Proposed Florida Tax Relief Amendment Under Attack

A tax proposal on Florida’s November ballot is causing quite a stir, because opposition feels it is unclear and poorly written, which would confuse voters. If passed, the law would provide an extra property tax break to some homebuyers. However, both labor unions and taxpayer groups are opposing it.

According to the Associated Press, a Tallahassee judge has scheduled a final hearing Thursday in the lawsuit seeking to remove the Amendment from Florida's November ballot.

The proposal, which the Legislature approved last year, would give people who have not owned a home for at least eight years an added — but temporary — homestead exemption on primary residences purchased on or after Jan. 1, 2010.

The Florida AFL-CIO and Jacksonville resident Brian K. Doyle say in their lawsuit that the title and summary are flawed because they don't mention the purchase date.

The plaintiffs also argue the title says the added exemption is for "new homestead owners" and the summary refers to "a first-time homestead" despite the eight-year provision that allows previous homeowners to qualify.

Doyle would not qualify for the tax break and many union members are government employees paid from property taxes that would be cut by the amendment.

In a written response, the state says the title and summary accurately describe the proposal's chief purpose and that the purchase date is the kind of detail not required by law.

Fannie Mae’s Duncan Says Homebuyer Tax Credit Shifted Demand

According to Douglas Duncan, Chief Economist of Fannie Mae, the recently expired homebuyers credit only shifted demand in the housing market. He also does not expect the credit to have any lasting impact on home values in the U.S.

“Temporary tax credits change behavior temporarily,” Duncan said today at a National Association of Real Estate Editors conference in Austin, Texas. “It’s simply shifted demand forward.”

“It actually created some price appreciation that’s not supportable long term,” Duncan said of the tax credit.

The percentage of consumers surveyed who planned to buy a home in the next six months fell to 1.9 percent in May after touching a seven-month high of 2.8 percent in March, the Conference Board said last week. The New York-based group’s index of overall consumer confidence rose for three straight months as the economy expanded and the job market improved.

Prior to the expiration, sales of previously owned homes jumped 7.6 percent to a 5.77 million annual rate in April, the highest level in five months, the National Association of Realtors said May 24. The median price increased 4 percent from a year earlier.

For more information on the long term effects of the credit, and Duncan’s speech at the National Association of Real Estate Editors check out this article on BusinessWeek.com.

New Rules Making Tax-Credit Closing Deadlines Tough to Meet

From The WashingtonPost.com:

For thousands of home buyers who scrambled to meet the April 30 federal tax-credit deadline for completed contracts, a new challenge is looming: Can they nail down their mortgage financing and get to closing before the program terminates?

As a result of toughened underwriting standards, confusing new federal disclosure rules, appraisal regulations and a long list of other potential obstacles, meeting that deadline could be harder than expected. In fact, mortgage industry leaders say some buyers who are seeking the tax credits won't get a cent because the clock will run out on them.

Under the extended first-time purchaser and repeat buyer credits -- the former carries an $8,000 maximum amount, the latter $6,500 -- all deals must close by June 30. This shouldn't be a problem for buyers who have already submitted their applications or who apply and are approved in the coming week or two, lenders say.

But credit-seekers who assume that closings can be done in less than 45 days -- as was often the case in recent years -- might be in for an unpleasant jolt. And if a borrower's needed turnaround time from application to settlement is 30 days or less, even the most resourceful lenders might not be able to deliver.

6 Biggest Mistakes Homebuyers Make

Buying a home is usually the largest purchase an American taxpayer will ever make, but it can also be one of the most confusing. As any one who has ever owner property can attest, there are many decisions to be made and what seems like hundreds of documents that must be signed. To help potential homebuyers rushing to purchase a house before the federal tax credit deadline, CNN Money has composed a helpful article explaining the 6 biggest mistakes to avoid.

1. Not knowing your credit score

If you're even toying with the idea of buying a home, you must know your exact FICO score. If you find it is less than ideal, wage a systematic campaign to raise it. Too many borrowers ignore this step and get surprised when they get interest rate quotes.

Once you've pored over your credit history and corrected any errors, your next step is to pay down revolving debt balances to no more than 30% usage. That will help raise your score significantly.

Why does it matter?

The lower your score, the higher your costs of borrowing. Fannie Mae and Freddie Mac, for example, charge higher up-front fees to borrowers with credit scores below 740.

For a buyer with a credit score between 680 and 700, the fee comes to 1.5% of the mortgage principal. On a $200,000 mortgage, that adds up to $3,000. Someone with a 740 score pays nothing.

Continue reading at Money.CNN.com…

Not Much Impact from Repeat Buyer Credit

From Google News:

It sounded like a great idea three months ago: Hand homeowners a $6,500 tax credit to find a new place to live, giving a thrust of energy to the housing market's recovery.

So far, people are staying put.

In November, the federal government extended a tax credit of up to $8,000 for people who hadn't owned a home for three years. This credit had helped boost home sales last summer and fall. Seeking to build on that momentum, the government added a new credit of up to $6,500 for current homeowners, hoping it would transform them into house-hunters this winter and spring.

But real estate agents around the country say the credit is doing little to elevate sales. Reasons vary.

The unemployment rate is still near 10 percent and consumer confidence is falling. Home prices have stabilized in some markets, but are still a third below their 2006 peak. Droves of people who want to sell are stuck because their home is worth less than they paid for it. Harsh winter weather has Americans shoveling driveways instead of preparing their home for buyer visits.

"No one is saying, `I need to buy something before it expires,'" said Tim Surratt, an agent with Greenwood King Properties in Houston.

The tax credit for current homeowners was intended to help stabilize prices and bolster the economy, but the housing market remains vulnerable. Sales of both new and previously occupied homes dropped in January, and the Mortgage Bankers Association's index of loan applications recently hit a 12 1/2-year low.

Contracts to Buy Homes Inch up in December

On Tuesday, the National Association of Realtors announced that the number of people preparing to buy a home rose slightly in December of 2009. Many are considering this a positive sign for the upcoming “spring home buying season.”

The National Association of Realtors said Tuesday its seasonally adjusted index of sales agreements rose 1 percent from November to December to a reading of 96.6. That was a bit lower than the 97.1 level analysts expected.

The index has risen for nine out of the past 10 months as buyers work to take advantage of an $8,000 first-time homebuyer tax credit.

The credit had been set to expire Nov. 30 before Congress extended it to April 30. Lawmakers also added a $6,500 credit for current homeowners.