Ilyce Glink Show Notes

Foreclosure Lawsuit Upset, Unemployment report

Foreclosure Lawsuit Upset: Massachusetts Supreme Court Rules against Wells Fargo and USBancorp

In a pivotal foreclosure lawsuit upset, the Massachusetts Supreme Court ruled against US Bancorp and Wells Fargo & Co. today in a case that could affect lower courts in that state and have serious financial consequences for some of the nation’s largest banks.

The state Supreme Judicial Court upheld a previous judge’s decision that two foreclosures made by the companies were invalid because the banks could not prove they actually owned the mortgages.

In the previous case, held in March 2009, Judge Keitch C. Long said the foreclosures were improperly transferred into two mortgage-backed trusts and voided them. The following October ,the banks requested he reverse the ruling, but he did not.

Today, Justice Ralph D. Gants, upheld the decision saying, “We agree with the judge that the plaintiffs, who were not the original mortgagees, failed to make the required showing that they were the holders of the mortgages at the time of foreclosure.”

READ MORE on my MONEYWATCH HOME EQUITY BLOG: Foreclosure Lawsuit Upset: Massachusetts Supreme Court Rules against Wells Fargo and USBancorp

FannieMae Launches WaysHome

Fannie Mae launched WaysHome today. It’s a free, interactive, online movie tool “designed to educate homeowners about their options to avoid foreclosure.” The site is based around an interactive move that allows you to choose your own path to avoiding foreclosure, but feels a little bit like a live-action Sims game.

Developed as part of Fannie Mae’s Know Your Options, WaysHome educates distressed homeowners on the short- and long-term impact of their decisions.

Billed as an “interactive movie,” users follow the story of one character and make decisions for them, all the while learning more about the answers they need for their personal situation.

Homeowners can immediately see the consequences of different actions and learn more about all of the options for avoiding foreclosure including repayment plans, forebearances, modifications, deeds-in-lieu, and short sales.

Someone who read the blog immediately tried out the interactive movie after reading about it and liked it. What about you?

READ MORE ON MY MONEYWATCH.COM BLOG: FannieMae Launches WaysHome

Federal Reserve Governor Janet Yellen Defends $600 Billion Securities Purchase

From Yellen’s speech:

To understand the rationale for our asset purchase program, it is helpful to review the evolution of macroeconomic conditions over the past several years. The National Bureau of Economic Research has dated the recession as having begun in December 2007, but the pace of economic contraction accelerated in the wake of the Lehman Brothers collapse in September 2008 and the ensuing disruption to global financial markets. As shown in figure 1, the unemployment rate rose from around 5 percent in the spring of 2008 to about 10 percent by the autumn of 2009 and has stayed well above 9 percent since then. Most observers, including myself, judge this level of unemployment to be much higher than levels consistent with full employment and stable inflation. For example, in a recent Survey of Professional Forecasters conducted by the Federal Reserve Bank of Philadelphia, the median estimate of the current level of structural unemployment–often referred to as the non-accelerating inflation rate of unemployment (NAIRU)–stood at about 5-3/4 percent, implying that the unemployment gap is nearly 4 percentage points.

In addition, a historically large fraction of the unemployed have been out of a job for a very long time. For example, roughly 4 percentage points of today’s unemployment rate reflects individuals who have been unemployed for half a year or more. Those who experience an extended period of unemployment face a risk of losing their ability to participate successfully in the workforce, lending additional urgency to the task of reviving the demand for labor.

Unemployment Drops to 9.4 Percent, But What’s Behind The Numbers?

The unemployment rate dropped in December from 9.8 percent to 9.4 percent. But, is that really an accurate picture of what’s going on with job creation?

Here’s what the Bureau of Labor Statistics (BLS) December Unemployment Insurance Report said: “The unemployment rate fell by 0.4 percentage point to 9.4 percent in December, and nonfarm payroll employment increased by 103,000, the U.S. Bureau of Labor Statistics reported today. Employment rose in leisure and hospitality and in health care but was little changed in other major industries. The number of unemployed persons decreased by 556,000 to 14.5 million in December, and the unemployment rate dropped to 9.4 percent. Over the year, these measures were down from 15.2 million and 9.9 percent, respectively.”

But not everyone agrees that this is an accurate reading. Take a look at the SurePayroll December Small Business Scorecard that looks at small business hiring.

ROTH IRA CONTRIBUTION LIMITS FOR 2011

You can contribute the maximum to your Roth IRA if you fall into the following AGI categories:

Single individual:

Less than $107,000 You can make a full contribution
$107,000 to $122,000 You can make a reduced contribution
More than $122,000 You cannot contribute to a Roth IRA

Married, filing jointly

Less than $169,000 You can make a full contribution (and a spousal Roth IRA contribution, so double the amounts below)
$169,000 to $179,000 You can make a reduced contribution
More than $179,000 You cannot contribute to a Roth IRA

Contribution amounts: $5,000 (if under 50 years old) or $6,000 (if 50 or older)

According to *Bill Nemeth, president of the Georgia Association of Enrolled Agents: *

The Roth Conversion Income Limits were eliminated in 2010 and for years after 2010 going forward. 2010 was the year that had the special provision for splitting the tax in 2011 and 2012 tax years.

New rules for conversions from IRAs to Roth IRAs. For tax years starting in 2010, the $100,000 modified AGI limit for conversions to Roth IRAs is eliminated and married taxpayers filing a separate return can now convert amounts to a Roth IRA. For any conversions in 2010, any amounts that are required to be included in income are included in income in equal amounts in 2011 and 2012. If you elect otherwise, you can choose to include the entire amount in income in 2010.

IRA Contributions must be made by April 15th but the return can be filed earlier. The IRS created the form 5498 (info reporting) to verify that you actually contributed to your IRA like you reported on your tax return. Extension to file taxes does not change the deadline. Clarification – The Form 5498 is issued by the company handling the IRA and is sent to the IRS and the taxpayer. The IRS can then verify that the taxpayer claimed the IRA contribution on the tax return and did indeed followed through and made the contribution.

This information-reporting form is used just like the 1098 form showing the amount of mortgage interest the taxpayer paid to their mortgage holder. This allows the IRS to confirm the amount of mortgage interest paid is the amount shown on the tax return.

Here’s what Woody Alpern, a CPA with Capital Investment Advisors said:

Remember if you have both after tax IRA money and Pre tax IRA money, you can’t just convert the after tax IRA to a Roth. Must tax prorata with pre tax ira and after tax ira. Income limit did go away for conversion.

Michelle, a CPA, called in to say that people with more complicated tax returns should use professional help.

Earned Income Tax Credit

Take a look at this Earned Income Tax Credit Chart to understand the relationship between income and getting money back.

Do State Revenue Departments Follow the IRS With Regard To Short Sales?

Michelle and her husband are doing a short sale on her former house (they got married last year). She wanted to know if the Georgia Department of Revenue would follow the Federal tax code on not taxing her on the short sale difference.

Bill Nemeth, Enrolled Agent, says that it is, but the reason Michelle is having a tough time finding it online is that the information hasn’t been posted yet on the Georgia DOR website. Here’s what he found:

From the 2010 GA Tax Instructions:

The Governor signed House Bill 1138 into law on June 3, 2010. Consequently, for taxable years beginning on or after January 1, 2010, with exceptions as discussed below, Georgia has adopted the provisions of all federal acts (as they relate to the computation of federal adjusted gross income (AGI) or federal taxable income for non-individuals) that were enacted on or before January 1, 2010. For 2010, the I.R.C. Section 179 deduction is $134,000 and the related phase out is $530,000.

For more tax questions, contact Bill directly at wgnemeth@aol.com

Loan Modification Hell Lawsuits

There are now about 70 comments on this blog post. Many folks have shared links and knowledge. You’ll want to check it out if you’re thinking of suing your mortgage servicing company or mortgage lender.

If you want to read all of the posts, go to Loan Modification Hell: All The Posts

How to Calculate IRS Required Minimum Withdrawals

Michelle wanted to know how to to calculate the minimum withdrawals for her IRA. Here’s the link on the IRS Site.

Get Great Tax Information on the Equifax Personal Finance Blog From TAXMAMA Eva Rosenberg

New Tax Laws For 2011 is one of Eva’s most popular stories these days. But you should check them all out.

Here’s a link to her main Equifax Personal Finance Blog Tax home page.

Ilyce Glink Show Notes – January 9, 2011 – Unemployment report, foreclosure lawsuit upset