Hello Everyone,If you have questions about the new bail out from the government, here are some questions and answers:
Questions and answers about the Hope for Homeowners Act of 2008, passed by Congress last weekend to try to steer as many as 400,000 struggling homeowners away from foreclosure:
Q: What exactly will the legislation do?
A: It will allow those who qualify to cancel their old mortgage loans and replace them with 30-year fixed-rate loans for up to 90 percent of the home's current value. The FHA will insure a total of $300 billion of the loans over a three-year period.But the decision on whether to write such a loan remains up to banks, which would have to be willing to take a loss on the existing loans in exchange for avoiding an often-costly foreclosure.
Q: Who is eligible?
A: Eligible borrowers must have spent more than 31 percent of their monthly incomes on their mortgages as of March 1, 2008. The troubled loan must have originated no later than Jan. 1, 2008, and be on the borrower's primary residence. And the borrower's income must be verified.
Q: When does the program start?
A: It takes effect Oct. 1 and runs through September 2011, although the FHA isn't likely to have it operating at full capacity until next year.
Q: Since lenders can pick and choose which loans to refinance, how can consumers determine if theirs will be selected?
A: Check with the bank or financial company servicing your mortgage, but it may be weeks before they make decisions concerning the new guidelines and assess individual loans.Even then, keep expectations limited."Servicers are going to be reluctant to take the government up on their offer," predicted Mark Zandi, chief economist at Moody's Economy.com. "The earliest they'll start taking them up on it is early next year. And even then it's likely to be modest."
Q: Is there anything a homeowner can do to improve chances of benefiting from the program, such as crunching numbers to make a case for the bank?
A: Not really. The best step is to keep up your payments as best you can.
Q: But doesn't this provide an incentive to NOT pay your mortgage, if you're barely keeping ahead of bills and are underwater on your house, so you can qualify?
A: No. If your situation deteriorates enough, the bank may reject any possible new loan."Turning yourself into a financial basket case is not going to work," said Dan Seiver, a finance professor at San Diego State University. "If you turn into a complete deadbeat, the servicer is going to just foreclose and dump it."
Q: So what should I be doing now besides trying to keep up with payments?
A: Talk to a local credit counselor and call the toll-free hot line of the Hope Now alliance — an industry group trying to coordinate a response to the mortgage crisis — at 1-888-995-HOPE. It is available 24 hours a day to provide mortgage counseling in multiple languages. Mary Thomason, director of resource development for The Impact Group of Atlanta, a housing counseling group, also suggests tracking expenses and income closely in order to be able to forecast your cash flow for the next six months and give yourself better control of your finances.
Q: If the banks and lenders refuse to write these loans, then what?
A: Public and political pressure may prompt them to participate. If not, and more people continue to lose their homes, Zandi says the next White House administration subject them to additional regulations or investigations if they remain unwilling to take on the risks.
Q: What happens if I'm able to sell my home after I refinance?
A: If you sell during the next five years, you must agree to share 50 percent of any profits from the resale with the government. What's more, homeowners can only retain equity gains based on a sliding scale. The homeowner would have zero equity from a sale in the first year, with the amount rising 10 percent in each succeeding year and capping at 50 percent from a sale in year five and thereafter. The equity must be repaid because the maximum amount on the new loans will be capped at 90 percent of the current market value, which automatically gives the previously troubled homeowner 10 percent equity in the home.
Q: Where can consumers find more detailed information about the plan?
A: There is a six-page summary of the housing act at http://banking.senate.gov/public/_files/HousingandEconomicRecoveryActSummary.pdf and the FHA's Web site at http://www.fha.gov is a place to watch for updated information. The entire 694-page bill is at http://www.house.gov/apps/list/press/financialsvcs_dem/hr3221_bill_text.pdf
Wednesday, July 30, 2008
Saturday, July 19, 2008
Thursday, July 10, 2008
PRO AND CONS OF THE 1031 EXCHANGE
October 1, 2007
Pros and Cons of the 1031 Exchange
By Neil A. OHara
How would you like to exchange one appreciated asset for another without having to pay capital gains tax? In the world of stocks and bonds, that only happens within qualified accounts like IRAs or 401(k)s. But it's a different story if your clients own business-related or investment real estate. Section 1031 of the Internal Revenue Code permits owners to exchange one piece of real property for another of "like kind"—a term broad enough to encompass anything from raw land to office buildings or mineral properties—without paying capital gains tax as long as they reinvest the entire sale proceeds in the new property.
A few restrictions apply, of course. The owner has 45 days from the closing of the sale to identify one or more replacement properties, and must close the new purchases within 180 days of the original sale. The owner can't touch the sale proceeds, either. The money has to go into escrow at a "qualified intermediary"—typically a bank or title insurer—pending reinvestment. A 1031 exchange works only if the real estate is held directly or as a tenancy-in-common (TIC), an undivided fractional interest in a property. Interests in a partnership or real estate investment trust (REIT) don't qualify. Nor does property used by the owner as a residence, which rules out vacation homes unless they are rented out.
In a hot real estate market, owners must take care not to flip properties in 1031 transactions. "If you trade too quickly the IRS may say you didn't buy the property for investment, but for the purpose of resale," says Steve Mastbaum, a tax expert and shareholder in law firm Greenberg Traurig's New York office. The consequences are ugly. The IRS not only disallows the tax deferral but also treats the profit as ordinary income rather than as a capital gain.
For people willing to accept the constraints, 1031 exchanges can lay the foundation for significant wealth. Stephen Wayner, first vice president at Bayview Financial Exchange Services in Coral Gables, Fla., has a client who put down $300 on each of two $3,000 lots he bought 33 years ago. Four exchanges later his net worth is $4.3 million—and he never put in another penny. Wayner says clients often use the tax-free proceeds of one sale for the down payment on a replacement, which allows them to buy more property and leverage the return.
IRS figures show a dramatic increase in 1031 exchanges in recent years. In 2004, the most recent year for which data is available, 219,675 individuals reported transactions, more than double the number in 2000. For partnerships, the transaction volume almost quadrupled to 47,928. Wayner says a whole new industry has sprouted since a 2002 IRS ruling permitted up to 35 people to join together as TICs to buy a piece of property and still qualify for 1031.
Patricia DelRosso, president of Inland Real Estate Exchange Corp. in Chicago, expects the growth to continue, as baby boomers who have spent their lives managing small real estate portfolios approach retirement. "They no longer want to deal with the three T's: tenants, toilets and trash," she says. "We can meet that need by offering a 1031 TIC exchange." While the owner still participates in decisions to sell, rehab or refinance the property, a management company handles collections and regular maintenance. DelRosso says a TIC exchange provides an opportunity to diversify, too. The owner can trade a portfolio of single-family rental homes for fractional interests in up to three replacement properties—a shopping center, an office building and a multifamily apartment complex, for example. Although advisors don't get paid directly from 1031 exchanges, suggesting a way for a client to defer tax builds credibility. And as William Fleming of PricewaterhouseCoopers' private company services practice notes: "People with these kinds of properties often have big securities portfolios."
(c) 2007 On Wall Street and SourceMedia, Inc. All Rights Reserved.
http://www.onwallstreet.com/
http://www.sourcemedia.com
Pros and Cons of the 1031 Exchange
By Neil A. OHara
How would you like to exchange one appreciated asset for another without having to pay capital gains tax? In the world of stocks and bonds, that only happens within qualified accounts like IRAs or 401(k)s. But it's a different story if your clients own business-related or investment real estate. Section 1031 of the Internal Revenue Code permits owners to exchange one piece of real property for another of "like kind"—a term broad enough to encompass anything from raw land to office buildings or mineral properties—without paying capital gains tax as long as they reinvest the entire sale proceeds in the new property.
A few restrictions apply, of course. The owner has 45 days from the closing of the sale to identify one or more replacement properties, and must close the new purchases within 180 days of the original sale. The owner can't touch the sale proceeds, either. The money has to go into escrow at a "qualified intermediary"—typically a bank or title insurer—pending reinvestment. A 1031 exchange works only if the real estate is held directly or as a tenancy-in-common (TIC), an undivided fractional interest in a property. Interests in a partnership or real estate investment trust (REIT) don't qualify. Nor does property used by the owner as a residence, which rules out vacation homes unless they are rented out.
In a hot real estate market, owners must take care not to flip properties in 1031 transactions. "If you trade too quickly the IRS may say you didn't buy the property for investment, but for the purpose of resale," says Steve Mastbaum, a tax expert and shareholder in law firm Greenberg Traurig's New York office. The consequences are ugly. The IRS not only disallows the tax deferral but also treats the profit as ordinary income rather than as a capital gain.
For people willing to accept the constraints, 1031 exchanges can lay the foundation for significant wealth. Stephen Wayner, first vice president at Bayview Financial Exchange Services in Coral Gables, Fla., has a client who put down $300 on each of two $3,000 lots he bought 33 years ago. Four exchanges later his net worth is $4.3 million—and he never put in another penny. Wayner says clients often use the tax-free proceeds of one sale for the down payment on a replacement, which allows them to buy more property and leverage the return.
IRS figures show a dramatic increase in 1031 exchanges in recent years. In 2004, the most recent year for which data is available, 219,675 individuals reported transactions, more than double the number in 2000. For partnerships, the transaction volume almost quadrupled to 47,928. Wayner says a whole new industry has sprouted since a 2002 IRS ruling permitted up to 35 people to join together as TICs to buy a piece of property and still qualify for 1031.
Patricia DelRosso, president of Inland Real Estate Exchange Corp. in Chicago, expects the growth to continue, as baby boomers who have spent their lives managing small real estate portfolios approach retirement. "They no longer want to deal with the three T's: tenants, toilets and trash," she says. "We can meet that need by offering a 1031 TIC exchange." While the owner still participates in decisions to sell, rehab or refinance the property, a management company handles collections and regular maintenance. DelRosso says a TIC exchange provides an opportunity to diversify, too. The owner can trade a portfolio of single-family rental homes for fractional interests in up to three replacement properties—a shopping center, an office building and a multifamily apartment complex, for example. Although advisors don't get paid directly from 1031 exchanges, suggesting a way for a client to defer tax builds credibility. And as William Fleming of PricewaterhouseCoopers' private company services practice notes: "People with these kinds of properties often have big securities portfolios."
(c) 2007 On Wall Street and SourceMedia, Inc. All Rights Reserved.
http://www.onwallstreet.com/
http://www.sourcemedia.com
Monday, July 07, 2008
U.S. residents to be fingerprinted
U.S. residents to be fingerprinted
By Tomasz Zalewski, Super Express, 28 July 2006.
Translated from Polish by Ania Milewska.
The U.S. Department of Homeland Security announced that greencard holders – permanent U.S. residents – will be fingerprinted at U.S. borders each time they re-enter the country. The new law is to go into effect in a few months. Since January of 2004, fingerprints (taken with a scanner and not with ink) and digital photos of all foreigners, with the exception of Canadians and Mexicans, visiting the United States have been taken at U.S. borders under the U.S. Visit Program. Snaring unlawful residents So far, close to 61 million people have been processed to determine the validity of their visas, to search for criminal records or for suspicion of terrorism. Anna Hinken, a spokesperson for the Department of Homeland Security, stated that fingerprinting permanent U.S. residents (who are not yet citizens) will help identify people who are using false or stolen greencards, which are easily accessible in the black market. Annually, about a million greencard holders cross U.S. borders, entering or leaving the country. It is estimated that about 12 million U.S. residents are greencard holders. Is it discrimination? The announcement of the new regulations has sparked protests by several pro-immigrant organizations. They claim that fingerprinting is discriminatory and is reminiscent of the requirement implemented after the 9/11 attacks, which affected males from the Middle East and South Asia, who had to register with the immigration authorities after entering the United States.
This article appeared in Edition 233 of Voices That Must Be Heard.
Translation © 2006, IPA, all rights reserved. Included by permisson of Super Express.
By Tomasz Zalewski, Super Express, 28 July 2006.
Translated from Polish by Ania Milewska.
The U.S. Department of Homeland Security announced that greencard holders – permanent U.S. residents – will be fingerprinted at U.S. borders each time they re-enter the country. The new law is to go into effect in a few months. Since January of 2004, fingerprints (taken with a scanner and not with ink) and digital photos of all foreigners, with the exception of Canadians and Mexicans, visiting the United States have been taken at U.S. borders under the U.S. Visit Program. Snaring unlawful residents So far, close to 61 million people have been processed to determine the validity of their visas, to search for criminal records or for suspicion of terrorism. Anna Hinken, a spokesperson for the Department of Homeland Security, stated that fingerprinting permanent U.S. residents (who are not yet citizens) will help identify people who are using false or stolen greencards, which are easily accessible in the black market. Annually, about a million greencard holders cross U.S. borders, entering or leaving the country. It is estimated that about 12 million U.S. residents are greencard holders. Is it discrimination? The announcement of the new regulations has sparked protests by several pro-immigrant organizations. They claim that fingerprinting is discriminatory and is reminiscent of the requirement implemented after the 9/11 attacks, which affected males from the Middle East and South Asia, who had to register with the immigration authorities after entering the United States.
This article appeared in Edition 233 of Voices That Must Be Heard.
Translation © 2006, IPA, all rights reserved. Included by permisson of Super Express.
Thursday, July 03, 2008
NEW VICE PRESIDENT
I have recently accepted the role of Vice President of Sales and Marketing for US Home Construction, Inc. We are both a Licensed Class (A) Builder, and an Architectural firm. The combination of these two important roles classifies us a Design-Build firm. The original General Construction company is about (12) years old. The old company was in need of a face lift and new management so US Home Construction, Inc. was bought and restructured recently. I am here because my goals as a real estate developer coincide perfectly with the growth strategy of the company. As a vice president I can keep the flexibility I need to assure success.
Find more photos like this on DCLife Magazine
My background enables me to provide:
- Accurate market consultation
- Marketing strategy
- Campaign Design
- SEM and SEO Comsultation
- Access to commercial lending
I think that I have a greater chance at becoming a top Real Estate Developer with such a strong relationship with a great Design-build firm.
_____________________________________________
Benefits of Design-Build
It is important to note that the Design-build method, while not focused on saving the owner construction costs, nonetheless often saves the owner money on the overall project. The combined effects of carrying a construction loan (which typically carries a higher interest rate than permanent financing) and an earlier useful on-line date usually yields considerable overall profitability to the project and may make seemingly unfeasible projects into genuine opportunities.
The compression is an important aspect of the implementation of this system. Other attributes include:
- increased accountability by the service provider
- single source project delivery
- a value based project feedback system
Accountability
Rather than a parcelized level of responsibility of the classic design-bid-build, design-build provides an integrated solution for the owner or client. This moves projects away from the "finger-pointing" that is often commonplace in contemporary construction projects, and allows the owner to look to one entity with any questions or concerns.
Single Source
Instead of having several contractors and consultants, an owner has just one entity to deal with. Design revisions, project feedback, budgeting, permitting, construction issues, change orders, and billing can all be routed through the design-build firm. This single point of contact allows a certain degree of flexibility for the owner. Most design-builders will leverage that flexibility for the owner's benefit by continually refining the construction program to maximize the owner's value at the completion of the project.
Value-based project feedback
Typically, in order for a contractor to bid on a project, very specific details relating to the methods and materials must be given to avoid any ambiguity and to make an "apples to apples" comparison of bids. In a design-build context, the owner, the owner's other consultants, and the design-builder can work together to determine what methods and materials will maximize the owner's value. In instances where marginally more expensive materials, designs, or construction methods might yield a higher return on investment for the owner than those of lower cost, the owner is free to adjust the project's program without having to re-bid the entire project.
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