TIPS FOR SENIORS Category
2010 Not A Good Year To Die
INDUSTRY NEWS, REAL ESTATE LEGISLATION, TIPS FOR SENIORS
Most are unaware of the capital gains and estate tax tax law changes for 2010. If you stand to inherit real estate from a family member, you may want to do everything possible to keep them alive until 2011! Why? Two changes are in effect for this year only which could have significant tax consequences for those that inherit real estate that has appreciated substantially.
The first change is there is no estate tax for those that die this year. However, there is also no stepped-up tax basis for real property transferred from one’s estate to their heirs. Confused? Perhaps an example will help:
Uncle Buck bought an investment property for $100,000 years ago but today he died and the current market value is $1,000,000. His heirs immediately sell the investment and pocket $1,000,000 (for the sake of this example there were no sale costs deducted from the gross sales price). No estate tax is due but the heirs will pay capital gains tax on the gain of $900,000 (The sales price minus the base purchase price of $100,000). If Uncle Buck had died in 2009, the basis value of the investment would have been “stepped-up” to current market value ($1,000,000). If the heirs sold the property today for $1,000,000, no estate tax or capital gains tax would be due.
Next year, the rule that allows a step-up in basis will once again apply and estate tax will only be due if the estate exceeds several million (the exact number has yet to be determined). Last year, the first $3.5 million was exempt from estate tax for a single person and $7 million for married couples. It’s expected the 2011 exemption limits will be similar to those that sunset-ed last year.
The bottom line is keep grandpa and grandma alive until next year when this lapse in favorable tax treatment is restored. This may not be something you can control, but seeking tax advice may be beneficial if you expect a big inheritance due to the untimely death of a wealthy friend or family member who has you in their will.
A tax deferred 1031 exchange may allow you to postpone or eliminate tax liability if you follow the law. Russell Marsan, certified exchange specialist for IPX, can answer any questions regarding these tax law changes at 800-406-1031.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN 25 YEARS LOCAL SALES EXPERIENCE
AG Publishes Names Of Fraudulent Loan Mod Companies
HOME LOANS, LOCAL GOVERNMENT, TIPS FOR SENIORS
State Attorney General Jerry Brown has published the names of individuals and companies that have been sued by the AG for alledgedly running loan modification scams. Some of these companies have pocketed as much as $3,500 per victim promising loan modification services, but done nothing. Those duped in the schemes can apply for restitution through the Ag’s website. Assets have been frozen and property belonging to some of these scammers has been seized in an effort to recover some of the funds for victims.
To see a list of individuals and companies involved, click here:http://ag.ca.gov/loanmod/
If you or someone you know was duped by one of the listed firms, make sure they contact the Ag’s office for information regarding potential compensation from those being sued. It’s likely to be only pennies on the dollar but that’s better than nothing!
Jerry also lists tips to avoid becoming a victim of these schemes.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN A QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Millions Could Save Billions But Can’t!
HOME LOANS, TIPS FOR SELLERS, TIPS FOR SENIORS
Efforts by the Federal Reserve to push mortgage rates to near-record lows have been sucessful but many homeowners can’t refinance their loans. The Wall Street Journal reported that 37% of all borrowers with 30-year fixed rate loans have interest rates of 6% or higher and could benefit by refinancing at current rates hovering around 5%.
Refinance activity is near its lowest level for the year due to lower home values and stricter underwriting standards preventing homeowners from benefiting from today’s low mortgage rates. Estimates place about 25% of all loans as being “underwater“. Homeowners that successfully refinanced in 2009 saved $3.4 billion in interest according to a report from First American CoreLogic.
The tightened credit standards implemented by Fannie Mae in 2008 are also posing new hurdles for prospective “refinanciers”. Credit score thresholds have risen meaning those with decent credit scores( just under 700) must pay additional loan points to get the best interest rate. According to some in the mortgage industry, this has stymied a refinance boom.
Most borrowers consider a refinance when mortgage rates are 1% below their existing rate. Otherwise, the period of time required to recoup the upfront refinance costs with the lower payments becomes so long it isn’t worth the effort and cost. One can easily calculate the break-even point by dividing the net monthly payment savings into the total refinance fees to determine how many months it will take before the borrower reaps the benefits of a lower interest rate. If a payment reduction will offset the upfront cost in 36-48 months, it usually makes sense to refinance.
530-941-7492 or 530-224-6767
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN 25 YEARS LOCAL SALES EXPERIENCE
Confusion Surrounds Curbside Recycling Program
LOCAL GOVERNMENT, SHASTA COUNTY, TIPS FOR SENIORS
Since 2001, Redding residents have been provided blue carts to replace the bins previously used to separate glass, paper and plastic. The “single stream” method allows residents to throw everything in one bin for sorting at the city’s transfer station. However, despite the many years this program has been in place, between a third and one half of items tossed in the recycling cart are non-recyclable.
This week I was headed home from work and noticed all the blue bins left curbside for pickup were empty except one. My neighbor had a large plastic trash bag on top of their full bin preventing the lid from closing. I suspect the driver spotted this non-recyclable item and decided it was filled with items deemed contaminants. The bin was not emptied and likely a form letter was left explaining which items were inappropriately placed in the bin.
This is a common problem, even in our home. My wife and I debate what items should and should not be placed in the cart. I find myself regularly removing items tossed in the blue bin knowing it is not on the list of items that should be placed in the cart. The sticker on the lid detailing what should and should not be recycled peeled away years ago.
The City of Redding’s website has a complete list and explanations of items accepted and common items that should not be placed in the bin. The following link will take you to that page:
Here are some items on the no-no list: http://www.ci.redding.ca.us/solwaste/recyclingrules.htm
- Plastic bags-including trash bags, shopping bags and the blue bag the newspaper comes in
- Styrofoam-including cups,egg containers and packaging materials
- Waxed cardboard-including milk and juice cartons
- Aerosol cans
- Shredded paper-it clogs the sorting machine
- Wire, rope and chain
- Wrapping paper and cards if they contain metallic printing or lining
Most plastics with numbers 1 & 2 are accepted as long as the mouth is narrower than the base. Other items accepted include:
- Glass bottles and jars, aluminum and tin cans
- Newspaper and paper egg cartons
- Junk mail and catalogs
- Cardboard and pasteboard boxes-broken down and plastic liners removed
The drivers also request the various collection carts be positioned at least three feet apart to allow the automated trucks to empty the cans.
The city has tried to make recycling as easy as possible so let’s all help make their jobs easier by educating ourselves regarding what should and shouldn’t be placed in the blue bin.
530-941-7492 or 530-224-6767
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN 25 YEARS LOCAL SALES EXPERIENCE
Phony Foreclosure “Audit” Scheme Unmasked
HOME LOANS, INDUSTRY NEWS, TIPS FOR SELLERS, TIPS FOR SENIORS
State Attorney General Jerry Brown is warning California homeowners in mortgage distress about a new scam designed to skirt recently implemented loan modification regulations. If you haven’t heard, it is now illegal for real estate agents, attorneys or anyone else to charge upfront fees for loan modification services. This latest scheme gets around this law by offering owners wishing to stave off foreclosure an expensive audit to determine if any fraud took place with regard to state and federal laws during the loan origination process.
Several months back, a client of mine received a solicitation from one such firm. They wanted $3,500 to do a “forensic audit” of my clients loan in an effort to uncover evidence of fraud which could then be used to negotiate a loan modification. I called the number on the letter on behalf of my client. The man I spoke with indicated he was located in San Juan Capistrano and formerly worked as a loan officer. I asked if there was any guarantee my client would be granted a loan modification and he said there was not. In fact, if fraud was discovered, my client would have to cough up thousands more to begin the process of taking the lender to task on the alledged fraud.
I referred my client to a non-profit credit counseling agency and he just informed me he has been granted a trial loan modification on his loan. This is not the first time I have helped a client avoid getting scammed by dubious loan modification service providers. To prevent being a victim of one of these schemes, the attorney general and Department of Real Estate make the following recommendations:
- Don’t pay upfront fees. Foreclosure consultants are prohibited from collecting advance fees
- Don’t ignore letters from your lender or loan servicer
- Don’t transfer title or sell your house to a” foreclosure rescuer”. This scam convinces homeowners they can stay in their home as renters and repurchase the home later (at a lower price). It could also be part of a fraudulent bankruptcy filing. The scammer can evict you and keep your home.
- Don’t make mortgage payments to anyone except your lender or loan servicer. Fraudulent consultants keep the money and you lose your home.
- Never sign a document without reading it. Many homeowners have unknowingly transferred title to someone intent on evicting them.
I would add to this list another caution-talk to your lender first before signing anything regarding any service that you believe will help you save your home from foreclosure. Deal directly with your lender’s loss mitigation department and employ one of the many non-profit credit counseling agencies if you need additional assistance.
These scam artists think nothing of taking advantage of those facing foreclosure. Contact me if I can be of any help.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN A QUARTER CENTURY LOCAL SALES EXPERIENCE
Olney Creek Residents In New Floodplain Not Alone
INDUSTRY NEWS, LOCAL GOVERNMENT, SHASTA COUNTY, TIPS FOR BUYERS, TIPS FOR SENIORS
A recent article in the LA TIMES reports tens of thousands of homeowners in Southern California are being required to purchase expensive flood insurance because FEMA has updated maps placing their homes in high-risk flood zones. Apparently, more than 150 cities and unincorporated areas in LA, Orange, Riverside, Ventura and San Bernadino counties have been notified of the new requirement.
Estimates peg the additional insurance premiums between $500-$1,700/year. Homeowners with a federally-backed mortgage (FHA, VA, Fannie Mae, Freddie Mac) will be required to purchase the costly flood insurance. More than half of all mortgages are federally insured or backed loans. Failure to purchase the insurance will result in lenders buying(forcing) the policy and billing the borrower for the policy which is usually at a higher cost than one purchased by the homeowner.
Hundreds of homeowners in south Redding along Olney Creek, east of HWY 273 have been notified the levee built about 30 years ago does not meet the revised height requirements to withstand a 100-year flood event. Property owners may be required to purchase pricey flood insurance this year. Cost estimates are comparable to those quoted for SoCal. A levee along the Santa Clara River in Oxnard was decertified just like the one in Redding, adding 1800 homes to a flood zone.
Property owners that own their property free and clear of loans can assume the risk by electing not to buy flood insurance. Others may hire a surveyor to certify the elevation of their property or home is above the designated flood zone (elevation certificate) if they believe they reside on higher ground.
Modern technology has allowed engineers to more precisely define limits of flood zones. FEMA feels they are doing homeowners a service by notifying them of a potential risk before disaster strikes.
The problem stemmed from flood maps that in some cases were more than 40 years old. In other cases, railroad berms identified on maps as providing flood protection have been eliminated. Local government agencies, including Redding, have asked the federal government for grants to fund engineering studies in affected areas to check the accuracy of the new flood designations.
Renters and homeowners in areas rezoned may want to contact FEMA for information on its National Flood Insurance Program. More than 90 insurance companies work with FEMA to offer flood policies. When purchased prior to a flood map zone change taking effect, the cost is substantially less.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS REAL LIVING
CORNER OF COURT AND PLACER IN REDDING
MORE THAN A QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Home Remodeling On The Cheap
INDUSTRY NEWS, SHASTA COUNTY, TIPS FOR BUYERS, TIPS FOR SENIORS
One side effect of the housing meltdown is plenty of out of work contractors willing to work for less just to pay the bills. A recent article in the Wall Street Journal estimates “remodeling prices are down 5% to 10% across the U.S. from their peak”. I would venture to say that number is even higher in the North state due to our very high unemployment rate. The article points out that spending on home remodeling projects from the record peak of $146 billion for third quarter 2006 to the third quarter 2007 has dropped to $118 billion for the year ending in the first quarter of 2009.
The factors cited for causing this decline include the sluggish real estate market, decreasing home prices and tighter credit. Most remodeling projects take place within 18-24 months of a home purchase. Lower number of units sold means fewer remodeling projects to follow. Lower home values mean homeowners can’t tap equity for remodeling projects. Tighter credit standards preclude borrowing for some wanting to remodel their homes.
In some areas, new home builders are venturing into the remodeling business creating additional competition for contractors that make their bread and butter focusing on the remodeling segment of the construction industry. Most remodeling project costs are 1/3 materials and 2/3 labor. Contractors are paying more for taxes and insurance but building material costs have declined for most materials not made from oil. Contractors resisting price cutting to land jobs are finding that others will knock down their bids to lock-up a remodel contract. One downside is the low bidder can’t finish the job at the agreed upon price “leading them to cut corners or even abandon the job”. The lowest price may not be the best value warn industry experts.
Another pitfall is possibly hiring someone that is an unlicensed moonlighting amateur. This can lead to shoddy work and little recourse due to the fact there is no license to file a complaint against.
My wife and I have jumped on the remodel bandwagon this year by replacing all of our plumbing and light fixtures, windows and two bathroom remodels. Next we hope to replace all our flooring and eventually a major kitchen remodel. Contractors are anxious to bid our work and are responsive to our calls unlike the boom times when you only got to speak to an answering machine and had a 50/50 chance of getting a return call.
Contractors need the work and our economy needs the cash circulation so jump in if you have the need and financial capability.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS REAL LIVING
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Shasta County Real Estate Fraud Cases Discussed
LOCAL GOVERNMENT, REAL ESTATE PRACTICE, SHASTA COUNTY, TIPS FOR SELLERS, TIPS FOR SENIORS
Robert Angulo is the investigator recently assigned by the DA’s office to handle real estate related crimes.
Robert spoke to a group at the Shasta Association of Realtors weekly meeting Wednesday. The real estate fraud unit has been up and running for just a few months and is already handling 31 cases. Here is a summary of cases being investigated or prosecuted:
- Property management company being operated by individual that does not have a real estate license or a trust account to handle tenant deposits and rent. This case goes to trial in November.
- Another property manager that committed grand theft, embezzlement and grand theft from an elderly person. Amount lost was reported at $40,000.
- Person creating false deeds. This person first created a deed to get the property out of his name and into the name of his girlfriend because he was incarcerated and didn’t want his neighbor, with whom he had disputes, to take his property. He later created another deed to put his name back on the property. He used false identification to get the documents notarized. This is a felony.
- Florida loan modification firm took $2,700 from a county property owner for loan modification services but did nothing. Robert found out the Florida Attorney General was already involved in prosecuting this firm so no action will be taken locally.
- Craigslist-Nigerian scam artists are using properties advertised for sale on Craigslist to create rental ads. Potential tenants are baited with really nice homes for cheap rent if they would just wire the funds to the scammer. Of course the home is not for rent and the money will be lost once sent. If it’s too good to be true, it’s probably a scam.
Robert also did a cross-check of all the property management companies in the phone book and found 8 that were being operated without a real estate licensee. In fact, most of the real estate fraud investigated thus far involved unlicensed individuals.
He also encouraged those in attendance to contact his office if anyone hears of someone being victimized by fraudsters or sees an ad for loan modification services that require an upfront fee or if our clients have strangers knocking on their door asking about the home for rent or asking them to leave because the bank has foreclosed. These are all scams that are happening here and elsewhere across the state and country.
Robert can be reached at 530-245-6350 or rangulo@co.shasta.ca.us.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Comptroller Warns Of New Reverse Mortgage Product
HOME LOANS, INDUSTRY NEWS, TIPS FOR SENIORS
One top bank regulator, John, Dugan, wants consumers to be aware of a new reverse mortgage loan product that bears similar characteristics to subprime loans that “fueled the housing boom and bust.” These reverse mortgages fall into a different class referred to as “proprietary products.”
The concern is the fact these complicated loans are targeted to seniors 62 years of age or older. Dugan heads up the federal Office of the Comptroller. He feels regulators need to develop new standards that will protect the growing US population of elderly homeowners.
During an address to the American Bankers Association, he remarked “While reverse mortgages can provide rea
l benefits, they also have some of the same characteristics as the riskiest subprime mortgages-and that should set off alarm bells.”
No information was provided to explain how this new proprietary product differs from the reverse mortgages offered in recent decades. Fannie Mae currently accounts for 90% of the secondary market for reverse mortgages. This government sponsored enterprise (GSE) purchases mortgages from lenders that originate the loans. Bank of America and Wells Fargo are big providers of reverse mortgages, according to a recent article published by CNNMoney.com.
Seniors considering a reverse mortgage should ask lots of questions to determine if the loan they are seeking is the standard loan product offered in years past or the new proprietary type which is the target of this warning. Typically, senior borrowers considering a reverse mortgage are required to be counseled extensively before making a decision to secure this type of loan.
Usage of a reverse mortgage should be considered a loan of last resort. If you plan to live out your life in your home and don’t need the equity for other purposes, a reverse mortgage may be a viable option. I would recommend seniors contact at least two providers of reverse mortgages to compare and contrast the loan terms and costs. Be prepared for the hefty upfront loan fees typical of reverse mortgages, usually in the $10,000-$15,000 range.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
CORNER OF COURT AND PLACER
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
HECM’s Help Seniors Buy Homes, Save Cash
FHA LOANS, HOME LOANS, TIPS FOR SENIORS
Reverse mortgages have traditionally been used by seniors to tap equity in
their home. Sandra Castrogiovanni, of Security 1 Lending, specializes in Home Equity Conversion Mortgages (HECM) for seniors. She addressed Realtors Wednesday touting new uses for this loan product. Seniors, age 62 or older, may want to consider a HECM if they want:
- To preserve their cash
- No monthly payment
- To qualify for a loan without any income verification
- To get a loan despite bad credit
To preserve cash, a senior may want to secure a reverse mortgage instead of paying off their new home with the cash proceeds from the sale of their previous home. The amount seniors can borrow depends on their age(s) and the appraised value of the home being purchased.
Reverse mortgages have no monthly payments-ever. In fact, the homeowner may receive a monthly payment from the homes equity. The net equity in the home is pledged to repay the HECM when the home is sold after the owner passes away. However, an extended absence for medical treatments or assisted living stay could trigger a forced sale of the home.
Since the home’s equity will be used to repay the loan, there is no requirement the borrower provide proof of income. In the event the senior is receiving monthly payments from their homes equity, the size of the payments is determined by the projected life span of the borrower(s) and equity available as security. Bad credit is not an obstacle either because the eventual sale of the property, not the seniors creditworthiness, is how the lender expects to recover their loan disbursements.
The senior can also receive a lump sum of cash to help pay for the home purchase and not receive any monthly payments. Again, the loans are set up so the senior can reside in the home for the remainder of their life. These loans are insured by FHA. Prospective borrowers will be thoroughly counseled on the ins and outs of this unusual loan. The loan fees for HECM’s are very high-over $15,000.
Here’s a few other details:
- Property must be owner occupied primary residence of borrower
- Mortgage insurance premium (MIP) required
- No seller concessions or credits
- Buyer must pay normal closing costs and seller must pay for all repairs
- No gift funds allowed to borrower
- Loan limit is $625,000 through 2009
Most importantly, use a local lender. Contact me if you have any questions.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASOCIATE
REAL ESTATE PROFESSIONALS GMAC
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
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