Committee agrees: HOAs need reining in But ombudsman for homeowners bill put on hold Debi Brazzale, Colorado News Agency Thursday, February 25, 2010

A legislative committee agreed yesterday that homeowners associations need reining in, but the lawmakers wouldn’t OK a plan to create a state ombudsman’s office for homeowners until revisions are made to the proposal. That was after the panel heard from homeowners complaining about overreaching associations in what one witness called the “wild, wild, west of HOA land.”

“Nobody disputes that there are issues with HOAs,” said Rep. Joe Rice, D-Littleton, who heads the Business Affairs and Labor Committee that heard the measure, House Bill 1278.

Rice, along with both Republican and Democratic committee members, liked the concept of homeowners being afforded the services that an ombudsman could provide, but they said they could not support the bill in its current form because of issues raised by state regulators, who would oversee ombudsman, and others who came to speak to the panel.

Division of Real Estate chief Erin Toll said the bill as is won’t work because there is not written into law a standard of conduct for homeowners’ associations that would guide and direct the ombudsman.

“I already know what the complaints are, we hear them everyday,” said Toll. “There needs to be clear standards of conduct about what HOAs can and can’t do along with clear sanctions if they don’t follow those standards of conduct.”

Yet, some were skeptical that an ombudsman is even the right approach to the concerns of homeowners, questioning the creation of another layer of bureaucracy in what some homeowners say is already a labyrinth of bureaucratic red-tape when HOAs and their attorneys are at odds with individual homeowners. Rep. Amy Stephens, R-Monument was among the skeptics.

“I’m not sure this is the right vehicle to get to where we want to be,” said Stephens.

Another concern raised and echoed in testimony was that the bill’s provision for two full-time employees to manage the office isn’t nearly enough.

“We want to be realistic about the expectations about this office of ombudsman,” said Amy Redfern, speaking for the Community Association Institute, which provides educational services to HOAs. Redfern said that they would like to see the bill revisited after more discussions with groups like theirs.

The bill is sponsored by two Democratic lawmakers from Aurora, Rep. Sue Ryden in the House and Sen. Morgan Carroll in the Senate. Carroll has been at the forefront of HOA legislation in previous years, and she and Ryden will sit down with the stakeholders to fine-tune the bill before bringing it back to committee. The next hearing on the bill has been scheduled for March 2.

Taxpayers Seeking Homebuyer Tax Credits, Refunds Must File Paper

Taxpayers Seeking Homebuyer Tax Credits, Refunds Must File Paper

by Broderick Perkins

Homeowners filing for the home buyer tax credit are not allowed to use electronic filing and must file hard copies due to special documentation requirements.

Earlier this year, the Internal Revenue Service (IRS) deployed new home buyer tax credit forms and instructions requiring forms that will force taxpayers to file on paper, rather than electronically.

The new home buyer tax credit filing rules are to ward off a repeat of 90,000 taxpayers who fraudulently claimed the credit, according to the U.S. Treasury.

Under the new and expanded home buyer tax credit rule , the credit is worth up to $8,000 for first-time home buyers and up to $6,500 for qualifying existing home buyers, in both cases, who buy a primary residence or have one built.

The tax credit is refundable. A credit that is larger than the taxes owed is returned to the taxpayer in the form of a refund.

The home can cost no more than $800,000 and qualifying income is limited to a maximum of $125,000 for single taxpayers and $225,000 for joint taxpayers.

Get the full scoop online from the IRS' "First-Time Homebuyer Credit" page online.

All taxpayers (first time and move up buyers) seeking a credit or refund, must use the new IRS Form 5405 "First-Time Homebuyer Credit and Repayment of the Credit" (Taxpayers must pay back the credit if they sell the home within three years). The instructions, which teach taxpayers what documents are required, are available on IRS FORM i5405.

In addition to Form 5405, also include at least one of the following documents:

• A copy of the HUD-1, Settlement Statement, showing all parties' names and signatures, property address, sales price, and date of purchase.

• For mobile home buyers who don't get a settlement statement, a copy of the executed retail sales contract showing all parties' names and signatures, property address, purchase price and date of purchase.

• For new home buyers who don't get a settlement statement, a copy of the certificate of occupancy showing the owner’s name, property address and date of the certificate.

Existing home owners applying for the $6,500 maximum tax credit must additionally prove they lived in their old home for the required period.

To do so, options are:

• File IRS Form 1098, "Mortgage Interest Statement." IRS Form i1098 offers the instructions.

• Also, supply mortgage interest statements or property tax records or homeowner's insurance records.

Again, because some of the documents required are not standard tax forms, taxpayers seeking the credit cannot file electronically.

They can, however, use off-the-shelf tax software or the IRS Free File online software to prepare returns, but they must still print out the return and mail it in with the required documents.

In addition to accuracy and compliance, the only other way to speed up any refund is to request, with the return, that the home buyer tax credit refund be deposited directly into a bank account.

Published: February 25, 2010

Investor Report: HUD Regulations

Investor Report: HUD Regulations

by Kenneth R. Harney

Seller financing to buyers is an essential tool for many real estate investors, but proposed regulations from HUD could create big problems.

That's the view of industry groups ranging from the National Association of Realtors to the National Real Estate Investors Association.

The HUD proposal, which is open for public comment through March 5th, sets up standards for state laws regulating mortgage originators under the so-called "SAFE" Act, the Secure and Fair Enforcement Mortgage Licensing Act.

Congress passed the law in 2008 and gave HUD authority to step in with its own rules when state laws are seen as too weak to properly regulate mortgage brokers and others.

In HUD's interpretation of who is, and who is not, a "mortgage originator," it exempts individuals who offer seller financing to homebuyers.

However, the proposed regulation appears to limit the exemption to just one group -- people selling their own primary residences.

That cuts out investors who offer seller financing on rental houses or second homes and condos. Under HUD's proposal, they'd have to go through the same registration, licensing, fingerprinting and other licensing hoops required of fulltime mortgage brokers.

Such a rule not only would be overkill, say investor groups, but would be counterproductive in terms of stimulating real estate and the economy.

In a four page letter sent to HUD Secretary Shaun Donovan last week, the National Association of Realtors argued that seller financing of investor units "can be crucial in certain markets, especially in times of economic stress," when unsold inventories threaten to depress prices further.

Most investors who provide notes to buyers are small scale -- not the sort of fulltime, commercial loan originators targeted by Congress for licensing and regulation.

Also last week, the National Real Estate Investors Association sent out an alert to its members urging them to write to HUD seeking a modification of its proposal. HUD's plan would "eliminate all seller-financiing" by investors, the group warned, no matter how few loans an investor made during a single year.

In its letter to Donovan, the National Association of Realtors mentioned what may prove to be an acceptable threshold: Investors who only "occasionally ... provide financing for property … should be exempt" from state registration.

For example, sellers who provide financing for "five or ten" properties a year" should not be treated as mortgage originators under the SAFE Act rules, said Vicki Cox Golder, president of the National Association of Realtors.

HUD is expected to come out with final rules later this year. But so far it's giving no hints on how it plans to handle the investor seller financing issue.

Published: February 19, 2010