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TODAY'S HOTTEST REAL ESTATE BLOG & NEWS ARTICLES! 03/9/10
IT HAS STARTED! ON 2/19/10 FEDS RAISED RATE .25%
ONLY 52 DAYS LEFT for Tax Credits!!
"IT AIN'T OVER TIL IT'S OVER." Yogi Berra. And whether you find those words deeply wise or simply puzzling...The Fed has told us repeatedly that their massive purchasing program of Mortgage Backed Securities is just about over - and this translates to home loan rates rising in the near future.
As you can see in the chart below, the amounts of Mortgage Backed Securities the Fed is purchasing are slowly dwindling, as the program is set to wrap up by March 31st, and are clearly trying to ration out the remaining portion. Last week, the Fed purchased $11 Billion in Mortgage Backed Securities, which leaves them with $66 Billion to spend out of their original $1.25 Trillion allotment. So about 95% of the total has already been spent and has purchased about 3 out of every 4 home loans during the past year. When such a large buyer leaves the market, it is very likely that prices on Mortgage Money will worsen.
This is very important because as the Fed has less money to last through the remaining months of the program, their ability to keep home loan rates low via their purchasing power will wane. And those who can take advantage of currently low home loan rates do not wait, as the clock on these historically low rates is ticking.
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Chart: The Fed's Purchase of MBS (By Month)
Also last week, Fed Chairman Ben Bernanke provided a speech on a number of topics, perhaps the most important of these being switching the Fed's benchmark from the commonly watched and monitored Fed Funds Rate, to a new benchmark of "interest paid on excess reserves". Banks are required to keep money on reserve with the Fed and may, from time to time, have an excess in those reserves, which the Fed can pay interest on.
Since the Fed Funds Rate is only a "target rate", banks can still lend money to other bank overnight at their own negotiated rate. Sometimes near the end of the trading day, banks have been lending their excess reserves out overnight for a rate that differs from the Fed Funds Rate, but is higher than interest on those reserves from The Fed. This undermines the Fed's ability to set a reliable benchmark.
The Fed wants to fix this by using the amount of interest they pay as the new benchmark, since the Fed has total control of this rate, which should be right at or just under the Fed Funds Rate.
There is one major take-away from this discussion - it appears that the Fed is getting their ducks in a row as they prepare to push interest rates higher. And when they do increase rates, the Fed does not want any obstacles that may undermine their plan.
AND SPEAKING OF OBSTACLES THAT COULD CAUSE PROBLEMS...WATER DAMAGE CAN WREAK HAVOC ON YOUR HOME AND YOUR FINANCES, AND IS ESPECIALLY IMPORTANT TO WATCH OUT FOR DURING COLD WINTER MONTHS. CHECK OUT THE MORTGAGE MARKET VIEW ARTICLE BELOW FOR TIPS ON PROTECTING YOUR HOME!
Keeping Your Home Safe from Water Damage
Preventing water damage in your home is important at any time of year, but particularly in the winter when the cold weather can wreak havoc on plumbing. Here are some tips to make sure your water bill is as low as it should be...and that your home is as safe and dry as it needs to be:
Pay attention to your bill: Major fluctuations in water usage from one month to the next could mean that you have a problem. Taking just a few minutes to look at your bill each month could make a big difference in your wallet!
Inspect appliances: While much of your home's plumbing can be hidden behind walls and cabinets, most of your appliances that use water can be easily inspected for potential leaks. Each month, take the time to inspect areas around your water heater, dishwasher, refrigerator, washing machine, sinks, and toilets. If any hoses or seals appear old or damaged, replace them. Also, inspect and repair obvious caulking and tile grout damage. It's a small price to pay for what could be expensive repairs later.
Inspect the sewer line: Clear away build-up and roots from around your sewer line. Obstructions in this area could create major plumbing problems in the future.
Check your water pressure annually: This is easier than it sounds. Simply purchase a pressure gauge and attach it to the hose faucet. Normal results should range from 45 to 65 pounds per square inch (psi). A reading above 65 psi is considered high and could lead to problems down the line.
Find and fix leaks quickly: Make a habit of checking the main fixtures regularly so that when something out of the ordinary occurs you will notice it and take action immediately. Sometimes, however, slow water leaks aren't very obvious. A great way to discover hidden leaks is to look for stains in areas where water is often used. For example, if you see even small stains on the cabinet floors beneath the sink in the kitchen or bathrooms, you could have a problem. Warm spots in the floor or tiles could also be an indication of hidden water damage.
Before a vacation: The worst thing to come home to after a great vacation is major water damage. Consider turning off your water while you're gone. For many homeowners there is a separate shut-off valve for the home that doesn't affect your irrigation system.
The bottom line is that a little time and effort can make a big difference when it comes to keeping your home safe and dry, and your expenses at a minimum!
3 Factors to Take Into Consideration Before Jumping Into Housing Market
3 Factors to Take Into Consideration Before Jumping Into Housing Market
By Jim Gallagher Print Article
RISMEDIA, February 6, 2010—(MCT)—If you have a good job and good credit, the next few months might be a good time to go house hunting. Fence-sitters take the risk that Congress may let a rich tax credit expire, and that interest rates may rise. Buyers and sellers should consider the following factors as they consider jumping into the housing market.
-Mortgage rates are blissfully low, and that may not last. The rate on a 30-year mortgage averaged 5% last week, according to Freddie Mac. Rates are low in part because the Federal Reserve has been buying up about $3 trillion in mortgage-backed securities and mortgage agency debt. The aim is to hold down interest rates and keep mortgages available. But the Fed is slowly removing that financial crutch as the economy improves. It has no plans to buy any more past March 30, 2010. The likely result is an uptick in rates. Meanwhile, the recovering economy by itself should raise rates as the year goes on. Economists at the Mortgage Bankers Association expect to see a 6.1% rate by year end. Such a rise would add about $104 to the monthly payment on a $150,000 mortgage
-The home buyer tax credit expires on April 30, 2010 and no one knows if Congress will renew it a second time. Expect a clash between the real estate lobby and fiscal conservatives worried about the $1.35 trillion federal deficit. To qualify for the credit, you must sign a purchase contract by April 30, 2010 and close by July 1, 2010. First-time buyers get up to $8,000. “First-time” is defined as someone who hasn’t owned a home in three years. Move-up buyers get up to $6,500 when they purchase a new primary residence. To get the credit, you have to have lived in the old home for at least five out of the last eight years. The credits start phasing out at $125,000 in adjusted gross income for singles and $225,000 for joint filers.
-There are indications that home prices are near a bottom in some areas and may actually be rising a bit. That statement is dicey, because conditions vary by neighborhood and the data can be tricky.
Things might look different if you’re a seller though. Do you want to put your house on the market near the bottom of a price cycle? Homeowners who have a choice in the matter—those who can still pay their mortgages—are largely saying no. Inventories of homes for sale are down about 10% from this time last year, and 30% from the mid-decade peak of the housing boom, says Kevin Cottrell, chief economist at Kelsey Cottrell Realty Group. On the other hand, if you’re planning to move up to something grander, you might find a bigger bargain when you buy. And that $6,500 tax credit could swing a close decision.
Home sales peaked in some areas October and November, as buyers raced the expiration date of the original first-time home buyer’s credit. Congress later extended and expanded it. That rush satisfied some pent-up demand, but real estate agents are hoping for another rush around April. “People will wait to the very last second,” said Mike Travaglini, a vice president of Coldwell Banker Gundaker’s office in south St. Louis County.
Mortgage lenders have been tightening credit standards, which means fewer eligible buyers, says John Frank, president of Paramount Mortgage in Creve Coeur. Mo. “It’s getting tighter and tighter,” he said.
Lenders are insisting on credit scores of 640 to 660 for loans sold to Fannie Mae, Freddie Mac and 620 for FHA guaranteed loans. Those standards are higher than the federal agencies themselves insist on. FHA—which guarantees loans for people with low down-payments—has been raising its own insurance charges to borrowers and demanding higher premiums from people with poor credit scores.
(c) 2010, St. Louis Post-Dispatch.
Distributed by McClatchy-Tribune Information Services.
Feds Giving Mortgage Modifications Additional Boost
Feds Giving Mortgage Modifications Additional Boost
by Broderick Perkins
It's not easy turning a potential foreclosure into a successful affordable mortgage modification -- from either side of the table.
Homeowners, facing confusing documentation requirements and conflicting advice from both honest and dishonest corners, become intimidated and drag their heels or bury their heads.
Lenders, grappling with voluntary provisions in ever-evolving regulatory adjustments, skilled worker shortages and disoriented homeowners, not surprisingly develop an edge of ambivalence.
To help clear some of the sludge out of the Obama Administration's Home Affordable Modification Program (HAMP) the U.S. Treasury Department and Department of Housing and Urban Development (HUD) recently announced plans to speed up trial mortgage modification conversions to help homeowners obtain a permanent mortgage modification.
A more recent addition to the plan also calls for ban on mortgage lenders canceling trial modifications that are due to expire before Jan. 31, 2010, giving homeowners more time to convert.
A mortgage modification occurs when the lender reworks the terms of your existing home loan, typically to lower payments and make the home more affordable for you. Lower payments can result from a lower interest rate, extended loan term, reduced principal or any combination of those approaches.
Under the HAMP plan, borrowers who sign up for mortgage modifications begin with a trial modification of up to five months. That gives them time to submit a stack of paperwork, including proof of income, assets, debts, hardship affidavit and other documents, to make the modification stick. The trial period also gives them time to determine if the modified monthly payment is sustainable.
Approximately 60 percent of the 375,000 borrowers who have begun trial modifications are scheduled to convert to permanent modifications by the end of the year, but have not completed the paperwork, according to the Feds.
The mortgage modification conversion effort includes provisions that have already:
• Extended the period for trial modifications started on or before September 1, 2009 to give homeowners more time to submit the required information.
• Streamlined the application process to minimize paperwork and simplify the submission process.
• Ordered federal officials to meet regularly with servicers (banks and lenders) to identify necessary improvements to borrower outreach. Servicers failing to meet certain obligations could be subject to monetary penalties and sanctions.
• Developed operational metrics to hold servicers accountable for their performance, which will soon be reported publicly.
• Enhanced borrower resources on the MakingHomeAffordable.gov website and the Homeowner's HOPE Hotline (888-995-HOPE) to provide direct access to mortgage modification tools and housing counselors.
New resources on MakingHomeAffordable.gov include:
• Links to all of the required documents and an income verification checklist to help borrowers request a modification in four easy steps.
• Information about how the trial phase works, what borrower responsibilities are to convert to a permanent modification, and new instructional videos which provide step-by-step instructions.
Watch more MakingHomeAffordable.gov YouTube videos.
Published: February 4, 2010
Aging Buyers Want Easy, Comfortable Homes with First-Floor Master Bedroom
Aging Buyers Want Easy, Comfortable Homes with First-Floor Master Bedroom
by Phoebe Chongchua
By the time you read this sentence of my column, another baby boomer will have turned 50 years old—it happens every seven seconds. The Baby Boomer generation makes up about 28 percent of the population and has some interesting statistics. According to BabyBoomerMagazine.com, this group has greater wealth than any other, controls 70 percent of the total net worth of American households, and accounts for 40 percent of total consumer demand.
This group also doesn’t want to be referred to as "senior citizens"; yet they are aging and modern comforts, especially for their lifestyle and home, are high priorities. This population typically falls into the empty-nest category. Baby Boomer Magazine writes, "With our children out of the home, we empty-nesters have more discretionary money to spend on ourselves—from the more upscale discount houses to the designer boutiques." When it comes to housing, this group wants easy, comfortable homes. The National Association of Home Builders (NAHB) and the MetLife Mature Market Institute found some interesting data when they surveyed consumers and builders in 2009. The analysis of data on housing preferences shows strong similarities of preferences between the 55-to-64-year-old-age group as compared to the 65+ group.
Technology-heavy features are of interest to the younger group, while the older group has a primary interest in finding single-story floor plans or, at least, homes that offer a first-floor master bedroom as well as universal-design features (suitable for all ages).
"The younger group of mature consumers reported enthusiastically that they want services like home maintenance and repair as part of their next home purchase, along with services typically connected to older homeowners, such as housekeeping, onsite health care and transportation," said John Migliaccio, in a press statement, director of research at MetLife’s Mature Market Institute.
For both groups, easy living is a huge housing attractor. Low maintenance inside and outside the home is very appealing. However, not all homes are conducive to this. NAHB’s vice president for survey and housing policy research, Paul Emrath, warned in a public statement that the decreased construction of communities that serve the mature market could lead to a shortage of housing for that population. The current financial crisis has caused a lack of available capital for development and construction of these communities.
A few other key findings for the 55+ demographic group come from a study released last quarter by MetLife and NAHB. A few of the findings challenge conventional wisdom. The study reported that older buyers, often thought to shop for smaller homes, are actually looking for their next home to be equally sized to their current one. At the time of the survey, the respondents’ median size home was 1,886 square feet, compared to the median 1,903 square feet many say they want in a new home. Three bedrooms (51 percent respondents) are preferred over four or more (18 percent).
Other findings include the top rated features in a home: washers and dryers, storage space, easy-to-open windows, main-level master bedroom, and easy-to-use climate controls. Also, ranking high on the list for home features is preparation for high-speed Internet. Environmentally-friendly homes are alluring but most consumer respondents in this study reported they would not pay extra for it; 12 percent indicated they would. Energy-efficient appliances and home security systems were also rated as important features.
As for location, the majority of respondents say they prefer a suburban home; 32 percent want to live closer-in suburbs and 31 percent prefer further-outlying suburbs. A rural community is preferred by 28 percent, while only 9 percent want to live in a central city.
Published: January 29, 2010
FORBES Says: NOW Is The Best Time To Sell A Home
The Best Time Of Year To Sell A Home
Francesca Levy, Forbes.com
Jan 4th, 2010
Homeowners should buck the conventional wisdom about selling in the spring.
Putting a home on the market in this grim real-estate climate might seem like lunacy considering how heavily the market favors buyers. Home prices are down 28% from their national peak in the second quarter of 2006, according to the S&P/Case-Shiller home price index, which tracks sales in 20 major housing markets. Still, listing a home during certain months can improve a seller's odds.
Late spring and summer are usually thought of as the best times to put a home on the market because buyer demand builds steadily through spring. Sales then peak during the warmest months, when it's easiest for families to move without uprooting their children from school. But this year, experts predict that the selling boom, which normally starts in spring, will hit at a different time than it has in the past. Sellers with flexibility should market their homes earlier in the year.
According to data from Zillow.com, an online real-estate database, the volume of home sales was highest in June, July or August every year since 2000. This year, however, an $8,000 credit for those buying their first home--that expires on June 30, 2010 and requires buyers to have closed on a home by April 30, 2010--will force buyers to speed up their decisions. Historically low interest rates also suggest that sellers will face a busier market as early as February.
"This year, we're anticipating sales will peak earlier," says Nicole Hall, editor in chief of Lendingtree.com, an online mortgage comparison service. "The best time to get your house on the market will be February or early March, and maybe even earlier if you want to avoid competition."
The Economy Upsets Seasonal Trends
House hunting may have traditionally sped up after March, but nothing about the last few years in real estate has been traditional. In 2008, sales failed to pick up with their usual gusto in late winter because the financial crisis cast a shadow of fear over buyers, and lending seized up.
"Between the fall of 2008 and March of 2009, there was a long dead period in real estate," says Ken Shuman, spokesman for the real estate Web site Trulia.com. "You don't want to buy a house if you don't have job security, and a lot of people had jobs but didn't feel too secure about them."
2009 didn't follow typical trends, either. Fall, when sales usually plummet, saw more sales activity than usual this year because of the introduction of the government's tax credit, which was initially set to expire on Nov. 30, 2009.
Improving the Odds
Granted, some sellers have no choice but to sell at a slow time of year. Job relocation and the need to free up assets are facts of life that can deprive families of the luxury of waiting until the peonies bloom to put their homes on the market.
But Hall says that there are ways to improve your chances of a sale if you have to list your home late in the year, like playing up holiday decorations and shoveling walkways to maximize curb appeal. She adds that selling at this point in the cycle isn't always the worst fate.
"Look at how you can turn it to your advantage. Maybe because you're forced to sell at a different time, there will be less competition," she says. "Also, be realistic about your price. If you know you're selling at a tough time, it can be a tough call, but you might have to drop that price a little."
Shuman and Hall agree that the season shouldn't be the only factor homeowners consider when getting ready to sell. Paying attention to the vagaries of the local real-estate market, where inventory and prices can fluctuate week to week, will offer more guidance to sellers than simple seasonal trends.
"Check out your local inventory," says Hall. "Read the housing-market blogs, follow the local market really carefully, and look at the unemployment rate. That will make a big difference."
For smart sellers, Shuman and Hall agree, taking a chance and starting the sale process earlier will reap distinct benefits in 2010.
"The beginning of the year is going to be make-it-or-break-it," says Shuman. "If you're a seller, get your property listed as early in the year as you can."
Mortgage Modification Video Valuable for Distressed Homeowners
Mortgage Modification Video Valuable for Distressed Homeowners
by Broderick Perkins
A new video helps struggling homeowners navigate the federal mortgage modification program.
Offered for free to anyone by mortgage insurer and risk management company PMI Mortgage Insurance Co., the two-part video "Navigating the Home Affordable Modification Program" is a helpful adjunct to existing information about the federal Home Affordable Modification Program (HAMP) on the makinghomeaffordable.gov Web site.
A mortgage modification occurs when the lender reworks the terms of your existing home loan, typically to lower payments and make the home more affordable for you. Lower payments can result from a lower interest rate, extended loan term, reduced principal or any combination of those approaches.
A mortgage modification is not a refinanced mortgage, which replaces the old mortgage with a new loan.
Part 1 of the "Navigating HAMP" video provides basic orientation for homeowners who may not have heard of HAMP, it covers the objectives of the program, and helps you determine if you qualify for a HAMP modification.
Under HAMP, you may qualify for a mortgage modification if your home is your primary residence; your first mortgage's balance is no more than $729,750; you face financial hardship that is affecting or will affect your ability to make mortgage payments; you signed for your current mortgage on or before January 1, 2009 and your payment on your first mortgage (including principal, interest, taxes, insurance and homeowner's association dues, if applicable) is more than 31 percent of your current gross income.
"Distressed homeowners who are facing the prospect of losing their home need to know that help is available for those truly interested in saving their homes. This instructional video leverages the growing popularity of internet-based video to give homeowners an overview of how HAMP works and their important role in the process," said John Jelavich, head of PMI’s Homeownership Preservation Initiatives group.
Part 2 of the "Navigating HAMP" video uses examples to demonstrate how affordability is achieved with a loan modification, it walks homeowners through the steps necessary to obtain a modification and discusses the information homeowners need to provide their mortgage servicer, including:
• Pay stubs or other verification of your monthly before-tax (gross) income.
• Your most recent income tax return.
• Statements for savings and other assets.
• Your first and second mortgage (if any), home equity loan or line of credit statements
• Account balances and minimum monthly payments due on all of your credit cards, car loans, student loans and other debts.
• A completed Hardship Affidavit describing any circumstances that caused your income to be reduced or expenses to be increased.
"The jury is still out on the success of the HAMP program. Progress has been slow in materializing but may finally be gaining steam as many of the trial loan modifications are finally beginning to transition into permanent ones," said Nancy Osborne, chief operating officer of Erate.com, a Santa Clara, CA-based financial information publisher and interest rate tracker.
Osborne added, "A large part of the problem has been getting the loan servicers ramped up with the staff and technology to handle the massive wave of modifications, something they had no real experience with previously."
To learn more about loan modifications visit "Mortgage Modification Madness", "Mortgage Modification Updates" and watch "Navigating the Home Affordable Modification Program."
Obscure Facts About the Home Buyer Tax Credit
Obscure Facts About the Home Buyer Tax Credit
Housing Sector
The IRS gets the final say when it comes to who gets to claim the homebuyer tax credit, who does not, and under what circumstances.
They have made a feeble attempt to update some of the FAQs posted on their website www.irs.gov but if it's anything like the last extension, it will take them a while to update their FAQ page.
However, there are some little-known "interpretations" that most loan officers, real estate agents and even tax advisors dont know about.
1. When a FTHB buys a 2-4-family home, and occupies one of the units as their personal residence, they are only allowed to claim 10% (or $8000 max) of the unit they OCCUPY--not the entire sales price. Example: If the FTHB bought a duplex for $120,000 and the units are identical, the "cost basis" is $60,000 and the tax credit they can claim would be $6,000.
2. Income limits are based on ADJUSTED GROSS INCOME.
3. Income CAN Exceed $125,000 (single) and $225,000 (married) by up to $20,000 and FHTB & Long-term Residences can still get a partial tax credit based upon a "MAGI formula" created by the IRS.
4. New Construction - the "date of purchase" is considered the "date" the FTHB OCCUPIES the property--not the closing date or the start-or-construction date.
5. Homes sold on "Land Contract or Contract for Deed" to a FTHB can QUALIFY for a tax credit if they meet 7 tests listed on the FAQs.
6. Tax credit is not available for FTHB in US Territories--only the 50 states.
Distressed Sales Include Rescission Rights
Distressed sales include rescission rights
Law of the Land
Thomas R. Lloyd owned and occupied his home in San Francisco, and fell behind on his mortgage payments. In an effort to avoid foreclosure, Lloyd sold his home to equity buyer Jeffrey E. Hoffman and simultaneously signed a leaseback/lease-option agreement under which Lloyd would continue to live in and make lease payments on his home, and for two years would have the right to purchase the home back.
The sales contract did not notify Lloyd of his rights under California's Home Equity Sales Contract Act ("HESCA"), California Civil Code Section 1695, et seq., which was applicable because his home was in foreclosure at the time of the sale.
HESCA is a statute that protects owners of homes in foreclosure, in part by requiring that equity purchasers inform distressed homeowners of their right to rescind the sale. A distressed owner/seller's right to rescind the sale continues until the owner/seller is informed of the right to rescind. Further, HESCA expressly provides that "(a)ny waiver of the provisions of (HESCA) shall be void and unenforceable as contrary to the public policy."
Lloyd defaulted on his lease payments and, in the course of an eviction proceeding, executed a general release of all known and unknown claims.
Several months later, Lloyd filed for bankruptcy and rescinded the foreclosure sale of his home, invoking HESCA. When the home's buyer and Lloyd's creditors challenged the rescission, the bankruptcy court ruled in favor of Lloyd on grounds that the buyer never informed Lloyd of his rights under HESCA.
On initial appeal, the district court also ruled in favor of Lloyd, finding that the general release he signed did not release his rights under HESCA, because he was neither aware nor notified of any such rights.
When the buyer/creditor appealed to the next level, the Court of Appeals affirmed the lower court's ruling. The appellate court referenced the district court's explanation that "where, as here, an equity purchaser fails to provide a sale contract that complied with the requirements of HESCA, the right to rescind is not extinguished and survives even after the execution of a broad release of all known and unknown claims."
Accordingly, the district court held and the Court of Appeals affirmed, in order to block a distressed seller's rescission of a sale contract under HESCA, "the court will require evidence that the equity purchaser has notified the equity seller of his right to rescind, and that the seller has actual understanding of the rights he relinquishes under the release."
Because the equity purchaser in this matter was not able to show that he notified or explained Lloyd's HESCA rights to him at any time, Lloyd's right to rescind the sale contract endured, and the buyer's challenge to the rescission failed. The bankruptcy court and district court rulings were upheld.
Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Ask her a real estate question online or visit her Web site, www.rethinkrealestate.com.
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What's your opinion? Leave your comments below or send a letter to the editor. To contact the writer, click the byline at the top of the story.
Copyright 2009 Tara-Nicholle Nelson
'Chicken Soup' for the pocketbook'
Book Review
Title: "The Richest Kids in America: How they Earn it, How they Spend it, How you Can, Too"
Author: Mark Victor Hansen
Publisher: Hansen House, 2009; 168 pages; $10.19 on amazon.com
If you haven't heard of Mark Victor Hansen of "Chicken Soup for the Soul" series mega-fame, you probably haven't heard of Christmas, either. But if there's a tween, teen or young adult on your holiday shopping list, it's time you heard of him now.
His latest book, "The Richest Kids in America: How They Earn It, How They Spend It, How You Can Too" (Hansen House, 2009), provides a fresh, kid-centered slant on the basics of entrepreneurship, innovation and philanthropy -- necessities for kids who want to get a head start on starting or just understanding today's complex financial and business environment.
Don't be put off by the materialistic-sounding title -- this book is actually a primer for and about kids that emphasizes dollars and cents much less than it does passion, vision, creativity and giving.
Formatted to maximize attention-grabbing and minimize eye-glazing, and written in language that breaks down the complex into very simple but powerful concepts, "The Richest Kids In America" is set off by Hansen's two big conceptual bookends: introductory and conclusory exhortations to "Dream Big" (introduction) and "Live Big" (conclusion), which are full of youth-oriented versions of the potential-pushing motivational material for which Hansen is so well known.
After cheerleading them to dream big, Hansen takes young readers through three sections on entrepreneurship and philanthropy. Section 1, "Creating Money with Your …," briefs readers on how they can convert curiosity into cash, how to harness their passions with purpose, and how to adopt a cycle of "learning, earning and returning," before it provides the inspirational case study of Internet mogul Cameron Johnson, who started his business at 12.
Then, in Section 2, "Making it Work," Hansen takes readers from inspiration to execution, teaching them the basics of how to convert problems in the marketplace (and in their lives!) into an actionable business model; the power of niche marketing; and how to harness a strong support network of family, advisers and peers to power their business efforts.
Throughout, each chapter is filled with the real-life stories of young people who are operating their own profitable businesses.
The book's final section, "Building a Brand to Command," briefs readers on why and how they should understand and own every area of their business, time management concerns, and the importance of "Giving to Make a Living," again featuring story after story of the challenges, lessons learned and stunning successes of many other young entrepreneurs -- both at business and at giving back.
While it might seem to some that young people should be protected from worries about money as long as possible, that approach has proven flawed, as the last generation or so has been bombarded with credit-card offers, student loans and other potential financial pitfalls even before they start college.
To expose them only to the hazards without providing them with the tools for financial, business and career empowerment and self-sufficiency seems misguided and lopsided, at best. My 16-year-old will be getting a copy of "The Richest Kids in America" for Christmas -- and yours should, too.
If You Would Like To Buy A House In The Next Few Years...NOW IS THE TIME!!!!!!
There are millions of reasons to buy a home today! The most important reason is $MONEY$! The cost of mortgage money is bound to go up by April. A small increase in rates could cost a homeowner 50,000 or more over the life of the loan. The higher interest rates will also make homes less affordable. The government has been subsidizing the interest rates in 2009 but that comes to a screaching halt on March 31st 2010. The Treasury Department has been buying Mortgage Backed Bonds weekly. But that stimulus money runs out at the end of March. With the unprecedented debt the country has taken on recently, top economists see higher interest rates and inflation just around the corner. There is enormous pressure not to borrow more money, especially to keep mortgage rates down which helps the BANKS who many believe started this whole mess. The BANKS are healthy again and that isn't sitting well with the average unemployed or under employed American. They will want any money spent to help create jobs and get the economy moving not just WALL STREET.
The second reason is that all loans are getting harder to qualify for and in the next few days FHA will announce their new guidelines for home loans. FHA is said to be increasing down payment and credit score requirements. This is a major source of first time buyers financing. If inflation kicks in it could be a double whammy for buyers. The house they could have gotten for 250 could now be 300. That will put a lot of homes out of reach or at least they will be paying more than they should have just a short time ago. The positive side is people who buy now get great rates, great inventory to choose from and the chance for appreciation when the inflationary effect of all the goverment borrowing kicks in.
Dennis King
First-Time Homebuyer Credit Questions and Answers: Basic Information
First-Time Homebuyer Credit Questions and Answers: Basic Information
Updated to note new legislation. The new legislation extends and expands the first-time homebuyer credit allowed by previous Acts. The new law:
extends deadlines for purchasing and closing on a home
authorizes the credit for long-time homeowners buying a replacement principal residence
raises the income limitations for homeowners claiming the credit
This page will be reviewed and revised as appropriate soon based on the new legislation.
Q. What is the credit?
A. The first-time homebuyer credit is a new tax credit included in the Housing and Economic Recovery Act of 2008. For homes purchased in 2008, the credit operates like an interest-free loan because it must be repaid over a 15-year period.
The credit was expanded in 2009 for homes purchased in 2009, increasing the amount of the credit and eliminating the requirement to repay the credit, unless the home ceases to be your principal residence within the 36-month period beginning on the purchase date. It was further expanded in late 2009 to extend deadlines and to allow long-time homeowners buying replacement homes and people with higher incomes to qualify for the credit. (Nov. 12, 2009)
Q. How much is the credit?
A. The credit is 10 percent of the purchase price of the home, with a maximum available credit of $7,500 ($8,000 if you purchased your home in 2009) for either a single taxpayer or a married couple filing a joint return, but only half of that amount for married persons filing separate returns. The full credit is available for homes costing $75,000 or more ($80,000 if purchased after Dec. 31, 2008, and before Dec. 1, 2009).
Q. Which home purchases qualify for the first-time homebuyer credit?
A. Any home purchased as the taxpayer’s principal residence and located in the United States qualifies. You must buy the home after April 8, 2008, and before May. 1, 2010 (with closing to take place before July 1), to qualify for the credit. For a home that you construct, the purchase date is considered to be the first date you occupy the home.
Taxpayers (including spouse, if married) who owned a principal residence at any time during the three years prior to the date of purchase are not eligible for the credit. This means that you can qualify for the credit if you (and your spouse, if married) have not owned a home in the three years prior to a purchase. If you make an eligible purchase in 2008, you claim the first-time homebuyer credit on your 2008 tax return. For an eligible purchase in 2009, you can choose to claim the credit on either your 2008 or 2009 income tax return.
Q. If a taxpayer purchases a mobile home (manufactured home) with land and qualifies for the credit, is the amount of the credit based on the combined cost of the home and land?
A. Yes. The first-time homebuyer credit is ten percent of the purchase price of a principal residence. The total purchase price (mobile home and land) is used to determine the amount of the first-time homebuyer credit.
Q. Is a taxpayer who purchases a mobile home and places the home on leased land eligible for the first-time homebuyer credit?
A. Yes. A mobile home may qualify as a principal residence and it is not necessary that the taxpayer own the land to qualify for the first-time homebuyer credit.
Q. Can a taxpayer who purchases a travel trailer qualify for the credit?
A. A travel trailer that is affixed to land may qualify as a principal residence.
Q. Can an individual who has lived in an RV qualify for the credit?
A. For purposes of the first-time homebuyer credit, an RV with a built-in motor is personal property that is not affixed to land and does not qualify as a principal residence. Accordingly, someone who has owned and lived in an RV within the past three years may still qualify as a first-time homebuyer.
Q. Can I apply for the credit if I bought a vacation home or rental property?
A. No. Vacation homes and rental property do not qualify for this credit.
Q. Who is considered to be a first-time homebuyer?
A. Taxpayers who have not owned another principal residence at any time during the three years prior to the date of purchase.
Q. Can a dependent on someone else’s tax return claim the first time homebuyer credit if they otherwise qualify?
A. Yes. There is no limitation under section 36 that a first-time homebuyer cannot be a dependent. However, taxpayers who do not otherwise qualify for the credit do not become eligible for the credit simply by using a minor child’s name. In addition, under state law children under the age of 18 generally are not bound by any contract they sign and cannot be required to comply with the terms of the contract. Thus, it is extremely unlikely that a seller of a home, or a lender if financing is required, would enter into a bona fide sale of a home to a child. Merely using the child’s name to purchase a home does not qualify the child for the credit if, in substance, the child is not a bona fide purchaser of a home.
Q. When do I have to buy a new home to get the credit?
A. The home must be purchased after April 8, 2008, and before Dec. 1, 2009, in order to obtain the credit. For a home you construct, the purchase date is considered to be the date you first occupy the home.
Q. How do I apply for the credit?
A. The credit is claimed on new IRS Form 5405, First-Time Homebuyer Credit, and filed with your 2008 or 2009 federal income tax return.
Q. Are there income limits?
A. Yes. The credit is reduced or eliminated for higher-income taxpayers. The credit is phased out based on your modified adjusted gross income (MAGI). For a married couple filing a joint return, the phase-out range is $150,000 to $170,000. For other taxpayers, the phase-out range is $75,000 to $95,000. This means that the full credit is available for married couples filing a joint return whose MAGI is $150,000 or less and for other taxpayers whose MAGI is $75,000 or less.
Q. Can a taxpayer claim the first-time homebuyer credit after entering into a contract for the purchase of a residence but before closing on the purchase?
A. No. Taxpayers cannot claim the credit before there is a completed sale and purchase of the residence. The sale and purchase are generally completed at the time of closing on the purchase. (New 7/2/09)
Q. Can a taxpayer claim the first-time homebuyer credit if the purchase is pursuant to a seller financing arrangement (for example, a contract for deed, installment land sale contract, or long-term land contract), and the seller retains legal title to secure the taxpayer's payment obligations?
A. If the taxpayer obtains the "benefits and burdens" of ownership of a residence in a seller financing arrangement, then the taxpayer can claim the credit even though the seller retains legal title. Factors that indicate that a taxpayer has the benefits and burdens of ownership include: 1. the right of possession, 2. the right to obtain legal title upon full payment of the purchase price, 3. the right to construct improvements, 4. the obligation to pay property taxes, 5. the risk of loss, 6. the responsibility to insure the property and 7. the duty to maintain the property. (New 7/2/09)
Q. I purchased a home that qualifies for the first-time homebuyer credit. I will be renting two of the bedrooms and reporting the rental income on Schedule E. Will I still qualify for the credit if I use the home as my principal residence?
A. Yes, if you meet all first-time homebuyer eligibility requirements. See Form 5405, First-Time Homebuyer Credit, for more details.
Q. I purchased a duplex home with two separate dwelling units. I will live in one dwelling and will rent out the other dwelling unit and report the rental income on Schedule E. May I qualify for the first-time homebuyer credit, and what amount do I use for the purchase price to determine the amount of the credit?
A. Yes, you may qualify for the credit for the dwelling unit that you use as your principal residence. To determine the amount of your credit, you must allocate the purchase price of the duplex between the two separate dwelling units. Your credit is 10% of the portion of the purchase price of the duplex allocated to your dwelling unit that you use as your principal residence, up to a maximum credit of $8,000. You may not use the entire purchase price of the duplex to determine the amount of your credit.
Q. If two unmarried people buy a house together, how do they determine how much each may take of the credit?
A. IRS Notice 2009-12 provides guidance for allocating the first-time homebuyer credit between taxpayers who are not married.
Q. I am a single co-owner of a home. How do I get this credit?
A. Depending on the year of purchase, you will claim the credit on either your 2008 or 2009 federal income tax return.
Q. I don’t owe taxes and/or my income is exempt from tax and I do not have a filing requirement. Do I qualify for the credit?
A. The credit is fully refundable and, if you qualify as a first-time homebuyer, having tax-exempt income will not preclude eligibility. Although there are maximum income limits for qualifying first-time homebuyers, there are no minimum income criteria. Thus, someone with no taxable income who qualifies as a first-time homebuyer may file for the sole purpose of claiming the credit for a refund.
Q. Does the first-time homebuyer credit apply to homes located in the U.S. Territories?
A. No.
Q. Would I be considered a first time homebuyer if I owned a principal residence outside of the United States within the previous three years?
A. Yes. A taxpayer who owned a principal residence outside of the United States within the last three years is not disqualified from taking the credit for a purchase within the United States.
Q. If qualified, are homebuyers required to claim the first-time homebuyer credit?
A. No.
Q. Who cannot take the credit?
A. If any of the following describe you, you cannot take the credit, even if you buy a new home:
Your income exceeds the phase-out range. This means joint filers with MAGI of $170,000 and above and other taxpayers with MAGI of $95,000 and above.
You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.
You do not use the home as your principal residence.
You sell your home before the end of the year.
You are a nonresident alien.
You are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. (This does not apply for a home purchased in 2009.)
Your home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)
You owned a principal residence at any time during the three years prior to the date of purchase of your new home. For example, if you bought a home on July 1, 2008, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2005, through July 1, 2008.
Q. Does previously inheriting a home and living in the inherited home automatically disqualify an individual as a first-time homebuyer with respect to a different home that is purchased within the prescribed 2008 and 2009 time frames?
A. Yes, an ownership interest in a prior principal residence would preclude the taxpayer from being considered a first-time homebuyer. As long as the taxpayer owned and used the prior home as his principal residence, then he is not a first-time homebuyer. There is no exception for taxpayers who did not buy their prior residences. (05/06/09)
Q. Is a step-relative considered a related party?
A. Step-relatives are neither ancestors nor lineal descendents and are therefore not related persons for purposes of the first-time homebuyer credit. (05/06/09)
Q. If I claim the first-time homebuyer credit in 2009 and stop using the property as my main home before the 36 month period expires after I purchase, how is the credit repaid and how long would I have to repay it?
A. If, within 36 months of the date of purchase, the property is no longer used as the taxpayer's principal residence, the taxpayer is required to repay the credit. Repayment of the full amount of the credit is due at that time the income tax return for the year the home ceased to be the taxpayer's principal residence is due. The full amount of the credit is reflected as additional tax on that year's tax return. Form 5405 and its instructions will be revised for tax year 2009 to include information about repayment of the credit. (05/06/09)
Q. If a person does not actually make the payments on a home that’s their primary residence, but the deed and mortgage documents are in their name, can they be considered a first-time home buyer?
A. Yes. If a taxpayer purchases a home to be used as a primary residence from an unrelated person and has not owned a home within the previous 36 months, the taxpayer is eligible for the first-time homebuyer credit regardless of who makes the mortgage payment. (05/06/09)
Q. Do taxpayers affected by Hurricane Katrina or other disasters qualify as first-time homebuyers if their principal residence (i.e. main home) became uninhabitable more than three years ago and they have not formally disposed of the uninhabitable home or purchased or built a new home in the interim?
A. A first-time homebuyer is an individual (and the individual's spouse, if married) who has not had an ownership interest in a principal residence (within the meaning of Section 121 of the Internal Revenue Code) during the three years before the date a new principal residence is purchased. Applying Section 121, a taxpayer can be a first-time homebuyer if the taxpayer has not owned and used a property as a principal residence at any time during the three years before the date of purchase of the new residence. Taxpayers affected by Hurricane Katrina who have owned but not used their property as a principal residence within the last three years may be eligible for the first-time homebuyer credit when they purchase a new principal residence. (05/07/09)
Related Items:
First-Time Homebuyer Credit Questions and Answers: Homes Purchased in 2008
First-Time Homebuyer Credit Questions and Answers: Homes Purchased in 2009
First-Time Homebuyer Credit: Scenarios
First-Time Homebuyer Credit
Page Last Reviewed or Updated: November 13, 2009
First-Time Homebuyer Credit Questions and Answers: Homes Purchased in 2008
First-Time Homebuyer Credit Questions and Answers: Homes Purchased in 2008
Q. How is the credit repaid on a 2008 home purchase?
A. The first-time homebuyer credit will be recaptured on Form 1040 as additional tax and is repaid in 15 equal annual installments beginning in the second tax year after the year in which the credit is claimed.
Q. When must I pay back the credit for the home I purchased in 2008?
A. For homes purchased in 2008, the first-time homebuyer credit is similar to a 15-year interest-free loan. You must begin repaying the loan the second year after claiming the credit. It is repaid in 15 equal annual installments beginning with the second tax year after the year the credit is claimed.
For example, if you properly claim the maximum available credit of $7,500 on your 2008 federal tax return, you must begin repaying the credit by including one-fifteenth of this amount, or $500, as an additional tax on your 2010 federal tax return. Normally, $500 will be due each year from 2010 to 2024.
There are a number of exceptions that apply to the repayment rule. Please see Form 5405 and its instructions; review the first-time homebuyer credit section of Publication 17, Your Federal Income Tax for Individuals; or consult your tax professional.
Q. For homes purchased in 2008, how will the IRS know if someone sells their residence before the 15 years are up?
A. Through both self reporting and third-party information.
Related Items:
First-Time Homebuyer Credit Questions and Answers: Basic Information
First-Time Homebuyer Credit Questions and Answers: Homes Purchased in 2009
First-Time Homebuyer Credit: Scenarios
First-Time Homebuyer Credit
Page Last Reviewed or Updated: November 13, 2009
First-Time Homebuyer Credit Questions and Answers: Homes Purchased in 2009
First-Time Homebuyer Credit Questions and Answers: Homes Purchased in 2009
New legislation extends and expands the first-time homebuyer credit allowed by previous Acts. The new law:
extends deadlines for purchasing and closing on a home
authorizes the credit for long-time homeowners buying a replacement principal residence
raises the income limitations for homeowners claiming the credit
Q. I plan to build a home and occupy it in 2009. Can I claim the first-time homebuyer credit now and use the funds toward the down payment or other ongoing construction costs?
A. No. To qualify for the first time home buyer credit, the residence must be purchased. By statute, a residence which is constructed by the taxpayer is treated as purchased on the date the taxpayer first occupies the residence. (05/06/09)
Q. I bought my home in 2009 (early) and filed my 2008 tax return claiming the $7,500 first-time homebuyer credit that has to be repaid. Now the expanded law provides for an $8,000 credit that doesn’t have to be repaid. What do I need to do to get the $8,000 credit that doesn’t have to be paid back?
A. You can file an amended return.
Q. If I purchase a home in June 2009, and have already filed my 2008 tax return, can I amend my 2008 return or will I have to claim it on my 2009 return?
A. You can either file an amended return to claim it on your 2008 return or claim it on your 2009 return.
Q. I am in the process of buying a home. I expect to close the deal before December 1, 2009. Can I claim the first-time homebuyer credit now? That would allow me to use the refund for a down payment.
A. No. You may not claim the credit in anticipation of a purchase that has yet to happen. Until you have finalized the purchase of your home, which for most purchasers occurs at the time of the closing, you do not qualify for the credit. IRS news release 2009-27, First-Time Homebuyers Have Several Options to Maximize New Tax Credit, contains details for filing options if the home is purchased after April 15, 2009.
Q: When must I pay back the credit for the home I purchased in 2009?
A: Generally, there is no requirement to pay back the credit for a principal residence purchased in 2009. The obligation to repay the credit on a home purchased in 2009 arises only if the home ceases to be your principal residence within 36 months from the date of purchase. The full amount of the credit received becomes due on the return for the year the home ceased being your principal residence.
Q. Suppose a member of the military who purchased a home and qualified for the credit receives orders to deploy overseas for possibly 18 months. If they sell the home within 3 years from the date of purchase, do they have to pay back the credit?
A. Section 36 does not provide any recapture exceptions for military personnel who are deployed and sell their home within 36 months from the purchase date. If the taxpayer does not sell the residence, then the military deployment may be considered a "temporary absence" and the home may still be the taxpayer's principal residence if the taxpayer intends to return to the residence after the deployment.
Q. If I claim the first-time homebuyer credit for a purchase in 2009 and stop using the property as my principal residence before the 36 month period expires after I purchase, how is the credit repaid and how long would I have to repay it?
A. If, within 36 months of the date of purchase, the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full amount of the credit is due at that time the income tax return for the year the home ceased to be your principal residence is due. The full amount of the credit is reflected as additional tax on that year's tax return. Form 5405 and its instructions will be revised for tax year 2009 to include information about repayment of the credit.
Q: I’m already a homeowner. If I buy a replacement home to use as my principal residence, do I have to sell my home to qualify for the homebuyer tax credit?
A: If you meet all of the requirements for the credit, the law does not require you to sell or otherwise dispose of your current principal residence to qualify for a credit of up to $6,500 when you buy a replacement home to use as your principal residence. You must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2010 and close on the home by June 30, 2010. Additionally, you must have lived in the same principal residence for any five-consecutive year period during the eight-year period that ended on the date the replacement home is purchased. (11/17/09)
Related Items:
First-Time Homebuyer Credit Questions and Answers: Basic Information
First-Time Homebuyer Credit Questions and Answers: Homes Purchased in 2008
First-Time Homebuyer Credit: Scenarios
First-Time Homebuyer Credit
Page Last Reviewed or Updated: November 17, 2009
First-Time Homebuyer Credit: Scenarios
First-Time Homebuyer Credit: Scenarios
S1. If a single person (Taxpayer A) qualifies as a first-time homebuyer at the time he/she purchases a home with someone (Taxpayer B) that is not a first-time homebuyer and then later that year they marry each other, is the credit still allowed?
A. Eligibility for the first-time homebuyer credit is determined on the date of purchase. If Taxpayer A, a first-time homebuyer, buys a house and then later that year marries Taxpayer B, not a first-time homebuyer, the credit is allowable to Taxpayer A. Taxpayer A may take the maximum credit.
S2. Taxpayer A is a single first-time home buyer. Taxpayer B (parent) cosigns for A and does not qualify. Both names are on the mortgage. Can Taxpayer A claim the credit and, if so, how much?
A. Yes. Taxpayer B is not a first-time homebuyer and cannot claim any portion of the credit, but A may claim the entire credit ($7,500 for purchase in 2008; $8,000 for purchase in 2009), if the home was purchased as Taxpayer A's primary residence.
S3. A taxpayer owned her principal residence. Several years ago, she decided to relocate to a rented apartment, but did not sell the former residence. Instead, she rented it out to tenants. Now the taxpayer plans to buy another house and make it her new principal residence. Does she qualify for the first-time homebuyer credit?
A. A taxpayer who owned rental property within the past three years is still eligible for the credit. The taxpayer cannot have owned and used a home as his or her principal residence within the last three years.
S4. If husband and wife wanted to sell the home that the wife owned when they got married, and the husband had not owned a home within the past three years, could he qualify as a first-time homebuyer for the credit even though the wife would not qualify?
A. No. The purchase date determines whether a taxpayer is a first-time homebuyer. Since the wife had ownership interest in a principal residence within the prior three years, neither taxpayer may take the first-time homebuyer credit. Section 36(c)(1) of the Internal Revenue Code requires that the taxpayer and the taxpayer's spouse not have an ownership interest in a principal residence within the prior three years from the date of purchase. The husband may not take the credit even if he filed on a separate return.
S5. Taxpayer purchased a home on April 24, 2008, while she was separated from her husband. Later in the year, they reconciled and were living together at the end of 2008. She has not owned a home since 2004 but he owned one which he sold in 2006. They remained married the entire time. Is the taxpayer eligible for the first-time homebuyer credit?
A. No. The purchase date determines whether a taxpayer is a first-time homebuyer. Since the husband had ownership interest in a principal residence within the prior three years, and the taxpayers were legally married, neither taxpayer may take the first-time homebuyer credit. Section 36(c)(1) requires that the taxpayer and the taxpayer's spouse not have an ownership interest in a principal residence within the prior three years from the date of purchase. While individuals do not have to be married to get the credit, marriage (and legal separation) imputes ownership of a previous home upon the other spouse. The wife may not take the credit even if she filed on a separate return.
S6. I have been estranged from my spouse for over three years and file married filing separate. I don’t know if my spouse has owned a main home in the last three years, but I have not. If I buy a house in 2009 that otherwise qualifies for the first-time homebuyer credit, can I claim the credit?
A. Section 36(c)(1) requires that the taxpayer and the taxpayer's spouse not have an ownership interest in a principal residence within the three years prior to the date of purchase. While individuals do not have to be married to get the credit, marriage (and legal separation) imputes ownership of a previous home upon the other spouse. If your spouse has not owned a main home in the last three years, then you may claim the credit.
S7. I am separated from my spouse and considered unmarried, and qualify for the unmarried head of household filing status. My spouse has owned a main home in the last three years, but I have not. If I buy a home on May 1, 2009, that otherwise qualifies, can I claim the first-time homebuyer credit?
A. No. Section 36(c)(1) requires that the taxpayer and the taxpayer's spouse not have an ownership interest in a principal residence within the three years prior to the date of purchase. While individuals do not have to be married to get the credit, marriage (and legal separation) imputes ownership of a previous home upon the other spouse. The taxpayer may not take the credit even if filed on a separate return.
S8. A qualifying taxpayer bought a home in August 2008 that needed a lot of work before occupying. They finished the renovations and moved in the home in January 2009. Can they claim the $8,000, since they did not occupy the home until 2009?
A. No. Taxpayers who purchase an existing home and renovate the property before moving in are eligible for the first-time homebuyer credit based on the date of purchase, not the date of occupancy.
Related Items:
First-Time Homebuyer Credit Questions and Answers: Basic Information
First-Time Homebuyer Credit Questions and Answers: Homes Purchased in 2008
First-Time Homebuyer Credit Questions and Answers: Homes Purchased in 2009
First-Time Homebuyer Credit
Page Last Reviewed or Updated: August 05, 2009
Fire Sprinklers Set to Become Standard in New Homes; Group Warns of Inferior Cabling
Fire Sprinklers Set to Become Standard in New Homes; Group Warns of Inferior Cabling
by Peter L. Mosca
Members of the International Code Council's Residential Building Code Committee (RBCC) have made it clear that fire sprinklers are destined to become a standard feature in all new homes. The fire sprinkler requirement was added to the International Residential Code (IRC) last year, and it is scheduled to become effective January 1, 2011, in states that adopt the latest version of this code. Currently, 48 states use the IRC as a basis of regulating residential construction, although some states lag behind in adopting updates.
At a hearing held earlier this week, the National Association of Home Builders (NAHB) had petitioned the International Code Council (ICC), which publishes the IRC, to repeal the fire sprinkler requirement, but the RBCC rejected that request by a vote of 7 to 4.
"This vote is significant in two ways," said Chief Ronny J. Coleman, president of the IRC Fire Sprinkler Coalition and former fire marshal for the state of California. "Not only did the RBCC reject the homebuilders' request to repeal the sprinkler requirement, but if you look at the vote, every member of the committee, other than the four who are appointed by NAHB, voted to uphold the fire sprinkler requirement." Following the committee vote, NAHB attempted to use a new procedure in the ICC process that allows members assembled at the hearing to overrule the committee decision, but the members made it clear that they were standing firm on protecting American families from fire. More than 1,000 ICC members in attendance voted overwhelmingly to affirm the RBCC's decision.
"ICC's message on this matter is pretty clear," said Jeffrey Shapiro, P.E., executive director of the IRC Fire Sprinkler Coalition. "Their membership has now supported the home fire sprinkler requirement at both the 2008 and 2009 annual hearings, and each of those votes passed by more than a two-thirds margin." Those decisions | |
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