The804.com–Richmond VA Real Estate Blog

Washington Post (Robert Bruss)

• Next month I will write my final mortgage payment check and want to be sure all the related details of paying off the mortgage go smoothly. What steps should I take?
• I’m confused about this $250,000 deduction for a house sale. I thought you had to own it for at least 60 months and live in it at least 24 months to qualify. But you recently told a reader he could live in his house for a year, rent it for a few years and then move back in for a year to claim the sales deduction. What does the 60 months refer to? Can I sell my house, get the $250,000 deduction, buy another house, live in it for 24 months, sell it and get the deduction again?
• My oldest sister and another sister with her husband bought a house together. The oldest sister’s credit was not too good, so her name was left off the title. Then, because of unexpected job changes, my other sister and her husband couldn’t move in, so my oldest sister has been making the mortgage and property tax payments. Can she can claim the tax deductions for her payments although her name is not on the title? Or do my other sister and her husband get the deductions?
• We purchased our house 12 months ago. When getting a professional survey in conjunction with a remodeling project, we learned the fence separating us from a neighbor is on our side of the boundary by about two feet. What rights do we have, if any?
• My mother passed away last year. We, her sons, have had the condo listed for sale more than 12 months without a buyer nibble. It is in South Florida, near Fort Lauderdale, where real estate has been painfully slow since the 2005 hurricanes. More than 100 condos are for sale in the large complex. We have it listed for sale with a real estate agent who lives in the complex. Our condo is priced a bit less than the competition. The unit is furnished and in decent condition. We tried advertising, lease to own, agent incentives and closing-cost incentives. We even took it off the market a while. The agent phones every few weeks to tell us how slow the local condo market is. Since we don’t live nearby, changing agents would be a hassle. Any suggestions?
• Thanks for the recent explanation of “stepped-up basis” when a spouse dies. I live in a common-law state. It doesn’t seem fair that a surviving spouse in a community-property state gets a 100 percent stepped-up basis to market value for inherited property whereas in my state a surviving spouse gets only a 50 percent stepped-up basis. Is there any way I can switch to the community-property rules?
•  My sister and I want to sell the home we inherited from our mom. We want to sell it to my niece (my sister’s daughter). Do we have to sell it for the current market value? Or can we sell it for whatever price we want? It is worth about $233,000. (That’s our market value “stepped-up basis” when Mom died.) We are willing to sell it for $185,000, giving the niece a “family discount.” But my sister’s lawyer says we should get $50,000 cash-down payment and then carry back a mortgage from the niece, which my sister and I would hold. Do we have to get a down payment?
•  I own a two-family rental duplex and a single-family rental house. I want to sell the duplex and pay off some of the mortgage balance on the rental house. Under Internal Revenue Code 1031, can I invest the proceeds of the rental duplex sale to pay down the mortgage on the rental house without owing capital gain tax?
• My older sister owns a house in California. She has German citizenship and lives in Berlin. When she sells the house, how can she avoid paying tax on the large capital gain? If she adds my name to the title (I am a U.S. citizen), will this help her for the $250,000 home-sale tax exemption?
• I bought my house in December 2005, financing 100 percent of the purchase with two mortgages. The house has been nothing but trouble. It was built in 1985. The so-called professional home inspector failed to point out that the water heater was original and that the attic air conditioner installed in 2003 was improperly installed, causing ceiling damage. What are my chances of unloading this house without losing my shirt? Property values in my area are holding steady.
•  My mother passed away a few months ago. She willed her home, which has a reverse mortgage, valued at $570,000, entirely to my 45-year-old brother. Yes, my sister and I are not too pleased! We know he needs to refinance to stay in the house, as he obviously does not qualify for a senior-citizen reverse mortgage. How does the bank learn of the death of a reverse-mortgage borrower? Will our brother be offered a refinanced mortgage? He doesn’t work and has no income at this point, so he would have to sell.
• My parents, in their 60s, plan to buy a house in Arizona. It will be their principal residence. They want me to co-sign on their mortgage so I will be the heir. Shouldn’t they instead just create a revocable living trust instead of hurting my chances of buying my own home in a few years? What are my tax implications, debt risks and title rights? My parents both have excellent credit.
• The title to my parents’ home is held in my mother’s name alone. When they bought it about 35 years ago for about $200,000, my dad was overseas in the military and my mother earned enough to qualify for a mortgage on her own. However, my dad is now in rapidly declining health. The house has greatly appreciated in value and is worth about $1 million. When I visited my parents recently, my mother said that after my dad dies, she plans to sell the house because she won’t owe any tax thanks to that “stepped-up basis” you often discuss. Will she get a stepped-up basis even though my dad’s name is not on the title?
• My wife and I are interested in buying a condominium for investment purposes. But the condo homeowner association tells us we cannot rent it to tenants and must keep it vacant or live in it. Can they legally impose this restriction on us?
• I purchased and moved into my home in July 2005. I sold my previous residence in September 2005 and claimed that $250,000 home-sale tax exemption. When does my two-year requirement end for the $250,000 exemption? Is it in July or September 2007?
• I am concerned that when we change the title on our home from my wife and me as joint tenants into our living trust, the local property tax assessor will consider this an ownership change and reassess our home to raise our property taxes or revoke our homestead exemption. Is this going to be a problem?

MarketWatch (Lew Sichelman)

• Now that housing values have fallen in a great many places, a major problem for people who bought their homes over the last year or so is that they can’t sell for as much as they paid. I was wondering if it would make sense for Congress to come up with a provision where taxpayers who incur a loss from the sale of property originally purchased as a primary residence, not as an investment, would be able to deduct, perhaps over the course of several years, the amount of the loss. Wouldn’t such a write-off work to assuage a lot of fears over deflating property values? People currently pay a capital gains tax on short-term sales of their own homes, so why not a write-off for capital losses? 
• I have had a run of bad luck and dumb decisions. Now, my old car is broken down and I do not have the money to fix it. I have in the last two months spent about $1,200 in repairs, including new tires. I feel I should keep my car but I know it is in bad shape. How can I use my home to get another car and not go into debt? That is, how can I maintain my present level of mortgage payments? Do you have any solutions?
• As a formerly burned out real estate broker (unsuccessful, twice), I have recently retired from a career in computer-related sales and management, and newspaper circulation (translated to delivery driver). The delivery driver (Teamster) position provides me a small pension, and I also collect a small Social Security check each month, as well. Now, at age 68, I recently have been relicensed as a realty broker in Michigan. I am rusty — for example, the HUD-1 form is new to me. I hope to do sales, property management, mortgages, foreclosure sales, preforeclosure sales and short sales, all as a one-man show. I am interested in exploring whether I also should become a mortgage broker in Michigan, but I have been unsuccessful in getting a response from anyone as to the education, testing and licensing requirements. I have taken loan officer training, but I would like to be able to do the “whole enchilada” of real estate and mortgage, again as a one man show. The State of Michigan highly regulates real estate brokers and agents. Michigan recently went to the practice of applying a fee to the broker (as you know, the business entity is the broker, not a person), and an additional fee for the associate broker. Thus, the state collects two fees from me for my Unicorn Real Estate LLC. There does not seem to be similar licensing rules and regulations pertaining to the mortgage business in Michigan. It seems I can be a loan officer without any education, testing or licensing. Nobody responds to my requests for information relative to becoming a mortgage broker. The Michigan Mortgage Brokers Association has not responded to my repeated e-mails. Can you refer me to a person or agency that can help me determine the requirements, so that I can then determine whether it is in my best interest to become a mortgage broker? 

Seattle Times (Elizabeth Rhodes)

• I got an e-mail for a raffle that’s giving away a $650,000 custom home in California. Raffle tickets are $150 each and proceeds benefit a California church. Is this legal?
• My husband and I own our house free and clear. He has an adult daughter; I have no children. We want to split our property with 50 percent going to his family and 50 percent to my family when one of us dies or we both die. How can we make this work? My husband says if it won’t work he’ll sell the house and rent an apartment. But I want a house. If I buy one on my own, does my husband have any rights to it?
• In a prior column you wrote that landlords can require tenants to carry renter’s insurance (Feb. 11). Why would a landlord care if a tenant has this insurance?

Miami Herald (Richard White)

• I live in a gated community. Our rules prohibit parking on the street. I live at the end of the street, which is a dead-end. My board does nothing to enforce the no parking rule. Is there anything I can do to force them to enforce the rule? It is difficult for me to get out of my house because people park their car across the street from my driveway. What will happen if I hit a car while getting out of my house? Who will be responsible since a rule is being broken? None of the directors are affected. Can I get some relief in court?
• I am the president of a condominium. There are seven board members, requiring a quorum of four. However, only two of us are available regularly, resulting in meetings constantly requiring rescheduling. It is practically impossible to access enough of the out-of-town directors either in person or via telephone. Can we move to reduce the number of board members from seven to five?

NY Times (Jay Romano)

• When my 24-unit building changed owners a number of years ago, the former landlord returned the security deposit on my rent-stabilized apartment. The new landlord made no request for a deposit until recently. On my last lease renewal I was asked to send in a partial deposit, and this year the landlord is demanding the remainder for the full deposit. Since I have lived here now for over a decade without a deposit, can the new landlord demand one now?
• I am on a board of a Queens co-op that has split into two factions. The annual shareholder’s meeting is scheduled for next month. Can I endorse, lobby and campaign for a slate of like-minded shareholders who are interested in joining the board?

San Francisco Chronicle (Robert Griswold)

• Can a landlord require renters liability insurance? 
• I have a question about my rights to my share of the security deposit. I am an occupant at a rental house where my two roommates are listed as the only lease holders. I am going to be moving in a few months and the two roommates would be continuing the lease and paying the rent now equally without my portion. I wasn’t sure legally how I should get my security deposit back. Because I will be moving out during the lease and not at the end of it, am I entitled to my full deposit back? 

Wall Street Journal (June Fletcher)

• I’m looking to sell my home this fall and will soon be interviewing real-estate agents. It’s been a long time since I needed one. In this weak housing market, what should I be looking for?

Washington Post (Robert Bruss)

• I live in a condominium complex where one resident has a pit bull, a breed of dog considered by many to be dangerous. He allows it to run loose. Despite getting several letters of complaint, our condo association board of directors has done nothing other than to write a letter of warning last year to the resident. The dog continues to run loose. If this dog were to bite someone, would the board of directors and the condo association be liable?
• I own a house in Las Vegas. My daughter lives in it and makes the monthly payments. Can either of us deduct the mortgage interest? If so, which one?
• My two brothers and I own our mother’s house in Pennsylvania. One brother and I want to buy out our younger brother’s share if he is willing to sell to us. If he refuses to sell, can we stop him from moving into the house after our mother dies? He has lost two houses to foreclosure and now lives in a rented mobile home. He has bad credit and lives on Social Security. We are afraid he won’t pay his share of the property taxes, insurance and rent. My son lives in the basement and now pays my mother rent. She is 91. How can we buy out our younger brother?
• I have a contract to buy a house (contingent on a satisfactory professional inspection). But after investigation, we discovered that the man listed on the home sales contract as the seller does not own the house. He has a lease-purchase agreement to buy it. What is this? Is there any reason to be wary? Is the contract valid with his name on it?
• What is a fair percentage rent increase? Insurance, water and property taxes have greatly increased in our area. How much can I raise the rent?
• My question is about my responsibilities with a Colorado time-share inheritance from our late mother. My two brothers and I do not want the time share because it would cost more than it is worth. Must we accept it and pay the retitle and outstanding association fees?
• We have the title to our home in a revocable living trust. We have an equity line of credit through our mortgage company. But we want to change that equity loan to a different bank for a lower interest rate. We were denied because of the living-trust issue. Why should that living trust make a difference?
• My parents, in their 80s, live in Florida. They face tremendous hurricane insurance and other maintenance cost increases. They have only a modest government pension. To help meet increasing living costs and looming medical needs, we’re looking at a reverse mortgage compared with selling their home to one or more of their adult children. For example, if our parents sell, should they hold a mortgage note with the buyer paying income to them?
• I am a real estate broker and am curious why you keep insisting that home sellers interview three agents before listing a home for sale. Because all agents have access to the same multiple listing service and national Web sites, and most agents have their own Web sites, why do you recommend interviewing three agents? Why not six or nine or even 18? What do you think sellers will learn by interviewing three agents? Any licensed agent can sell a house. We all have the same tools at our disposal, and we are all highly trained.
• My sister entered into a pre-construction condo contract in February 2006. She paid the 5 percent required down payment. The condo will be finished this May or June. Now she doesn’t want to buy it because her employer is downsizing and her job might be lost. This would have been her first real estate purchase. Can she deduct her forfeited 5 percent deposit from her taxes?
• We bid on a bank-foreclosed house. Our bid was accepted. As specified in our purchase contract, we had the house promptly inspected. We found huge water-damage issues that would need $25,000 to repair. The bank did not respond for five days. Then it asked us to collect repair estimates. During that process, we decided we did not want the house. We feel that the bank should refund our good-faith deposit because it did not accept our $25,000 repair counteroffer in a timely way and we did not accept the house after the inspection. What are our rights? 
• With home-sale market conditions such as they are and the extended market times needed to sell a correctly priced residence, do you still believe a 90-day listing is in the best interest of either the seller or the real estate agent? With the absorption rate in the six- to eight-month range, do you think it would justify spending marketing dollars on properties that statistically have no chance of selling?
• My husband’s 85-year-old mother is planning on selling her home. It is worth about $560,000. Because she is widowed, she is entitled only to the $250,000 principal-residence-sale tax exemption. Considering her age, will the IRS consider the excess gain taxable?
• Our nanny bought a house last year with her husband’s uncle. The uncle is four months behind on the mortgage payments and has left the country because he is wanted by the police on an unrelated matter. The bank initiated foreclosure. But it refuses to deal with my nanny because her name is not on the mortgage. What can she do to avoid foreclosure and get the down payment back?
• How can I add someone to my deed? My property has no mortgage. I want to stay on the deed, as well.
• My ex-wife bought a new modular home in a senior community. She rents the land for $400 per month. I guess the method of buying the home was cash because I am told one cannot get a mortgage for these properties. Is there any way she can unlock her equity tied up in the house? 

Market Watch (Lew Sichelman)

• Why don’t you loan agents quit calling it a “no-cost loan.” We all know these loans have costs. Couple this with yield spread premiums/rebates, and no wonder most people think you’re crooks. It’s too bad that Martinez left government before he had a chance to reform this corrupt industry.
• Here is a calculator to determine the difference in costs between a no-cost loan and a loan in which the borrower pays points at closing. I just found it today, as I am contemplating this same issue - http://finance.yahoo.com/calculator/real-estate/hom-08
• The numbers and complexity (of settlement fees) says it all. It’s all about deceiving the consumer. Plain and simple.
•  Enjoyed your good-natured banter on the responses. Sometime a little levity keeps sanity.
• I am a mortgage banker in Minnesota who believes, for the most part, that yield spread premiums serve only one party - the loan broker. I have seen deals where these brokers have taken three points on the back of a $600,000 deal and put people into loans that don’t serve the client. Many of these brokers are car salesmen who play the game by seeing how hard they can push the client before the client says “Ouch!” They just love to slam people. So keep preachin’. Information is power. 
• Wow, did you catch an earful! Thank you for your perseverance. I really enjoy your column. I am a plain-old vanilla consumer with a real job - actually between jobs, as the saying goes. I have had only eight home loans (currently between home loans, as the saying goes) and all assets have been in cash for the past three months. I try to maintain a knowledge of current mortgage instruments, so that whenever I go shopping for another, I know what to ask. My decisions about what to purchase are just that — mine. You and your competition serve to keep us average Joe consumers well informed, and I for one want to offer you some positive feedback. You do a great service. No dissing here! The numbers never lie. It’s just that some people really don’t know how to figure it out or even (heaven forbid) which questions to ask. You deserved to close your column with “Thank ya; thank ya vera much.” 
• I am a chief credit officer with 32 years’ experience and I look at the fees in the context of other issues as well. When you review overall practices in the mortgage business, I think the last few years have demonstrated that lending has been largely predatory. I base my opinion on the structure of the loans I see, from the fees charged, and also the rates and their adjustment period. 
  When you look at the number of prime and subprime loans that are repricing this year from around 3.45% to somewhere near 6.3%, it doesn’t take a genius to see that there will be severe sticker shock for many borrowers. What has happened is that the mortgage industry has created all of these new mortgage products simply to increase their profits. Any way you slice it, “gouge” the consumer has been the watchword of the day. We will now all pay a severe price as the current down-cycle unfolds. Whether or not the economy moves into a recession is immaterial. The pain will be felt by the consumer, who has been the core engine for spending. I love how self-serving mortgage guys love to tell everyone that what they did was for the client’s benefit, when really the purpose was to ring the bell on their bonus for that new condo or automobile. The bad actors are now all on stage, and all we have to do is wait. No amount of interdiction will change the final ending of the play. 
•  I am on your side. The fact is that the deception is in the name, “no-cost mortgage.” Whether the borrower benefits by paying a higher rate or not, there is still a cost, whether it is in points or fees. The term “no closing costs” has driven me nuts for years! There is no such thing; you pay either in the rate or in cash at closing.
• I wasn’t going to bother you with another e-mail, but I wanted to thank you for replying to my question. I saw the flurry of replies you received from your response and thought I’d write again to tell you that your response did give me insight into the inner workings of the no-closing cost loan. That has been my problem; my loan guy won’t tell me what exactly he has going on the backside. All I know is I pay him minimal fees, but I have no way of knowing if he is inflating my rate by an eighth of a percent, or half or who knows. I was hoping there might be someone willing to write a no-cost loan at a rate I can get from “old faithful,” my current and long-time loan broker. I do no-doc loans with him and he is something of a friend, so it is difficult to know where I should be with my rate and it is hard to ask him very pointed questions.  On a somewhat reassuring note, three or four of your readers’ responses were from the same company I was in contact with. The problem for us borrowers is that typically, when we need to refi, we do, indeed, need to refi. There is no time to risk wasting a month with an unknown entity. However, the no-cost loan seems tailored to us, since we have many 80/20 loans and rarely keep properties more than two years. Anyway, I enjoy reading your column, and I have a ton more questions. 
• Thanks for bringing this subject up for all to consider. If nothing else, it will hopefully encourage people to explore all their options, especially first-time buyers. I found your article and the responses enlightening and entertaining.
• I have a business degree and 25 years experience as a community college finance instructor and owner of a mortgage brokerage firm. I consider myself a pretty honest a mortgage guy. One other point that has yet to be made concerning no-cost loans is that they make even better sense if you are getting a shorter-term loan, say 10 or 15 years, instead of 30 or 40 years. Think about it: If you pay points to get a lower rate, you are getting the lower rate for half the time on a 15-year loan compared to a 30-year. Consequently, the lower rate on a shorter term loan is worth less. To be sure, the time value of money comes into play, so it’s not a huge difference. But it’s enough that if the trade-off is 1/8% for a half point or more, you should always take the higher rate/lower point option.
• Charging yield spread premiums is not illegal. We have been a subprime mortgage company since 1992. It is fully disclosed to the public and there is no hidden act there. It you want to brand the mortgage lending industry as a free lunch, be my guest. You have just taken something out of context and vilified it with your ignorance. Banks and lenders have a right to charge borrowers under the law. If you don’t like it, keep on renting your one-bedroom townhouse and wash your clothes at the local laundrymat with all the losers who go there. 

Miami Herald (Richard White)

• Our condominium consists of three buildings, each two stories, built in 1986. We have always had indoor/outdoor carpeting on our hallways and stairs but we have become concerned about the effects the carpet may have on the underlying concrete. There are many stories circulating about condominiums with deteriorating balconies and weakened upper floor hallways due to the carpeting retaining moisture and causing the rebar to rust. Have you found that a solid concrete or acrylic surface is better than carpet on outdoor areas?
• At our recent condominium annual meeting, each officer gave a report. After the treasurer’s report, the president asked the directors if there were any questions. As a point of order, I asked if the members should vote on the treasurer’s report subject to any corrections or omissions. The manager and president said it was not necessary. As members of the association, should we not vote on the treasurer’s report?
• Do Florida Statutes Chapter 718.112(2)© and the Florida Administrative Code, Section 61B-23.002 (15) cover homeowners’ associations? It says any owner may record or videotape meetings. Some board members think that you cannot tape any meetings. I would like you to advise me if I can tape and transcribe the meetings without interference from the board.

Seattle Times (Elizabeth Rhodes)

• Our former next-door-neighbors heated their cottage with oil. The tank was near our property line so they had an easement to use our driveway to fill it. The new owners are replacing the cottage with a new home that won’t use oil. Is the easement automatically voided now that the tank is no longer used? Is there any hazard in leaving the tank derelict underground? Also do we have control over this abandoned utility or do the new owners bear responsibility?
• We hired a company to clean the carpet in one of our rental properties. The man doing the work said he couldn’t clean the carpet because the pad was covered with urine. He used a black light to see this. Do all cleaners use black lights now? Then we called a rental company for advice. It said that we couldn’t charge the last tenant for that urine problem unless the carpet was less than 5 years old. Is there a law on this?
• In your recent foreclosure story (March 4 “Net zeroes in on foreclosures”) you said a person who buys a house can end up being responsible for loans that are ahead of the one that’s in foreclosure. How can the new owner take over the first loan? I heard that assumable loans are no longer offered.

NY Times (Jay Romano)

• After a recent storm, a huge chunk of ice fell off the roof of a commercial building that is next to mine and overlooks my deck and skylight. The ice broke the skylight. My co-op lease says that the windows are my responsibility. The owners of the building next door say they are not responsible. Is that true? 
• Our condo has old windows that leak, making it difficult, expensive and wasteful to heat and air-condition. The windows cannot be repaired, and the board voted down the costly window replacement project that some owners had requested. Can the board deny us the ability to remedy the problem and force us to spend money on energy instead of replacement?

San Francisco Chronicle (Robert Griswold)

• I am concerned that so many landlords use credit reports to select tenants. Sure, a bad credit report may be a red flag. But that doesn’t mean the tenant won’t pay the rent in a timely manner. 
• My son has been leasing a house for more than three years. He’s on his second contract, which will be up next June. He has now asked to break his lease. His reason is that his wife shot herself to death in that house and he cannot bear to live there. He tries to stay with relatives when he can. The landlord says that is not a good enough reason to let him break the lease. 

Washington Post (Benny L. Kass)

• We have been reading that a lot of homeowners are in financial trouble and that their homes are going into foreclosure. We would like to buy a home at a foreclosure sale and need guidance as to how to go about this.