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You are here: Home » 2011 » March

“KEEP YOUR HOME” GLITCH

A few months ago I told you about a program called “Keep Your Home California” that can provide financial assistance to California homeowners who are in some form of financial distress on their residence. The program is funded by the Federal government and has $2 billion in funds allocated to it. You can learn more about the program and apply for help at www.KeepYourHomeCalifornia.org. Not everyone will qualify.

They have four main programs. 1. Unemployed Mortgage Assistance will pay your mortgage if you are unemployed. 2. Mortgage Reinstatement will help bring your payments current. 3. Principal Reduction will reduce your principal. 4. Transition Assistance will help you relocate to a rental if you can’t stay in your home.

The Unemployed Mortgage Assistance program is one of the largest, and most requested programs. They will make your payment for up to six months if you are unemployed, and you don’t have to be behind to qualify. But some California homeowners are running into a technicality that prevents them from taking advantage of this program, even if they qualify. There is a maximum monthly payout set at $3,000. This means if your mortgage payment is more than $3,000, it won’t cover the full payment. Many homeowners would be willing to make the extra payment themselves, but that’s where the glitch comes in. Most loan servicers will not accept less than the full monthly payment. Let’s say your payment is $3,100. So your lender would receive one check from Keep Your Home California and then a check for $100 from you. Most servicers would send BOTH checks back, refusing to cash them. The servicer may accept the checks if they were sent together in the same envelope, but Keep Your Home California only sends checks to the loan servicers, not to the homeowners. And they aren’t set up to receive and manage checks from homeowners made out to their servicers. They are looking into solutions, but so far haven’t found one to this challenge.

CHANCE TO HELP JAPAN & NZ QUAKE VICTIMS

[I’d like to take a break from any real estate topics this week and share with you some information about how you can help the victims of the recent earthquakes that have devastated parts of New Zealand and then Japan.]

Shortly after the Christchurch, NZ, Feb 22nd earthquake hit, a 17-year old Brentwood resident, James Graydon, was speaking with his mom and expressed a desire to want to do something to help the people of NZ since he has relatives living in that city and his grandfather, local resident Rob Gwynne, had lived there for 32 years before coming to America. From that initial conversation, a global fundraising campaign was sparked and became reality in short order. As soon as the Japanese earthquake hit, the focus of the campaign was expanded to include both countries.

To donate online, please visit www.aid4rof.org, click on the “Act Now” tab and follow the instructions. You can specify if you want your funds to benefit Japan or NZ (if you have a preference). To send a check, please make it payable to: Love 4 Our Neighbors – with AID4ROF in the memo line and mail to: Love 4 Our Neighbors, 2025 Newton Drive, Brentwood, CA 94513. Or, you may visit any Chase branch in the U.S. to make a deposit directly into account number 904813888.

Net proceeds will directly benefit the victims of the Christchurch, NZ earthquake and the Northeastern Japan earthquake & tsunami. Funds will be wired directly to non-profit partners in each country. For more information or to find out how you can help, please call: 1-855-AID4ROF (243-4763)

TAX SURPRISES NEXT MONTH

Income tax returns are due next month. I wanted to cover two items that are highly misunderstood. Both of these may surprise you, and depending on your situation, either in a really good way, or a really bad way!

The first is one is in regards to the 1099 issue on forgiven debt, what’s known as “phantom income.” If you have had forgiven debt due to a foreclosure, short sale, loan mod, etc. you should receive a 1099 from the lender. There are several important exemptions. One of the biggest is that purchase-money debt is exempt, which means money used to buy, build or substantially improve a principal residence (so a loan for investment property, or taking cash out may be taxable). The second exemption is if you are insolvent, which means your debts exceed your assets. [See IRS pub. 4681.]

The second one has to do with the homebuyer tax credits. Not all homebuyer tax credits are the same. First, there was the federal tax credit that came out in 2008. Then in 2009-2010 there was another federal tax credit, but it was significantly different from the prior year’s credit. Then California had a homebuyer tax credit in 2010. I don’t have space to get into all the details of how all these tax credits are different. I can only focus on the federal 2008 credit, because that is the one that you have to start paying back. That’s right, starting with your 2010 return (the one that’s due next month), you need to start paying back the credit over a 15-year period. The good news is that it is an interest-free loan, so you simply take the amount of your credit and divide by 15. The bad news is that if you sell your home prior to 15 years, the remainder of your loan will be due that tax year. Now, if you got one of the other credits in 2009 or 2010, you don’t have to pay it back UNLESS you sell your home within 3 years for Federal credit and 2 years for California credit.

REBATES FOR YOUR OLD FRIG/FREEZER

If you have an older refrigerator or freezer, this may be of interest to you. Old units can be very inefficient, and buying a new one may pay for itself in a rather short time when you factor in a lower electric bill. Some new units use 50% the energy of older units. But what to do with the old one? California prohibits dumping them into a landfill, and most recycling companies charge you to come pick up your units.

Well the good news is there is a way you can have someone come pick up your old unit, and you may even qualify for a $35 rebate! I found one company online called Jaco Environmental that promises to handle picking up your old unit, and process the rebate for you! Their website is http://www.jacoinc.net and their phone number is 800-741-0172. (As a disclaimer, I haven’t used them personally yet, and I don’t get any money for referring them. If you use them, please let me know how it went.)

Below are the requirements to participate –
1. The refrigerator or freezer must be clean, empty and all units must be in working condition.
2. The unit must meet the size requirement, which is 10—32 cubic feet.
3. You must be a current PG&E electric customer.
4. Limit two units total per customer per calendar year.
5. You must provide clear and safe access to your appliances for the removal team. They will not risk injury or be able to move personal effects or modify your home (e.g.: remove door or railings) to remove the unit(s).

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