loan to someone who can’t afford it.

To find a credit union, go here: http://www.findacreditunion.com/ Another place to find a mortgage is a local bank. As with credit unions, local banks will look long and hard at your application. You will need to have a down payment. Local banks are not going to give a loan to someone who can’t afford it.

Even if you’re not in the market for a home right now, it will pay off in the future to gain membership in a credit union and/or open a bank account at a small local bank.