Written by Judi Bowers

With snow on the ground and the calendar showing it’s the middle of March, mountain residents aren’t thinking too much about replacing their roof, unless it’s leaking. But if their roof is a wood shake shingle roof, replacement is vital.

There are rules and regulations that require homeowners to replace their shake shingle roofs, whether living in unincorporated areas of San Bernardino County or in incorporated cities. And there are grant funds to help.

In 2000, as the mountain communities faced the ongoing and widespread problem of diseased and dying trees, fire chiefs recognized the need to tackle the problem as a unified front, says Jeff Willis, Big Bear fire chief. The Mountain Area Safety Taskforce or MAST was formed from that need.

MAST is more than the core group of fire chiefs. It includes other agencies and departments such as law enforcement, county roads and Caltrans and more. Willis says the group is organized like an incident command system dealing with operations, logistics and planning.

Moving on from the tree issue after the Old Fire in 2003, defensible space and other prevention needs took center stage. All the preparation prior to the 2003 fires got national attention and other communities followed the MAST model, Willis says. With the success of removing trees, defensible space and shake shingle roof replacement is a natural next step. “We’ve proven without a doubt we can manage it if we have the funds,” Willis says about preventive programs.

Big Bear Lake Fire Protection District applied for a grant, the first of its kind in the nation, to aid property owners in replacing the roofs. FEMA awarded $1 million, of which about $700,000 has been spent, according to David Yegge, fuels reduction specialist for Big Bear Lake Fire Protection District. His position is actually 100 percent funded by the grant.

The first grant targeted 150 homes to be funded on a cost share basis for replacing the shake roof, Yegge says. Of the 150, 110 are in the city of Big Bear Lake, the remaining 40 technically in Big Bear City on the fringe of Big Bear Lake. Yegge explains that in some areas of Moonridge, one side of the street is in the city limits, the other in the county. It didn’t make sense to only replace roofs on one side of the street, he says.

The goal of the first grant was to create a ring of defense around the community separating the national forest and urban area. Homes within 1,500 feet of the forest were targeted first.

Three more grants totaling $4.3 million have been approved and are awaiting funding, Willis says. Included in those approvals is the ability to move beyond Big Bear. Working with MAST and San Bernardino County Fire, Yegge and Willis will administer grants to replace shake shingle roofs in other mountaintop communities from Wrightwood to Angelus Oaks.

There is a huge need across the mountains, Yegge says. Most homes that burned in the 2007 Slide Fire in the Running Springs area had shake roofs, he says.

But it takes time, Willis and Yegge say. The process to identify the properties, meet with property owners and outline the regulations before a single roof is replaced could take about 18 months.

Defensible space is part of the agreement. Homeowners must create defensible space on their property to the satisfaction of the fire agency and FEMA before approval for the cost share reimbursement.

MAST member departments have identified the properties in the mountain communities for replacement, Willis says. There is a potential for 900 homes to have roofs replaced, including those in Big Bear Valley, he says.

Willis will hire subcontractors with knowledge in defensible space to inspect properties and document conditions before and after. The contractors are paid out of the grant funds. Working with San Bernardino County Fire combines the strength of both agencies, Willis says.

The grants reimburse a portion of the cost of replacing a shake shingle roof, up to 70 percent depending on certain factors, Willis says.

Anyone interested in the program should contact Yegge at 909-866-4668.

In 1981, English punk rock band The Clash wrote “Should I Stay or Should I Go?” about the rocky personal relationships between members of the band when facing the dilemma of sticking together or breaking up. The lyrics could not be more appropriate for homeowners buried in a mountain of negative equity and wondering what to do. After all “if I go there will be trouble and if I stay it would be double.”

The first step in answering this question is to find out if you qualify for a modification or if you can refinance using the HARP program to take advantage of today’s low interest rates. The process of getting a modification can be very frustrating.  It’s “always tease, tease, tease, you’re happy when I am on my knees.” It not only takes a while to get approved, you must keep in mind that the lender does not have a legal obligation to offer or approve a loan modification. It is important to note that they may dual track your file, which means that while they are considering the modification they are moving forward with the foreclosure. Sometimes they “set you free” and foreclose in the middle of your modification application.

Let’s say you get a modification. I have a friend who was approved for what at first appeared to me to be an unbelievable loan modification. The modification did not lower the principle but did lower the interest rate to just 2 percent and locked that in for 30 years! This reduced their payment to the same amount that they would pay to rent a similar property. As such, it certainly seemed reasonable to stay – they get to keep their credit intact and remain owners, while paying no more than they would in rent anyway. Plus the payment remains fixed for 30 years, while rents would increase. But that analysis is incomplete. The question that remains is their status when they might want or need to sell, and when do they break even given the substantial negative equity that would remain?

Life events like divorce, death, job loss, job transfer, and others happen. Also sometimes folks just want to relocate. Based on our analysis, and assuming long-term home price appreciation rates, these folks would need to stay until 2026 to simply BREAK EVEN vs. paying rent. Worse, unless they use the rent savings to pay down principal, they’ll be stuck upside down in the property, and unable to sell without bank approval of a short sale until 2033. So whether or not it is a good deal for them depends a lot on how long they plan to stay.

For my friends, the best financial decision appears to be to try to short sell their current home, or if necessary let the bank foreclose. If they then rent for 3-5 years they should be able to qualify again to buy. Assuming interest rates don’t skyrocket, or some other major change doesn’t occur, this will save them over $100,000, and give them the flexibility to move if needed without being stuck in their current prison of debt until 2033.

Unfortunately, few homeowners facing this decision have the financial skills to really analyze the various scenarios, and few will consult a qualified accountant or other professional to do it for them.

This analysis is different for every homeowner facing this question. How far under water they are, and the terms of the loan modification are clearly important. It also requires some assumptions about price appreciation, rent inflation, and future interest rates. And importantly, it requires some serious thought as to how long they plan to stay, and perhaps some soul searching on the moral implications of walking away.

Bottom line, this question can be answered only by the homeowner based on their current situation and what is best for them. Would you stay or would you go now?

Home prices fell to their lowest point in more than a decade in January, which helped to lift the pace of home sales, according to a report from an industry trade group.

The National Association of Realtors reported that the median home price in January fell 2% from December to $154,700. That’s the lowest price reading since November 2001, before the run-up in home prices that became known as the housing bubble.

The median price is the point at which half of homes are sold for a higher price, and half are sold at a lower price.

Serving as a drag on existing home prices is a large inventory of homes in foreclosure.  Distressed home sales, which includes homes in foreclosure and so-called short sales in which the home is sold for less than what is owed on the mortgage, made up 35% of sales in January.

“Prices will continue to fall through the first half of 2012 due to the high share of distressed sales,” said Stuart Hoffman, chief economist with PNC Financial. “The recent agreement between the big mortgage servicers, state attorneys general and the Obama administration will also result in more homes going to foreclosure over the next few months, adding to downward pressure on prices.”

But the pace of sales rose to the highest level since May of 2010, helped by the low prices and rock-bottom mortgage rates.  The seasonally-adjusted annual sales pace of 4.57 million homes was up slightly from the revised 4.38 million in December. The last time homes sold at that pace, buyers were rushing to qualify for an $8,000 homebuyer’s tax credit that was about to expire. The latest reading was roughly in line with the expectations of economists surveyed by Briefing.com.

“The uptrend in home sales is in line with all of the underlying fundamentals — pent-up household formation, record-low mortgage interest rates, bargain home prices, sustained job creation and rising rents,” said Lawrence Yun, chief economist for the Realtors.

The housing market has been showing signs of recovery in recent months. The combination of low mortgage rates and a decline in home prices means homes are more affordable than they’ve been in decades. PNC’s Hoffman agreed that the report is a further sign of recovery in the market, although he cautioned “it will remain a long process.”

New homes starts by builders have been rising, along with their confidence and customer traffic, according to an industry survey.

The supply of existing homes on the market tightened slightly in the Realtors’ latest report, slipping 0.4% to 2.3 million homes, roughly a 6 month supply. That is down 20% from the supply of homes a year ago.

1.  The average interest rate on a 30-year fixed mortgage hit a record low this week, down to 3.87%, according to Freddie Mac.

2.  The difference between a 4% rate and a 5.5% rate on a $200,000 home loan is just shy of $200 in monthly payments and can save a homeowner more than $60,000 in interest payments across the life of the loan.

3.  Big Bear home prices are lower than they have been in years.  Some homes can be purchased for 50% less than what homes were selling for in the peak of the market in early 2006.

4.  Another motivating factor could be the fact that rents remain high right now, and in many cases, it’s actually cheaper to buy a home than rent one.

5.  There are usually fewer buyers in Big Bear during the winter, so there is less competition when shopping for your dream home!

Written by Tara-Nicholle Nelson

Technically speaking, April 15th is tax day. But for Americans who expect a refund – including many homeowners who want to cash in on real estate-related tax perks – filing sooner holds the promise of getting that check in hand, stat.

If you count yourself in that number, here’s a handy guide for 9 pieces of paper you should be sure to round up as you prepare to file, in order to reap every penny of the tax rewards you’ve earned by virtue of owning a home.

• 1.  Mortgage Interest Statement – IRS Form 1098. The meatiest real estate tax deduction on the books is the one that allows you to deduct 100 percent of the mortgage interest you paid in a year – including prepaid interest or points you might have paid at close of escrow, if you bought a home last year. By now, you should have received in the mail a Form 1098 from your mortgage lender that reports how much that interest totaled up to in 2011.  If you itemize your taxes and claim a mortgage interest deduction, you must include this form with your tax form when you file.

(If you haven’t received yours yet, most lenders that have online account management services also post the form digitally in your secure account on the web. Just login like you would to make your monthly payment, and look for a notice that says you can now download your 2011 Form 1098.)

• 2. Property Tax Statements. In addition to deducting your mortgage interest, if you own a home you are eligible to deduct the property taxes you pay to your local city, county and/or state.  You are not allowed to deduct some of the other miscellaneous expenses that some localities bundle up with the taxes they collect, like waste management and local assessments for things like street lighting, libraries and sidewalk construction.  To get this deduction right, the best practice is to have your property tax statements at hand and make sure you’re only deducting what’s allowed.

If you bought your home this year, it’s highly possible that you might not even have received a property tax statement yet – if that’s the case, look to #3, below.

• 3. Uniform Settlement Statement (HUD-1). If you bought or sold a home last year, right after closing you should have received a form called the HUD-1 Settlement Statement (hint: it’s usually on legal-sized paper and contains an accounting of credits and debits for you and your home’s buyer or seller). That form documents a number of line items which might help you out at tax time, including prepaid interest, the prorated property taxes you paid at closing, and closing costs like original fees and discount points. Some states offer tax credits for buying a foreclosure; check with your tax pro to find out if any such credits apply to you. If so, this statement might be your ticket to lower taxes.

And here’s another handy hint – if you can’t find your copy, you might have gotten it on a disk – and you can always email your real estate or escrow agent for a copy, as well.

• 4. Moving Expense Receipts. Moving expenses are tax deductible, if your move is closely related, both in time and in place, to the start of work at a new or changed job location and you meet the IRS’ time and distance tests. Long story short, your new home must be at least 50 miles farther from your new workplace than your old home was from your prior place of work, and you must work essentially full-time. So, if you bought or sold a home and moved in 2011, you’ll need to include receipts from expenses you incurred making the move (meals not included) in your tax prep paperwork.

• 5. Cancellation of Debt Statement – IRS Form 1099. Homeowners who lost a home to foreclosure, or divested of one by negotiating a short sale or deed in lieu of foreclosure with their lender might receive some version of Form 1099 from their lenders, charging them with income in the amount of the mortgage debt that has been cancelled. You see, if you borrow money from someone, then they cancel the debt, that money you originally borrowed becomes income in the eyes of the IRS – and income is, as you know, taxable.

• 6. Utility statements for home office. For the average everyday homeowner who works at their employer’s place of business, utilities are not deductible (sorry!). But if there is a part of your home that is “regularly and exclusively” used for business, you might be able to claim that portion of your home as a home office, and deduct some portion of your home utilities and costs of painting and repairs, as a result.Talk with your tax provider about what expenses are allowable to be claimed under your home office deduction, and whether or not you should take it.

• 7. Income and Expense statements from rental properties. Some of you have elevated the art of home ownership to a business!  If you are a landlord, your tax situation is more complicated than that of the average bear; you’ll need to have complete income and expense statements when you put your tax returns together. It might actually behoove you to consult with a tax professional to make sure you are appropriately depreciating the property over time and not taking deductions that will expose you to the risk of audits, as well as to begin cultivating a long-term tax strategy for your real estate portfolio.

• 8. Contractor receipts from energy efficient home improvements. Under the Nonbusiness Energy Tax Credit, homeowners who have made improvements to their homes that fall within a list of energy efficient upgrades might be eligible to claim tax credits. If, during 2011, you installed energy efficient improvements such as insulation, new dual-paned windows and furnaces, you might be eligible for a tax credit of 10 percent of the cost of these upgrades, up to  $500 – only $200 of which may be used to offset the cost of windows.

• 9. Mortgage Credit Certificate (MCC). If you own a home you bought in the last few years using a Mortgage Credit Certificate issued by a local housing authority, that Certificate may entitle you to a pretty hefty tax credit, based on a percentage of the mortgage interest you paid – on top of your mortgage interest deduction. MCCs apply as long as you live in the home and have a mortgage on it, but they only apply to defray taxes you actually owe – you can’t use them to get a refund.  In any event, your mortgage credit certificate, if you have one, is a must-have document as you start putting your tax prep plan in play.

No matter what your tax situation is, if you own a home, it absolutely cannot hurt to get some professional help and advice to make sure you maximize your deductions, while minimizing your exposure to audit. And you should always consult with a tax attorney or certified public accountant regarding your tax liabilities and implications when you buy, sell, short sell or lose a home to foreclosure.

Although the actual settlement has not yet been released, the attorney general has stated that other financial benefits for California include $849 million for refinancing 28,000 borrowers who are underwater but current on their payments; $279 million restitution for 140,000 homeowners who were foreclosed upon between 2008 and 2011; $1.1 billion for unemployed homeowners, transitional assistance, and repairing blight; $3.5 billion to extinguish unpaid loans that remain after foreclosure for 32,000 homeowners; and $430 million to the state attorney general’s office for costs and fees. As part of a California guarantee, if the lenders fail to reduce principal balances by a minimum of $12 billion, they will be required to pay fines up to $800 million to the state.

The loans involved in this settlement are those owned or serviced by Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial Inc. The settlement releases the five named lenders from certain federal and state claims pertaining to robo-signing and other foreclosure misconduct by the lenders. It does not affect any individual’s rights to bring legal action against a lender. It also does not apply to the majority of mortgage loans, which are those owned by Fannie Mae or Freddie Mac.

This mortgage settlement does not change any homeowner’s existing financial relationship with a settling lender. It does not relieve homeowners from any obligation. It does not require a settling lender to stop any foreclosure.

Homeowners seeking relief under the settlement agreement should contact their loan servicer or a HUD-approved housing counselor. More information including detailed FAQs is also available from the California Attorney General’s website, or visit the National Mortgage Settlement website.

From the prior 3 month period (August 1st to October 31st), the average sold price was $217,619, $141.22 per square foot and 112 days on market.  This reflects a decrease in average sold price by about 4% compared to the prior 3 month period.  Marketing times (average days on market) have decreased by nearly 14%.

In 2011, homes consistently sold for 95% of list price on average.  Of the 863 homes that sold in 2011, 368 were “distressed” sales – foreclosures or short sales, about 43%.

Written By Kelli Galippo

This article discusses the purported moral implications of a homeowner’s decision to strategically default and why no such implications exist for a strategically defaulting business.

Is a strategic default un-American?

In their collective effort to encourage homeownership by any means necessary, the government and the media make no apologies for characterizing the strategically defaulting homeowner as an unpatriotic contradiction to capitalism.

As the jobless Lesser Depression continues wreaking havoc on home values and shriveling opportunities for the unemployed, speeches and press conferences by society’s figureheads continue emphasizing the importance of sending the “right message” to your family by paying back what you promised to pay.

Why aren’t those same figureheads pointing fingers at strategically defaulting businesses?

It seems a business that chooses to declare bankruptcy at the opportune moment to preserve cash flow is a wisely managed entity in the eyes of financial analysts everywhere, but a homeowner who does the same is labeled a cheat. The ability to strategically default with impunity is unique to businesses since the concept of morality in finance varies depending on whether it’s businesses or individuals involved.

The double standard

Political rhetoric aside, the decision to strategically default is not a moral decision. Every trust deed contains a put option, a contract provision requiring the lender to buy the home on any default. Homeowners are not committing a crime (or even a theological no-no) by exercising their put option, but merely making a wise financial decision in light of current economic conditions.

Declaring bankruptcy is very commonly used in the business world as a sort of restart button; a chance to pare down debt before it gets out of hand. American Airlines recently declared bankruptcy, but not as a last ditch effort to salvage the company. They made a tactical decision to cut their losses, shed some debt, get competitive standing and preserve their earnings — and investors rewarded them for it.

Underwater homeowners can do the same, but most don’t because of the perceived social and seemingly moral consequences. Though businesses are commended for a strategic bankruptcy to avoid going under, homeowners who owe more than their homes are worth are warned not to employ the same wisdom for fear of public ridicule and a scarlet letter from their lender.

What’s ironic is organizations that criticize the strategic default have chosen to strategically shed their black-hole assets themselves. The Mortgage Bankers Association (MBA), whose president has publicly argued that strategic default “sends the wrong message” to society, recently completed a deliberate short sale of its headquarters for millions of dollars less than the remaining principal balance of the building’s mortgage – no recourse of course.

Strictly business

While the government drones on about an underwater homeowner’s moral duty to faithfully pay his mortgage through thick and thin, lenders focus only on the bottom line when making financial decisions. Lenders could approve more modifications or principal reductions for the unemployed and beleaguered in the name of morality, but they choose profit (read: sound business decisions) over social responsibility every time.

Washington and Wall Street have deliberately confused homeowners by muddling the difference between moral decisions and business decisions. Lenders have no problem forgiving the debt of big business politicians because it earns them political clout. In the long run, it is more lucrative to stay in the good graces of politicians and business executives, which makes forgiving their debt a rational decision.

Debt forgiveness for one homeowner, on the other hand, means debt forgiveness for all homeowners, and that is just too much lost profit.

Many homeowners unknowingly made bad decisions when they were encouraged by everyone to borrow money under subprime lending conditions. But lenders who made loans with adjustable interest rates and no down payments must also be held responsible for their part. As long as underwater homeowners keep faithfully paying their mortgages, lenders suffer a lesser degree of consequences for their irresponsible, overzealous behavior during the Millennium Boom.

De-occupying our homes

Lenders have made it clear they won’t budge; they fully expect homeowners to pay their mortgage no matter what. Homeowners who disagree must actively decide to stop paying their mortgage and walk away from the property, a mere exercise of the put-option written into their mortgage contracts.

The Occupy Wall Street (OWS) diaspora has migrated to foreclosed homes around the country, their motive being to stop lenders from taking homes through foreclosure. But if OWS really wants to vindicate underwater homeowners, they will picket to force lenders to take back the collateral no longer worth the amount borrowed.

If homeowners want to salvage their finances, they will stop believing the government- and lender-endorsed rhetoric of the good American borrower and stop making personally pointless mortgage payments.

Copyright © 2011 by first tuesday Realty Publications, Inc. Readers are encouraged to reprint or distribute this information with credit given to the first tuesday Journal Online — P.O. Box 20069, Riverside, CA 92516.

1. Drive slowly.  It is easy to lose control of your vehicle on snow-covered roads.  Give yourself time to maneuver and remain in control.

2. Accelerate and decelerate slowly.  Applying the gas or the brakes too quickly can cause your tires to spin or slip out of control.  Take your time when accelerating, and give yourself extra distance when slowing down.

3. Carry tire chains. Check with Caltrans or local authorities as they often require vehicles to be equipped with tire chains on snowy days.  Even if you have 4-wheel drive with snow tires, it’s a good idea to carry chains and a shovel.

4. Stay home.  If you don’t really need to go out, then don’t.  Even if you can drive well in the snow, not everyone else can.  There’s no need to put yourself in harm’s way if those errands can wait until the roads are clear.

Ring in the holiday season with Santa and the lighting of the Big Bear Christmas Tree in The Village. The tree lighting ceremony starts at 4:30 pm on Friday, November 25th at the corner of Village Dr and Pine Knot Ave. Meet Santa and Mrs. Claus at the Santa House from 6:30 until 9pm.  The Village Shops and Restaurants will remain open throughout the evening.

The Community Arts Theater Society of Big Bear Valley (C.A.T.S.) presents their original stage adaptation of Charles Dickens’ “A Christmas Carol” at the Big Bear Lake Performing Arts Center. Performances over the Thanksgiving weekend will be on Friday, November 25th & Saturday, November 26th from 7:30-10pm and a matinee on Sunday, November 27th from 1:30-4 pm.  Call 909-866-4970 for tickets and info.

Let the shopping season begin!  Find the perfect holiday gift for everyone on your list at the 27th annual Mountain Christmas Boutique at the Big Bear Convention Center.  More than 60 vendors will feature a delightful mixture of hand made collectibles and unique gifts.  Visit “The Mountain’s Largest Holiday Show” on Friday & Saturday from 10am-5pm and on Sunday from 10am-3pm.

Have a Happy Thanksgiving!