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Pauline Foard - Mortgage Consultant from Wells Fargo Home Mortgage shared some useful information that she found on the IRS Government web site, which is a great tool for home buyers and sellers whether you have bought a home in the past or considering purchasing one in the near future. The following information is taken from one of the newsroom articles found on the IRS's web site. I have posted the link at the bottom of the article so you can read more about tax tips for homeowners and download IRS form 5405 pertaining to this home buyer tax break.

Expanded Tax Break Available for 2009 First-Time Homebuyers

IR-2009-14, Feb. 25, 2009 WASHINGTON — The Internal Revenue Service announced today that taxpayers who qualify for the first-time homebuyer credit and purchase a home this year before Dec. 1 have a special option available for claiming the tax credit either on their 2008 tax returns due April 15 or on their 2009 tax returns next year. Qualifying taxpayers who buy a home this year before Dec. 1 can get up to $8,000, or $4,000 for married filing separately. “For first-time homebuyers this year, this special feature can put money in their pockets right now rather than waiting another year to claim the tax credit," said IRS Commissioner Doug Shulman. “This important change gives qualifying homebuyers cash they do not have to pay back.” The IRS has posted a revised version of Form 5405, First-Time Homebuyer Credit, on IRS.gov. The revised form incorporates provisions from the American Recovery and Reinvestment Act of 2009. The instructions to the revised Form 5405 provide additional information on who can and cannot claim the credit, income limitations and repayment of the credit. This year, qualifying taxpayers who buy a home before Dec. 1, 2009, can claim the credit on either their 2008 or 2009 tax returns. They do not have to repay the credit, provided the home remains their main home for 36 months after the purchase date. They can claim 10 percent of the purchase price up to $8,000, or $4,000 for married individuals filing separately. The amount of the credit begins to phase out for taxpayers whose adjusted gross income is more than $75,000, or $150,000 for joint filers. For purposes of the credit, you are considered to be a first-time homebuyer if you, and your spouse if you are married, did not own any other main home during the three-year period ending on the date of purchase. The IRS also alerted taxpayers that the new law does not affect people who purchased a home after April 8, 2008, and on or before Dec. 31, 2008. For these taxpayers who are claiming the credit on their 2008 tax returns, the maximum credit remains 10 percent of the purchase price, up to $7,500, or $3,750 for married individuals filing separately. In addition, the credit for these 2008 purchases must be repaid in 15 equal installments over 15 years, beginning with the 2010 tax year. http://www.irs.gov/index.html

President Obama today pledged to help approximately 9 million homeowners facing foreclosure or struggling to pay their existing mortgages. His plan targets 2 groups of owners who have been impacted by the mortgage crisis. The first group are those who have seen their home values drop, but are not currently facing foreclosure but are struggling to stay afloat. This group would be able to refinance their mortgage for a lower rate. The other group who are facing foreclosure or pre-foreclosure mostly in part to "bad mortgages" such as adjustable rate, subprime & exotic loans would be able to have their loans modified to a lower interest rate for at least 5 years. This housing plan has a $75 billion price tag but experts predict it could exceed this amount. Obama was quoted saying, "By making these investments in foreclosure prevention today, we will save ourselves the costs of foreclosure tomorrow - costs borne not just by families with troubled loans, but by their neighbors and communities and by our economy as a whole. Given the magnitude of these costs, it is a price well worth paying".

Obama's plan to help "responsible homeowners" will allow 4-5 million families who took out conforming loans owned or guaranteed by Fannie Mae or Freddie Mac to be able to refinance through these government institutions. The plan could save these home owners hundreds of dollars a month by refinancing to a lower percentage rate. The government will use $100 million in treasury funds to increase the size of their portfolios from $850 billion to $900 billion so companies can loan that money out and lower interest rates. It is unclear whether homeowners who now owe more money than their homes are worth will qualify for such refinancing and what standards would apply for who qualifies for new loans. The Treasury Department plans to develop guidelines for loan modifications. Expect some specifics in about 2 weeks. I believe the target date to be March 4th.

On Good Morning America today, FDIC Chairwoman Sheila C. Blair discussed the formula she developed to help bail out IndyMac, is to get monthly mortgage payments down to 38% of the borrower's gross pay. This step is in the hands of the banks & mortgage companies. Without assistance from the federal government during this part, banks and investors will have to take a loss as the borrower's monthly mortgage payments shrink. Once the 38% threshold is reached, government aid kicks in. The bank and government will share the cost of getting that loan down to a 31% debt-to-income ratio and that rate must stay in effect for at least five years. Loan servicers get a $1,000 upfront fee for modifications that meet the requirements of the program and an additional $1,000 success fee for each year a borrower stays current for up to three years. This plan is targeted solely to helping homeowners who commit to making their payments and stay in their home. It is not aid for speculators or house flippers.

"In the end, all of us are paying a price for this home mortgage crisis. And all of us will pay an even steeper price if we allow this crisis to deepen -- a crisis which is unraveling homeownership, the middle class and the American Dream itself," the president said.

**Source - ABC News reporters Jake Tapper & Matthew Jaffe

U.S. President Barack Obama signed a $787 billion economic stimulus bill into law on Tuesday, February 17th as global markets plunged on fears the recession would deepen despite government rescue plans around the world.

Obama, who has described the package as one part of a broad plan to solve U.S. economic ills, was expected to lay out a strategy on Wednesday to stem home foreclosures and address the housing crisis -- one of the chief causes of the financial sector meltdown.

U.S. stocks slid, sending Wall Street near lows set in November. Other global markets also sank on fears that government action will not be enough to pull the United States out of recession and avert a deepening worldwide financial crisis.

Obama, whose plan to boost the banking industry was also met with falling stock markets last week, sounded a cautious but confident note in his remarks before signing the bill.

"I don't want to pretend that today marks the end of our economic problems, nor does it constitute all of what we're going to have to do to turn our economy around," he said.

"But today does mark the beginning of the end."

The White House has said it will take about a month for the money to start flowing. Some economists, however, believe the measures will come too late to have an effect in 2009, when many forecasters predict full-year output will contract.

Press Secretary Robert Gibbs indicated that another stimulus bill might be required at a later date, though he said the administration was not working on one now.

"There are no particular plans at this point for a second stimulus package," he told reporters on board Air Force One, adding, however, that he "wouldn't foreclose it."

The focus on Wednesday will turn swiftly to Obama's housing plans, which will aim to reduce foreclosure rates and help property owners at risk of losing their homes. That plan, unlike the bailout of big money banks, is likely to be popular with average Americans.

*** Information compiled by Welt Online News

So, watch out for the projected date of March 4th for implementation of the plan and how those facing foreclosures may receive assistance as well as restructuring of some loans.