BYE, BYE AMERICAN....ECONOMIC UPDATE

A piece of the American pie is fading fast with one of the last of the zero down programs, eliminated by HR3221, Housing and Economic Recovery Act of 2008 , kicking Down Payment Assistance programs Ameridream and Nehemiah to the curb October 1st. Most banks are requiring close of escrow before the October 1st deadline. Some will go up to two weeks past, but boy, that would be just a little too exciting. Will the DPAs bounce back? Maybe. There are court appeals, new legislation introduced, grass roots movements; but the reality is that a new law would have to be signed off by the House of Representatives, the Senate and the President. It will be months, if indeed any legislation is passed, and it will be highly regulated with many stipulations. The original Down Payment Assistance Programs, Mom and Dad, are still in effect. The Down Payment Assistance Programs are going away, but how about that new tax credit? Pretty dang cool! Buyers who have not owned homes in the past three years are eligible and it applies to homes closed after April 9, 2008 and before July 1, 2009. The tax credit is a straight dollar-for-dollar deduction of your tax bill. So a married couple who would ordinarily pay $8,000 in taxes would pay just $500. But no, your buyer is not going to get a check in the mail from the government for $7500 after closing on their home. They will have to fill out a to-be-determined form with their tax return in January or February, and the tax credit will be calculated from the taxes paid in. As always, with anything regarding the IRS; check with an accounting professional to get exact information. FYI: Boys and Girls, read the contracts that you receive from the banks, asset managers and trustees! Escrow was opened yesterday with a contract from a bank trustee, signed by the borrowers, stating that the trustee had up to 60 days to get bank approval for deed re-conveyance. The borrowers are utilizing Ameridream, so you do the math. On Tuesday, we were waiting to close on another bank owned property, when the bank refused to give back our borrower his earnest money. He had signed a bank addendum that he would not receive funds at closing. The REO interpreted it to include his earnest money. If you think the banks on these REO properties are going to do what is best for your client, think again.