NEW CONVEYANCE TAX INCREASE

REMINDER…. CONVEYANCE TAX INCREASE EFFECTIVE 7/1/11
The Connecticut General Assembly adjourned its 2011 Regular Session on Wednesday, June 8. The following material highlights a number of important pieces of legislation that were enacted in the session.

Conveyance Tax

• Public Act 6: Section 102 of this act increases the state's portion of the tax by ¼ of one percent. This increase will go into effect on July 1, 2011, and will be applicable to conveyances occurring on or after that date. The act was signed by the Governor on May 4, 2011.
• Residential property (and vacant land) will thus be taxed at ¾ of one percent (instead of ½ of one percent).
• Residential property that is conveyed for more than $800,000 (the so-called "mansion tax") will be taxed at ¾ of one percent up to that amount, and then at 1 and ¼ of one percent on the excess.
• Nonresidential property that is currently taxed at 1% will instead be taxed at 1 and ¼ of one percent.
• Conveyances to a financial institution of property on which mortgage payments have been delinquent for not less than six months will be taxed at ¾ of one percent, instead of ½ of one percent.
• Section 103 of the bill provides that the revenue attributable to the increase in the state tax rate shall be deposited by the Department of Revenue Services into a municipal revenue sharing account, with funds used for municipal grants.

Note: The legislature did not enact a bill that would have allowed municipalities to impose a "buyer's tax" on the conveyance of real property.

Foreclosures
House Bill 6351: This bill extends the sunset date of the foreclosure mediation program from July 1, 2012 to July 1, 2014. The bill also extends the program to include the owners of property occupied by a religious organization. Other changes made to the mediation program include new restrictions on the making of motions and new documentation requirements.

Other matters covered by the bill include the protections afforded to certain tenants of foreclosed homes; the registration requirements imposed on those who bring foreclosure actions and on those in whom title vests following a foreclosure action; and overtime requirements applicable to certain mortgage loan originators.

Recording Fees
Public Act 48: Section 134 of this act amends Conn. Gen. Stat. § 7-34a to make permanent the ten dollar surcharge on recordings that was first established in 2009. That surcharge was due to expire on July 1, 2011. Revenue raised by the surcharge is to be dedicated to the uses set forth in Conn. Gen. Stat. § 4-66aa, as amended by Section 133 of the bill. The act has not yet been signed by the Governor.

FIRST TIME HOME SELLER TIPS!

3 Tips for the First-Time Home Seller

  ^[1]RISMedia, June 14, 2011—Today’s buyer-take-all bonanza is a boon for fence-sitters and buyers with great credit and deep pockets. But sellers are steeling themselves to new realities that include paying (rather than making) money at the closing table, providing extras to sweeten the deal, and spending more time and cash making the home camera-ready.

For first-time sellers who have never been through the process before, it’s a different world. One where the value of the house isn’t measured in the profit made on the sale, but by the enjoyment the owners had from living in the home.

UPSIDE DOWN OWNERS

DAILY REAL ESTATE NEWS June 9, 2011

40% of underwater borrowers took cash out of homes CoreLogic: Owners with home equity loans more than twice as likely to be upside down By Inman News Inman News™ Share This Homeowners with home equity loans are more than twice as likely to be "underwater" as those who didn't take cash out of their homes, according to statistics compiled by real estate and loan data aggregator CoreLogic. CoreLogic estimates that at the end of March, 22.7 percent of homeowners with mortgages -- about 10.9 million borrowers -- owed more on their mortgage than their home was worth. That's down slightly from an estimated 11.1 million underwater borrowers at the end of December. Falling home prices can put borrowers who have little equity in their homes underwater. By allowing homeowners to convert equity they have in their homes into cash, home equity loans reduce the cushion borrowers have against price declines. CoreLogic said that 38 percent of borrowers with home equity loans were underwater at the end of March, compared with 18 percent of homeowners who had no home equity loan. More than 40 percent of all underwater homeowners (4.5 million) have home equity loans, CoreLogic said. As might be expected, CoreLogic found that the presence of a home equity loan also increased the amount of negative equity. Underwater homeowners who had taken out home equity loans owed $83,000 more than their home was worth, on average, compared with $52,000 for those who hadn't taken cash out of their home. Past studies have shown that the higher a borrower's combined loan-to-value ratio (CLTV), the more likely they are to stop making payments on their loan. In many cases, borrowers will opt for a "strategic default" -- not because they can't afford the monthly payments, but because they don't believe their home will regain its value anytime soon. CoreLogic found that borrowers with home equity loans were slightly more likely to default at "moderate" levels of negative equity, up to 115 percent CLTV. Beyond that point, the relationship reverses, and default rates were slightly higher among homeowners without home equity loans. Among all underwater borrowers nationwide, the average amount of negative equity was $65,000. In states with higher-cost housing, the average was considerably higher. In New York, underwater borrowers had an average of $129,000 in negative equity, followed by Massachusetts ($120,000), Connecticut ($111,000), Hawaii ($98,000), and California ($93,000). At the other end of the scale, underwater borrowers in Ohio had the lowest negative equity -- $31,000, on average -- followed by Indiana ($34,000), and Minnesota ($38,000). Nevada led all states in the proportion of underwater borrowers -- 63 percent of Silver State homeowners with mortgages owed more than their home was worth -- followed by Arizona (50 percent), Florida (46 percent), Michigan (36 percent), and California (31 percent). At the metro level, Las Vegas led the nation, with 66 percent of mortgaged properties underwater, followed by Stockton (56 percent), Phoenix and Modesto (55 percent), and Reno (54 percent). Metropolitan markets located outside of the five states with the highest negative equity shares include Greeley, Colo. (38 percent); Boise (36 percent); and Atlanta (35 percent).

INTEREST RATES MAKE IT A GREAT TIME TO BUY!

Mortgage rates ease again to new 2011 low

Demand for purchase loans up slightly from year ago
By Inman News

Rates on fixed-rate mortgages dropped slightly this week, hitting new lows for the year, Freddie Mac said in releasing the results of its latest Primary Mortgage Market Survey.
While lower rates often trigger applications for refinancing, purchase loan demand also picked up last week and was slightly stronger a year ago, a separate survey by the Mortgage Bankers Association showed.
Freddie Mac's survey showed rates on 30-year fixed-rate mortgage averaged 4.6 percent with an average 0.7 point for the week ending May 26, down from 4.61 percent last week and 4.84 percent a year ago.
Rates on 30-year fixed-rate mortgages hit an all-time low in Freddie Mac records dating to 1971 of 4.17 percent during the week ending Nov. 11, 2010, before climbing to a 2011 high of 5.05 percent in February.
Rates on 15-year fixed rate mortgages averaged 3.78 percent with an average 0.7 point, down from 3.8 percent last week and 4.21 percent a year ago. Rates on 15-year mortgages hit an all-time low in records dating back to 1991 of 3.57 percent in November.
For 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans, rates averaged 3.41 percent with an average 0.5 point, down from 3.48 percent last week and 3.97 percent a year ago. The 5-year ARM hit a low in records dating to 2005 of 3.25 percent in November.
Rates on 1-year Treasury-indexed ARM loans averaged 3.11 percent with an average 0.5 point, down from 3.15 percent last week and 3.95 percent a year ago.
Looking back a week, the MBA's weekly Mortgage Applications Survey showed applications for purchase loans climbed a seasonally adjusted 1.5 percent during the week ending May 20 compared to the week before. Purchase loan applications were up 3.1 percent from the same time a year ago.
Demand for refinancings was also up slightly, to the highest level since Dec. 10. Requests for refinancings accounted for 66.8 percent of all mortgage loan applications, the highest share since Jan. 28.
In a May 18 forecast MBA economists said they expect rates on 30-year fixed-rate mortgages to rise to an average of 5.5 percent during the final three months of this year, and continue a gradual rise to an average of 5.9 percent during the fourth quarter of 2012.