Florida attorney general investigating 81 mortgage modification companies

Bottom Line: Save your money . . . call your lender yourself.

State regulators are pressing their case against four South Florida foreclosure rescue companies this week, as federal regulators crack down on an industry that they say is taking millions from desperate homeowners but doing little or nothing for them.

A Palm Beach Circuit Court judge granted the Florida Attorney General’s Office an emergency ruling Friday, requiring four mortgage modification operations to cease doing business: FHA All Day.Com, Safety Financial Services, Housing Assistance Law Center and Housing Assistance Now.

Investigators last week went to a Deerfield Beach storefront that once was the address for at least two of the businesses and found bags of shredded paperwork, said Regional Deputy Attorney General Cindy Guerra. “We found employees getting rid of documents... and documents with people’s personal information that had not been shredded all over the place,” said Guerra.

The ruling also requires Jason Vitulano, the owner of FHA All Day and the person officials say was connected with all four companies, to get court permission before transferring any assets worth more than $1,000.

Victims will be in court to testify Thursday, Guerra said. Regulators allege the companies made illegal telemarketing calls that used President Barack Obama’s voice and charged up to $5,000 up front to modify home loans, a violation of the 2008 Foreclosure Rescue Fraud Prevention Act. They said it appeared nothing had been done for consumers months after they signed up.

The state has received more than 350 complaints about the four businesses and is asking for full restitution for consumers.

No criminal charges have been filed and no one else has been named in the civil case.“But it’s difficult to tell what will happen,” said attorney general spokeswoman Sandi Copes. “We keep peeling back the layers and it stinks.”

Vitulano said Monday that he dissolved FHA All Day and Safety Financial a while ago, and is not involved with the other two companies. The Deerfield Beach office is subleased “and whatever shredded documents they found, I don’t know what they are,” he said.

“We have thousands of completed loan modifications that I will show up in court with,” Vitulano said.State regulators have launched 81 investigations against mortgage modification operations, including 14 where lawsuits have been filed. Officials said investigators are looking at 86 additional companies and that the numbers may grow.

The Federal Trade Commission also has launched a major crackdown on foreclosure rescue firms with its Operation Loan Lies, announcing 189 actions in 25 states earlier this month.

Equity stripping mortgage schemes were active years ago, said Reilly Dolan, FTC assistant director for financial practices. The foreclosure crisis quickly spawned more mortgage modification companies but the operators switched to charging upfront fees, as falling housing values had left homeowners with little equity, Dolan said.

The commission has no total loss figure, but “any one company can cause several million dollars in injury,” Dolan said.He said consumers should watch for companies that ask customers to pay in advance, that guarantee they can reduce a mortgage rate or suggest homeowners pay them directly instead of their lenders.

Consumers struggling with their mortgages also can get free help from federally certified counselors at 888-995-4673 or by going to www.995hope.org.

Home prices up for 1st time in 3 years

Index of 20 major cities rises on a monthly basis for the first time since July 2006, hinting that the worst of the declines may be over.

The value of U.S. homes grew on a monthly basis in May for the first time in nearly three years, according to 20-city index released Tuesday.

The month-over-month increase was 0.5%, according to the report from financial data company Standard & Poor's and economists Case-Shiller. It was the first increase in the monthly index since July 2006.

On an annual basis, home prices in the 20 cities fell 17.1%, but it was the fourth straight month that the year-over-year decline lessened.

"This could be an indication that home price declines are finally stabilizing," said David Blitzer, chairman of the index committee S&P, in a prepared statement.

While acknowledging that the report was good news, Mark Zandi, chief economist for Moody's Economy.com, downplayed the importance of a single month's statistics.

"I think it's a temporary respite," he said. "It reflects the recent decline in foreclosure sales, and prices will continue to fall over the next several months."

Robert Shiller, the Yale economist who co-founded the index and who's famous for warning that the housing boom was, in fact, a bubble, said the decrease in foreclosure sales does show up in the index statistics as a plus for home prices. That's one reason he did not want to sound too optimistic; foreclosures could take off again.

"And we could get more economic bad news, but it does look encouraging," he said.
He added that he thought that Washington's efforts have boosted the nation's spirits, an important factor for the housing market.

"The government has done a lot to support the housing market," he said. "Confidence has improved. People are talking about 'green shoots.' People are thinking it's time the recession came to an end. The stock market is up."

Cleveland gains: The improvement in the index was as broad as it was deep, with 13 metro areas showing gains, compared with eight in April. Two, New York and Tampa, Fla., showed no change.

The biggest winner was long-suffering Cleveland, where prices rose 4.1%. The city still falling the most was Las Vegas, where prices declined 2.6%.

The report added to the list of positive housing market indicators. These include rising new home sales, increased home building and increased pending sales.

Paul Bishop, the managing director of research for the National Association of Realtors, was glad to see the upturn but did not want to overemphasize the results of a single month, saying the economy is not out of the woods yet.

"Job losses could continue after the recession ends," he said. "That's where the economy intersects with consumers in the most tangible way. Until consumers have some level of confidence that the economy is improving, many will be reluctant to buy."

Washington's goal: Stabilizing the housing market has been a primary goal of Washington policy makers. Congress has tried to stimulate homebuying by creating a temporary tax credit of $8,000 for people who have not owned a home for at least three years.

The administration has also tried to tackle the foreclosure problem, creating a program to help mortgage borrowers avoid defaulting on their loan payments and losing their homes.

Zandi added that lenders are still figuring out the administration's foreclosure prevention plan, and have suspended the foreclosure process for many borrowers in default. That means fewer distressed properties, which tend to bring in lower prices, than usual.

One of the most positive things the government has done, according to Shiller, was to take control of the failing mortgage companies Fannie Mae and Freddie Mac.

These were government sponsored enterprises that guaranteed a flow of mortgage lending by buying or backing mortgages in the secondary market. Without government backing up these companies, mortgage lending would have dried up, which would have devastated home sales.
Lower prices: Prices have also fallen so far in so many places that it's drawing people back into the market.

In Las Vegas, prices are off about 53% from their peak, set in August 2006. Phoenix prices are down 54%.

Overall, the 20-city index is down more than 32% from its high.

Interest rates were very low in May, which also could have helped the housing market. The rate for a 30-year mortgage was well below 5% during the month, which encouraged buyers and drove up demand.

Zandi is hopeful that the market is stabilizing. "It feels like the cycle is winding down," he said. "I think it depends on how well the mortgage modification plan will work and I'm guessing it will work reasonably well."

One possible scenario, according to Shiller, is that home price declines end and then nothing happens for several years, the "L-shaped" recovery.

"Then, we can stop talking about home prices and get onto more interesting topics," he said.

Save Our Homes' tax gap eroding fast during recession

During the boom, Florida's Save Our Homes tax break pitted neighbor against neighbor. It was common for identical condos in a building, or similar houses on a block, to receive widely different tax bills depending on when the owner bought.

But during the real estate bust, the value of the Save Our Homes tax break has plummeted.

The break will shelter $14.6 billion in homesteaded property value from taxes this year, down from $29 billion in 2008, Palm Beach County Property Appraiser Gary Nikolits said this month at the Economic Forum of Palm Beach County.

Save Our Homes was designed to protect longtime homeowners from soaring property values. It says the taxable value of a homesteaded property can go up no more than 3 percent a year.
But homesteaders' taxable values don't decline much during a real estate crash. The current downturn has narrowed the gap between longtime homesteaders and recent buyers.

Meanwhile, Nikolits said the market value of Palm Beach County's 627,000 residential and commercial properties fell 14.9 percent from Jan. 1, 2008, to Jan. 1, 2009.

This year, the market value of all property in the county is $189.5 billion, down from $235.9 billion in 2007.

Even the most bulletproof corner of the commercial real estate market is suffering amid the Great Recession. Vacancy rates at Publix-anchored centers in Palm Beach County jumped from 7.8 percent to 10.2 percent in the past seven months, and rents fell for the first time in more than 10 years, according to a study by Woolbright Development of Boca Raton.

Still, Woolbright says, "the Palm Beach Publix center market is holding up quite well." Only five of the county's 70 Publix centers are more than 20 percent empty.

By Jeff Ostrowski
Palm Beach Post

Home sale prices rise in Palm Beach County, fall in Treasure Coast

In a sign that the region's crushing housing crash might finally be easing, Palm Beach County home prices spiked in June.

The median price of an existing single-family home rose to $250,300, its highest level since October, the Florida Association of Realtors said today.

The number of sales in Palm Beach County also rose, hitting 859 in June, up 15 percent from a year ago.

However, Treasure Coast house prices continued to fall, dipping to $109,900 in June.
Realtors welcomed the promising news for Palm Beach County's housing market. Sales activity has picked up as buyers begin to conclude that the free-fall is over.

"It's been a great time to buy real estate for six months, but I think people are finally getting acclimated to it," said Douglas Rill, owner of Century 21 Americas Choice Realty in West Palm Beach. "Prices have come down dramatically, there's plenty of mortgage money, there's the $8,000 tax credit."

Palm Beach County condo prices also rose in June. The median price was $116,400, up from $107,500 in May.

The median price of a condo in the Treasure Coast rose to $110,000, up from $91,700 in May, although the small number of condos sold in Martin and St. Lucie counties makes the median price there more volatile.

For more people, scales tip toward buying a home

For Aaron Carter, a musician who was struggling to fit a drum set, a piano and three guitars into his 600-square-foot apartment in Phoenix, the math on owning a home finally began to work in his favor.

Rent for the apartment he shared with his wife: $615. Mortgage payment for a home with twice the space: $760. And the interest on a mortgage is tax-deductible. So they jumped at the chance to buy some elbow room.

“We figured that everything together, getting more space, getting out of the apartment life and also just the prices right now, it just was the perfect time for us as a couple” to buy, said Carter, 20.

For Americans debating whether to buy or rent their homes, the scales are tipping toward ownership. Because of the slide in home prices, low interest rates and tax incentives, renters are realizing they could handle a mortgage for a just little more money.

It could mean a quicker end to the housing-market doldrums, as renters buy up unsold homes languishing on the market.

In once-inflated markets like Phoenix, Las Vegas and inland swaths of California and Florida, where prices have tumbled more than 40 percent, sales are rising because first-time homebuyers are snapping up bargain-priced homes.

They are getting help from a federal tax credit that covers 10 percent of the home price or up to $8,000 for first-time buyers who earn up to $75,000 a year, or $150,000 for a couple. The credit expires the end of November.

Cheap foreclosures in some of those markets are now drawing multiple bids. As supply and demand even out, home prices will eventually begin to rise. But for now buyers are having little trouble finding bargains.

Jere Ross, an Air Force vehicle operator, and his wife recently bought a four-bedroom, 1 1/2-bath house in Zephyrhills, Fla., a Tampa suburb, for $86,500 rather than jump into another yearlong apartment lease.

Ross, 23, used a Veterans Administration loan, which doesn’t require a downpayment, and got a 30-year mortgage at a fixed rate of 5.5 percent. His monthly payment comes to $700 a month, including property taxes and insurance – $110 less than he paid to rent an apartment nearly half the size.

“It just came to a point where we were just throwing our money away on rent,” Ross said. “When it came to find out that we could own this house for less than what we’re paying in rent, it was a ‘no duh!’ kind of moment.”

The study, conducted for the AP by Marcus & Millichap Real Estate Investment Services, used prices for the first three months of this year.

It calculated mortgage payments by assuming a 10 percent downpayment, a 30-year fixed loan at 5.15 percent, and taxes and insurance that added up to 1.5 percent of the purchase price. It assumed borrowers used private mortgage insurance.

While the analysis found the gap between what it costs to own and rent is shrinking, it’s still too wide for many who live paycheck to paycheck.

Renters who want to become homeowners also face the obstacles of scraping together a downpayment and qualifying for the loan. And renters with a record of paying bills late will have a hard time getting a low interest rate.

“There’s still those buyers that are having trouble getting financed, a lot of them are still just looking for that easy way in, and it’s just not there.”

Homeowners also have to shoulder many costs renters don’t face – association fees, insurance, some utilities. And there are still cities, among them San Francisco and Los Angeles, where it’s usually still more affordable to rent – even though home prices have fallen more than 30 percent.

Nevertheless, homes in some parts of the country are more affordable than they’ve been in decades.

Port St. Lucie approves property tax increase, council pay freeze

City property owners will see their taxes go up, and the Port St. Lucie City Council and a workers’ union will see their pay remain the same, all to help the city out of an $11 million deficit.

“The is the worst budget year that I’ve experienced,” Vice Mayor Jack Kelly said.
At the final day of its budget retreat, the council Friday unanimously approved a 26 percent property tax increase, boosting the rate from $4.22 to $5.34 per $1,000 of taxable value.
Under the approved tax hike, a property owner with a $123,891 assessed value minus a $50,000 homestead exemption will pay $419 on the city portion of their tax bill.

City Manager Don Cooper proposed raising the property tax rate to handle an $11 million deficit. Without the tax hike, the city would had to close its Communications and Parks and Recreation departments, and recreation facilities.

“This is the right thing to do to keep the city above water,” Kelly said.

Also on Friday, the council agreed to suspend an ordinance that would automatically give them a pay raise. City spokeswoman Rita Hart said the Professional Employees Association union agreed to a pay freeze in exchange for the city not laying off any of its union members.

City officials estimate the freeze on union workers’ pay would save the jobs of 20 to 25 people. However, savings to the city was not available Friday evening.

“We’re no different than anybody else,” Mayor Patricia Christensen said.

Normally, city council pay increases are at the rate of the consumer price index. City records show Christensen receives $46,134 a year, council members Chris Cooper, Michelle Berger and Linda Bartz are paid $30,929 and Kelly is paid $28,870 because he has declined past pay raises.

While the tax rate is higher, the owner of a $123,891 home with a $50,000 homestead exemption actually could pay about $103 less next year, when compared to this year because the property’s assessed value is lower. Four years ago, that $123,891 house had an assessed value of $159,135, city records show.

Also, City Manager Don Cooper estimated some 117 city positions are on the chopping block. But some of those positions are not filled or have been left open through attrition, said David Pollard, the city’s director of the office of budget and management.

“The unemployment rate is already high and we would have been adding to the rate,” Councilman Chris Cooper said.

At 7 p.m. Sept. 14, the council will have a public hearing where the public can voice their concerns about the tax rate.

Palm Beach County, Treasure Coast foreclosures up in first six months of 2009

WASHINGTON — The number of properties in foreclosure rose throughout the region in the first half of 2009, as more people lost their jobs and were unable to pay their monthly mortgage bills, research firm RealtyTrac says today.
In Palm Beach County, 14,303 homes were in some stage of foreclosure in the first six months of 2009, up 23 percent from the first half of 2008.

In St. Lucie County, 6,665 properties were in foreclosure, up 22 percent from 2008. In Martin County, 1,584 homes were in some stage of default, up 59 percent from a year ago.

Statewide, 268,064 homes were in foreclosure, up 42 percent from the first half of 2008.
Meanwhile, nationally, the number of U.S. households on the verge of losing their homes soared by nearly 15 percent in the first half of the year.

The mushrooming foreclosure crisis affected more than 1.5 million homes in the first six months of the year, according to Irvine, Calif-based RealtyTrac.

The data show that, despite the Obama administration's plan to encourage the lending industry to prevent foreclosures by handing out $50 billion in subsidies, the nation's housing woes continue to spread. Experts don't expect foreclosures to peak until the middle of next year.
Foreclosure filings rose more than 33 percent in June compared with the same month last year and were up nearly 5 percent from May, RealtyTrac said.

"Despite all the efforts to date, we clearly haven't got a handle on how to address the situation," said Rick Sharga, RealtyTrac's senior vice president for marketing.

More than 336,000 households received at least one foreclosure-related notice in June, according to the foreclosure listing firm's report. That works out to one in every 380 U.S. homes.
It was the fourth-straight month in which more than 300,000 households receiving a foreclosure filing, which includes default notices and several other legal notices that homeowners receive before they finally lose their homes. Banks repossessed more than 79,000 homes in June, up from about 65,000 a month earlier.

On a state-by-state basis, Nevada had the nation's highest foreclosure rate in the first half of the year, with more than 6 percent of all households receiving a filing. Arizona was No. 2, followed by Florida, California and Utah. Rounding out the top 10 were Georgia, Michigan, Illinois, Idaho and Colorado.

The Obama administration in March launched a $50 billion plan to give the lending industry financial incentives to modify mortgages to lower payments, but it's off to a slow start.
As of early July, about 130,000 borrowers were enrolled in three-month trial modifications under the plan, and 25 mortgage companies have signed up to receive potential payments of up to $18.6 billion, according to the Treasury Department. But analysts and housing counselors say it isn't having much of an impact.

"The plan isn't going well, at least not yet," said Mark Zandi, chief economist at Moody's Economy.com. "It's a creative plan with lots of incentives, but it's very complex."

Thursday, July 16, 2009

New Foreclosures Coming In Every Day!

We can help you find the best foreclosure deals in Florida. Contact us today! 561-427-0470 (Peggy or Andrea) or info@NCPflorida.com

Bad news and good news from the Fed

The central bank said unemployment could hit 10% this year, but also said the economic decline could soon end and raised its growth forecast for 2010.

NEW YORK (CNNMoney.com) -- The unemployment rate could top 10% later this year, the Federal Reserve said Wednesday, but the central bank also said it believes the end of the recession could be in sight.

These forecasts were included in the minutes of the central bank's June 24 meeting. At that meeting the Fed left its key interest rate near zero percent, but said there were signs of a recovery in some sectors, including the financial markets.

According to the minutes, members of the Fed's rate-setting committee generally agreed that "the decline in [economic] activity could cease before long."

The current recession, which started in December 2007, is the longest downturn in the U.S. economy since the end of World War II.

Fed policymakers now believe that the unemployment rate will rise to between 9.8% and 10.1% in 2009 before declining modestly next year. The Fed had forecast in April that unemployment would top out in a range of 9.2% to 9.6% this year, but the rate reached 9.5% in June.

The Fed also issued a slightly more optimistic forecast for the economy. The Fed said the nation's gross domestic product, the broadest measure of economic activity, should decline by between 1% and 1.5% in 2009, compared to an earlier forecast of a drop of between 1.3% to 2%.
Policymakers also raised their forecast for GDP growth in 2010 and 2011, calling for growth of between 2.1% and 3.3% next year and growth of 3.8% to 4.6% the following year.

The Fed said in its forecast that it expected a "sluggish" recovery in the second half of this year, and that problems in the credit markets would allow for only gradual improvement in the economy next year.

The central bank also said most of its members believe it could take as long as five or six years for the economy to achieve a sustainable growth rate and for desired levels of unemployment and inflation to meet the central bank's objectives.

Last Updated: July 15, 2009: 2:45 PM ET

Frequently Asked Questions About the Home Buyer Tax Credit

The American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009.The following questions and answers provide basic information about the tax credit. If you have more specific questions, we strongly encourage you to consult a qualified tax advisor or legal professional about your unique situation.

Who is eligible to claim the tax credit?
First-time home buyers purchasing any kind of home—new or resale—are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and before December 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner.

What is the definition of a first-time home buyer?
The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.

How is the amount of the tax credit determined?
The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.

Are there any income limits for claiming the tax credit?
Yes. The income limit for single taxpayers is $75,000; the limit is $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The phaseout range for the tax credit program is equal to $20,000. That is, the tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.

What is "modified adjusted gross income"?
Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine "adjusted gross income" or AGI. AGI is total income for a year minus certain deductions (known as "adjustments" or "above-the-line deductions"), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of income including wages, salaries, interest income, dividends and capital gains.To determine modified adjusted gross income (MAGI), add to AGI certain amounts of foreign-earned income. See IRS Form 5405 for more details.

If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?
Possibly. It depends on your income. Partial credits of less than $8,000 are available for some taxpayers whose MAGI exceeds the phaseout limits.

Can you give me an example of how the partial tax credit is determined?
Just as an example, assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by the phaseout range of $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.

Here’s another example: assume that an individual home buyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by the phaseout range of $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.

How is this home buyer tax credit different from the tax credit that Congress enacted in July of 2008?
The most significant difference is that this tax credit does not have to be repaid. Because it had to be repaid, the previous "credit" was essentially an interest-free loan. This tax incentive is a true tax credit. However, home buyers must use the residence as a principal residence for at least three years or face recapture of the tax credit amount. Certain exceptions apply.

How do I claim the tax credit? Do I need to complete a form or application?
Participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on line 67 of the 1040 income tax form for 2009 returns (line 69 of the 1040 income tax form for 2008 returns). No other applications or forms are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests. Note that you cannot claim the credit on Form 5405 for an intended purchase for some future date; it must be a completed purchase.

What types of homes will qualify for the tax credit?
Any home that will be used as a principal residence will qualify for the credit. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats. The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences.

It is important to note that you cannot purchase a home from your ancestors (parents, grandparents, etc.), your lineal descendants (children, grandchildren, etc.) or your spouse. Please consult with your tax advisor for more information. Also see IRS Form 5405.

I read that the tax credit is "refundable." What does that mean?
The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.

For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed).

I purchased a home in early 2009 and have already filed to receive the $7,500 tax credit on my 2008 tax returns. How can I claim the new $8,000 tax credit instead?
Home buyers in this situation may file an amended 2008 tax return with a 1040X form. You should consult with a tax advisor to ensure you file this return properly.

Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?
Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been "purchased" on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after January 1, 2009 and before December 1, 2009. In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date.

Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?
Yes. The tax credit can be combined with the MRB home buyer program. Note that first-time home buyers who purchased a home in 2008 may not claim the tax credit if they are participating in an MRB program.

I live in the District of Columbia. Can I claim both the Washington, D.C. first-time home buyer credit and this new credit?
No. You can claim only one.

I am not a U.S. citizen. Can I claim the tax credit?
Maybe. Anyone who is not a nonresident alien (as defined by the IRS), who has not owned a principal residence in the previous three years and who meets the income limits test may claim the tax credit for a qualified home purchase. The IRS provides a definition of "nonresident alien" in IRS Publication 519.

Is a tax credit the same as a tax deduction?
No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $8,000 in income taxes and who receives an $8,000 tax credit would owe nothing to the IRS.A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $8,000 in income taxes. If the taxpayer receives an $8,000 deduction, the taxpayer’s tax liability would be reduced by $1,200 (15 percent of $8,000), or lowered from $8,000 to $6,800.

I bought a home in 2008. Do I qualify for this credit?
No, but if you purchased your first home between April 9, 2008 and January 1, 2009, you may qualify for a different tax credit. Please consult with your tax advisor for more information.

Is there any way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2009 tax return?
Yes. Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the downpayment.Buyers should adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.

In addition, rule changes made as part of the economic stimulus legislation allow home buyers to claim the tax credit and participate in a program financed by tax-exempt bonds. As a result, some state housing finance agencies have introduced programs that provide short-term second mortgage loans that may be used to fund a downpayment. Prospective home buyers should check with their state housing finance agency to see if such a program is available in their community. To date, 14 state agencies have announced tax credit assistance programs, and more are expected to follow suit. The National Council of State Housing Agencies (NCSHA) has compiled a list of such programs, which can be found here.

The Secretary of Housing and Urban Development has announced that HUD will allow "monetization" of the tax credit. What does that mean?
It means that HUD will allow buyers using FHA-insured mortgages to apply their anticipated tax credit toward their home purchase immediately rather than waiting until they file their 2009 income taxes to receive a refund. These funds may be used for certain downpayment and closing cost expenses.Under the guidelines announced by HUD, non-profits and FHA-approved lenders will be allowed to give home buyers short-term loans of up to $8,000.The guidelines also allow government agencies, such as state housing finance agencies, to facilitate home sales by providing longer term loans secured by second mortgages.

Housing finance agencies and other government entities may also issue tax credit loans, which home buyers may use to satisfy the FHA 3.5 percent downpayment requirement.In addition, approved FHA lenders will also be able to purchase a home buyer’s anticipated tax credit to pay closing costs and downpayment costs above the 3.5 percent downpayment that is required for FHA-insured homes.More information about the guidelines is available on the NAHB web site. Read the HUD mortgagee letter (pdf) and an explanation of the FHA Mortgagee Letter on Tax Credit Monetization (pdf). An FAQ about monetization (pdf) is available at the NAHB web site.

If I’m qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?
Yes. The law allows taxpayers to choose ("elect") to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.Taxpayers buying a home who wish to claim it on their 2008 tax return, but who have already submitted their 2008 return to the IRS, may file an amended 2008 return claiming the tax credit. You should consult with a tax professional to determine how to arrange this.

For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest?
Yes. If the applicable income phaseout would reduce your home buyer tax credit amount in 2009 and a larger credit would be available using the 2008 MAGI amounts, then you can choose the year that yields the largest credit amount.