Bank owned(foreclosed upon) properties still make up a major portion of listings in Las Vegas and other hard hit areas such as Phoenix, Miami, etc. Some of these bank owned properties may have been on the market for months or even years before being sold. In Las Vegas many were never even lived in. So, from a logical stand point, America’s banks should be eager to get these properties off the market. After all, these properties are accruing more debt for the bank. HOA fees, property taxes and utility bills will continue to pile up and are necessary to be paid in full at closing by the bank.

A client of mine came to me with their own conventional financing in place through let’s say BANK A. My client has perfect credit and 30% to put down. We got a full price offer accepted on a discounted luxury property in Lake Las Vegas now selling for just under $200,000. The HOA fees for this V Lake Las Vegas townhome are approximately $900 per month, which makes them very hard to sell, since so few people are willing to pay more than triple the normal association fees in Las Vegas. Our client was happy to do it, and as luck would have it, BANK A was also the owner of the foreclosed property. What a win/win situation! BANK A would no longer be in possession of a property slowly depreciating  vacantly in the Nevada desert, and would not be accruing $900 per month in unused association fees, since the new owner would take over the fees at closing. Then BANK A decided not to sell to it’s own client. Can’t take the risk because not enough people actually live there. Too many investors, not enough people in primary residence.

So here is the hypocrisy. The bank is willing to sell the property but will not finance it, even with a 30% down payment and guarantee that the buyer is going to live in it. Banks turning down offers is nothing new. Last month the Denver ABC News affiliate ran a story about a veteran Joel Brown getting his offers turned down because he was trying to use his VA loan.  What it really boils down to is blatant misuse of funds. I thought that banks were bailed out in large part to get our economy moving yet it is harder than ever for even the best qualified buyers to borrow from their own banks! Fire sales are going on for investors with cash. Banks would rather wait and sell the property to an investor for cash than finance it. All of the major banks that were caught holding worthless mortgages got more than their fair share of tarp funds to tide them over.

So investors come along, scoop up heavily discounted properties for cash then turn around and resell them for a profit….to the home buyers that couldn’t originally get a loan on them in the first place. There is even a bank that allows these flip properties to be sold before the 60 day minimum resale rule on FHA loans. Let’s call that one Bank W. There are rules regarding this of course, but with over a million distressed properties on the market who has time to make sure anyone is following the rules?

Feel free to comment below if you or one of your clients has run into the same problem. Thanks for stopping by our Las Vegas real estate news blog.

The First Time Home Buyer tax credit has been the target of many debates over the last year. Originally crafted by the Bush administration and then expanded by the Obama administration, is in the process of being extended yet again to allow more potential homebuyers to take advantage of it. If passed, the new deadline could be moved to September 30 of this year. The goal of the credit was to boost the nation's ailing housing markets and help stabilize the economy.

Has it been effective? It depends on who you talk to. The National Association of Realtors credits a million new home sales directly to the tax credit. However not everything has been coming up roses. A big complaint among consumers is the wait to receive the credit. Initially home buyers were told to expect the credit with 12 weeks of filing an amendment, but some have reported waiting five months or even longer. The long delays have not endeared the IRS to taxpayers waiting on their refunds. The internet is awash is speculation about the reasons for the delays and how they can speed up the process.

Some recent events have shed some light on the causes for the delays in receiving the tax credit.

The tax credit generated a flood of amended returns for both the 2008 and 2009 tax season. With fraud on the rise, more returns were being audited and the results were appalling. Now, an investigation has been launched by the Treasury Department Inspector General for the tax administration, J. Russell George. The report generated by the investigation focused on taxpayers who claimed both the 2008 and 2009 First Time Home Buyer tax credit.

The report showed more than 14,100 taxpayers wrongly received at $26.7 million in tax credits. The fact that some taxpayers decided to try to fraudulently claim the credit isn't the most shocking thing; it’s who was able to get the credit.

Roughly 1,300 prison inmates received over $9 million in tax credits for homebuyers at the time they were incarcerated when they claimed they bought a home according to a government investigator. 4,608 state and federal inmates filed for the credits. 241 of the inmates who received the credit were serving life sentences.

How were so many prisoners able to falsely claim the credit? Part of the blame does fall on the IRS because they don't keep current records of who is in prison, according the IG report. Another reason is that prisons are not required to provide the IRS with information about inmates, although many do voluntarily. IRS spokesman Frank Keith defended their recent track record, stating "When the IRS has reliable data, we do a very effective job of using it to ensure compliance. When the IRS does not have reliable data, it is a much more difficult process for us."

The IRS also claims to have blocked almost 400,000 questionable claims and opened over 150 criminal investigations. In its statement, the IRS claims that "These aggressive efforts have saved taxpayers more than $1 billion."

Keith also stated that the IRS has asked Congress to enact legislation to ensure the agency gets up-to-date inmate information. In the interim, the IRS plans to reach out to prison officials to start a task force to improve inmate information sharing.

However it isn't just inmates cashing in on the tax credit falsely. The IG report estimates that 2,555 taxpayers wrongly received over $17 million in tax credits for homes that were bought prior to the tax credit being enacted. Another estimated 10,282 taxpayers received credits for properties that were also used by someone else to claim the credit. 206 taxpayers filed for the credit on multiple addresses. And to add insult to injury, investigators also found 87 IRS employees who may have improperly claimed the credit, although the review is still ongoing.

It’s no wonder that the average taxpayer is waiting over 16 weeks to get tax credit. Obviously, there was an error in estimating the effectiveness of the tax credit and the unfortunate side effects.

Mr. George had this to say in a statement. "This is very troubling. Congress created and modified the homebuyer credit to stimulate the economy and help taxpayers achieve the American dream, not to line the pockets of wrongdoers." Of course the IRS is taking action to reclaim the cash. According to IRS figures, over 2.6 million taxpayers claimed the tax credit through the April deadline. All things considered, the amount of fraud uncovered so far has been minimal, but its just more fuel for the fire. Taxpayers are tired of hearing about delays or requests for the same paperwork they have already submitted.

Assistant Treasury Secretary Michael Mundaca stated that, despite its problems, the homebuyer tax credit helped to spur more than 2.5 million new home purchases and helped to stabilize the housing market.

If you are one of the thousands of taxpayers still waiting for your refund, there are a couple of things you can do. First, you can contact a tax advocate. They will help you make sure you have submitted the correct paperwork and that the IRS has received it. Second, you can contact the IRS directly to check on the status of your refund. Quite often the IRS representative will give you a rough time frame in which you can expect your credit. The IRS will also pay you interest on your credit as well.

Given the rather large pool of taxpayers claiming credit the amount of fraud uncovered so far has been minimal. However as a result, the processing time of returns is now longer than ever.

So as a home buyer, would say that the First Time Home Buyer tax credit was a primary factor in your decision to buy a home? Please feel free to answer in comments.

Thank you for reading our Las Vegas real estate blog.

Source: Associated Press, IRS.com

Attention to all of you sitting on the fence. Time is running out for the First Time Home Buyer Tax Credit. Rumors have been flying around Washington for the last several months about a possible extension of the credit, but do you really want to gamble on the Federal government? After all, congress could simply reinstate the 2008 tax credit of $7,500  again that has to be paid back!

The 2009 credit officially ends on November 30th of 2009. In order to claim it, you have to meet certain qualifications which have been posted on this site. The major hurdle facing any buyer that wishes to claim the credit is closing in time. Right now, unless you are paying cash, homes are taking anywhere from 35 to 45 days or more to close escrow from the time the offer has been accepted.

What does that mean for you? Simply put, if you are looking to buy a property this month, in order for you to close in time to claim the credit, the property needs to be in escrow as soon as possible. Preferably, by the end of next week at the very, very latest.

This only applies to bank owned homes. If you are buying a new Las Vegas home or condo directly from the builder or an actual regular listing being sold by the owner, then you have up until the end of the month to get your offer accepted and escrow started. Many new home builders are stating that they will guarantee close of escrow before November 30th on any of their homes.

The Las Vegas real estate market is still a buyer's market (as are most of the major real estate markets in US) and you have to allow additional time to close escrow on a property. If you are currently thinking about buying a property and claiming the tax credit, you might want to consider a new home. New home builders are offering some fantastic deals right now and you'll avoid a lot of headaches as far as closing on the property.

Thanks for stopping by our Las Vegas real estate blog and feel free to share your experiences with us.