State halts tax-credit program...

California is cutting off applications for a tax credit that was designed to promote sales of new homes.The Franchise Tax Board said it would stop taking applications for the tax credits at midnight Thursday.The program offered $100 million in credits to about 10,000 consumers who buy homes that have never been occupied. The credit is equal to 5% of the purchase price or $10,000, whichever is less.

Buyers must occupy the homes for at least two years immediately after the purchase.The tax board expects to have received 12,000 applications.

But help is on the way …

AB 765 (Caballero) Income tax credit: purchase: principal residence.

Analysis

The Personal Income Tax Law authorizes a credit against the taxes imposed by that law in an amount equal to the lesser of 5% of the purchase price or $10,000 in the case of the purchase of a qualified principal residence on and after March 1, 2009, and before March 1, 2010, but not to exceed an aggregate limitation of $100,000,000 for all credits allowable.

Existing law requires a certification that the residence has never been occupied be provided to the Franchise Tax Board within one week of the sale of the qualified principal residence. This bill would allow a taxpayer to reserve a credit with the Franchise Tax Board and would require that the certification be provided to the Franchise Tax Board within one week of the close of escrow of the qualified principal residence. This bill contains other related provisions.

Housing Bill Won't 'Perform Miracles'

Senate Approves Measure, but Critics Say Law Unlikely to Prevent Most Foreclosures


By Lori Montgomery and Paul Kane Washington Post Staff Writers
Sunday, July 27, 2008; Page A01

Even as a huge bipartisan majority in the Senate voted yesterday to send a sprawling housing bill to the White House, economists, consumer advocates and other analysts said the package of programs for struggling homeowners and shaken mortgage lenders is unlikely to relieve the foreclosure crisis that is driving the nation toward recession.

"This is not the end of the housing crunch," said Jared Bernstein, a senior economist at the Economic Policy Institute. "Housing prices have already fallen 15 percent and they need to fall 10 percent more. This bill isn't going to change that equation."

Some Judges Stiffen Foreclosure Standards (WSJ)

WSJ
July 26, 2008; Page A3

A cadre of state-court judges scrutinizing foreclosure actions in a string of recent rulings have discovered flaws in documents that borrowers may be able to use to keep their homes.

The rulings show the critical role that judges are beginning to play as foreclosures mount in the most severe housing crisis since the Great Depression. The recent decisions build upon widely circulated opinions issued last fall by federal judges in Ohio who found trusts that hold the mortgages regularly begin foreclosure proceedings before they obtain the legal right to do so.

WSJ Law Blog
July 25, 2008

Subprime Legal: Judges Scrutinize Mortgage Docs, Deny Foreclosures

It’s been about nine months since several federal judges in Ohio issued the widely-read foreclosure dismissals that shined a light on sloppy paperwork done by companies that specialize in handling foreclosures.

Since then, the WSJ reports tonight, other judges across the country have caught on and are carefully scrutinizing mortgage documents filed as part of foreclosures and dismissing cases based on mistakes they’re finding, which borrowers might be able to exploit when facing foreclosure. (For another good read on judges and lawyers working to staunch foreclosure, click here for a recent NLJ story.)