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Research and Patience Aid in Subprime Climate
NYSSCPA shares tips for changing landscape

FOR IMMEDIATE RELEASE

Contact: Lois Whitehead, Public Relations Manager
212-719-8405
lwhitehead@nysscpa.org

NEW YORK, NY, August 28, 2007 - The domino effect of the subprime mortgage crisis has affected not only the housing and construction markets but has also trickled down to other credit markets, affecting those attempting to secure car and other personal loans. With uncertainty abounding, members of the New York State Society of Certified Public Accountants (NYSSCPA) are advising consumers to tread carefully.

Howard Landsberg, CPA, chair of the NYSSCPA Real Estate Committee, encourages patience.

“People should refinance now, but wait to purchase a home. Buyers stretching to afford their first home are being hit the hardest in the present market. Lenders have reined in their underwriting rules for borrowers with less than perfect credit. If you can improve your credit score, it is better to wait to buy,” says Landsberg.

Robert Reitman, CPA, former chair of the committee, adds, “In my opinion, people should wait to purchase a home as reports are stating values of properties are declining in the majority of the United States. If an individual can lock into a fixed rate mortgage they can afford, as compared to their current variable mortgage product, it would be prudent to refinance. They need to assess the amount of cash they have available to pay for housing. They should not extend themselves with a product they cannot afford if interest rates increase in the future.”

Consumers should also consider the differences between a fixed rate mortgage and a variable rate mortgage. A fixed rate mortgage offers predictable housing costs for the life of the loan. A variable rate is a mortgage on which the interest rate charged by the lender may be adjusted in accordance with a stipulated cost-of-funds index (e.g., prime rate).

With so many real estate buying opportunities in the current market, many consumers are considering a second home. Unless you are prepared to pay cash for the property, the answer to whether you should look into purchasing a home hinges on your ability to qualify for a mortgage on the second home. Lenders use two benchmarks when reviewing mortgage loan applications:

The market is also influencing parents to opt out of paying increasingly expensive on-campus room and board fees. For many, buying an apartment for college-age children could be considered a second home. Parents are also co-signing loans for their children. Banks typically design loans for students who will use the home as his or her primary residence, and require a down payment of about 3 percent of the purchase.

If you are in a foreclosure situation and the bank sells your home for less than the amount left on your mortgage, any forgiven debt can be treated as taxable income. The IRS form for reporting this is 1099-C. The C stands for cancellation of debt.

And finally if you are considering a home purchase, NYSSCPA recommends consulting with your CPA who will have a better understanding of your current and future financial portfolio.

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About the NYSSCPA

Representing 29,000 CPAs, the New York State Society of Certified Public Accountants (NYSSCPA) is the oldest state accounting organization in the nation, celebrating its 110th anniversary this year.

Incorporated in 1897, the Society is a not-for-profit organization that seeks to establish and maintain high standards of integrity, honor, and character among certified public accountants. Its members are CPAs working in public practice, industry, government and education in a state that serves as the home of Wall Street and major financial institutions.

The New York State Society of CPAs is located at 3 Park Avenue, New York, NY 10016. To learn more about the Society call 800-633-6320 or visit the Society’s website at www.nysscpa.org.