$18,000 in Combined Homebuyer Tax Credits


Available for a Limited Time

Californians have a brief window of opportunity to receive up to $18,000 in combined federal and state homebuyer tax credits. To take advantage of both tax credits, a first-time homebuyer must enter into a purchase contract for a principal residence before May 1, 2010, and close escrow between May 1, 2010 and June 30, 2010, inclusive. Buyers who are not first-time homebuyers may use the same timeframes to receive up to $16,500 in combined tax credits if they are long-time residents of their existing homes as permitted under federal law, and they purchase properties that have never been previously occupied as provided under California law.

Under the federal law slated to soon expire, a first-time homebuyer may receive up to $8,000 in tax credits, and a long-time resident may receive up to $6,500, for certain purchase contracts entered into by April 30, 2010 that close escrow by June 30, 2010. Additionally, under a newly enacted California law, a homebuyer may receive up to $10,000 in tax credits as a first-time homebuyer or buyer of a property that has never been occupied. The new California law applies to certain purchases that close escrow on or after May 1, 2010 (see Cal. Rev. & Tax Code section 17059.1(a)(4)). California law generally allows buyers of never-occupied properties to reserve their credits before closing escrow, but buyers seeking to combine the federal and state tax credits will not be able to satisfy the timing requirements for such reservations (see Cal. Rev. & Tax Code section 17059.1(c)(1)(A)). Other terms and restrictions apply to both tax credits.


Governor signs home tax credit bill

Governor Schwarzenegger today signed AB 183 providing $200 million for home buyer tax credits. The bill allocates $100 million for qualified first-time home buyers who purchase existing homes and $100 million for purchasers of new, or previously unoccupied, homes.

Eligible taxpayers who close escrow on qualified principal residences between May 1, 2010 and December, 31, 2010, or who close escrow on a qualified principal residence on and after December 31, 2010 and before August 1, 2011, pursuant to an enforceable contract executed on or before December 31, 2010, will be able to take the allowed tax credit.

This credit is equal to the lesser of 5 percent of the purchase price or $10,000, taken in equal installments over three consecutive years. Under the bill, purchasers will be required to live in the home as their principal residence for at least two years or forfeit the credit (i.e. repay it to the state). Buyers also must be at least 18 years old and be unrelated to the seller. First-time buyers are defined as those who have not owned a home in the past three years.

See AB 183 here

Must-do Home Cleaning & Maintenance

Spring is upon us, or so it would seem and with the fairer weather comes the urge to clean-up, air out and organize… Following is a list of Must-Do items to add to your regimen.

Whereas you may be comfortable doing some work yourself, other items require the expertise of a licensed professional (e.g. general contractor, plumber, electrician or HVAC contractor etc.). One great way to stay on top of home maintenance is to have regular inspections (minimum twice annually) by a licensed general contractor who offers home maintenance or handyman services. He or she will either be knowledgeable enough to address your issues or recommend that a specialist be brought in to evaluate the problem. Always be sure that every contractor is licensed and insured before any work begins.

If you need a good general contractor/handyman, I recommend South Bay Home Services. Jim Scira is clean, meticulous and conscientious.

Also, for more general room-by-room cleaning/spring cleaning pointers visit Spring Cleaning: A Complete Checklist (A Spring Cleaning Extravaganza) by Sarah Aguirre at About.com Guide

Maintenance & Cleaning Tips for Your Home


  1. Replace your furnace filter
  2. Clean the kitchen exhaust hood and air filter
  3. Check your electrical system
  4. Always have a multi-purpose fire extinguisher accessible.
  5. Check light bulbs in all fixtures for correct wattage
  6. Review your fire escape plan with your family
  7. Consider installing a lightning protection system on your home
  8. Protect electrical appliances from power surges & lightning
  9. Have an HVAC contractor inspect & maintain your system
  10. Check for damage to your roof
  11. Run through a severe-weather drill with your family
  12. Repair all cracked, broken or uneven driveways and walks
  13. Protect your home from sewer or drain back-up losses
  14. Check all the fascia and trim for deterioration
  15. Check your water heater
  16. Check shutoff valve at each plumbing fixture
  17. Clean clothes dryer exhaust duct, damper & under dryer
  18. Replace extension cords that are brittle, worn or damaged
  19. Inspect & clean smoke & carbon monoxide alarms

Replace or clean your furnace filter

It should be checked once a month and replaced or cleaned as needed. Some filters are reusable and are supposed to be taken out, washed with a hose and re-inserted. A dirty filter can lower the efficiency of the heating/cooling system, increase heating costs and cause fires.

Clean the kitchen exhaust hood and air filter

Keeping this clean of cooking grease will help keep a stovetop fire from spreading.

Check your electrical system

Look for burn marks at the main electrical panel; they can be a sign of arcing inside the panel, which can easily lead to a fire. Loose connections or damaged insulation can cause the arcing. Note: Only a qualified electrician should remove the front panel cover.

Trip and reset the circuit breakers regularly.

Remove any combustible materials such as paper boxes or flammable liquids from the area near the main electrical panel. Sparks caused by arcing inside the panel can ignite material stored nearby.

Check all electrical outlets for loose-fitting plugs they are an indication of a worn out receptacle. Worn receptacles should be replaced as they cause overheating and fires. Also check electrical outlets and switches to be sure they work properly. If any switches, outlets or receptacles do not work, have a qualified electrician determine the problem and fix it to avoid fires inside the walls of your home.

Install safety covers to help protect children from electrical shock. Any appliance or tool that gives even the slightest shock should be unplugged and checked by an electrician or repair shop.

Always have a multi-purpose fire extinguisher accessible

Make sure it is Underwriters Laboratories (UL) listed or Factory Mutual (FM) approved. Check the gauges to make sure they are charged and ready to use.

Make sure the light bulbs in all your fixtures are the correct wattage

The light fixture manufacturer recommends the correct wattage. If too high a wattage bulb is used in a light fixture, heat produced inside the fixture can lead to fire inside the fixture, ceiling or wall.

Consider installing a lightning protection system on your home

Read more at Lightning protection systems.

Protect all your electrical appliances from power surges and lightning

Read more at How to choose surge protection for your home.

Have a professional air conditioning contractor (HVAC) inspect and maintain your system as recommended by the manufacturer

Maintenance should include:

– Cleaning the evaporator coil
– Lubricating fans and motors
– Tightening or changing the belts
– Checking electrical safeties
– Checking the drain pan for leaks
– Testing the capacitors
– Check the condensate drain
– Test the crankcase heater
– Calibrating the thermostat
– Visually checking the wiring for potential short circuits

These steps can help decrease the chance of fire, save money by making the system run more efficiently and help prevent breakdowns.

Things you can maintain:

– Check the condensate hose to be sure it is not blocked with algae.
– Clean the outside condensing unit screen of leaves.
– Listen for unusual noises.

Check for damage to your roof

Signs include missing, curling, cupping, broken or cracked shingles. Pooling or ponds of water that fail to drain from flat roofs may indicate low areas and inadequate drainage.

Repair all cracked, broken or uneven driveways and walks to help provide a level walking surface

This will help prevent guests and family members from slipping, tripping or falling.

Protect your home from sewer or drain back-up losses

Read more at Wet Basements.

Check all the fascia and trim for deterioration

These areas can become weathered and worn and may lead to potential water damage.

Check your water heater

If you have a gas-fired water heater, check to make sure it is venting properly. Light a match next to the vent and wave it out (don’t blow it out). See if the smoke is pulled up into the vent. If it isn’t, have a professional inspect and repair it. Otherwise, carbon monoxide and other combustibles can build up in the home.

Check around the base of your water heater for evidence of leaks. If your water heater is over 5 years old, it should be checked monthly for any leakage or rusting at the bottom. If water leakage or rust is found, the water heater should be replaced.

Check the shutoff valve at each plumbing fixture to make sure they function

Know the location of all valves and what equipment and water lines they serve. Teach all family members.

Clean the clothes dryer exhaust duct, damper and space under the dryer

Poor maintenance allows lint to build up in the exhaust duct and cause fire.

Replace all extension cords that have become brittle, worn or damaged

Exposed wires may cause arcing, which will produce heat and can start a fire. Care should also be taken to keep appliances and their power cords away from water or a heat source because this will damage the cord’s insulation.

Inspect and clean dust from the covers of your smoke and carbon monoxide alarms

Read more at Smoke alarms save lives.

Living Rent-Free in the wake of the Real Estate Finance Crisis

This piece from the LA Times (February 27, 2010) is an interesting read and I believe gives an accurate analysis of the situation within our financial institutions. Frankly, they’re hammered. One observation however is there was no mention of short sales and that too is part of what could explain why banks are extending the foreclosure process.

It’s said that where a lender can foreclose and at least break even, there is no chance of an approval on a short-pay. I’d imagine that processing these properties is a priority. Everything else (the majority) is depreciated to the point that modification, short sale or foreclosure is the only option. As less than 30% of distressed properties owner seek alternatives (e.g. modification and short sale) lenders have a massive amount inventory to organize, foreclose and sell.

Many borrowers in default stay put as lenders delay evictions

Despite being months behind, many strapped residents are hanging on to their homes, essentially living rent-free. Pressure on banks to modify loans and a glut of inventory are driving the trend.

It’s been 16 months since Eugene and Patricia Harrison last paid the mortgage on their Perris home. Eleven months since the notice got slapped on their front door, warning that it would be sold at auction.

A terse letter from a lawyer came eight months ago, telling them that their lender now owned the house. Three months later, the bank told them to pay up or get out by the end of the week.

Still, they remain in the yellow ranch-style home they bought seven years ago for $128,000, with its views of the San Jacinto Mountains. They’re not planning on going anywhere.

“We’re kind of on pins and needles, but who’d want to leave when you put this kind of energy into a house?” said Eugene Harrison, 70, gesturing toward a bucolic mural of mountains, stream and flowers the couple painted on the living room wall.

Throughout the country, people continue to default on their home loans — but lenders have backed off on forced evictions, allowing many to remain in their homes, essentially rent-free.

Several factors are driving the trend, industry experts say, including government pressure on banks to modify loans and keep people in their homes.

And with a glut of inventory in places like Southern California’s Inland Empire, Nevada and Arizona, lenders are loath to depress housing prices further by dumping more properties into a weak market.

Finally, allowing borrowers to stay in their homes helps protect the bank’s investment as it negotiates with the homeowners, said Gary Kirshner, a spokesman for Chase bank, a major lender.

“If the person’s in the property, there’s less chance for vandalism, and they’re probably maintaining the house,” he said.

Economists say the situation won’t last forever, but in the meantime the “amnesty” may allow at least some homeowners to regain their financial footing and avoid eviction.

In the Inland Empire, an estimated 100,000 homeowners are living rent-free, according to economist John Husing, who based that number on the difference between loan delinquencies and foreclosures. Industry experts say it’s difficult to say how many families are in that situation nationally because only banks know for sure how many customers have stopped paying entirely.
But Rick Sharga of Irvine data tracker RealtyTrac notes that the number of loans in which the borrower hasn’t made a payment in 90 days or more but is not in foreclosure is at 5.1% nationally, a record high. And yet the number of foreclosures last year was 2.9 million, below the 3.2 million that RealtyTrac economists predicted.

More evidence is provided by another firm, ForeclosureRadar, which says it now takes an average of 229 days for a bank to foreclose on a home in California after sending a notice of default, up from 146 days in August 2008.

“For some reason, banks are being more lenient with homeowners who are behind on their loans,” Sharga said. “Whether it’s a strategy to try and slow down the volume of foreclosures or simply a matter of the banks being able to keep up with volume is something that banks only know for sure.”

Lenders say the trend reflects their efforts to work with borrowers to modify loans to avoid foreclosure. Bank of America “continues to exhaust every possible option to qualify customers for modification or other solutions,” spokeswoman Jumana Bauwens said.

Some lenders are making it a policy to partner with delinquent borrowers. Citibank said this month that it would let borrowers on the brink of foreclosure stay at their homes for six months, whether or not they make payments, if they turn over their property deed.

Such policies may partly reflect the fact that lenders can’t keep up with all the foreclosures, some say.

“The mortgage lenders are so backlogged that some people are able to slip through the cracks,” said Kathryn Davis, a real estate agent at America’s Real Estate Advocates in Corona.

That was apparently the case for the Harrisons, who were told at various times that their house had been sold, that it belonged to someone else and that it was empty.

“It’s been frustrating, a real major pain in the buttocks,” said Eugene Harrison, a nondenominational minister with a clipped mustache and a sudden laugh.

The Harrisons missed their first payment in October 2008, shortly after Patricia Harrison, 57, lost her job as a healthcare aide and her husband’s part-time towing work dried up. They said they applied for a loan modification with Countrywide Financial (since acquired by Bank of America) but were told that they couldn’t receive one until they were three months behind on their payments. So they stopped paying.

In April 2009, they received a notice warning them that their property “may be sold at a public sale,” and in July, they were told their house was a bank-owned property.

The bank sent a notice by FedEx in October demanding $3,000, and when the Harrisons called to discuss this notice, they were told they had four days to vacate the house.

Panicked, they arranged to stay with family in New Mexico and started packing their things, filling their garage with boxes of books, camping equipment and art. But no one came to kick them out.

“We were afraid to leave the house, afraid the sheriff was going to come,” said Patricia Harrison, an amateur painter.

After contacting consumer advocates about their situation, the Harrisons decided to stay put. Soon after, two men in a white pickup truck showed up at the house and peeped in the windows, telling the Harrisons that they thought the house was abandoned.

The Harrisons suspected they were planning to move in themselves and chased them away.

The couple don’t want to leave but are in the midst of a running dispute with Bank of America about the terms of their loan modification. The bank says it mailed them documents this month.

As they wade through the red tape, the Harrisons can’t imagine abandoning a house where they’ve left their mark in the goldenrod and potpourri rose walls, the new fixtures and stenciling in the bathrooms, the fruit trees planted in the yard.

Although the Harrisons’ future is uncertain, industry observers agree that the rent-free life can’t last forever. As home values climb, banks will find it financially advantageous to foreclose on delinquent borrowers and sell their properties.

“In many cases, particularly in California, people owe a boatload of payments, and no bank is going to forgive that,” said Guy Cecala, editor of Inside Mortgage Finance, a trade publication.

In Diamond Bar, the Fraguere family is finally moving on after living rent-free for 18 months. Job loss and other setbacks prevented them from paying their mortgage, but they say they didn’t hear anything from the bank, First Franklin, until a real estate agent showed up at their door last month saying she was going to sell their house.

Sandy Fraguere wasn’t surprised that it had taken the bank so long to ask them to move.

“I don’t think they really knew what was going on or who was there,” she said.

Next stop for the Fragueres is a hotel, where they plan to stay for two weeks until their apartment in Chino Hills is ready for them to move in. Their dogs are being boarded and their belongings stored until they can retrieve them someday. Their children, ages 8 and 9, are being steeled for more instability.

The Fragueres have started saying goodbye to their neighbors, adding yet another empty house to a block that has already seen two other families forced to pack up and leave.

Los Angeles Times – February 27, 2010 by Alana Semuels

A HUD required good faith loan estimate will protect you

Beginning Jan. 1, the Dept. of Housing and Urban Development (HUD) required lenders to issue Good Faith Estimates to protect consumers applying for mortgage loans. Some loan officers, however, sidestep the new requirement by giving their initial quotes on informal worksheets that carry no federal consumer protections. It is important that consumers understand the differences between the federally mandated good faith estimate form and a lender’s informal worksheet.

Last month, HUD told lenders and loan officers that under no circumstances can worksheet quotes be issued to a mortgage applicant in lieu of a good-faith-estimate form.

Under the new law, once a mortgage applicant supplies the essential application information, including Social Security number, property address, and estimated value, among other data, lenders must issue a binding-cost good-faith estimate. Once this information is provided, lenders are required to issue the good faith estimate within three days of the application.

Loan officers cannot refuse to provide a good faith estimate to an applicant who requests one, nor can they tell applicants that they must commit to moving forward with their mortgage company to obtain a mortgage prior to receiving a good faith estimate.

Once an applicant has received a good faith estimate, they can take the form with them to comparison shop. The new form includes itemized boxes allowing mortgage applicants to compare quotes from up to four lenders, such as interest rates, loan fees, prepayment penalties, and total settlement expenses.

The good faith estimate also ties upfront estimates to later charges at closing, and encourages borrowers to check line by line for any discrepancies. The form explains which fees come with zero tolerance for changes between upfront estimates and closing—generally the lender’s own fees and local transfer taxes—and which fees allow a 10 percent fluctuation for changes higher than the estimate, such as certain title and closing-related services.

Some worksheets resemble good-faith estimates, but have titles such as “estimated settlement costs” at the top of the page. Others indicate on the bottom of the form that the worksheet is not a good faith estimate, so consumers should carefully review documents before making any decisions.

Shopping for a loan? A good-faith estimate will protect you

LA Times.com
February 28, 2010
by Kenneth R. Harney

If you plan to take out a mortgage or refinance any time soon, you might want to hear this blunt message from federal officials: Don’t fly blind. When you’re shopping among competing lenders for the best loan terms and fees, make sure you know which quotes come with a guarantee and which do not.

Depending upon how loan officers provide their quotes upfront — on an informal “work sheet” that carries no federal consumer protections or on a new, three-page “good-faith estimate” mortgage shopping tool that comes with rock-hard guarantees — there could be a world of difference.

A loan officer might quote you fees that are low-balled by hundreds of dollars on an informal work sheet to get your business. But if the quotes are made on a good-faith estimate, they’ve got to be accurate because, under federal rules that took effect Jan. 1, any significant excesses must come out of the lender’s own wallet at closing.

This month the Department of Housing and Urban Development brought together representatives of the highest-volume mortgage lenders in the country — who originate a combined 80%-plus of all new home loans — to review the agency’s reformed good-faith-estimate and closing documents.

Among the issues discussed: the widespread use of informal work-sheet estimates to quote loan shoppers mortgage rates and closing fees. HUD does not object to lenders using work sheets to give casual shoppers a rough idea of what they’ll pay. But the agency says it wants lenders and loan officers to make clear to customers that work sheets are not good-faith estimates, and they are not guaranteed.

At the meeting with major lenders, HUD Deputy Assistant Secretary Vicki Bott warned that under no circumstances can work-sheet quotes be issued to a mortgage applicant “in lieu of a GFE.” Once a consumer supplies the essential application information — Social Security number, property address and estimated value, among other data — lenders must issue a binding-cost good-faith estimate.

Also, loan officers cannot refuse to provide a good-faith estimate to an applicant who requests one, nor can they tell applicants that they can receive a GFE only if they commit to moving forward with their company to obtain the mortgage.

“By no means can they say you are bound to me as your lender” following issuance of a cost-guaranteed good-faith estimate, Bott said. Why? Because the whole concept of the revised GFE is to enable home buyers and refinancers to shop intelligently, with confidence in lenders’ estimates.

You can now get cost-guaranteed quotes on a good-faith estimate from one lender, then take them and compare them with GFE quotes from competitors. The new form contains itemized boxes allowing comparison of up to four lenders’ quotes — including interest rates, loan fees, prepayment penalties and total settlement expenses.

The good-faith estimate also ties upfront estimates to later charges at closing, and encourages borrowers to check line by line for any discrepancies. The form explains which fees come with zero tolerance for changes between upfront estimates and closing — generally the lender’s own loan fees and local transfer taxes — and which fees allow a 10% tolerance for changes higher than the estimate, such as certain title and closing-related services.

Here is how to be a smart mortgage shopper using the new federal rules to your advantage. If you are seriously looking for the best deal and are prepared to supply basic application information, ask for a good-faith estimate by name. If you’re merely shopping for generic rate quotes, work sheets are fine as long as you understand their limitations.

Beware of look-alike ploys and substitutes. Bott told lenders to make sure their work sheets do not “look like a GFE” and that they “be clear [to the consumer] that they are not GFEs.”

Some work sheets that have been used by lenders since Jan. 1 resemble good-faith estimates but have titles such as “estimated settlement costs” at the top of the page. Others indicate on the bottom of the form that the work sheet “is not a GFE,” but the typeface is so small it’s barely legible.

Finally, be aware that federal law requires that a good-faith estimate be issued within three days of any application.