Calle Ocho (Recession Remix ‘09 Volume 2.0)

It’s spring again.

Everybody knows it’s spring again.

To the girls and boys and people above.

This is the time to fall in love.

Nobody beats the Biz.

It’s March. And that can only mean one or all of four things – aguaseros, St. Patrick’s Day (think Miller Lite with blue #2 and yellow #5), my birthday ($20’s, $50’s, & $100’s, cashier’s checks, and wire transfers are accepted – no personal checks), and

Recession Remix ‘09 Volume 2.0 Version

The Recession Remix ‘09 version didn’t include the last (or first – depends on your perspective – half empty/half full?) 7 blocks this year. SW 11th AVE served as the festival’s eastern boundary (as opposed to SW 4th AVE in years past). Kiwanis of Little Havana, sponsor and organizer of the 31-year-old street festival, was forced to (surprise, surprise) cut costs. Organizers cite that donations aren’t rolling through like they used to (not exactly in those words, but…).

Apparently, artists aren’t donating their talents these days either. Baby Rasta y Gringo, Fat Joe, and Mr. 305 himself – Pitbull (of “Culo” fame) – served as “headliners” in this year’s edition, a far cry from the Celia Cruzes, El Gran Combos, Oscar D’Leons, Willie Chirinos, and yes, even the talentless Gloria Estefans (with her record-setting conga line and all) of yesteryear.

But who goes to Calle Ocho for the “talent”? I mean, really, the last thing anybody’s worried about at Calle Ocho is if Yolandita Monge is gonna hit 3 octaves above Middle C. Calle Ocho is for notes of another kind

Yep. Sapporo, the sumo wrestler in a can, was back in Little Havana this year. You may remember that last year these pups were $1 (as in won dolla). Well, the good folks at Casa Juancho – home to the sumo wrestlers – marked it up 100% this year! That’s right, this year Sapporos were

Still the best deal in town, by far. Remember, these sumos are good for 22 oz. Did you notice the Don Q for $3? Oowee!

Nevertheless, last year’s rules (click here for last year’s rules) were still kind of in place this year. The New Balance 992’s? Check. Canon PowerShot SD 750? Got it. Hat down low? Yes, Sir. Arnette eyewear? You know it.

What else? Mas na’. Time to beat the pavement and make new friends.

Friends like

“Peanut butter jelly time. Peanut butter jelly. Peanut butter jelly. Peanut butter jelly with the baseball bat”.

How do you say “camel toe” in Spanish again?

You KNOW Puelto Jico was in the house. You can’t call it a party if you didn’t invite a Puerto Rican. Straight up.

Or maybe I’ll just keep it Clark Kent and kick it with

Naw, who wants to kick it with a mild-mannered reporter at an event like this when you can kick it with

No come dulce de leche por el colesterol. Dice palabras en ingles mezclada con español.

Or maybe I’ll just grub on some

Note: If the following conversation was taking place in Facebook, it would be taking place via the inbox, not on the wall (hint, hint!). Go ‘head and get you a lil’ Facebook etiquette for free…

Hachy (Cyber BFF), I thought about the paella and the dry ice and calculated the shipping costs and all that, but – remember the sumo wrestlers in a can?

I had a few.

Well, maybe a little more. You understand, I’m sure.

Not a big fan of paella? Let’s see what else is cooking:

Alright. That’s more my speed.

How ’bout some

I could’ve gone with

,

but opted for

and

Nicaraguans know their meat. The carne asada was as good as it looks. Very tasty. The gallo pinto? I’ve had much better. But remember – sumo wrestlers.

The arepa? I can’t remember the last time I’ve had a good one. Anybody know where they serve a good arepa?

Dessert?

Naw, this is a much better dessert

Sorry. I meant this

There.

Is that salsa music?

Of course. There’s a salsa school doing their thing in front of the stage. You know what I’m talking about. You got the guy screaming “Coca Cola” and everybody reacts to his call in synchronized manner. That’s dope. They practiced hard last week.

Hey, I know that voice. Yeah, the raspy backup vocals? You know it too? Is that…that’s him, right? You mean the guy who voted yes so that the Marlins can have their very own ballpark in the wrong location?

I knew it was him. He’s got some vocals. Good footwork too.

Damn, I lost my friends. Where did

,

,

,

,

,

,

,

,

,

,

,

go?

Damn. They left me.

Oh well, I wanted to buy you all a souvenir anyways. Check it out. I thought about getting you an

but then you’d think I’m cheap. So I thought about

but then you’d think I’m cheap AND a communist, so I thought “why don’t I just get them something that’ll show some good ole’ nationalistic pride?”

but I realized right before I was about to pay that not everyone wears a belt. So I moved on to the guy right next to him, cause he had

but I had to run out of there. Homeboy threatened to sue me after I questioned the authenticity of his goods while photographing them. Take a look:

That’s a Louie baby!

Having to stop to catch my breath gave me a chance to think.

Being that

I thought to myself, “Why would I buy you, my loyal readers, a generic gift at Calle Ocho when I can give you the gift that keeps on giving?”. You can have your very own straight-to-video copy of “Keep It Raunchy, Mami (and Papi)”. It’ll serve as a new and improved edition of “Calle Ocho: When In Doubt”.

You can thank me later.

Adrian Salgado is a realtor associate with dash – real estate company and can be reached at 305-491-7179 or SalgadoA@gmail.com. You can friend him on Facebook, follow him on Twitter, and/or connect with him on LinkedIn.

Making Home Affordable | Loan Modification & Refinancing

Making Home Affordable, the program unveiled by the Obama Administration on March 4, 2009 to help homeowners at risk of losing their homes via taxpayer-subsidized reductions in their mortgage payments, is expected to help three to four million families avoid foreclosure at a cost of $75 billion over the next several years according to The New York Times.

The plan encourages lenders to modify the mortgages of homeowners who can no longer afford their monthly housing payments because of a hardship – loosely defined as  “lost income, increased expenses, payment shock from an adjustable-rate mortgage, and other indications of being at risk of default” – into a 30 or 15 year fixed interest rate loan. The program, applicable only to those with mortgages owned or guaranteed by Fannie Mae or Freddie Mac, is designed to “prevent the destructive impact of foreclosures on families and communities” according to the Treasury Department.

Who is eligible?

To apply for Making Home Affordable, you must be:

• The owner-occupant of a one (1) to four (4) unit home (i.e. must be your primary residence).
• Current on mortgage payments (i.e. have not been more than 30 days late on your mortgage payments in the last 12 months).
• Have an unpaid balance that is equal to or less than $729,750 (for one unit properties; higher for two to four unit properties).
• Have a loan that was originated before January 1, 2009.
• The first mortgage cannot exceed 105% of the value of the property (ex: your property is worth $100,000 and you owe no more than $105,000).
• Have a stable income to support the new mortgage payments.

How do I know if my loan is owned or has been securitized/guaranteed by Fannie Mae or Freddie Mac?

Call your mortgage servicer (the entity you sent payment to) or lender and ask them. You may also contact Fannie Mae or Freddie Mac directly at:

• Fannie Mae

• 1-800-7FANNIE (8:00 am to 8:00 pm EST)
• www.fanniemae.com/homeaffordable

• Freddie Mac

• 1-800-FREDDIE (8:00 am to 8:00 pm EST)
• www.freddiemac.com/avoidforeclosure/

How does it work?

A mortgage lender or mortgage servicing company will initially receive cash incentives to modify a borrower’s loan so that the monthly housing payments (principal, interest, property taxes, homeowners insurance, homeowners/condo association fees) decline to no more than 38% of the household’s monthly gross income. At this point, the government will match, dollar for dollar, the lender’s cost in reducing payments to the target affordability level of about 31% of your gross monthly income.

How is that achieved?

Step 1: The lender drops the interest rate to as low as 2%. If that lowers the monthly housing payment to 31% of gross monthly income, then that’s the rate. For example, if 3.5% lowers the monthly housing payment to 31%, then 3.5% is your rate. The rate will not go lower.

Step 2: If lowering the rate to 2% doesn’t lower the monthly housing payment to 31% of gross monthly income, the lender will then extend the term of the loan up to 40 years. Again, it doesn’t have to be 40 years. If a 2% rate over 34 years lowers the monthly payment down to 31% of income, then 2% over 34 years is your program.

Step 3: If a 2% rate and a 40-year term do not get the payment down to the target affordability level of 31%, the next step is to forbear principal. This does not mean that the lender, out of the goodness of his/her heart (can’t decide what sex “lenders” are), will chop off the principal owed. It means that the borrower pays interest on only part of the mortgage balance. The borrower still owes the same amount as before.  For example, someone might owe $100,000, but pay 2% over 40 years on $75,000. However, all $100,000 must be paid back if the homeowner sells the home or refinances the mortgage later.

Note: The lowered interest rates don’t last for the entire term of the loan. They last only five years.  If a lender agrees to reduce the interest rate below the current market rates of about 5%, the lender is allowed to raise the rate by as much as 1 percentage point per year until the rate is close to the prevailing rate during the week that the modification was approved.

If the lender reduces the interest rate to a level that is still above today’s market rate (i.e. 6% from 9%), the modified rate remains in place for the life of the loan.

Each lender will determine if its cost from reducing the monthly payments, after accounting for the government’s cost-sharing, would be less than the costs it would incur from foreclosing. If the result of that calculation shows that the lender’s cost in modifying the loan would be lower than the cost of foreclosing, the lender would be required to modify the borrower’s loan.

I have a first and second mortgage. Can I refinance both under Making Home Affordable?

Only the first mortgage is eligible for modification. As long as the amount due on the first mortgage is less than 105% of the value of the property, borrowers with more than one mortgage may be eligible. The lender that has your second mortgage must agree to remain in second lien position.

What are the costs associated with modifying the loan?

Lenders will have to bear the administrative expense of reviewing the loans and making their cost estimates. If there are costs associated with the modification (i.e. back taxes, liens, etc.) your servicer will add those costs on to the amount you owe.

Is housing counseling required?

If the sum of all recurring monthly expenses (car payments, credit card debt, second mortgages, child support) is equal to or exceeds 55% of your gross monthly income,  you must agree to participate in housing counseling provided by a HUD-approved housing counselor as a condition of getting the modification.

How do I apply for a loan modification?

Call your mortgage servicer and ask to be considered for a Home Affordable Modification. Eligible loans can be modified ONE TIME through December 31, 2012. Before calling, make sure that you have the following information and/or documents ready:

• Recent pay stubs
• Most recent income tax return
• Information about any second mortgage on the home
• Account balances and minimum monthly payments due on all of your credit cards
• Account balances and monthly payments on all your other debts such as student loans and car loans
• Hardship letter describing the circumstances that caused your income to be reduced or expenses to be increased (job loss, divorce, illness, etc.)

In theory, there is NO limit on the loan-to-value ratio for a modified loan. People may be eligible for help even if the value of their home is much less than the outstanding amount of the mortgage. However, persuading their lender to modify a loan that is deeply underwater is a whole ‘nother thing.

This program will help a small percentage of those in need of help. It doesn’t do a whole lot for the family whose main source of income just lost a job and whose monthly income pretty much evaporated. It won’t do much either for that person who racked up credit card debt in an effort to save his/her home. In other words, in places like Florida, specifically South Florida, where prices have fallen due to over development, mortgage fraud, and “investor” speculation, the message is pretty clear: sink or swim. A large percentage will sink.

At any rate, BEWARE of any person or organization (no matter how legit they may look) that asks you to pay a fee (especially upfront) in exchange for a counseling service or modification of a loan.

Adrian Salgado is a realtor associate with dash – real estate company and can be reached at 305-491-7179 or SalgadoA@gmail.com. You can friend him on Facebook, follow him on Twitter, and/or connect with him on LinkedIn.

Home Buyer Tax Credit

If you’re like me, your head probably spins like a character out of a Tim Burton movie when the slight mention of the words “stimulus”, “package”, “tax”, and “credit” make their way through your external auditory canal.

First, there was the $15,000 Tax Credit for all home buyers approved by the Senate. The problem with that? It wasn’t final. Why? The Senate version of the bill was different than the version presented by the House, which means that the bill had to go to a conference committee consisting of members of both the House and the Senate in order to reconcile the differences between the two bills. What happened when they got together? They scrapped the $15,000 Tax Credit and opted for a smaller tax credit that applies to first time home buyers only.

The First Time Home Buyer Tax Credit, an $8,000 tax credit made effective when President Obama signed the American Recovery and Reinvestment Act into law on February 17, 2009, provides an incentive for first time home buyers to purchase a home this year. In turn, the credit serves as a mechanism to decrease the oversupply of homes currently for sale.

The credit is available only to first time home buyers who purchase a principal residence on or after January 1, 2009 and before December 1, 2009. Any home that is purchased for $80,000 or more qualifies for the full $8,000 tax credit. If the house costs less than $80,000, the credit will be 10% of the cost.

Ex: If an individual purchases a primary residence for $60,000 (very doable in this market), the credit would be $6,000.

How will they determine who is a first time homebuyer?

A person is considered a first time home buyer if he/she has not had any ownership interest in a home in the three (3) years previous to the day of the 2009 purchase.

What is considered a principal residence?

A principal residence is the home where an individual spends most of his/her time (generally more than 50% of the time). It is also defined as owner-occupied housing.

Is there an income restriction?

An income restriction based on the tax filing status that the purchaser claims when filing his/her income tax return is in place. Individuals filing a Form 1040 as Single (or Head of Household) are eligible for the credit if their income is no more than $75,000. Married couples who file a joint return may have income of no more than $150,000.

So, how does this tax credit work?

The tax credit is applied to the total income tax bill once the total income tax owed by the purchaser has been computed. Every dollar of a tax credit reduces income taxes by a dollar.

In other words, say that before taking any credits on a tax return a person has a total tax liability of $10,000. The $8,000 tax credit would wipe out all but $2,000 of the tax due ($10,000 – $8,000).

How about if a person’s entire income tax liability for the year is less than the $8,000 tax credit?

This is where it starts to make sense. This tax credit is what is referred to as a refundable credit, meaning that if an eligible purchaser’s total tax liability is less than the $8,000 tax credit, the IRS would send the purchaser a check for the difference between the $8,000 credit amount and the amount of tax liability.

Let’s say the purchaser has a total tax liability of $5,000. Once the $8,000 tax credit is applied it not only erases his/her tax liability, it provides the purchaser with an asset in the form of a $3,000 check from Tio Sam.

Unlike the $7,500 tax credit enacted by Congress in 2008 which served more as an interest-free loan, the 2009 $8,000 tax credit does not have to be repaid.

Furthermore, eligible home buyers who make their purchase between January 1, 2009 and December 1, 2009 can treat the purchase as if it had occurred in 2008. Thus, they have the option of claiming the $8,000 credit on their 2008 tax return due on April 15, 2009 (if they purchase between January 1, 2009 and April 15, 2009) or claiming the credit on their 2009 tax return due April 15, 2010.

Eligible purchasers who extend their 2008 income tax filing (until as late as October 15, 2009) can also treat a purchase between January 1, 2009 and the date of their extension deadline as a 2008 purchase. Thus, they too have the have the option of claiming the $8,000 credit on their 2008 tax return or claiming the credit on their 2009 tax return due April 15, 2010.

Anyone claiming the credit who decides to sell the property within 3 years of the date of purchase, will be required to pay back the full amount of any credit, including any refund received from it. The 3-year recapture rule is designed as an anti-flipping rule.

So, will this help jump-start the struggling real estate market? I don’t know. The fact that it only applies to first time home buyers and not all home buyers doesn’t offer any incentive to those who have the equity to sell and buy in today’s market (contrary to popular belief or what the media would have you believe, people like that still exist). However, this is definitely an upgrade to the 2008 $7,500 tax credit that has to be repaid.

For more information regarding the First Time Home Buyer Tax Credit click here or feel free to contact me at 305-491-7179 or SalgadoA@gmail.com.

Disclosure: Adrian Salgado is a realtor associate with dash – real estate company. He is not an accountant, CPA, tax attorney, or any other kind of tax professional. As a matter of fact, he hates accounting with a passion and believes that anyone with an accounting degree is really a masochist disguised as a numbers cruncher. Seek the advice of a masochist professional before making any decisions that may potentially cause the IRS to send Luca Brasi over to your newly purchased home.