How to lose your $8000 tax credit

As most working Real Estate Professional will tell you now a days, the rush is on to collect the government tax credit. Just as cash for clunkers had lit fires under the feet of potential car buyers, the same is true in the real estate industry.

First time home buyers are trying to collect their just rewards, and many know that the property must close escrow by November 30, 2009 to qualify. End of November seems like a long time off, but here is some food for thought because I don’t want you to lose out on technicalities.

Let’s consider that November 26 is Thanksgiving this year. Let’s admit it, most of us are procrastinators, so we will push the envelope and wait until the last moment to get in the door. Case in point, look at the lines at the post office at 11:30 PM on April 15 of each year.


The number of people trying to close escrow on November 30 will be overwhelming and it is also a Monday. But here is an insider tip in Real Estate: avoid closing escrow on Mondays and Friday because government employees at the County Recorders Office have higher rates of absenteeism on Mondays and Fridays, so the office will be under-staffed and the likelihood of your deed not recording on those particular days increase dramatically.


As Thanksgiving is on November 26 this year, we can pretty much eliminate all of that week, meaning November 23 through 27. But remember, we will have probably hundreds, if not thousands, of people trying to get their $8,000, so the County Recorders Office will be overwhelmed compared to normal number of closings, but given the current budget crisis in California, I doubt your County will hire extra staff or provide over time to handle the extra influx of closings. I could be wrong, but do you want to make an $8,000 bet on that? This is a government credit program, if you miss your filing deadline for whatever the reason, do you want to challenge the bureaucracy and hope you they will take your side?

To compensate for the overwhelming number of people wanting this credit (see Cash for Clunkers above) a safe move would be to close escrow probably at least a full week before Thanksgiving (that means November 19); I would even argue a week before that or November 12. But wait, we need to discount 30 days for escrow time, so we will need to find, negotiate (in probably multiple offer situation) and be in contract by October 12, 2009 to insure you get your $8,000 credit.
October 12 is not that far off……

Steve Mun, Silicon Valley Realtor
www.stevemungroup.com

Greed run amok: tax collectors are letting large banks foreclose on homeowners

As people still struggle with unemployment and the financial distress associated with such hardship, the prime beneficiaries of TARP (bank bailout program) continue to benefit and even thrive at the expense of tax payers who help fund the program to help them out of their difficult situation in the first place. As a Short Sale Agent in San Jose, I see how lending institutions deal with its customers on a daily basis, yet I am continually amazed at the means by which these gargantuan lending instituations have benefitted during their time of need, yet when the individual home owner are struggling, rather than help, they pounce right on them and go for the jugular…..

Here is a ridiculous illustration of that point. During this economic morass we are all enduring, city and county governments also suffer as a result of the individual home owner not being able to pay their property taxes. Because we are treading on unchartered territories and local government is in desperate need of cash flow, some of them are now selling their delinquent tax bills to third party companies for cash. [By the way, this is what these large banks are doing with their HELOC (home equity line of credit) and why they are now starting to play hard ball and refusing to sign off on short sales unless they are given the right to settle said deficiency after the closing. They write off their loss, turn around and sell the right to collect to a collection agency for additional cash and walk away to let the collection agency deal with collecting the deficiency. It’s a win-win for the banks because they are squeezing as much as they can out of the borrower at the first bite level and letting someone else get a second bite at the borrower in exchange for a fee.]

These tax lien purchasing companies are not affiliated with, nor have any interest in the local communities, so they are pushing the local homeowners quicker into foreclosure by adding additional penalties and obscene interest rates, which the homeowners cannot afford, then forcing them into foreclosure to collect their debt from the proceeds of the sale. All of this suffering and devastation over a very small percentage of the value of the property.

Think about this: it is not the lender that is owed the mortgage, nor even the lender which owns the line of credit, it is the third party entity that bought the rights to the delinquent tax bills that is forcing a homeowner into foreclosure over a few thousand dollars, which was inflated due to their horrendous interest and penalty charges…… What’s wrong with that picture??!!

The largest of these entities which buys and sells property tax liens, the one which is devastating Lucas County, Ohio and the one discussed in the New York Times article is called Plymouth Park Tax Services. Guess who is the parent company of this little known company? JP Morgan Chase – perhaps the biggest beneficiary of TARP!

Thank God, Santa Clara County is not selling its tax liens to these companies.

Steve Mun, Silicon Valley Realtor

www.stevemungroup.com