Expiring Mortgage Debt Relief Act Fuels Strategic Default: Survey

A foreclosure prevention agency found that the pending expiration of the Mortgage Debt Relief Act of 2007 is prompting struggling homeowners to strategically default on their loan.

YouWalkAway.com conducted a national survey and found 34 percent of respondents indicated that the act, which is set to expire December 31, 2012, contributed to their decision to walk away sooner rather than later from their property. Those surveyed were YouWalkAway.com clients who were actively considering or navigating through the foreclosure process.

The Mortgage Debt Relief Act releases homeowners from the obligation of paying taxes on mortgage debt forgiven from a short sale, foreclosure, or modification. Taxpayers are eligible if the property is the primary residence.

“The survey results are not surprising; YouWalkAway.com saw a number of homeowners reach out to us in early and mid-2011 due to the impending 2012 deadline,” said Jon Maddux, CEO of YouWalkAway.com, in a release. “Many were prompted to begin the foreclosure process in 2011 in order to ensure their foreclosure is complete by the end of 2012.”

While the expiring act motivates homeowners to seek completion of the foreclosure process before the expiration date, for those who won’t qualify in time, Maddux said not extending the act will then cause short sales to stop immediately due to the fear of getting hit with a huge tax bill.

In addition, 78 percent of respondents from the YouWalkAway.com survey expressed intentions of walking away from their home. Of those, at least 74 percent would qualify for relief under the act.

“Potentially millions of people will find themselves stuck with a huge tax bill after foreclosure if the government doesn’t renew the Debt Relief Act at the end of 2012 or if they don’t finalize their foreclosure by that date. The bill may just expire, like when Congress chose not to renew the home buyer’s tax credit,” said Maddux.

Cheryl Gerhardt, a CPA who has worked with YouWalkAway.com clients, said about 80 percent of the people who approach her about foreclosure tax consequences qualify for the relief under the act.

“These are usually people who purchased during the height of the market from 2005 to 2007 and never had the opportunity to take out a second, whereas a few years ago clients who were getting foreclosed upon had made purchases in the early 2000’s, took out a home equity line of credit and could not qualify,” said Gerhardt.

In March, House Bill H.R. 4290, or Homeowner Tax Fairness Act, was introduced to extend the act to 2015. The bill is sponsored by Rep. James McDermott.

The Mortgage Relief Act was actually extended in October 2009, three months before the act’s expiration date.

YouWalkAway.com works with borrowers facing foreclosure as well as those opting to strategically default on their underwater homes. The survey the agency conducted reached out to 2108 borrowers and received responses from over 25 percent of those contacted.

Prices Show Strongest Year-to-Year Gain in 6 Years: NAR

Existing-home sales rose to 4.62 million (seasonally adjusted annualized rate) in April from a downwardly revised March rate of 4.47 million, the National Association of Realtors (NAR) reported Tuesday. Economists had forecast the April sales pace would be 4.66 million.

The median price of an existing home climbed 10.1 percent to $177,400 from $161,100 in April 2011, the strongest year-to-year gain since January 2006. The median price in April reached its highest level since July 2010 when it was $182,100.

The inventory of homes for sale in April rose to 2.54 million, the highest level since last November, bringing the months’ supply of homes on the market to 6.6.

The 10.0 percent year-to-year gain in the sales rate was the strongest since October when sales were up 14.0 percent year-over year.

Distressed homes – foreclosures and short sales sold at deep discounts – accounted for 28 percent of April sales (17 percent were foreclosures and 11 percent were short sales), down from 29 percent in March and 37 percent in April 2011, the NAR said. Foreclosures sold for an average discount of 21 percent below market value in April (compared with an average discount of 19 percent in March), while short sales were discounted 14 percent in April compared with 16 percent in March.

The months’ supply of existing homes for sale remains well below the July 2010 cyclical peak of 12.4 which had been the highest level since 1982. Inventories as tracked by the NAR are 20.3 percent below their year ago level however anecdotal evidence though suggests there is still a large “shadow” inventory of homes available for sale, especially bank-owned properties.

Regionally, existing-home sales rose in April in every region of the country led by a 5.1 percent month-to-month increase in the Northeast where sales were up19.2 percent over April 2011. Sales rose 4.4 percent over March in the West (a 7.3 percent year-year gain), 3.5 percent in the South (6.5 percent year-year) and 1.0 percent in the Midwest (14.4 percent year over year).

The median price of an existing home rose month-month and year-year in all four regions. At $256,600, the median price of an existing home reached its highest level since August 2010. The median price of an existing home in the South rose to $153,400, the highest level since July 2010 and the median price of an existing home in the West rose to $221,700, also the highest since July 2010.

The year-to-year price gain in the West, 15.9 percent, was the strongest since November 2005. The year-to-year price increase in the Northeast was the first since last June.

BofA Offering Up to $30K in Relocation Assistance for Short Sales

Just days after Bank of America officially announced its nationwide program offering up to $30,000 in relocation assistance for short sales, a Massachusetts-based real estate company revealed in a blog that one of its clients was approved to receive $10,000.

“We knew this client was eligible for some relocation assistance but we did not realize it would be this much. It was a welcome surprise for our client who is having a hard time coming up with money to move,” said Anthony Lamacchia, owner and broker of Mcgeough Lamacchia Realty. “I think [BofA] is making many improvements across the board, and I applaud them for it.”

BofA posted the announcement in a statement Tuesday. In order to be eligible for the relocation assistance, BofA stated that the short sale must be initiated by the end of this year and close by September 26, 2013. Also, sellers must do their part and work proactively with the bank to obtain a preapproved sales price before submitting a purchase offer.

The relocation expenses are offered at closing and can range from $2,500 up to $30,000, and the amount offered is determined on a case-by-case basis, with variables such as the value of the home and amount owed factored into the equation.

“This program can help customers make a planned transition from ownership when home retention options have been exhausted or they have made a decision not to keep the home,” said Bob Hora, home transition services executive for BofA.

Mcgeough Lamacchia Realty also posted an example of a cash incentive letter in which BofA outlined tips on how to more successfully complete a short sale.

The tips were to return all requested documents on time, respond quickly to counter offers, complete the release of subordinate liens where applicable, and stay in touch with your real estate agent.

In addition to the cash assistance offer, BofA also recently announced in April that it’s trimming response times for short sales down to 20 days. However, real estate professionals must do their part and submit five documents for a complete short sale package when initiating the process.

The five documents are a purchase contract including Buyer’s Acknowledgment and Disclosure HUD-1; IRS Form 4506-T; Bank of America Short Sale Addendum, which includes the Agent Certification form; and Bank of America Third-Party Authorization Form.

According to a BofA statement, the bank has completed 200,000 short sales in the last two years and another 30,000 in the first quarter of 2012.

Military families to get free national parks pass

NORFOLK, Va. –  Active-duty military personnel and their dependents will soon be able to enter every national park for free as part of an effort to thank service members and their families for the sacrifices they make, the Interior Department announced Tuesday.

An annual pass will be made available to members of the military free of charge beginning Saturday, which is Armed Forces Day. The America the Beautiful National Parks and Federal Recreation Lands Annual Pass ordinarily costs $80. It provides access to more than 2,000 national parks, wildlife refuges and other public lands.

The initiative is being marked with a Tuesday ceremony at Colonial National Historical Park in Yorktown, Va., the site of the last major battle of the American Revolutionary War. The park is nestled in a region of Virginia that plays host to all five branches of the military, including the world’s largest naval base.

“I think when one goes into Virginia and you see all the sites, the Yorktown battlefield and the whole history of the country, it’s important that those who have fought in the tradition of making sure the nation’s democracy and freedom are protected also have access to these wonderful sites there,” Interior Secretary Ken Salazar said in a conference call with reporters in advance of the announcement.

The National Park Service estimates that giving away the passes to service members and their families will result in a revenue loss between $2 million and $6 million. The passes allow the owner and passengers in a single private vehicle access to sites that charge per vehicle. At sites where entrance fees are charged per-person, it covers the pass owner and three adults age 16 and older.

“We collect about $150 million in fees nationwide, so we don’t think that this amount of decrease will be significant to the overall operations of the service,” said Jon Jarvis, director of the National Park Service.

Military personnel can get the passes at any national park or wildlife refuge that charges an entrance fee by showing their military ID. Each family member will also be able to obtain their own pass even if the service member is deployed or if they are traveling separately.

The pass will be accepted at National Park Service, U.S. Fish and Wildlife Service, Bureau of Reclamation, Bureau of Land Management, U.S. Forest Service and U.S. Army Corps sites that charge entrance or standard amenity fees.

The free pass will be made available for activated members of the National Guard and Reserves, but not for military veterans or retirees.

The effort compliments the Joining Forces initiative being spearheaded by first lady Michelle Obama and Jill Biden, wife of Vice President Joe Biden, to support military families.

“Our nation owes a debt of gratitude to our servicemen and women who make great sacrifices to protect our country and preserve our freedom,” Jill Biden said. “In recognition of their service, we are so pleased to be putting out a welcome mat for our military families at America’s most beautiful and storied sites.”

Read more: http://www.foxnews.com/us/2012/05/15/military-families-to-get-free-national-parks-pass/#ixzz1vA4li4Yr

Mowing down Pollution Lawnmower Trade-in

SATURDAY,  May 19 2012       8:00am – 10:00am
County Administration Center1600 Pacific Highway San Diego

Developed and hosted by Supervisor Ron Roberts, the event will feature the exchange of 650 gasoline lawnmowers for new, rechargeable battery-powered, Black & Decker CM1936 mowers with 19-inch blades and 36 volt power systems.

All residents of San Diego County with proper identification and a qualifying gasoline mower are eligible for this program. The price of the new mower is $99.99, thanks to a special four-year bulk purchase agreement and funding from air pollution fines. The mowers retail for about $420.

The exchange process is simple. The event is first come, first served. Traditionally, county residents line up well before the 8 a.m. start time.

NAHB: Homebuilder confidence hits five-year high

By Jessica Huseman

• May 15, 2012 • 9:28am

Homebuilder confidence in the market for new single-family homes reached its highest level since 2007, according to the Home Builders/Wells Fargo Housing Market Index. At 29, the level is five points higher than last month’s downwardly revised numbers.

“Builders in many markets are reporting that buyer traffic and sales have picked back up after a pause this April,” said Barry Rutenberg, chairman of the National Association of Home Builders and a homebuilder from Gainesville, Fla.

“It seems we have resumed the gradual upward trend in confidence that started at the beginning of this year, as stabilizing prices and excellent affordability encourage more people to pursue a new-home purchase.”

Each of the index’s components rebounded from declines in the previous month. The component assessing current sales conditions and the component gauging traffic of prospective buyers each rose five points in May to 30 and 23, respectively, with the traffic component hitting its highest level since April of 2007. The component evaluating sales expectations in the next six months rose three points to 34.

“While home building still has quite a way to go toward a fully healthy market, the fact that the HMI has returned to trend is an excellent sign that firming home values, improving employment and low mortgage rates are drawing consumers back,” said NAHB Chief Economist David Crowe, who said the recovery could be stronger if not for obstacles such as inaccurate appraisals and rising materials prices.

Three out of four regions registered improving builder sentiment in May. This included a six-point gain to 32 in the Northeast, and five-point gains to 27 and 28 in the Midwest and South, respectively. The West posted a two-point decline, to 29.

Gutters and pipes keep water away from foundation

 

Gene Kelly probably would not be remembered as well for his part in “Singin’ in the Rain” if the movie set had been equipped with rain gutters.

When it comes to the place you live, the last thing you’ll be doing is singing if you don’t properly manage watershed at the perimeter of your home. You can control roof water, the water that hits the roof, by using rain gutters, downspouts, and sub-surface drainage pipes.

Roof gutters have been made from stone, copper, wood, metal, and plastic, to name a few. Their cost vs. their value differs, to a great extent, on the architecture of your home. For example, a turn-of-the-century Victorian would not have as much value with plastic gutters as it would if it were retrofitted with the wood type that originally was installed on the eaves.

Naturally, unless you have a European castle, stone gutters are out. But the rest are all viable alternatives.

Copper and wood are among the most expensive types, but copper is the longest lasting of all the types. Yes, all metals oxidize, but copper does it more slowly than most. However, copper does have its shortcomings. As it oxidizes, it produces a by-product that is poisonous to insects, fungi, plants, and yes, people too.

Although wood lasts several decades, it is extremely expensive to replace. The most common gutters in use today are made from galvanized sheet metal. The sheet metal is made from heavy gauge tin that is galvanized on both sides to retard rusting.

Aluminum is less prone to rust than galvanized sheet metal, but it is not as strong as its tin alternative; therefore, the aluminum is more easily damaged. Aluminum gutters are most commonly referred to as “seamless gutters” because the metal is so soft that it can be formed on the job site in lengths that traverse from roof corner to roof corner without joints (seams) in between.

Plastic gutters and downspouts are the least expensive to buy and the easiest to install, but, unfortunately, they have the shortest life expectancy. The material is fragile and can’t (or shouldn’t) be painted. As with all polyvinyl chlorides, plastic begins to oxidize from day one.

If plastic is all that your budget allows, go for it. You’ll cut down on the cost of other repairs and will be able to upgrade to a longer-lasting alternative sometime in the future.

In our opinion, you get the best value by installing galvanized sheet metal gutters and downspouts. They should be painted to ensure lasting quality, and you will have to control rust from time to time.

Galvanized gutters can be a do-it-yourself project if you’re very handy with tools. But for many, this project is best left to a sheet metal person. We have fabricated and installed gutters and found the process to be time-consuming, but far from difficult. Installation requires specialized tools that can cost almost $100 – a pop-rivet gun, a scribe, end cap crimping pliers, circle cutting snips, and regular tin snips, to name a few.

Although not widely advertised, you can buy galvanized sheet metal gutter parts (inside and outside corners, downspout angles, and so on) that make installation easier for the do-it-yourselfer.

To install the gutters, follow these steps:

Cut the gutter to length.

Crimp the end caps in place.

Seal the seams with liquid aluminum.

If you need more than one length of gutter, simply overlap the joint an inch or so, install two or three pop-rivets, and seal the seam and the rivet holes with liquid aluminum. Soldering is not required.

The same holds true for installing downspout outlets, which also come ready-made:

Place the outlet upside down inside the gutter.

Scribe a line in the gutter along the inside of the outlet.

Cut out the hole, turn the outlet right side up, and push it down into the hole you made.

Wash the gutter with vinegar or a mild acid cleaner, use a metal primer, and then paint on the final coat.

Gutters and downspouts are only two of many elements that make for effective watershed surrounding a home. What happens beyond the downspout and the conditions that exist around the perimeter of a home can either act in harmony with gutters and downspouts to protect a home or negate their value entirely.

Winter rain and excess water due to poor drainage and excessive landscape irrigation change the condition of the soil beneath your home – expanding it in some places and making it mushy in others.

Imagine dry soil as a stack of dishes before dinner, and imagine wet soil as that same stack of dishes after dinner. The stack of dirty dishes is much taller. When the earth gets wet, water fills voids between plates in the earth and the ground level rises. The reverse occurs when the ground dries out. You probably aren’t strong enough to lift your foundation, but wet earth is.

If you can prevent water from getting under your house, the dirt underneath will very likely remain stable and house movement will be minimal. Moreover, you can prevent the wood framing members under your home from becoming damaged by fungus and rot by keeping the crawl space dry.

You can control surface water (the water that hits the ground) by shaping and grading the earth, concrete, brick and other surfaces around your house so that they shed water away from your foundation. This can be as simple as using a garden rake or as complex as replacing concrete, depending upon the conditions that exist.

Rainwater that your gutters collect (and subsequently downspouts transport) should be transported away from your home. Geotechnical engineers (soils engineers) recommend that roof and ground water be diverted to at least 3 feet away from the perimeter of your home. We think 20 feet is better.

The best means of transporting this rainwater is to tie all of the downspouts into a solid 3-inch plastic drainpipe that is buried below the surface of the soil. The drainpipe should then discharge into a municipal storm drain system or drainage culvert.

If budget or other circumstances do not allow for this configuration, at a minimum, place pre-cast concrete or plastic splash blocks that divert water away from the foundation. In addition, a host of temporary pipes and tubing material can be placed above ground to carry water from downspouts and away from the foundation. Disadvantages to these devices are that they are temporary and can be a trip hazard.

 

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