Investment Trend Forecast for Real Estate in 2016

The Emerging Trends in Real Estate report, makes projections in both commercial and residential real estate for the next year. A highly respected report, it surveys more than 1,400 people in the real-estate market, from investors to property managers.

Here, we take a look at what the report details.

18 Hour Cities

 

Continued urbanisation is one of the most significant issues that will affect the real estate industry. Many cities across the country are mimicking the walkability and transit-oriented development that New York, Washington DC and San Francisco have established successfully as “24-hour cities”. Smaller cities are copying this model, but on a more affordable scale, thus being coined 18-hour cities.

While last year, this was an emerging phenomenon, but in 2016, it is becoming something to invest in. Attracting potential workers due to availability of affordable services, and employers due to the lower cost of doing business. The report states that this means that 18-hour cities are being considered viable investment alternatives to the big six.

Suburbs

 

The suburbs are thriving, but in a new way to the past, by using components of the urban environment. Investors like urban investments more than the suburbs, so using urban components are making them much more attractive to big investors. There is growing evidence that supports the idea that millennials will eventually make their way to outer neighbourhoods and suburbs. In this areas they are still looking for good public transport and the amenities that they enjoy in the urban areas.

Housing Options for All

 

The US is moving away from traditional home ownership, with changing demographics and household preferences meaning that the single family housing market is improving. This means that there are a number of new opportunities in housing options, with the housing market seeing aging baby boomers who are looking for homes to age in, and first time buyers looking for affordable options in higher cost urban options.

Food is Important

 

There is a general trend towards those wanting eat fresh and nutritious foods, but who live in urban areas. One way to meet this need is through urban farming, utilising rooftops and obsolete industrial properties, making it an excellent investment opportunity.

Capital

 

Investors are considering expanding to a wider market set and alternative investment choices because global uncertainty continues to enhance the attractiveness of hard assets in stable markets. There is a lot of domestic and global capital that continues to flow into the US real estate market.

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source: modestmoney.com

How Much Mortgage Can I Afford?

Due to the economic crisis and mortgage crisis that swept the United States, not to mention the fact that many people have been concerned about a housing bubble bursting here in Canada. One of the policies that came out of the situation was that the maximum mortgage length was dropped from 35 to 30 years, and then to 25 years.

Even without that change, it still makes sense to think that you might be asking how much mortgage can I afford? When you look at the situation in terms of monthly cash flow, this makes a big difference. As you start thinking about the type of home you want to buy, make sure that you pay attention to the monthly payment, and how it fits into your regular budget.





For most people, the difference in the maximum amortization length shouldn’t be a deal breaker. However, it does force people to pay off their houses sooner. On top of that, it also means that some buyers not might be able to get the same size mortgage. While most buyers will still be able to get a home, though, some fringe buyers will be forced out of the market, since this will increase their debt service ratio and could be the difference between qualifying for the mortgage or not.

If you think that you might not be able to afford a mortgage with a shorter amortization schedule, you should consider some of the options out there designed to help you boost your ability to afford a mortgage:

Home Buyers Plan

One way to make your home more affordable is through the Home Buyers’ Plan, which allows you to borrow $25,000 from your RRSP to put towards your down payment. Your spouse can withdraw $25,000 from his or her RRSP as well. So if you both have saved up enough in your RRSPs, this can be a great way to come up with $50,000 to add to your down payment and reduce your mortgage.

This is a nice bonus, since you wouldn’t normally be able to take money out of your RRSP before retirement. But this is a viable option. When you make a bigger down payment, you reduce the amount that you borrow, also reducing the amount of the monthly payment. It’s a good way to use your assets to purchase a home that is more affordable.

TFSA

Another great way to save up a down payment is to use your TFSA, which now provides $31,000 in contribution room if you were at least 18 in 2009, $62,000 if you have a spouse, that’s also saving up towards your new house. The TFSA is great, since you can take advantage of tax-free growth, and you don’t have to worry about penalties.

Figuring Out How Much You Can Afford

You also need to know how much mortgage you can afford before you raid your registered account for a down payment. There are different rules of thumb that can help you figure out how much home you can afford. Some suggested that you should limit your mortgage payment to 30% of your monthly income.

While the 30% rule can be a good start, the reality is that you need to consider what makes you comfortable. Look at your situation. Consider how much debt you already have. If you have a lot of debt, you need to keep your mortgage payment low. Additionally, you should also consider what might happen if you lose some of your income. You don’t want to have a mortgage payment that is so high that you are worried about defaulting if something goes wrong.

The mortgage rules that the CMHC announced a few years ago will certainly make it more difficult for some to get a mortgage. However, that doesn’t mean that you don’t have a chance at a mortgage. If you put together a decent down payment with one (or both) of the ideas above, and if you can be realistic about how much house you really need to buy, you can qualify for a mortgage and pay it off sooner!

source: canadianfinanceblog.com

US housing bust a memory, but recovery incomplete

NEW YORK - When US homebuilder Pulte announced earnings last month, it boasted higher profits and a surge in new orders as fresh evidence of an improved American housing market.

But perhaps the most striking aspect of the report was Pulte's bet on the future. The company boosted its budget for land purchases by 27 percent to $1.2 billion for 2013 and 2014.

Still, Pulte chief executive Richard Dugas pledged the group would remain "prudent."

"We are not going to chase volume, but intend to invest intelligently," Dugas said on a conference call with analysts.

Such is the state of the US housing market recovery.

After several years in the post-bubble doldrums, the housing sector is at last beginning to show real signs of a comeback. Discussion among home builders has shifted from the lack of activity to shortages in labor, lumber and land that constrain the sector.

But the comeback is the cautious and careful turnaround of an industry whose prior excesses led to the biggest economic downturn since the Great Depression.

The latest data on home sales underscore the rebound. The January reading on a pending homes sales index rose 9.5 percent above the year-ago level and stood at its highest level since April 2010, according to the National Association of Realtors.

Existing-home sales hit an annual pace of 4.92 million in January, more than 400,000 from a year earlier, and new-home sales were up 28.9 percent from 12 months earlier.

But industry officials and analysts are hesitant to break out the champagne just yet.

Most benchmarks of the sector -- whether housing starts or new home sales -- remain well below their levels from before the bust. What's more, investors are cautious given broader uncertainty over the eurozone and ongoing US budget debates in Washington.

Patrick Newport, an economist at IHS Global Insight, estimated the housing market is about four years removed from its low but another two to three years away from truly bouncing back.

"We're off the bottom, but levels are still depressed," Newport said.

Giant US home improvement retailer Home Depot also gave a mixed-bag reading on the market. Even as the company reported Tuesday a 13.9 percent year on year gain in sales in the fourth quarter, to $18.2 billion, it painted a cautious picture of the housing market.

"We continue to believe that the path to recovery will resemble a gradual thawing process," said Home Depot chief executive Frank Blake.

"There will be a workout stage for a couple of years before we hit really the strong recovery stage."

Blake said some indicators of true improvement would be an increase in household formation and housing turnover "significantly above where it is now."

A major facet to the market recovery is the lean state of housing inventories.

The total number of homes on the market in January 2013 stood at 1.74 million, a decline of 25 percent from last year and the lowest level since December 1999, according to NAR data.

Demand is stronger, helped by ultra-low interest rates on mortgage loans.

But tempering that are higher demands on buyers to prove they merit the loans, compared to the high tolerance of financial weaknesses and easy documentation practices before the crash of 2005-2006.

It is not uncommon for a borrower to be asked to prove his employment status multiple times before a loan is granted, said Alex Barron, an analyst at the Housing Research Center.

They're putting people through the ringer," he said. "You've got to show all kinds of documents. It is difficult for a lot of people."

The rising cost of lumber and other construction materials and a tight labor pool in some key markets, are concerns.

Lennar chief executive Stuart Miller called land "the biggest constraining factor" on the rebound, but the biggest worry is a shift in US economic policy.

"The main risk to the recovery is whether interest rates can hang in there," said Barron. "If interest rates start to go up, then I think the recovery will be at risk."

source: interaksyon.com

International Mortgage Trends

In our modern, global and egalitarian society, home ownership is accepted as the main way families build wealth.

It is also one of the main metrics by which to measure the “health” of an economy.

Because so much economic activity (and inactivity, if you ask the Supreme Court) depends on personal attitudes and sentiments, it is useful to examine the opinions of home owners and aspiring homeowners. The Genworth International Mortgage Trends Report for 2011 shows some interesting behaviors in the countries they surveyed: Australia, Canada, UK, Ireland, USA, India, Mexico, Italy.

The report revealed:

    Two in three American respondents believe it is a good time to buy a home
   
   The average age of first time homebuyers in the US has increased since the 1970s (27.3) to
    the 00s    (31.6).

    In the United States, 40% of respondents use half or more of their income servicing debt.

    28% of American respondents overpay their mortgage.

    Canadian respondents are generally more comfortable with mortgage debt

    The more impoverished countries (Mexico and India) had respondents that had lower debt
     to income ratios and less tolerance for borrowing more than eighty percent of a home’s value.



If you read the news lately it would seem like the US housing market is on the rebound, with new housing starts flirting with levels not seen in a few years, which shows how we have progressed since the 2011 international mortgage trends report was researched.

Mortgage rates are low and prices are generally low in the US.

Where I live, the market has been flat for the last three years, but that’s much better than a down market,. We are fortunate to have equity in our home, but I feel bad for those who are underwater.

Across the board buyers are starting to stir and take advantage of the lowered cost of home ownership. For a while much of the activity was wealthy people or investors buying second and third properties, becoming wealthier while the majority tried to scrape their jaws off their 401k statements.

That is the point we strive to reach when we practice the art of personal finance.

When the market is down, the person who is debt free is capitalizing, buying assets, taking advantage of lower share prices. Down markets represent opportunities instead of worries. Housing crashes become clearance sales.

Decisions start to come without emotion, based on research and planning instead of stumbling and reacting.

Success comes from learning the wants, needs and beliefs of the majority of people. This will bring rewards even when the business cycle does its little shimmy.

source: marriedwithdebt.com

New York Mortgage Trial Could Have Broad Impact on Wall Street

NEW YORK (Reuters) - A Michigan bank accused of misstating the quality of home loans it repackaged into mortgage-backed securities is set to go to trial on Wednesday, in a case that could affect pending lawsuits against some of Wall Street's biggest firms.

The lawsuit against Flagstar Bancorp Inc of Troy, Michigan, is one of the first to go to trial over claims that a lender misrepresented loans pooled into mortgage-backed offerings. 

Flagstar was sued in 2011 by bond insurer Assured Guaranty Ltd, which had guaranteed $900 million of securities and was on the hook to pay investors when the investment plummeted in value in the housing market meltdown. 

While Assured is seeking only $108 million in its breach-of-contract case -- a relatively small sum in financial industry litigation -- Wall Street will be watching the Manhattan federal court trial closely. Assured has also sued UBS AG, Credit Suisse Group AG, Deutsche Bank AG and JPMorgan Chase & Co over similar allegations. 

Leading up to the lawsuit, Assured had demanded Flagstar repurchase some of the loans, and Flagstar refused, according to the insurer's complaint. Flagstar has countered that Assured is a sophisticated party that extensively reviewed the securities before agreeing to insure them. 

During a September 5 insurance industry conference hosted by brokerage firm Keefe, Bruyette & Woods, Assured Chief Executive Dominic Frederico referred to the potential impact of a "big win" in the Flagstar case. 

The other defendants "will all of a sudden get really interested in getting a settlement achieved," he said. 

Ashweeta Durani, a spokeswoman for Assured, and Susan Bergesen, a spokeswoman for Flagstar, declined to comment for this story. 

FIRST TO TRIAL 

The Flagstar lawsuit is one of many cases over mortgage practices when the housing market was booming. 

In February, Flagstar agreed to a $132.8 million settlement to resolve civil fraud claims by the U.S. Department of Justice that the bank had improperly approved thousands of home mortgages for government insurance. 

The Justice Department on Tuesday sued Wells Fargo, also on allegations of falsely certifying mortgages that were federally insured. 

In another case, the New York attorney general sued JPMorgan earlier this month over the quality of the loans in mortgage securities sold by Bear Stearns. 

Other bond insurers, including MBIA Inc and Ambac Financial Group Inc, have also brought lawsuits similar to Assured's over repackaged mortgages. One of the biggest pending cases is MBIA's $3 billion lawsuit against Bank of America Corp's Countrywide Financial unit in New York State Supreme Court. A trial date in that case has not been set. 

The Flagstar case has progressed swiftly to trial thanks in part to the presiding judge, Jed Rakoff, who is known for trying to get cases to move along quickly. A settlement is still possible ahead of the trial, but neither side would comment on whether any settlement discussions were underway. 

Rakoff, who is hearing the case without a jury, is well known in the financial industry. He is the same judge who last year rejected Citigroup Inc's $285 million settlement with the U.S. Securities and Exchange Commission over the sale of toxic mortgage debt. He criticized the SEC for allowing the bank to settle without admitting or denying the allegations. 

The Flagstar trial is expected to focus heavily on why certain loans were included in mortgage-backed securities, an issue at the heart of the lawsuits brought by the bond insurers. 

The question is whether lenders misrepresented details of the loans, such as homeowners' credit scores and their debt-to-income ratios, painting a false picture of the default risks of mortgages underlying the securities. The insurers point to underwriting guidelines that required all the loans in the securities to meet standards. 

Assured has accused Flagstar of falsely representing the quality and characteristics of loans packaged into two offerings issued in 2005 and 2006. An analysis of 800 loans found 610 instances of misrepresentations, according to Assured's lawsuit. 

The trial could also test bond insurers' ability to recover damages using evidence from so-called "statistical sampling." Insurers say they should be able to rely on a sample of the multitude of loans underlying a mortgage pool, rather than have to go loan by loan to prove their case as the defendants have sought. 

Flagstar has denied misrepresenting the loans, and has said Assured's case is based on "faulty statistical hypotheses." 

The case is Assured Guaranty Municipal Corp v Flagstar Bank, FSB in U.S. District Court for the Southern District of New York, No. 11-2375 

source: nytimes.com

Mortgage Prepayment Rate Reaches Highest Level Since 2005

(Bloomberg) — Mortgage prepayment rates have soared to the highest in seven years as homeowners take advantage of the lowest borrowing costs on record to refinance.

Home loans were repaid in August at a pace that would erase 25 percent of the debt in a year, according to Lender Processing Services Inc. (LPS), a Jacksonville, Florida-based data provider that tracks 40 million mortgages.

The cost of 30-year loans dropped to 3.4 percent last week, helping push refinancing applications to a three-year high, after the Federal Reserve said it will buy $40 billion of mortgage securities per month to stimulate the economy. That followed government efforts to increase refinancing with new rules designed to expand eligibility and reduce costs.

“There should be a lot of opportunity for people to refinance,” Herb Blecher, senior vice president at LPS Applied Analytics said in an interview. “The interest rate environment is favorable even for folks who refinanced recently to get a new loan.”

Prepayment speeds also reflect borrower defaults and debt retired in home sales, which increased in August to a two-year high as the housing market showed signs of recovery.

Refinancing applications climbed almost 20 percent last week to the highest since April 2009, leaving this year’s average pace 56 percent greater than in 2011, according to a Mortgage Bankers Association index released today.

Repeat Refinancing

Borrowing costs for typical 30-year fixed-rate loans have declined from last year’s high of 5.05 percent, according to Freddie Mac surveys. That’s spurred a wave of repeat refinancing activity. Prepayment speeds in August rose the most among loans made last year, climbing 23 percent, LPS data show.

Read full article from Bloomberg

source: thenichereport.com

JC Flowers Pumps $105 Million Into New UK Mortgage Firm

LONDON (Reuters) - U.S. private equity firm JC Flowers is investing 65 million pounds to help establish a new British mortgage provider and investment company called Castle Trust.

Castle Trust said on Sunday that it will provide UK home-buyers with an extra source of funding in addition to bank lending, as well as offering people the chance to invest in the housing market through saving products linked to house prices. 

Castle Trust will be chaired by Callum McCarthy, the former chairman of the Financial Services Authority who is chairman of JC Flower's European arm. 

Under the company's lending scheme, home-buyers will take out a regular mortgage but can also borrow 20 percent of the cost of the house from Castle Trust. When they come to sell the house or reach the end of their mortgage term, they will owe Castle Trust 40 percent of any profit made on the sale. 

Home ownership is popular in Britain but the cost of buying a property has risen beyond the reach of some people after lenders tightened borrowing terms following the financial crisis. 

"Castle Trust aims to bring solutions to problems which have too long affected the UK housing market," McCarthy said in a statement. 

source: nytimes.com

The Real Impact of the Fed on the Housing Market

(TheNicheReport) — The September announcement of the Federal Reserve with regard to monetary policy and economic stimulus was well-received by market insiders and institutional investors, but what about the average participant of the American housing market? How much do home shoppers and borrowers benefit from the Fed’s commitment to keep mortgage interest rates low and purchase mortgage-backed securities.

For borrowers who have refinanced their mortgage in the last twelve months, the Fed’s announcement does not open a great incentive to refinance again -unless the principal amount is near the loan limit and borrowers intend to stay in their homes for the remainder of the term. Borrowers who have not been able to qualify for a refinancing or a loan modification due to negative equity should benefit from increased home values as buyers and investors feel they have more time to find good deals and lock into low rates.

Extended Relief

The Fed’s stimulus comes at a time when unemployment is still high and the economy is recovering at a pace that is slower than expected. Home sales and prices have recorded monthly increases since January 2012, but real estate investors have been behind a good portion of the purchase transactions. Now that home prices have recovered a bit, house hunters are ever more dependent on low mortgage interest rates.

For investors and home shoppers who thought the low rates would only last until the end of 2012, the Fed’s stimulus plan gives them more time to find their dream homes or investment properties. There is also a chance that mortgage interest rates could hit a new record low from now until 2015. If the benchmark 30-year fixed descends towards 3.25 percent, 20 and 15-year fixed home loans will be attractive. The same goes for adjustable rate mortgages.

This extended relief favor house hunters and investors, but should the government amend the Home Affordable Modification Program (HAMP) to include even more troubled borrowers, the recovery could be accelerated significantly.

The Right Time to Make a Move

Borrowers, home buyers and investors should not trust that the good times will last through 2015. If median home prices continue to recover, the Fed may slow down on its purchases of mortgage-backed securities and mortgage rates could climb higher. Investors are likely to continue their bidding in regional markets where home prices have rapidly appreciated, but a high number of foreclosures may cool down those markets.

One concern by some analysts and observers is that the Fed’s powerful influence could suddenly turn the market and leave some participants out. While that might be the case, the high number of pending foreclosures could have the opposite effect. Another factor to consider is optimism, which could return to the housing market, as it usually does, after the presidential election.

source: thenichereport.com

U.S. housing market recovering but price rises seen modest

(Reuters) – The U.S. housing market is starting to recover and home prices will see modest growth this year and next, according to a Reuters poll, which also suggested the property market would get little boost from any Fed buying of mortgage-backed debt.

Recently there have been signs the housing sector is improving, and many economists think home building will add to economic growth this year for the first time since 2005.

Indeed, 35 of 38 economists polled in the past week said the market was recovering.

But the pace of recovery is still painfully slow. Analysts think house prices in the United States, as measured by the S&P/Case Shiller composite index of 20 metropolitan areas, will rise just 1 percent this year, according to the median forecast in the Reuters poll.

That is an increase from a forecast of flat prices in a poll carried out in July, but still unlikely to keep up with inflation. Consumer prices are expected to rise 2 percent this year and in 2013.

“We still have years to go for a full recovery,” said Scott Brown, an economist at Raymond James in St. Petersburg, Florida.

The poll forecast house prices would rise 2.5 percent next year, up from a projection of 1.8 percent in the July poll.

Read full article from Reuters

source: thenichereport.com

Current home prices and demand do not point to a full recovery

Median home prices in the United States have enjoyed a steady increase for all of 2012, and in some regional housing markets investors have engaged in bidding wars over some listings in the last few months. The rising prices are certainly welcome news, but many real estate observers and analysts are warning against the conflation of a housing bottom with a market recovery.

The main cause of the 2012 run-up in home prices cannot be attributed to normal demand. Real estate investors are very certainly hungry for deals found at the bottom of the barrel, and these are the type of purchase transactions that have been predominant in certain regional markets like Phoenix and South Florida. A more pressing factor in rising home prices can be traced to the waning number of listings.

Existing Home Inventories Take a Dip

The number of previously occupied residential listings is currently the lowest on record since 2004. The number of newly constructed homes is also pretty low, but this is hardly a case of insufficient supply in the face of high demand. The current real estate market conditions are anything but normal.

On one hand, too many investors are interested in the rock-bottom deals provided by Real Estate Owned (REO) portfolios and foreclosed properties. Banks started warming up to short sales in early 2012, and they are now beginning to realize that they can realize greater profits from their distressed properties. This realization has had a bit of a cooling effect on the housing market.

On the other hand, many investors have moved away from REO and distressed properties and are now looking at the low end of the price spectrum. Home sellers are now motivated to hold off for better opportunities, and investors are willing to skip over them for the time being. This low-inventory situation is not really motivating home builders since there are many foreclosures still pending.

Not Interested or Not Able to Sell

First-time homebuyers and real estate investors seem to be the only participants in today’s housing market, but this is not the way a normal market operates. The American housing market has traditionally depended on families who wish to upgrade their living situation, to move to a bigger house or a better neighborhood with improved amenities. That vital market element is currently missing as many homeowners have been left underwater on their mortgages and unable to sell their properties.

Other homeowners are simply not motivated to sell or to move. The current household mobility is concentrated on the busy rental markets, which coincidentally are the same markets that are performing better than the rest. Until a widespread economic recovery is not experienced in the U.S., the housing market will continue producing artificial statistics.

source: thenichereport.com

FHFA Announces First Winning Bidder in REO Pilot Initiative

Washington, DC – The Federal Housing Finance Agency (FHFA) today announced that Pacifica Companies, LLC has purchased 699 Fannie Mae properties in Florida as part of a real estate owned (REO) pilot initiative.

FHFA will announce the winning investors for properties in other areas upon closing of the transactions in the coming weeks. Properties in Atlanta (541) were not awarded. Those properties will be evaluated for disposition through Fannie Mae’s retail sales operation or through future structured transactions. All properties were sold near or above market value.

Click here for additional details about the transaction.

source: thenichereport.com

Banks Reduce Their Foreclosure and REO Portfolios

Real estate investors eager to snap up foreclosed properties encountered fewer opportunities during the second quarter, mostly due to banks controlling the number of Real Estate Owned (REO) properties listed for sale. According to a recent report by real estate analytics firm RealtyTrac, banks are currently holding more than 620,000 properties acquired through the foreclosure process, but they are choosing to list only 1 percent of them.

Sales of REO properties have played a major part in the slight recovery of the housing market this year. In some regional markets, foreclosed properties and short sales have made up almost half of all purchase transactions. Real estate investors have been the major players in this small recovery, and they are drawn towards the bargains presented by REO portfolios.

The current situation recalls the uptick in sales seen in early 2009. Bargain-seeking investors back then did not have access to as many short sales as they do now, and the brief buying frenzy back then did not translate into a price increase. Banks are more willing to allow short sales now, a fact that has translated into an improvement of home sales and a tangible recovery of prices.

The average discount of a foreclosed home these days is 32 percent. The average price of a foreclosure deal is $170,400 –a 7 percent improvement over last year. Foreclosure sales represented 23 percent of all real estate transactions this year.

According to statements made to the Associated Press by a RealtyTrac vice president, banks are now in a position to hold on to their REO assets a little longer. In Nevada, one of the ground zero states of the housing crash, investors are taking part in bidding wars over REO listings. Banks are very likely to grow their REO portfolios as more foreclosures are completed, but the number will be lower than expected.

After a period of inactivity due to an investigation by several state attorneys into the questionable practices of the major American mortgage lenders and servicing institutions, the backlog of foreclosures is expected to resume processing, but the banks now have to spend about $25 billion in writing down principal mortgage balances. This will prevent REO portfolios from growing too large.

A significant number of foreclosures are expected to be conveyed to the banks next year. While many investors will probably wait until more REO listings become available, those who participate in bidding battles will contribute to the improvement of pricing and of the overall housing market.

source: thenichereport.com

Mortgage debt relief act: One step closer to an extension

Some encouraging news for financially stressed homeowners across the country: The Senate Finance Committee approved a bipartisan bill before heading home for summer recess that would extend the Mortgage Forgiveness Debt Relief Act through 2013. Don’t jump yet, given the majority of Republicans in the House that might have serious objections, we will know in about a month, so cross your fingers.

What this is about: The law spares homeowners who receive principal reductions on their mortgages from being hit with hefty federal income taxes on the amounts forgiven.

Without it, millions of owners who go through foreclosure or leave their homes following short sales would experience even more financial stress.

The bill, which now moves to the full Senate for possible action next month, also would extend tax write-offs for mortgage insurance premiums for 2012 and through 2013, and it would continue some energy-efficiency tax credits for re-modeling and new-home construction.

The mortgage debt relief extension ultimately could affect millions of families who are underwater on their loans, delinquent on their payments and heading for foreclosure, short sales or deeds-in-lieu-of-foreclosure settlements. Under the federal tax code, all types of forgiven debt are treated as ordinary income, subject to regular tax rates. When an underwater homeowner who owes $300,000 has $100,000 of that forgiven as part of a modification or other arrangement with the bank, the unpaid $100,000 balance would normally be taxable.

But in 2007, Congress saw the fast-mounting distress in the housing market on the horizon and agreed to temporarily exempt certain mortgage balances that are forgiven by lenders. The limit is $2 million in debt cancellation for married individuals filing jointly, $1 million for single filers. This special exemption, however, came with a time restriction.

The current deadline is Dec. 31. Without a formal extension by Congress, starting on Jan. 1 all mortgage balances written off by banks would be fully taxable — a nightmare scenario that has had financially stressed homeowners worried for months.

Before election day, if there are serious objections in the Republican-controlled House, however, then all bets are off until the lame-duck session, when election losers as well as winners get to write federal tax policy.

Some bad news for homeowners who are foreclosing or short selling their condos without paying for the HOA dues.

The bad news is, the homeowner’s association will be able to pursue you personally for any money you owed it before the foreclosure sale was finalized—and the cost for not paying is steep. Under California’s Civil Code, if a regular or special assessment remains unpaid for more than 15 days after it’s due, the association is authorized to recover the sum due, plus interest, late charges and attorney’s fees. After 30 days, the association is allowed to charge an annual interest rate of up to 12% on everything it is owed, including all fees and expenses.

source: asianjournal.com

Michael Phelps DUMPS Baltimore Condo At $400,000 Loss

Michael Phelps didn't just take a beating in the 200m butterfly recently ... he also got his ASS kicked by the real estate market -- letting go of his swank Baltimore condo for $400,000 less than what he bought it for.

Phelps purchased the 4,080 sq. ft. home in Fells Point back in 2007 for $1.69 million -- but then the housing market crashed ... and so did the value of his home.

The 19-medal-winning swimmer listed the 3-bedroom pad earlier this year for $1.42 million -- but even that was asking too much ... because when he finally sold the place last week ... he could only get $1.25 mill.

For the mathematically challenged, that's a loss in value of $440,000 -- but it's just a drop in the bucket ... the guy's agent once predicted Phelps would earn roughly $100 million during his lifetime from endorsements.

Oh yeah, He's also THE GREATEST OLYMPIAN OF ALL TIME!

source: tmz.com