Lose homes, pay more tax ???

Investors in second or multiple homes stand to be among the biggest losers from the housing downturn.   That's because proposed mortgage bailout programs don't address second homes and investment properties.  Many owners of multiple properties don't realize that investments they thought would help them build long-term wealth may in fact leave them in bankruptcy and facing a sizeable tax debt.

MAKING SENSE OF THE STORY FOR CONSUMERS

• Homeowners who borrowed against the value of their second home, or who financed the purchase of their second home and subsequent homes by pledging their primary home or other properties as security, may be liable for taxes on the difference in value should they sell any of their properties for a price less than the value owed on the mortgage.
• Under the Mortgage Forgiveness Debt Relief Act, a homeowner doesn't have to pay taxes on forgiven debt if the collateral behind the mortgage is owner-occupied.  That provision doesn't apply to a growing number of homeowners renting out their second home or investment property.  Of some 7.5 million vacation homes, only about 10 percent are considered owner-occupied, according to the NATIONAL ASSOCIATION of REALTORS® (NAR).  Many of these homeowners borrowed against the ever-increasing (or so it seemed) value of these properties to finance improvements or to buy other properties.
• There may be a way out for some, one bankruptcy lawyer counsels:  Get a lender to agree that foreclosure "fully satisfies all obligations under the loan."  That might protect the seller from having to pay taxes on the forgiven debt - although one attorney said, "I sure don't want to be the one litigating it" in court.

To read the full story, please click here:

http://www.nytimes.com/2008/05/30/business/30tax.html?th&emc=th

**disclosure: speak with your CPA/Tax Accountant for your case scenario, Agent holds no liability for this article

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Higher Loan Limits Are Needed for FHA, Freddie Mac & Fannie Mae

The House of Representatives has done its part by passing reform proposals for FHA, Freddie Mac & Fannie Mae that make the increased loan limits included in the economic stimulus legislation permanent.  This is particularly important for states, like California, that have a high cost market. Evidence shows that the increased FHA/GSE loan limits are providing a much needed infusion of stability, liquidity and security into the market. If the Senate doesn't insist on higher limits, the burgeoning recovery will be thrust into an unnecessary period of additional turmoil.

Don't let the Senate stop progress through inaction. Tell Senators Boxer and Feinstein that realistic and permanent loan limits help all areas of the country and are needed now.

Send a letter to the following decision maker(s):
Barbara Boxer and Dianne Feinstein

Below is the sample letter (please feel free to cut and copy):

Subject: Make Higher Loan Limits Permanent for FHA, Freddie Mac & Fannie Mae

Dear ???,

As your constituent, I urge you, as a Member of the Senate, to support making permanent the FHA, Fannie Mae and Freddie Mac loan limits in the bipartisan Economic Stimulus Act, signed by President Bush last February. The legislation raised the maximum loan limits in high cost areas to $729,750 but it expires on December 31, 2008. The limits help homeowners in 240 counties in 26 states and can help get our national economy back on track.

The House -passed housing stimulus bill, H.R. 3221, makes the $729,750 limits permanent. Senate bills cap the limits at $550,440. Our 1.2 million members applaud the progress the Senate has achieved, but strongly believe that the final bill must include the House bill's loan limits.

The national mortgage market meltdown dramatically raised the cost and reduced the availability of mortgages in my market. Higher limits are helping to revitalize local housing markets, providing safe, fair and affordable mortgages for our state's homeowners. The limits are also helping to stabilize our entire economy. Higher limits simply reflect market realities in high cost areas. A lower limit unfairly penalizes citizens based simply on geography.

Drastically reducing the temporary limits at year's end to the Senate cap of $550,440 will push our fragile housing and credit markets back into turmoil. We need permanent limits of $729,750 to stabilize our housing markets and help citizens of every state -- not just residents of high cost areas. Please support making the $729,750 loan limits permanent.

Sincerely,

Anne Reyes

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Tips for Lowering Homeowner's Insurance Costs

Many homeowners may be knowledgeable about home security but they may not realize that homeowners insurance is required when purchasing a new home. To help you educate clients about the importance of insurance, and the steps that can be taken to keep it cost effective, REALTOR® Magazine Online has developed a handout entitled "Tips for Lowering Homeowner's Insurance Costs".   Feel free to share this useful guide by printing it directly from the site or downloading and customizing it with your information.

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Ignore the Myths - Get the Facts!

REALTORS® Should Vote YES on Proposition 98 and

Vote NO on Proposition 99

C.A.R. is urging REALTORS® to vote YES on Proposition 98 and vote NO on Proposition 99 when they vote in the upcoming June primary. Proposition 98 will limit the ability of local governments to use eminent domain to seize private property and give it to OTHER private entities.

In recent weeks Proposition 98's opponents have circulated a great deal of misinformation. To set the record straight, C.A.R. wants you to know the truth about 98:

Myth 1: Opponents claim that tenants currently in rent controlled units will be summarily evicted.

Fact: Tenants currently in rent controlled units cannot be summarily evicted. Prop 98 only lifts rent controls AFTER a tenant: (1) vacates the unit voluntarily or (2) has been removed for a just cause, which is defined by local rent control ordinances.

Myth 2: Critics of reform claim that Prop 98 threatens the construction of state water projects. 

Fact: Prop 98 will NOT limit the construction of state water projects. This view has been rejected by independent legal authorities such as the Institute for Justice, the organization that litigated the Kelo case, as well as a prominent water attorney that represents numerous California water agencies. Experts have affirmed Prop 98's intent to protect government's use of eminent domain for legitimate public use - state water projects are OBVIOUSLY a legitimate public use. Additionally, the state Legislative Analyst's Office did not cite any impact on water projects in their report to the Attorney General's office.

Myth 3: Opponents claim that Prop 98 prevents local governments from using eminent domain to obtain property for PUBLIC purposes, like schools, libraries, etc.

Fact: Prop 98 ONLY prevents eminent domain from being used to seize private property to give to other PRIVATE entities. The state Legislative Analyst's Office says this: "Under the measure, government could continue to take property for facilities that it would own and use, such as new schools, roads, parks, and public facilities."

For more information go to http://takeaction.realtoractioncenter.com/ct/BdX0WCK1vS4D/

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Every Sunday you will see Gloria under her bright red awning selling her wonderful and tasty salsa.  Please visit her at Farmer's Market (Santana Row, San Jose) and get a taste of her salsa and jalapeno cheeses.
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