$7,500 TAX CREDIT FOR FIRST-TIME HOMEBUYERS: With certain exceptions, a first-time homebuyer will receive a tax credit of 10% of the purchase price up to $7,500 maximum, for the tax year in which the buyer purchases a principal residence. The tax credit, however, must be repaid like an interest-free loan in equal installments over the next 15 years or in full if the homebuyer sells the property for a gain. A buyer qualifies as a “first-time” homebuyer as long as the buyer (and spouse if any) has not owned a principal residence in the U.S. for the last three years. The tax credit phases out for a taxpayer with a modified adjusted gross income over $75,000 (or $150,000 for joint returns). This tax credit is available for qualifying homes purchased from April 9, 2008 through June 30, 2009.

The State Legislature enacted foreclosure reform law to address the adverse effects of high foreclosure rates in California. The new law requires lenders to contact homeowners to explore options for avoiding foreclosure at least 30 days before filing a notice of default. It also requires owners acquiring property through foreclosure to maintain the exterior of vacant residential properties. The new law also extends from 30 to 60 days the time for residential tenants to move out of properties that have been foreclosed upon, unless other laws apply. These requirements will remain in effect until January 1, 2013. The full text of Senate Bill 1137 (Perata) is available at www.leginfo.ca.gov.

A bill passed by the House will assist up to 2 million borrowers in danger of foreclosure by allowing them to refinance their current mortgages with a Federal Housing Administration (FHA)-backed loan.

To read the full story, please click here:

http://money.cnn.com/2008/07/23/real_estate/housing_rescue_guide/index.htm?postversion=2008072321

Despite Popularity of Online Home Buying and Selling Tools,

In the home-buyer segment, Keller Williams achieves a score of 831 on a 1,000-point scale, and receives highest ratings from customers in all three factors. Following in the rankings are Prudential (820) and Coldwell Banker (816). Prudential performs well in the agent and office factors, while Coldwell Banker performs particularly well in the services factor.

Among home sellers, Prudential ranks highest with a score of 793 and performs particularly well in the marketing and office factors. Coldwell Banker and RE/MAX follow Prudential in the segment rankings, in a tie. Coldwell Banker performs particularly well in the marketing factor, while RE/MAX performs particularly well in the agent factor.

“When buying a home, customers particularly appreciate agent professionalism, responsiveness to calls and e-mails and the agent’s skill in locating and showing properties in the appropriate price range—all areas in which Keller Williams excels,” said Jim Howland, senior director of the real estate and construction practice at J.D. Power and Associates. “When it comes to selling a home, marketing of the home is particularly critical, although professionalism and responsiveness of the agent are still important. Both Prudential and Coldwell Banker demonstrate considerable strengths in the area of marketing.”

The study finds that despite the popularity of home-buying and -selling resources on the Internet, real estate agents are key to customer satisfaction with real estate companies. A large proportion of both home buyers and sellers rely on the Internet to facilitate the buying or selling process, with 68 percent of buyers saying that they used Internet tools to help them in the purchase process and 61 percent of sellers reporting that they used a Web site listing to market their home. In addition, among home sellers, online methods are the most important aspect of marketing. However, the agent factor carries the greatest importance among the factors that comprise overall satisfaction among both home buyers and sellers.

“Although the Internet provides home buyers and sellers with the ability to perform some essential tasks—such as listing a home for sale or researching a neighborhood in which to purchase a home—it still does not replace the importance of a good real estate agent,” said Howland. “Particularly in an uncertain real estate market, professional advice from agents can be especially valuable to buyers and sellers. The knowledge and expertise provided by experienced agents is an important benefit of using a full-service real estate company.”

The study also finds that the average time a home for sale remained on the market was slightly more than six months, although home sellers represented by the top-ranking real estate companies report that their homes were on the market for slightly less time—approximately five and a half months, on average.

“Satisfaction averages 794 among those customers whose homes sold within 5 months or less, but declines considerably to an average of 730 among customers whose homes took 7 months or longer to sell,” said Howland. “A real estate company that provides agents who are skilled at determining the appropriate market value and listing price for homes, and who can effectively market properties, can help minimize the time that clients’ homes remain on the market—which can not only save the seller money, but also diminish inconvenience and anxiety.”

Additional noteworthy study findings include the following:

• Nearly one-half of respondents (46%) report using recommendations from family or friends to find their real estate agent. Approximately 28 percent used the Internet, while 23 percent used an agent they had used previously and 11 percent used a printed real estate guide.

• On average, home buyers were shown approximately 13 homes before making a purchase.

• Home sellers report that, on average, their home was shown approximately 11 times and approximately five open houses were conducted before the sale occurred.

The 2008 Home Buyer/Seller Study includes 3,670 evaluations from 3,205 respondents who bought or sold a home between April 2007 and June 2008.

About J.D. Power and Associates

Headquartered in Westlake Village, Calif., J.D. Power and Associates is a global marketing information services company operating in key business sectors including market research, forecasting, performance improvement, training and customer satisfaction. The company’s quality and satisfaction measurements are based on responses from millions of consumers annually. For more information on home building and home improvement, car reviews and ratings, car insurance, health insurance, cell phone ratings, and more, please visit www.JDPower.com. J.D. Power and Associates is a business unit of The McGraw-Hill Companies.

Founded in 1888, The McGraw-Hill Companies (NYSE: MHP) is a leading global information services provider meeting worldwide needs in the financial services, education and business information markets through leading brands such as Standard & Poor’s, McGraw-Hill Education, BusinessWeek and J.D. Power and Associates. The Corporation has more than 280 offices in 40 countries. Sales in 2007 were $6.8 billion. Additional information is available at http://www.mcgraw-hill.com.

The California State Legislature recently enacted the Senate Bill 1137 into Law. The bill is set in place to provide relief from the adverse effects of the high rates of foreclosures in California. Here are the basics, which are in effect until January 1, 2013:

 - Lenders are required to contact homeowners at least 30 days prior to filing a notice of default (the first step in the foreclosure process) to explore options for avoiding foreclosure - effective on or about September 8, 2008

- Owners acquiring property through foreclosure must maintain the exterior of the building if it’s vacant - effective July 8, 2008

- Tenants of homes being foreclosed on now have 60 days (up from 30 days) to vacate the property, unless other laws apply - effective July 8, 2008

So the foreclosure process is this - A homeowner falls behind on their payments (one month, three months, ten months, the rules depend on the lender) & the lender retains the right to file a Notice of Default (NOD). This is where the first part of the new law makes a change. The lender is now required to attempt some other resolution with the borrower at least 30 days prior to filing the NOD. After the NOD is filed, the homeowner has 90 days (3 months) to either bring their payments current or some other form of financial restitution to the lender (i.e. refinancing) or they can file for bankruptcy.

After that period the lender may file the Notice of Trustee Sale (NOTS), which is the notification that the home will sell at public auction typically at the local courthouse. From the time the NOTS is filed the lender must wait another 20 days before they can actually put the home on the auction block. The process was a minimum of 110 days from the time the NOD is filed prior to the new law. Now with the extra 30 days prior to when the lender can file the NOD the timeline is extended to a minimum of 140 days.

Contact between the Lender & Borrower - The effect:

Presumably this will minimize the number of foreclosures as lenders are now forced to contact the borrower to find some remedy other than foreclosure. For reference, California has the highest volume of foreclosures than any other state in the country with 71,930 Notices of Default filed year-to-date. If this helps put a tourniquet on the market then, again, presumably, the prices in the market will begin to level off. Economists argue both sides of this; in fact, there’s an equivalent bill being tossed between the US House of Representatives & the Senate where the argument is debated. California went ahead with the law so we shall see what the effect will be in the months/years to come.

Maintenance of Vacant Properies - The effect:

If a house is not sold to an owner occupant at the foreclosure auction then the house often goes back to the bank and then becomes a REO Foreclosure & is put on the market by the bank. This is what is known in the market as a “Foreclosure” or “REO”. In this case the new owner (the bank) is required to maintain the exterior of the house, take action against trespassers or squatters, and clean & maintain standing water to prevent the proliferation of mosquitoes, & other public nuisances. If they do not comply with this section of the law they are liable to fines to the tune of $1,000 per day they don’t comply. The presumed effect here is to keep property values from dropping further. Some argue that this will effect lenders due to increased & required costs which will effect the lenders’ bottom line & potentially devalue stock prices, which in turn may further negatively effect the market.

60-Day Notice for Tenants to Vacate - The effect:

Tenants now have more time to vacate their rental unit should it fall into foreclosure, which will further lengthen the process of foreclosure. The hope here is that the longer banks have to wait until they foreclose on a property the more time there is to remedy the situation by other means. There are arguments saying that given the state of our economy it doesn’t matter how long it the process of foreclosure takes, if someone’s going into foreclosure there’s little they can do to avoid it.

Overall: we’ll have to just wait and see the effects of such legislation. Again, the argument from economists is either do something (like enact laws of this sort to help slow the bleed) or do nothing (i.e. let the market correct itself; we created this mess, the mess will correct itself ala Adam Smith’s theory of economics).

First-time home buyers dominated second quarter home sales

According to HouseHunt.com, first-time home buyers led the way during April, May and June; snapping up an estimated 54 percent of existing homes purchases!

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