The U.S. Internal Revenue Service is probing more than 100,000 doubtful claims of a tax credit meant for first-time home buyers, the Wall Street Journal reported on its website on Tuesday.
The $8,000 tax credit for first-time home buyers under the American Recovery and Reinvestment Act was passed in February to help prod the U.S. economy back to life.
Lawmakers have expressed concern that significant number of claims might turn out to be fraudulent, the paper said.
The IRS was investigating 167 "criminal schemes" involving the credit, according to the House Ways and Means oversight subcommittee, the paper said.
Source: Reuters
Tuesday, October 20, 2009
Friday, October 16, 2009
Top California Hoa Attorney
Need a Top California HOA Attorney?
Contact: Robert M. DeNichilo, Esq.
(949) 766-4700
http://hoabrief.com/
Contact: Robert M. DeNichilo, Esq.
(949) 766-4700
http://hoabrief.com/
Thursday, October 15, 2009
California Condo Law - FHA Reserve Requirements
QUESTION: Regarding the FHA 60% reserve funding requirement; just what does the 60% mean?
ANSWER: As reported last week, starting November 1 the FHA will not insure loans in condo developments where the association’s reserves are less than 60% of the funding levels called for in the association’s most recent reserve study. The 60% reserve requirement is not a national standard, it was issued by the Santa Ana HUD/FHA office. Since the Santa Ana office serves the Western region, their rule controls all loan guarantees in California.
Reserve Requirements. In addition to requiring 60% reserve funding for existing condominium associations, the Santa Ana office obligates condo conversions to 100% reserve funding. Below describes how the new requirements work.
Existing Condos. If an association’s roof costs $100,000 to replace in 20 years, then $5,000 must be set aside annually for the next 20 years. Assume the roof is now 10 years old; to be fully funded, the association must have $50,000 in its reserve account for the roofs. To meet the Santa Ana requirement, the association needs at least 60% of the $50,000, i.e., $30,000 cash on hand for the roofs. To arrive at the total cash for all reserve items, the same calculation is applied to each item in the reserve study. If all components taken together total $1 million as of today’s date, then the association must have 60% of $1 million in the bank, which means $600,000.
Condo Conversions. If the development is a condo conversion, the association needs 100% of the reserve study’s fully funded requirement. In the roof example above, condo conversions need the entire $50,000 in roof reserves to qualify for FHA loan guarantees. Keep in mind that roofs are only one component. If all components taken together total $1 million, then the association must have $1 million in its reserves to qualify.
Bona Fide Reserve Study. An obvious way to meet the FHA requirement is to doctor the reserve study to reduce the $1 million funding requirement to whatever amount is currently in your reserves. That would be a very bad idea. Directors would face potential liability for fraud (not covered by insurance) and breach of fiduciary duties. In addition, the FHA requires that associations use a bona fide site visit reserve study for their calculations. Bona fide means “made in good faith without fraud or deceit.”
Thank you to Robert Nordlund of Association Reserves, Inc. and Clifford Treese of Association Information Services for their input on this question.
COMMENT: It’s understandable the FHA would not want to guarantee loans in weak associations. Unfortunately, the Obama Administration’s timing is terribly short-sighted. The new requirement is being imposed when the housing market is already distressed and associations are suffering record foreclosures. FHA insured loans are vital to the housing market because they enable buyers with modest incomes to purchase homes. On November 1 when the new regulations go into effect, tens of thousands of condominiums in California will become virtually unsalable. This will further depress the housing market and drive more condominiums into foreclosure. Not a smart move. -
Bye Adrian Adams
ANSWER: As reported last week, starting November 1 the FHA will not insure loans in condo developments where the association’s reserves are less than 60% of the funding levels called for in the association’s most recent reserve study. The 60% reserve requirement is not a national standard, it was issued by the Santa Ana HUD/FHA office. Since the Santa Ana office serves the Western region, their rule controls all loan guarantees in California.
Reserve Requirements. In addition to requiring 60% reserve funding for existing condominium associations, the Santa Ana office obligates condo conversions to 100% reserve funding. Below describes how the new requirements work.
Existing Condos. If an association’s roof costs $100,000 to replace in 20 years, then $5,000 must be set aside annually for the next 20 years. Assume the roof is now 10 years old; to be fully funded, the association must have $50,000 in its reserve account for the roofs. To meet the Santa Ana requirement, the association needs at least 60% of the $50,000, i.e., $30,000 cash on hand for the roofs. To arrive at the total cash for all reserve items, the same calculation is applied to each item in the reserve study. If all components taken together total $1 million as of today’s date, then the association must have 60% of $1 million in the bank, which means $600,000.
Condo Conversions. If the development is a condo conversion, the association needs 100% of the reserve study’s fully funded requirement. In the roof example above, condo conversions need the entire $50,000 in roof reserves to qualify for FHA loan guarantees. Keep in mind that roofs are only one component. If all components taken together total $1 million, then the association must have $1 million in its reserves to qualify.
Bona Fide Reserve Study. An obvious way to meet the FHA requirement is to doctor the reserve study to reduce the $1 million funding requirement to whatever amount is currently in your reserves. That would be a very bad idea. Directors would face potential liability for fraud (not covered by insurance) and breach of fiduciary duties. In addition, the FHA requires that associations use a bona fide site visit reserve study for their calculations. Bona fide means “made in good faith without fraud or deceit.”
Thank you to Robert Nordlund of Association Reserves, Inc. and Clifford Treese of Association Information Services for their input on this question.
COMMENT: It’s understandable the FHA would not want to guarantee loans in weak associations. Unfortunately, the Obama Administration’s timing is terribly short-sighted. The new requirement is being imposed when the housing market is already distressed and associations are suffering record foreclosures. FHA insured loans are vital to the housing market because they enable buyers with modest incomes to purchase homes. On November 1 when the new regulations go into effect, tens of thousands of condominiums in California will become virtually unsalable. This will further depress the housing market and drive more condominiums into foreclosure. Not a smart move. -
Bye Adrian Adams
Tuesday, October 13, 2009
Price`s Holding!
"A tracking firm says the median home price in Southern California held steady last month from August, at $275,000.
San Diego-based MDA DataQuick reported Tuesday that the median price in the six-county region of Southern California was 11 percent lower than the September 2008 median price of $308,000. That price is the median's lowest year-over-year decline since November 2007.
Sales were up two-tenths of a percent from August to September. The firm says sales were bolstered by late-closing summer transactions, low mortgage rates and buyers hoping to take advantage of a soon-to-expire tax credit.
In Orange, San Diego and Ventura counties, the median prices paid for resale houses increased for the first time since at least August 2007."
San Diego-based MDA DataQuick reported Tuesday that the median price in the six-county region of Southern California was 11 percent lower than the September 2008 median price of $308,000. That price is the median's lowest year-over-year decline since November 2007.
Sales were up two-tenths of a percent from August to September. The firm says sales were bolstered by late-closing summer transactions, low mortgage rates and buyers hoping to take advantage of a soon-to-expire tax credit.
In Orange, San Diego and Ventura counties, the median prices paid for resale houses increased for the first time since at least August 2007."
Sunday, October 11, 2009
Monday, October 5, 2009
Market bottom out
Market bottom out
Has the California real estate market hit the bottom?
post your thoughts and views.
Jason M. Gokei
The California Condo King
Studios to Luxury Town Home
from the Valley to the Sea
951-818-9601
sold@TheCaliforniaCondoKing.com
http://www.thecaliforniacondoking.com/
http://www.facebook.com/ThecaliforniaCondoKing
http://www.twitter.com/califCondoKing
Has the California real estate market hit the bottom?
post your thoughts and views.
Jason M. Gokei
The California Condo King
Studios to Luxury Town Home
from the Valley to the Sea
951-818-9601
sold@TheCaliforniaCondoKing.com
http://www.thecaliforniacondoking.com/
http://www.facebook.com/ThecaliforniaCondoKing
http://www.twitter.com/califCondoKing
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