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San Diego Real Estate Veterans

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January 2016

Before going to H&R Block, Your Accountant or Tax Preparer

UncleSamImpersonator

  • KNOW what you’re signing-  I’m guilty of this myself and so are many of our clients. I hand over all my paperwork to my accountant – let him do the math and sign the returns when done.  Sometimes I get a refund, often I owe money.  I don’t really know what’s going on with my taxes, I trust my guy. For many of our clients they operate the same way.  However, in the year or two leading up to the purchase or refinance of a home, our clients need to know what NET numbers are showing on their taxes. I cannot tell you how many times I talk to clients who are shocked to find out that they think they make $200,000 a year; however, are only showing net income on their tax returns of $72,000 a year.  Our clients need to realize that it is this taxable net income that is used for qualifying – not the gross income clients have in mind.
  • Beware of 2106 expenses-   Hidden on page 2 of a standard tax return is something called 2106 expenses. These are non-reimbursed business expenses.  This figure, if present, is deducted dollar-for-dollar from the approved income.  So, a teacher who makes $65,000 – yet claims $20,000 in non-reimbursed business expenses such as supplies and training not reimbursed by their employer, will only have net income of $45,000 to go towards the loan approval.
  • Change of entity types –  Usually clients are looking to buy a home right around the time they start to make more money.  Unfortunately, this increase in income usually comes with an accountant who recommends the formation of a new entity [through which our potential buyer is getting paid].  For example, let’s take a self-employed make-up artist who has recently increased her earnings from $75,000 a year to $175,000 a year due to a new show she is working on.  This increase in income may simultaneously prompt her to want to buy a house, but may also prompt a change in the nature by which she receives her income.  Changing from a Self-employed Schedule C on the tax returns, to a S-corporation with a new pay structure can kill your ability to get the loan done.  There are LOTS of solutions and workarounds here, however, like most things, we need some time to plan.  We need to get the pre-approvals to your lender early so we can game-plan and work with underwriting on a solution.
  • Reviewing draft tax returns –  If you don’t know what your signing, that’s what we are here for.  My team is happy to review a draft copy of the 2015 tax returns with your clients BEFORE you file with the IRS. This will allow us to review the income, expenses and deductions prior to the final returns being filed.

 

Real Estate agents are here to help you buy/sell a home. REALTOR teams take it to the next level by assembling professionals to assist you in making wise financial decisions for you and your family. Make sure you surround yourself with a team that understands your needs and will work with you to achieve them.

JRThrasherContact

 

Beware: California Foreclosure Rescue Companies Scamming Hispanics

A trio of California foreclosure rescue companies targeted Hispanics with fake loan modifications, offering the false promise of mortgage relief in exchange for thousands of dollars, the Department of Housing and Urban Development alleged Tuesday.

HUD announced Tuesday that it is charging three California-based foreclosure rescue companies, The Home Loan Auditors, Century Law Center and SOE Assistance Center, with violating the Fair Housing Act by targeting Hispanic homeowners for “illegal or unfair loan audit and loan modification assistance because of their national origin.”

According to HUD, from 2008 to 2010 these three companies and nine of their agents lured struggling Hispanic homeowners into paying thousands of dollars for home loan audits that the homeowners never received and promised loan modification services that actually had little, if any, value.

HUD also said that the companies allegedly exploited the homeowners’ limited English proficiency and used deceptive marketing in Spanish, including making false representations, in order to mislead them into paying for loan modification services.

“Families struggling to stay in their homes need real help, not false promises that make a bad situation worse,” said Gustavo Velasquez, HUD Assistant Secretary for Fair Housing and Equal Opportunity. “HUD will continue to take appropriate action against individuals and companies that victimize unsuspecting homeowners because of where they come from or the language they speak.”

According to the complaint from HUD, The Home Loan Auditors allegedly created several Spanish-language promotional vides and other presentations that falsely presented the company’s ability to secure loan modifications.

HUD alleges that in one THLA video, a caption in Spanish stated “REMEMBER A LOAN MODIFICATION WITHOUT AN AUDIT IS LIKE GOING TO COURT WITHOUT EVIDENCE.”

HUD’s complaint notes that home loan audits are “useless” in securing a loan modification or any form of mortgage relief.

HUD’s complaint also alleges that THLA directly solicited some consumers with Spanish-language letters replete with misleading information.

In one example provided by HUD, the solicitation letter was an “official-looking” form that falsely stated in Spanish that the borrower’s mortgage provider was currently under investigation for fraudulent mortgage practices and promised that if the borrower became part of a lawsuit against the lender, the borrower could stop their foreclosure, reduce their monthly mortgage payments, reduce the balance owed on their loan, and/or receive monetary compensation.

In another example, a borrower was promised that their mortgage payment would be reduced to reflect the “current market value” of their home in exchange for $10,000.

The borrower was then instructed to stop communicating with their lender and stop paying their mortgage as well.

HUD notes that until contacting THLA and engaging in its services, the borrower had been current on their mortgage and only fell behind in their payments when instructed to do so by THLA.

HUD states that all the affected homeowners ultimately lost their properties due to foreclosure.

HUD notes that its charge will be heard by a United States Administrative Law Judge unless any party to the charge elects to have the case heard in federal district court.

If an administrative law judge finds after a hearing that discrimination has occurred, he or she may award damages to the complainants for their loss as a result of the discrimination.

The judge may also order injunctive relief and other equitable relief, to deter further discrimination, as well as payment of attorney fees. In addition, the judge may impose civil penalties in order to vindicate the public interest. If the case is heard in federal court, the judge may also award punitive damages to the complainants.

Recent articles by Ben Lane

Ben Lane is the Senior Financial Reporter for HousingWire. In this role, he helps set a leading pace for news coverage spanning the issues driving the U.S. housing economy. Previously, he worked for TownSquareBuzz, a hyper-local news service. He is a graduate of University of North Texas.

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