ST. PETERSBURG — Home improvement magazine This Old House showed the Tampa Bay area some love in its latest issue.

Editors at the magazine picked St. Petersburg’s Old Northeast as one of this year’s “Best Old House Neighborhoods” in the country.

The magazine gushed about the charming section of town, calling it “a gardener’s paradise,” and noting its eclectic mix of architecture styles.

Old Northeast was the first established neighborhood in St. Petersburg, according to the Historical Old Northeast Neighborhood Association.

It also is listed in the National Register of Historic Places and is considered one of the city’s most affluent neighborhoods.

For more on the magazine’s choice, visit www.thisoldhouse.com.

Shortly after the federal government enacted sweeping healthcare reform earlier this year, there was considerable concern over a last-minute addition to the legislation: a 3.8 percent tax on investment income of upper-income households to help shore up Medicare. The tax takes effect in 2013.

Among the concerns expressed among consumers and business people, including real estate professionals, both then and today, is that the tax amounts to a transfer tax on real estate. Not true, NAR Director of Tax Policy Linda Goold says.

Here’s how the tax works. For individuals earning $200,000 a year or more and married couples earning $250,000 a year or more, certain investment income above these income levels might be subject to the 3.8 percent tax on a portion of that income. I say “might” because whether the tax applies or not depends on many factors having to do with the kind and amount of the investment income the household receives.

Investment income includes capital gains, dividends, interest payments, and, for those who own rental property, net rental income.

Importantly, the $250,000 (for individuals) and $500,000 (for married couples) capital gain exclusion on the sale of a principal residence remains in place. So, if you’re a married household that sold a house for a $500,000 gain (that’s gain, not sale proceeds), that amount remains excluded from your income calculation.

Let’s take a look at a married couple that has $325,000 in adjusted gross income (AGI), plus $525,000 in capital gains from the sale of their house.

This household would be considered upper-income by most standards. Not only is their income relatively high, at $325,000 (adjusted gross income, or AGI), but they’re receiving a $525,000 gain on their house sale. Presumably, they bought their house years ago and it’s appreciated over the years, so upon selling it, their gain is a relatively high $525,000.

For this household, only $25,000 in investment income would be subject to the 3.8 percent tax. That would amount to $950. That’s because it’s the $25,000 over the $500,000 capital gains exclusion that’s taxable.

Before they would know that, though, they would have to do a calculation that involves their adjusted gross income. They would have to add their capital gain of $25,000 to the amount of their income above the $250,000 income trigger (for married couples). Since their income is $325,000, they would add the $25,000 to $75,000 ($325,000 – $250,000), which would equal $100,000. Then they would compare the $25,000 to that $100,000, and apply the tax to the lesser of the two, which is the $25,000. Thus, $25,000 x 3.8% = $950.

So, you have a household that had income of $850,000 for the year, and its tax on investment equaled $950.

This is a simplification. Other tax issues could come into play. But it shows that the tax applies to just a portion of investment income for certain upper-income households and that the capital gains exclusion remains untouched.

Nobody likes taxes, and this tax was inserted into the legislation at the 11th hour as a “pay-for,” that is, as a revenue generator to help offset some of the costs of the reform. It’s expected to generate $325 billion over eight years.

NAR has prepared a brochure that looks at how the tax might apply under eight income scenarios: 1) sale of principal residence (which we just looked at), 2) sale of a non-real estate asset, 3) gain, interest, and dividend from securities, 4) real estate investment income, 5) rental income as sole source of earnings, 6) sale of second home with no rental use, 7) sale of inherited investment property, and 8. purchase and sale of investment property.

You can download the brochure for free. It’s written in plain language and I think you’ll find it organized efficiently, so you can see at a glance the potential considerations for the different scenarios. Of course, it’s just guidance: each household’s situation will be different, so you would want to suggest to your customers and clients that they consult with a tax advisor to make sure the tax is applied correctly in their case.

You can also get a good sense of how the tax works in the video above, in which Goold walks through a sample income scenario.

Millions of borrowers who could have their foreclosure cases checked for errors – and possibly get restitution – are passing up the chance.

Federal banking regulators announced Wednesday that they’ll extend an April 30 deadline for consumers to request such reviews to July 31.

Only 89,000 people have asked for reviews even though more than 4 million got letters from the government late last year telling them that they could, says Bryan Hubbard, a spokesman for the Office of the Comptroller of the Currency.

Consumer groups say promotion was flawed by letters that were too legalistic and text-heavy advertisements that weren’t eye-catching.

“They’ve done a pretty lousy job on public outreach,” says Ira Rheingold, director of the National Association of Consumer Advocates.

The reviews are part of last year’s federal settlement with 14 mortgage servicers and affiliates who manage home loans. They’re separate from the $25 billion settlement that states and the federal government reached last week with some of the same servicers.

Borrowers hurt by foreclosure abuses could receive help under both settlements.

Under the first, auditors hired by the servicers but approved by regulators will review cases. The consumer letters included a 13-question form asking people to describe how the foreclosure process financially harmed them.

The letters “looked like what you’d get from a loan scamming company. A lot of them probably got tossed,” says Deborah Goldberg, of the National Fair Housing Alliance.

The OCC, overseeing the settlement with the Federal Reserve, has not estimated how much the settlement will cost servicers. In addition to examining the cases of borrowers who ask for reviews, auditors are sample-checking 100,000 other foreclosure cases, Hubbard says.

The settlement covers people who were harmed in foreclosures in 2009 and 2010, if their servicer is part of the settlement. More information is at independentforeclosurereview.com.

With the $25 billion settlement, $1.5 billion will go to up to 750,000 consumers – payouts could be about $2,000 depending on borrower response. Payouts won’t require loan reviews.

A settlement administrator will send claim forms. The process is expected to take months. See nationalmortgagesettlement.com for details.

© Copyright 2012 USA TODAY, a division of Gannett Co. Inc.

Report from CNN Money (click here) show Pinellas county with a -3% drop in property values over the 1st quarter of 2012. The 2nd part of this report show a huge price increase expected in the follow 4 quarters. We are already seeing a tremendous amount of activity in St. Petersburg and the beaches so far this year, including multiple offers and lots of cash sales. I’m sure the interest rates are playing a big part with sub 4% rates.

If you look at my last blog post you can see the inventory levels and the number of sales of both single family and condos on the rise. Check back with us in Mid Feb for Jan 2012’s numbers.

Click to view December 2011 Pinellas County Residential Real Estate Report

The same story keeps repeating itself in the local real estate market. Listings are down for both the
condo and single family market. There does appear to be more strength in the single family market
versus the condo market. For all of 2011 the median sales price for condo’s dropped by $13,000 even
while listings have been at five year lows and sales have increased by 7.4% from December 2010 to
December 2011. In the single family market the median sales price has managed to see some support
at a floor of $125,000 from December 2010 to December 2011 while listings decreased by almost
62%.
Overall the residential market sales, as well as the median sales price were relatively flat year over
year. Active inventory is at a 6 year low (6.4 months supply of inventory) with just over 24% of the
7,964 active listings being distressed. Of the 1,927 distressed listings, 1,596 are short sales and 331 are
foreclosures.
Condo sales from December 2010 to December 2011 are up 7.5%. The median sales price for condos
dropped by $14,000 and condo listings decreased from 5,205 to 4,010 or 23% for the same time
period.
Single family listings are down from 6,327 to 3,954, or 38% from December 2011 to December 2010.
The median sales as noted previously remained stagnate year over year. Single family sales decreased
by 4.4% for the same time period.
Pending sales for the residential market are up almost 14% from December 2010 to December 2011.
However 74% of those pending sales are either short sales or foreclosures and 26% are non-distressed
properties. When you look at the pending sales that actually close you will see that 65% of the closed
sales in December were non-distressed and 35% are distressed. This may be due to more short sales
being listed as pending from December 2010 to December 2011.
Days on market also continues increase on all property types. Non-distressed properties days on
market increased almost 33%, short sale nearly doubled and bank owned properties increased almost
40% from December 2010 to December 2011.

Click to view December 2011 Pinellas County Residential Real Estate Report

This is just wonderful!

If you are a troubled homeowner hoping to refinance, pay attention next Tuesday as details come out on a new federal program that could make it easier starting in late December or early in 2012.

In the meantime, be sure you keep up with your mortgage payments so that you can qualify for the new deal.

Even if you missed payments in the past, it can help to be current going forward, said Kathy Conley, housing specialist for GreenPath Debt Solutions in Farmington Hills.

The revised Home Affordability Refinance Program (HARP) could apply to a broader base of people.

If, for instance, you owe $100,000 on a house that would appraise at just $50,000 – too deep underwater for a conventional refinancing – you might be able to refinance under the new HARP. That was not true under the old HARP, launched in 2009, which had a 125 percent maximum on loan-to-value ratio.

The new plan is expected be a big help for many homeowners in states that have been hard hit by drastic drops in home values, such as Michigan, Florida, California, Arizona and Nevada, according to Greg McBride, senior analyst for Bankrate.com.

Seeing mortgage rates hover near record lows – around 4.23 percent for a 30-year fixed and 3.48 percent for a 15-year – has many folks wondering whether it’s time to refinance.

In this tough housing market, what do you need to know? How can you save money by refinancing and make those low rates work for you?

Even with interest rates low and a revised federal program coming, refinancing is not for everybody who wants – or needs – a better deal on their home and some extra cash.

Some homeowners could face surprising hurdles, even if they’re not underwater and are current on payments.

“Everybody who is really hurting – and everybody who needs the help – can’t take advantage of the rates,” said Kip Kirkpatrick, CEO of Shore Mortgage Services in Birmingham, Mich.

What’s your credit score? How solid is your income? Got a lot of debt?

To refinance, the borrower needs a predictable level of recurring income – so such things as pension income would count, as would Social Security, your regular paychecks, alimony if expected to last three years or more, and interest on investments.

“You will need to provide a full accounting of your income,” said Bob Walters, chief economist for Quicken Loans in Detroit.

Lenders are going to look at how much money you owe on the mortgage and other loans relative to what you’re making.

“A reduction in income can lead to a higher ratio of debt payments to monthly income,” said Greg McBride, senior analyst for Bankrate.com. “A high debt-to-income ratio makes lenders nervous. The borrower is just one unplanned expense away from problems.”

As a general rule, it becomes more difficult – but not impossible – to qualify for a mortgage or refinance when a person’s total debt – to income ratio exceeds 40 percent to 45 percent, Walters said.

Your credit score counts. Lenders generally want a FICO of 680 or higher to qualify for the best rates in a conventional mortgage. A FICO of 620 tends to be the cutoff that often defines who can, and who can’t, get a mortgage.

Walters noted that there are exceptions to the 620 cutoff, especially when utilizing Federal Housing Administration programs with some lenders.

Credit scores also could have more wiggle room under the new federal Home Affordable Refinance Program. Gerri Detweiler, personal finance expert for Credit.com, said consumers who are in the process of a refinancing don’t want to go out and borrow money to get new furniture, buy a car or even get holiday gifts. Lenders are likely to look at your credit even the day before or the day of closing on that new mortgage, Detweiler said.

“If you’ve done something stupid with your credit, you could lose the loan,” she said.

So what if the house you bought for $280,000 and mortgaged for $260,000 is now worth $150,000?

Right now, you can’t do a thing with it.

For a conventional refinancing, the lender wants at most an 80 percent loan-to-value ratio. So if your home is worth $100,000 and you owe $70,000, you could qualify.

The new HARP 2.0 plan is going to address the underwater mortgage issue further.

“Anybody who thinks they’re underwater, I would say just hold off until the new program comes out,” said Brian Seibert, president of Watson Group Financial, a mortgage banker in Waterford, Mich.

The old HARP program had a maximum 125 percent loan-to-value ratio. But that cap is removed under the new plan.

“It’s easier to refinance through HARP than a conventional refinance,” Conley said.

But remember to stay current with mortgage payments.

Under HARP 2.0, the borrower would have to be current with the mortgage payment for the past six months and have no more than one late payment in the past 12. But Conley and others recommend that even if you were late in the past, you can try to be current now if you want to try to qualify for HARP 2.0.

“Definitely don’t skip the mortgage payment so you can go Christmas shopping,” Detweiler said.

Though the old HARP promised far more than it delivered – fewer than 900,000 refinancings and just 72,000 of them underwater – experts say consumers should avoid being discouraged. The revised program, which will run through 2013, could be an improvement.

The program would lower payments but would not reduce principal, so borrowers would still hold mortgages for more than their homes are worth. But they could avoid foreclosure.

Consumers who want to refinance should prepare paperwork, keep up payments, consider the new option and avoid the desire to give up.

“You feel the frustration that people have,” McBride said, “but sitting back and doing nothing is not going to solve the problem.”

WASHINGTON – Oct. 25, 2011 – Two big questions loom over the Obama administration’s latest bid to help troubled homeowners: Will it work? And who would benefit?

By easing eligibility rules, the administration hopes 1 million more homeowners will qualify for its refinancing program and lower their mortgage payments – twice the number who have already. The program has helped only a fraction of the number the administration had envisioned.

In part, that’s because many homeowners who would like to refinance can’t, because they owe more on their mortgage than their home is worth. But it’s also because banks are under no obligation to refinance a mortgage they hold – a limitation that won’t change under the new plan.

Here are some of the major questions and answers about the administration’s initiative:

Q: What is the program?

A. The Home Affordable Refinance Program, or HARP, was started in 2009. It lets homeowners refinance their mortgages at lower rates. Borrowers can bypass the usual requirement of having at least 20 percent equity in their home. But few people have signed up. Many “underwater” borrowers – those who owe more than their homes are worth – couldn’t qualify under the program. Roughly 22.5 percent of U.S. homeowners, about 11 million, are underwater, according to CoreLogic, a real estate data firm. As of Aug. 31, fewer than 900,000 homeowners, and just 72,000 underwater homeowners, have refinanced through the administration’s program. The administration had estimated that the program would help 4 million to 5 million homeowners.

Q. Why did so few benefit?

A. Mainly because those who’d lost the most in their homes weren’t eligible. Participation was limited to those whose home values were no more than 25 percent below what they owed their lender. That excluded roughly 10 percent of borrowers, CoreLogic says. In some hard-hit areas, borrowers have lost nearly 50 percent of their home’s value. Another problem: Homeowners must pay thousands in closing costs and appraisal fees to refinance. Typically, that adds up to 1 percent of the loan’s value – $2,000 in fees on a $200,000 loan. Sinking home prices also left many fearful that prices had yet to bottom. They didn’t want to throw good money after a depreciating asset. Or their credit scores were too low. Housing Secretary Shaun Donovan acknowledged that the program has “not reached the scale we had hoped.”

Q: What changes is the administration making?

A. Homeowners’ eligibility won’t be affected by how far their home’s value has fallen. And some fees for closing, title insurance and lien processing will be eliminated. So refinancing will be cheaper. The number of homeowners who need an appraisal will be reduced, saving more money. Some fees for those who refinance into a shorter-term mortgage will also be waived. Banks won’t have to buy back the mortgages from Fannie or Freddie, as they previously had to when dealing with some risky loans. That change will free many lenders to offer refinance loans. The program will also be extended 18 months, through 2013.

Q: Who’s eligible?

A. Those whose loans are owned or backed by Fannie Mae or Freddie Mac, which the government took control of three years ago. Fannie and Freddie own or guarantee about half of all U.S. mortgages – nearly 31 million loans. They buy loans from lenders, package them into bonds with a guarantee against default and sell them to investors. To qualify for refinancing, a loan must have been sold to Fannie and Freddie before June 2009. Homeowners can determine whether Fannie or Freddie owns their mortgage by going online: Freddie’s loan tool is at freddiemac.com/mymortgage; Fannie’s is at fanniemae.com/loanlookup. Mortgages that were refinanced over the past 2 1/2 years aren’t eligible. Homeowners must also be current on their mortgage. One late payment within six months, or more than one in the past year, would mean disqualification. Perhaps the biggest limitation on the program: It’s voluntary for lenders. A bank remains free to reject a refinancing even if a homeowner meets all requirements.

Q: Will it work?

A. For those who can qualify, the savings could be significant. If, for example, a homeowner with a $200,000 mortgage at 6 percent can refinance down to 4.5 percent, the savings would be $3,000 a year. But the benefit to the economy will likely be limited. Even homeowners who are eligible and who choose to refinance through the government program could opt to sock away their savings or pay down debt rather than spend it.

Q: How many homeowners will be eligible or will choose to participate?

A: Not entirely clear. The government estimates that up to 1 million more people could qualify. Moody’s Analytics says the figure could be as high as 1.6 million. Both figures are a fraction of the 11 million or more homeowners who are underwater, according to CoreLogic, a real estate data research firm.

Q: Who will benefit most?

A: Underwater homeowners in the hard-hit states of Arizona, California, Florida and Nevada could be greatly helped. Many are stuck with high mortgage rates after they were approved for mortgages with little or no money as a downpayment and few requirements. The average annual savings for a U.S. household would be $2,500, officials say.

Q: When will it start?

A: Fannie and Freddie will issue the full details of the plan lenders and servicers on Nov. 15, officials say. The revamped program could be in place for some lenders as early as Dec. 1.
Copyright © 2011 The Associated Press, Derek Kravitz, AP real estate writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

CHARLOTTE, N.C. – Oct. 7, 2011 – Bank of America, the nation’s largest mortgage servicer, is offering Florida homeowners up to $20,000 to short sale their homes rather than letting them linger in foreclosure.

The limited time offer has received little promotion from the Charlotte, N.C.-based bank, which sent emails to select Florida Realtors earlier this week outlining basic details of the plan.

Only homeowners whose short sales are submitted for approval to Bank of America before Nov. 30 will qualify. The homes must have no offers on them already and the closing must occur before Aug. 31, 2012.

A short sale is when a bank agrees to accept a lower sales price on a home than what the borrower owes on the loan.

Realtors said the Bank of America plan, which has a minimum payout amount of $5,000, is a genuine incentive to struggling homeowners who may otherwise fall into Florida’s foreclosure abyss.

The current timeline to foreclosure in Florida is an average of 676 days – nearly two years – according to real estate analysis company RealtyTrac. The national average foreclosure timeline is 318 days.

“I think this is a positive sign that the bank is being creative to try and help homeowners and get things moving,” said Paul Baltrun, who works with real estate and mortgages at the Law Office of Paul A. Krasker in West Palm Beach. “With real estate attorneys handling these cases, you’re talking two, three, four years before there’s going to be a resolution in a foreclosure.”

Guy Cecala, chief executive officer and publisher of Inside Mortgage Finance, called the short sale payout a “bribe.”

“You can call it a relocation fee, but it’s basically a bribe to make sure the borrower leaves the house in good condition and in an orderly fashion,” Cecala said. “It makes good business sense considering you may have to put $20,000 into a foreclosed home to fix it up.”

Homeowners, especially ones who feel cheated by the bank, have been known to steal appliances and other fixtures, or damage the home.

“This might be the banks finally waking up that they can have someone in there with an incentive not to damage the property,” said Realtor Shannon Brink, with Re/Max Prestige Realty in West Palm Beach. “Isn’t it better to have someone taking care of the pool and keeping the air conditioner on?”

A spokesman for Bank of America said the program is being tested in Florida, and if successful, could be expanded to other states.

Wells Fargo and J.P. Morgan Chase have similar short sale programs, sometimes called “cash for keys.”

Wells Fargo spokesman Jason Menke said his company offers up to $20,000 on eligible short sales that are left in “broom swept” condition. Although the program is not advertised, deals are mostly made on homes in states with lengthy foreclosure timelines, he said.

And caveats exist. The Wells Fargo short sale incentive is only good on first lien loans that it owns, which is about 20 percent of its total portfolio.

Bank of America’s plan excludes Ginnie Mae, Federal Housing Administration and VA loans.

Similar to the federal Home Affordable Foreclosure Alternatives program, or HAFA, which offers $3,000 in relocation assistance, the Bank of America program may also waive a homeowner’s deficiency judgment at closing.

A deficiency judgment in a short sale is basically the difference between what the house sells for and what is still owed on the loan.

HAFA, which began in April 2010, has seen limited success with just 15,531 short sales completed nationwide through August.

But Realtors said cash for keys programs can work.

Joe Kendall, a broker associate at Sandals Realty in Fort Myers, said he recently closed on a short sale where the seller got $25,000 from Chase.

“They realize people are struggling and this is another way to get the homes off the books,” he said.

© 2011 The Palm Beach Post (West Palm Beach, Fla.), Kimberly Miller. Distributed by MCT Information Services