Bank of America to Buy Countrywide

Bank of America to Buy CountrywideBank of America Corp. announced today that it has agreed to buy Countrywide Financial for $4 billion in stock.The purchase will make Bank of America the nation’s largest mortgage lender and loan servicer. "Countrywide presents a rare opportunity for Bank of America to add what we believe is the best domestic mortgage platform at an attractive price and to affirm our position as the nation's premier lender to consumers," Bank of America Chief Executive Ken Lewis said in a statement.The sale will place the responsibility of sorting out the payment issues surrounding millions of dollars worth of troubled loans on Bank of America. "There's still plenty of risk involved," says Bart Narter, senior analyst at Celent, a Boston-based financial research and consulting firm. "[Lewis] is brave to do it. But I think that it's very likely down the road to be profitable, maybe not immediately, but long-term."The agreement has been approved by both companies' boards and is subject to regulatory and Countrywide's shareholders approval.

Source: The Associated Press, Ieva M. Augstums (01/11/08)

NAR Makes Tremendous Strides on Public Policy in 2007

Since 1908, REALTORS® have worked hard to earn a reputation as America’s leading community builders and dream makers. Today, the “Voice for Real Estate” is stronger than it has ever been, speaking for millions of consumers in neighborhoods across America. And, we’re just getting started.

Thanks to your participation in our advocacy efforts, NAR made tremendous strides on the public policy front last year, passing legislation in three key areas that will preserve the long-term value of real estate and help you grow your businesses:

Mortgage Relief – We achieved a major victory for consumers caught in costly mortgages, when President Bush signed the Mortgage Cancellation Tax Relief Act in December. We also are making affordable financing available to potential buyers through landmark FHA Reform. We expect this bill will go to conference early next year.

Terrorism Insurance – NAR also worked with Congress to keep the commercial real estate market strong and stable well into the future. President Bush recently signed a bill that continues the Terrorism Risk Insurance Program for seven years.

Banks in Real Estate – For the first time ever, Congress also passed a two-year moratorium on banks entering the real estate business, which will take effect early next year. We also have record support for a permanent ban through the Community Choice in Real Estate Act.

REALTORS® are in a prime position to succeed on many other key priorities in 2008, including GSE Reform, Flood Insurance Reform, Natural Disaster Reform, Affordable Housing Trust Fund and Mortgage Reform. All of these issues are critical to our professional success, a healthy real estate market and strong communities.

Dick Gaylord
2008 NAR President

Dale Stinton
NAR EVP & CEO

HUD Incentives

The Department of Housing and Urban Development (HUD) has announced new incentives on Ohio HUD-owned properties that will make them more affordable for homebuyers. This program started November 15:

Ohio homebuyers will be able to purchase a HUD home with a $100 down payment when they use financing insured by the Federal Housing Administration (FHA). In addition, homebuyers can obtain a $2,500 sales allowance at closing that can be used towards closing costs, to make repairs to the home or to pay down on the unpaid principal balance of the mortgage.
If the borrowers do not use FHA-insured financing they can still qualify for a $1,000 sales allowance to be used for the payment of closing costs.

Source: TBR News

Well-Water Homes: What to Investigate

A house that relies on well water can be a turnoff to some buyers. But before buyers shun these homes completely, here are some things that real estate professionals can help them investigate:

• Is it drinkable? Most mortgage lenders require a water potability test before closing a loan on a property. Beyond that, the buyer should consider a professional inspection and possibly more testing for potential contaminates.

• Do some official research. It's a good idea to look at the "well log" or "drilling report" from the county health department or environmental services office. These logs include information like construction date, contractor's name, drilling method and materials used, depth of the well, geological formations encountered, gallons per minute drawn, and distances from structures or septic fields when the well was built. These logs will also include any servicing or repair work done.

• Visual inspection. Inspect the well visually. Ideally, the well should be higher than surrounding ground. Look for pooled surface water around the well, which can indicate drainage problems.

• Look around. Are there potential sources of contamination — barnyards, septic systems, or ponds uphill from the well? Nearby underground gas tanks also can be a problem.

Source: Realtor® Online

Eliminate Income Tax on Foreclosed Properties

Eliminating 'Phantom Tax' on Foreclosures Gets a Boost

The House Ways and Means Committee voted to change a law that forces home owners to pay an income tax on mortgages that have been forgiven or foreclosed, a move that the NATIONAL ASSOCIATION OF REALTORS® has long supported.

The current tax code requires a lender who forgives debt to provide a Form 1099 to the IRS stating the amount the borrower has been forgiven. This disclosure applies whether a short sale, foreclosure, deed in lieu of foreclosure or any similar arrangement relieves the borrower of the obligation to pay some portion of his or her debt. If the property is sold at foreclosure or is sold for less than the amount borrowed, that difference is considered income and is subject to the tax.

“Changing the IRS code for these situations will relieve a tax burden for families who are already in financial distress and are most likely unable to pay additional taxes,” says NAR President Pat V. Combs, who supported the House committee’s action in moving the Mortgage Cancellation Tax Relief Act, H.R. 3648, forward. NAR has pursued repealing the “phantom tax” law since the early 1990s.

Action on this legislation comes at a good time, too — when many families are being affected by the resetting of interest rates on subprime mortgages and the ongoing rise in foreclosures.

H.R. 3648 would ensure that any mortgage debt secured by a principal residence will not be taxed. “The relief proposal addresses a fundamental unfairness that affects the lives of those who find themselves in truly unfortunate circumstances,” Combs says. “We must all work together to prevent the dream of homeownership from becoming a nightmare.”

The legislation includes a provision to safeguard against abuses. The provision, similar to one that already exists for commercial real estate owners, would treat commercial and residential property equally. NAR also supports the proposed offset, which tightens the requirements for taking advantage of some tax benefits while retaining all of them.

Source: Realtor® Magazine 9/27/07

Lifespan for home systems and appliances

Item Expected life (years)

Central A/C 15+
Window A/C 10
A/C compressor 15

Forced-air furnace 15
Gas or oil furnace 18

Gas water heater 11 to 13
Electric water heater 14

Microwave ovens 11
Electric ranges 17
Gas ranges 19
Gas ovens 14
Exhaust fans 20

Refrigerators 17
Freezers 16
Dishwashers 10

Disposal 10
Trash compactors 10

Clothes washers 13
Dryers 14


Source: National Association of Home Builders

Which Improvements Payback?

COST VS VALUE REPORT

According to the Cost vs. Value Report*, replacing your vinyl siding is the least expensive way to add value and increase the selling price for your home. Replacing wood windows and performing a minor kitchen remodel ($17,000 or less) tie for second place on the list of high-impact home improvements to help you sell. The third most profitable home improvement to add value to your home is a bathroom makeover ($12,000 or less).

Project Job Cost Resale Value Average
Vinyl Siding Replacement $9,134 $7,963 87.2%
Window Replacement (Wood) $11,040 $9,416 85.3%
Minor Kitchen Remodel $17,928 $15,278 85.2%
Bathroom Remodel $12,918 $10,970 84.9%
Window Replacement (Vinyl) $13,120 $11,109 84.7%
Two-Story Addition $105,297 $87,654 83.2%
Major Kitchen Remodel $54,241 $43,603 80.4%
Attic Bedroom Remodel $44,073 $35,228 79.9%
Basement Remodel $56,724 $44,685 78.8%
Deck Addition $14,728 $11,307 76.8%

Know Your Neighborhood
Before you decide which home improvement project adds the most house value, do a little competitive research by finding out what features are popular with other homes in your neighborhood. If most houses in your neighborhood are about 15 to 20 years old but have upgraded kitchens with contemporary countertops, tile flooring, and stainless steel appliances, you’ll net a better return if you invest in a minor kitchen remodel. By knowing your neighborhood, you’ll get a better sense of what projects are the best home improvement values for your dollar.

Know Your Region of the Country
Not only should know your neighborhood but you should also know your region. Consider a remodeled basement which, nationally, offers 78.8% ROI; widely popular with buyers in some parts of the country (in the Pacific, it nets a 92.7% ROI), remodeled basements are not as popular in other parts of the country (in
New England, its ROI is only 61.9%). To help you sell now, know what buyers in your area prefer.

According to the Cost vs. Value Report, each part of the country has unique home improvement values.

ROI=Return On Investment

Source Realtor Magazine