Help for Homeowners in Refinancing and Selling

IRS to help homeowners refinance or sell homes
Presented by Yahoo Finance

WASHINGTON – The Internal Revenue Service said Tuesday it will try to make it easier for homeowners in financial straits to refinance or sell their homes.

The plan announced by IRS Commissioner Doug Shulman would speed up a process where financially distressed homeowners may request that a federal tax lien be made secondary to liens by the lending institution that is refinancing or restructuring a loan.

Taxpayers will also be able to ask the IRS to discharge, or remove, its claim to a property in certain circumstances where the property is being sold for less than the amount of the mortgage lien.

“We need to ensure that we balance our responsibility to enforce the law with the economic realities facing many American citizens today,” Shulman said, stressing that “we don’t want the IRS to be a barrier to people saving or selling their homes.”

He said the program will focus on those people who ordinarily pay their taxes in full but “because of these extraordinary times are getting behind in their tax payments.”

A tax lien occurs when the government makes a legal claim to property as security or payment for a tax debt. The government thus notifies other creditors that it has a claim on the property.

The IRS can rule that its lien will be secondary to another lien, such as that of a lending institution, if it determines that taking a subordinate position will ultimately help with the collection of the tax debt. Taxpayers or their representatives may apply for a “subordination” of a tax lien if they are refinancing or restructuring their mortgage.

Lending institutions generally want their lien to have priority on the home being used as collateral.

Taxpayers may also request a certificate of discharge if they are giving up ownership of the property at an amount less than the mortgage lien if the mortgage lien is senior to the tax lien. A discharge does not relieve a person of the tax that is owed, but it does remove the lien on a particular property such as a home. The IRS would still maintain its lien on other possessions of the taxpayer.

Normally it takes about 30 days to rule on a request for a discharge or subordination of a tax lien, but Shulman said the IRS will work to speed up that process so there would be no delays for people trying to obtain new mortgage loans. The IRS urged people to contact the agency’s Collection Advisory Group early in the home sale or refinancing process.

The agency said it issues more than 600,000 federal tax lien notices annually and that currently there are more than 1 million outstanding tax liens tied to both real and personal property.

FOR REAL ESTATE INFO GO TO www.CentralValleyHomes.com

CAROL PERDEW
Prudential California Realty
(209) 239-7979
wwwCentralValleyHomes.com 

 

 

Homeowners May Be Locked In Homes With Negative Equity

Upside-down borrowers locked into homes
Study find More May Be Stuck Than Displaced

By Matt Carter, Inman News

A new study suggests buyer psychology and tighter credit aren’t the only factors keeping would-be home buyers on the fence — homeowners with negative equity are often “locked in” to their existing homes and are nearly 50 percent less likely to move in order to take a new job, cut their commute time or move to a neighborhood with better schools.

The study, Housing Busts and Household Mobility, found that while becoming “upside down” forces many homeowners to move from their homes because of foreclosure, an even greater number have historically ended up stuck in their homes.

That’s because until housing prices rebound, a sale of their existing home won’t pay off their existing mortgage — let alone generate the proceeds needed for a down payment on their next home.

The study’s authors — housing experts at the University of Pennsylvania Wharton School of Business and the Federal Reserve Bank of New York — warned that the repercussions of “lock in” include less efficient job markets and reduced incentives for homeowners to keep up and make improvements to their homes.

Some families will not be able to move to access better jobs in alternative labor markets, the study concluded, while others who would like to move to access better schools or a different-size home will be unable to do so, the study said.

The study looked at two decades of housing data, covering the period from 1985 to 2005, and found that negative equity reduces homeowner mobility more than previously believed. All in all, having negative equity reduced the percentage of homeowners moving within a two-year period by 5.6 percentage points, a reduction of 47 percent from the baseline mobility rate of 12 percent.

“That the net impact of negative equity … has been to reduce, not raise, mobility may surprise some given the high number of defaults and foreclosures in the current environment,” the study noted.

The study looked at a period when subprime lending was not nearly as prevalent, and included only owner-occupied homes — not those purchased as investments or second homes. Only time will tell whether the number of people locked into their homes during the current downturn outnumbers those forced to move because of foreclosure, the authors concede.

Even if the study’s analysis of the past can’t simply be extrapolated into the future, “policymakers should begin to consider the consequences of lock-in and reduced household mobility because they are quite different from those associated with default and higher mobility,” the authors said.

More research is “urgently needed” on issues surrounding the “financial frictions” associated with potential mortgage lock-in, the study said.

According to Worldwide ERC — formerly the Employee Relocation Council — about 794,000 households relocate a year because they are transferred to a new job within the U.S. About 54 percent are homeowners, while the rest are renters.

Worldwide ERC reports that most companies offer to purchase at least some employees’ homes if they can’t sell, while 20 percent reimburse employees’ selling expenses. The group, which represents organizations that manage relocation programs, estimates $32 billion a year is spent on U.S. corporate relocations.

The new study provided an overview of past research demonstrating that falling home prices or rising interest rates can lock borrowers into their homes. Households without access to enough cash or credit may find their options constrained even if home equity does not turn negative.

Another factor that can trigger the “lock-in effect” is the original loan-to-value (LTV) ratio. The smaller the down payment provided by the home purchaser, the more quickly they end up “upside down” in the event of price declines.

The study noted that in the San Francisco Bay Area, LTV ratios were typically around 80 percent until the end of 2002, and then increased sharply to 90 percent in 2004.

“Essentially, the typical new home buyer in the Bay Area bought a house for $800,000 in 2006 using a $720,000 mortgage,” the study concluded. “If prices really do decline by 25 percent from their peak, the underlying house value will be around $600,000, which is much lower than the typical mortgage balance taken out that year.”

In the late 1990s, barely 10 percent of Bay Area borrowers had LTVs above 95 percent. By 2006, about 35 percent of buyers had LTVs exceeding 95 percent, and more than half exceeded 85 percent.

The study’s authors — Fernando Ferreira, Joseph Gyourko and Joseph Tracy — also shed light on how demographics affect mobility. While being married does not affect mobility, divorce does make homeowners more likely to move.

So does race, sex and education. Households headed by a person with some college have two-year mobility rates that are 4.2 percentage points higher than those without a high school degree. Whites are more likely to move than non-whites, and female-headed households are more likely to move than those headed by males, the study found.

CAROL PERDEW
Prudential California Realty
(209) 239-7979
wwwCentralValleyHomes.com

Bass Pro Shop Will Showcase An Extraordinary Opening

The first Northern California Bass Pro Shop will be opening on Wednesday.  Based on other store openings, more than 10,000 people are expected to attend Wednesday’s pre-grand opening celebration. Bass Pro Shop is expecting to draw guests from up to 250 miles away for the five-day event. Read the following to find out more about the extraordinary Bass Pro showroom.

Bass Pro may lure 50,000 to Manteca in five days

Dennis Wyatt
Managing Editor
Manteca Bulletin

The biggest party Manteca has ever seen starts Wednesday at 8 a.m.

That’s when Bass Pro Shops opens its first Northern California store as the anchor in the Promenade Shop at Orchard Valley at the lifestyle center being built at Union Road and the Highway 120 Bypass.

Store representatives are projecting in excess of 50,000 guests in a five-day period go through the 120,000-square-foot store to celebrate the store’s opening.

Based on other store openings, more than 10,000 people will attend Wednesday’s pre-grand opening celebration.

It is such a huge crowd – many people spend four to six hours in the store – that the original opening time of 3 p.m. Wednesday worried Caltrans so much about the potential for a massive grid-lock on the Highway 120 Bypass just as the afternoon commute gets underway that Bass Pro Shops agreed to open the doors Wednesday at 8 a.m.

Official ribbon cutting activities are at 5 p.m. and the big draw – the “Evening of Conservation” to raise funds for area conservation groups – starts at 6 p.m.

To put the store’s draw in perspective, the implosion of the four 15-story Spreckels Sugar silos 12 years ago drew just over 9,000 spectators to watch what was a 15-second event. Concerns about dust – which never materialized – prompted the CHP to temporarily close the Highway 120 Bypass.

The biggest events in Manteca – the Crossroads Street Fair in April and the Pumpkin Fair in October – have had record turnout for the two-day events that came to just under 35,000 people. Most people spend a couple of hours at the street fairs. By comparison, Bass Pro Shop’s average visitors spend between four and six hours.

Bass Pro Shop is expecting to draw guests from up to 250 miles away for the five-day event.

Bass Pro representatives noted the store is a tribute to the grandeur of Yosemite National Park, and the history and culture of California’s Central Valley and its people complete with 3,500 area artifacts, antiques, pictures, mounts and memorabilia.

Hand-painted murals depict scenes of California ’s picturesque countryside from Emerald Bay to Muir Wood, to Gray Lodge State Wildlife Refuge and Sutter Buttes, to the California coast and Sierra range. The décor includes Spectacular waterfalls, lush forests, pristine mountain lakes and beaches.

Massive log and rock work frame the Grand Entrance. Inside, rustic wood floors, antique pine wall finishes, and vaulted post and beam construction ceiling make up the front lobby. A fire crackles in the 18- by 15-foot moss rock double-sided fireplace and a 65-foot replica of the world’s largest tree (in volume), The General Sherman in Sequoia National Park, greets visitors.

Giant outdoor themed chandeliers, made by Bass Pro Shops’ own artisans, hang throughout the store. Elk, deer, raccoon, rabbit, turkey, bobcat and bear tracks are imprinted in the concrete floor. Bear, deer, sheep and other wildlife in natural and action settings are set amidst boulders on top of the 24,000-gallon fresh water aquarium.

Massive rockwork soaring up to 30 feet high above the aquarium replicates Yosemite ’s Half Dome and allows visitors to walk under the waterfall as it cascades into the fresh water aquarium

The main aquarium will be stocked with more than 120 fish native to the area including largemouth bass, striped bass, sturgeon, brook trout, rainbow trout, blue catfish, white crappie and bluegill. The trout pond will feature 20 native rainbow, brook, cut throat, golden and brown trout. Two elevators rise up behind the trout pond offering riders a bird’s-eye view of the store and all the wildlife dioramas. An antique pedestrian trestle walkway spans the second floor between the hunting and camping department.

Special displays in the store include a pictorial and memorial tribute to John Muir and the 26th United States President, Theodore Roosevelt. An avid outdoorsman, President Roosevelt promoted the conservation movement and efficient use and maintenance of natural resources. Muir, an early advocate of conservation, was instrumental in saving the Yosemite Valley, the Sequoia National Park and various other wilderness areas.

The store also features a General Store and a Fudge Shop.

There is a laser arcade themed as a remembrance to one of California ’s most significant events-the Gold Rush. Remnants of an old gold mining community have been taken over by a bevy of wild ‘critters.’ The arcade features 56 animated laser targets and each laser rifle costs 50 cents for 20 shots.

The Bass Pro Shops Outdoor World in Manteca will also include a Conservation Room celebrating local conservation groups. The room will accommodate 120 people for various civic, educational or conservation functions.

FAST FACTS

• WHAT: Bass Pro Shops • WHERE: Union Road at the Highway 120 Bypass • WHEN: Wednesday, Oct. 15. Doors open at 8 a.m., ribbon cutting at 5 p.m., “Evening of Conservation” starts at 6 p.m. • TIPS: Don’t take Union Road to reach Bass Pro Shops either Wednesday or the following four days. Take Main Street or Airport Way to Woodward Avenue and approach the south side of the mall from roads off Woodward Avenue.

Carol Perdew
(209) 239-7979
www.CentralValleyHomes.com