Determination helps woman become first-time homeowner

It was hard to tell if Karen Wordelmann was more excited about her new house Sunday or the firefighters who gave her a ride to see it.

"Be still my heart. It's about 110 degrees, and now I'm having hot flashes,"she said as three firefighters left her bedroom after shaking her hand, getting their photos taken with her and saying goodbye.

The firefighters picked Wordelmann up at her Bluebird Court apartment and gave her a ride to her new home in the Wedgewood Terrace mobile home park, where she was greeted by Springfield's own version of "Extreme Makeover: Home Edition."

Wordelmann at age 3 was the poster child for the United Cerebral Palsy campaign. Now at age 51, she is a homeowner for the first time.

For the past several months, Wordelmann's boss at the Illinois Employment and Training Center, Brenda Patterson, has been contacting relatives, friends, co-workers, local building suppliers and others to help Wordelmann realize her dream of home ownership.

When she came through the door of her new home Sunday, she was overwhelmed.

"I'm speechless," she said. "I never expected any of this. This is a palace, and it's mine."

Co-workers landscaped the outside. Patterson's brother, Bob Harmening, and his friend, Willy Baum, among others, donated hundreds of hours taking down wallpaper, painting, hanging borders, putting down new floors, building a ramp and installing a wheelchair accessible bathroom.

There is an eat-in kitchen, living room, three bedrooms and two bathrooms. One of the three bedrooms has been converted into an office with a new computer. There is new furniture, and even a Christmas tree to celebrate the occasion. There is also a brand new grill, something Wordelmann said she was especially looking forward to. "I'm just shocked," she said.

For the past 20 years, Wordelmann has lived in an apartment on Bluebird Court that was built especially for her. At first, the area was beautiful. Friends and family came for visits, and her personal assistant came by several times a day. But as time passed, the crime rate rose. Eventually, no one would come. Her caregiver, afraid to drive her own vehicle, would take the bus.

"Finding personal assistants is hard - she's been with me four years," Wordelmann said. "Some people I hired from the apartment building turned out to be crack addicts and stole from me, made me late for work. So, I don't have them anymore."

She said that when her Access Springfield bus comes, people hang on it, knock on the windows and harass riders and drivers.

"No one wants to pick me up or drop me off any more. The neighborhood I live in is extremely undesirable. You can't park a car there without being bothered. There's a lot of drug traffic and guns are visible all the time."

Police statistics show that on Bluebird Court and the 10 streets immediately nearby - an area that makes up sub-beat 414 for Springfield police - there were 2,546 calls for service in the past 12 months. The calls include a variety of crimes and complaints.

Wordelmann said she was "stuck in a rut."

Wordelmann has been looking a long time for a place of her own. Initially, she thought it would be financially out of reach.

Then, this spring, she found a mobile home in Wedgewood Terrace. The price, $30,000, was reasonable, but with the cost of accessibility changes seemed to put it out of reach.

Her mother stepped in with financial help, and Wordelmann applied for help through the TechConnect low-interest loan program of the Illinois Assistive Technology Project. The loan put home ownership within reach.

Sue Castles, loan program coordinator for the federally funded, not-for-profit organization, said there are several facets, including low-interest loans to the disabled for equipment, specially equipped vehicles, home modifications and items that will help the disabled work from their homes.

Castles said one of the biggest benefits to TechConnect is that it makes low-interest loans to the disabled, who may not always have the best credit. Often, a disabled person may have spent months in a nursing home, or someone took advantage of them because of their disability, or they got behind because they had to wait for Medicare or their insurance company to pay bills.

"We try not to base a decision solely on credit history," she said. "We try to look at the history of repayment, and if people can explain to us how disability has affected them not being able to pay bills on time." Now, Wordelmann's life is on the brink of a major change.

"I'm excited because it's the first time I've had the chance to own my own home," she said. "Now my friends will come over and my family can come visit. I can cook out, and my grills won't get stolen. I can sit on my porch at night, grill out."

Robin Benson of the Statewide Independent Living Council agreed it's difficult for disabled people in Springfield to find affordable housing.

"I work with people every day. It's a challenge every day to find someplace to live. I agree, there just isn't enough. We're putting out an appeal to builders in the area to build accessible houses," she said.

There are some - such as the Springfield Housing Authority, TSP Hope, Habitat for Humanity and others - who are making strides. But Benson said that, according to the 2000 census, there were 8,938 people living in Springfield who had physical disabilities. In addition, the population is aging.

"The time has come where the baby boomers are getting older, and we're going to need accessible housing," she said. "Our goal is to keep people out of nursing homes but to get people to live as independently as possible." Independence is a word Wordelmann knows well.

While family, friends and co-workers helped put her in a new home, she also is determined to succeed on her own.

"Karen works here by her own aggression. She came in here as a client," Patterson recalled. "Now, she's the disability navigator."

Both women recall the day five years ago when Wordelmann arrived at the door of the employment and training center on South Ninth Street.

She struggled to get the door open. The front counter of the building was so high that people couldn't see she was waiting in line. One person tripped over her wheelchair as they walked by.

Wordelmann was there to apply for unemployment from a temporary job and to work on a resume. She recalled a counselor at the Department of Rehabilitation Services gave her the book "What Color Is Your Parachute?" In it, she remembered, it advised people to go into an office, look around. If you see something that needs to be done, that you can do - tell the employer.

"I heard that DORS was giving equipment to unemployment offices - equipment to help people with disabilities get jobs, and I wanted to do my resume," she said. "I was looking around and didn't see any of the assistive technology around."

So, she started asking questions. And, when she did, office staff went to the back of the office and got Patterson.

"We didn't handle the disabled. Karen said 'I'm looking for a job and I'm frustrated.' I said, 'How can we help you?' And, she looked around at all this equipment we weren't using, and said she could do it. She just doesn't let up." Wordelmann started as an intern and got a full-time job.

Patterson and Wordelmann became good friends, too.

"Over the years, her independence has waned, but her dedication and endurance have not," Patterson said of her friend who has used a wheelchair since she was in her early teens and who graduated from Chicago public schools and from college.

And while Wordelmann could rely on aid from the government, she chooses to work. She also passes that message on to others.

"Working heightens your self esteem and gives you a purpose for existence and not on the welfare rolls. There are more benefits to working. I have a job, and this is what I do. During times I didn't have a job, I was in the house all the time, watching soaps with nothing to do besides staring at four walls."

Sarah Antonacci can be reached at 788-1529 or sarah.antonacci@sj-r.com.

Trailer parks see new interest in tough economic times

By Adam Jadhav
ST. LOUIS POST-DISPATCH
01/24/2009

FENTON - Dave Diekmann sat at his dining room table recently musing about the trappings of home: pictures on the walls, a grill on the deck, a neatly trimmed lawn, kids playing video games in separate rooms, a giant mop of a white cocker spaniel flopping around on the floor.

All of that seemed out of reach last spring when real estate agents told Diekmann and his girlfriend, Sherri Ross, that having a house of their own wasn't an option, given their mediocre credit and the gloomy market. Better find a rental and wait it out.

But they wanted to move in together, they wanted room for Ross' three sons, a yard and a neighborhood, and they specifically didn't want to share walls and halls in an apartment building.

They found a solution in the place they least expected. They joined the growing population of people in these tough economic times who turn to a much-derided and often-overlooked affordable housing option: the mobile home park.

Seated at his dining table earlier this month, Diekmann was almost gloating over the find. He lives in the higher-end park Chancellor Farms, near state Highways 141 and 21, where garbage stays in bins and the grass is cut weekly.

"We all know the stereotype of trailer trash, but this isn't that," he said. "If it weren't for this, we'd be stuck in a ratty place somewhere.

Mobile home sales declined sharply in recent years as loans for brick-and-mortar homes were easy to come by. In one barometer, the Federal Housing Administration saw participation in its mobile home loan insurance program fall from almost 8,285 new participants in 1988 to just 1,377 in 2007.

But the tanking economy and frozen credit markets have sparked new interest in affordable housing; in 2008, the number of FHA insured mobile home loans rose almost 14 percent, to 1,569.

The manufactured housing industry - salespeople prefer the term to mobile home - is predicting a renaissance. At Bropfs Mobile Home Sales, a popular dealership in St. Charles, more customers report being pinched by the economy.

"We're experiencing more people that are coming in that are basically coming from situations where foreclosure situations, they can't afford a traditional house, they just don't have the credit," said Mac McCoy, a Bropfs salesman. "We've seen an extra 10 to 15 percent in that category. We expect that to increase. I don't see how it could not go up."

The rate of growth will be determined, in part, by a market that remains very much in flux, said Jay McCanless, an independent senior analyst who watches the manufactured housing industry for FTN Midwest Securities.

McCanless said the glut of foreclosed homes on the market at fire-sale prices could provide more competition for mobile homes, if buyers have the credit.

"There's definitely the potential that manufactured housing could see a pickup with the need for affordable housing," McCanless said. "But conditions in this market will determine how much that might be."

Buyers also must get over the stereotype of a mobile home community: dingy, flimsy metal trailers, grass up to the windows, meth labs around the corner. Mobile homes remain a small portion of all housing in the country - 6.7 percent as of 2007 according to U.S. Census estimates.

Tom Hagar, executive director of the Missouri Manufactured Housing Association, said he understands the stigma but manufactured homes today vary widely, from the models of the 1970s to up-to-date sectionals that can be customized and cost nearly the price of a traditional home and are built to federal codes.

And, Hagar said, as in any other community - from the cul-de-sac to the high rise - management, price and socioeconomic factors play a role in determining quality. Some low-rent parks exist, but so do high-end communities.

"Too often, people don't look at it as an option because they're only familiar with the negative side," Hagar said.

Last winter, Diekmann and Ross decided to move in together, but when they checked with real estate agents credit ratings got in the way. Diekmann never owned a credit card and had never built up a rating, he said. Ross' credit score also wasn't going to get them a payment they could afford.

The couple refused to rent. "I was just tired of paying somebody else's house payment," Ross said.

An online classified ad caught their attention: A mobile home community with a clubhouse, playground, swimming pool and strict rules. The park's owners, MHPI Inc., have more than 40 mobile home communities in the Midwest and provided financing that was forgiving of Diekmann's and Ross' credit woes.

Without that aid, Diekmann and Ross probably wouldn't have been able to buy. People with poor credit have trouble these days finding an affordable loan for a home, mobile or not.

The industry is looking tentatively to the FHA insurance program for help. As part of the massive housing bill Congress passed last fall, the FHA insurance program also is set to raise loan limits, ease some guidelines and possibly provide down payment assistance.

Diekmann and Ross bought a double-wide mobile home - three bedrooms, two baths, living room, dining room, kitchen - on a double lot. Their mortgage on an 11-year loan is $496 a month; the land rents for another $342 monthly.

A comparable apartment would cost hundreds more a month, something not feasible on the couple's income. Diekmann works as a lawn care contractor; Ross on a commercial refrigeration assembly line. Diekmann estimated they bring in about $55,000 in a good year.

The managers at the park conduct background checks on new residents and mandate regular house maintenance and yard care. Toys are picked up. Dogs are supervised. Trash left out and junk in the yard - say, a car on cinder blocks - are not tolerated.

"It's like a subdivision. It's really like any other neighborhood," said Ted Weier, general manager for the sales company responsible for filling vacancies.

A clubhouse, pool and playground sit at the entrance. Black lampposts in every yard turn on in the evening.

Mike Harris, a heating and cooling maintenance man, admitted he was skeptical when he first moved in to Chancellor Farms to take care of his ailing father. He planned to move his dad out as quickly as possible.

"At first, to even tell people I lived in a trailer park was kind of embarrassing," he said, sitting in his driveway working out a dent on his BMW 525 si.

Harris has been there eight years. He has built a garden fountain and pond. He has barbecues with friends in the summer. Far from cramped, he has a four-poster in the bedroom and a hot tub in the bath.

And he has no intention of leaving.

ajadhav@post-dispatch.com | 314-809-9423

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$8,000 First Time Home Buyer Tax Credit Frequently Asked Questions

$8,000 Tax Credit to First Time Home Buyers does not have to be paid back! This is a gift you can use for any thing you like. The timeline has been extended to December 2009. You can use it to pay bills or even make payments on the home you buy. Start Shopping NOW!!

Who is eligible to claim the tax credit?

First-time home buyers purchasing any kind of single family home-new or resale-are eligible for the tax credit. To qualify for the tax credit, the new buyer must purchase the home on or after January 1, 2009 and before December 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner.

What is the definition of a first-time home buyer?

The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the home-ownership history of both the home buyer and his/her spouse.

For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.

How is the amount of the tax credit determined?

The tax credit is equal to 10 percent of the home's purchase price up to a maximum of $8,000.

Are there any income limits for claiming the tax credit?

The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.

How Much Can You Afford to Spend On Your Next Home?

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What is "modified adjusted gross income"?

Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine "adjusted gross income" or AGI. AGI is total income for a year minus certain deductions (known as "adjustments" or "above-the-line deductions"), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of income including wages, salaries, interest income, dividends and capital gains.

To determine modified adjusted gross income (MAGI), add to AGI certain amounts such as foreign income, foreign-housing deductions, student-loan deductions, IRA-contribution deductions and deductions for higher-education costs.

If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?

Possibly. It depends on your income. Partial credits of less than $8,000 are available for some taxpayers whose MAGI exceeds the phaseout limits.

Can you give me an example of how the partial tax credit is determined?

Just as an example, assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.

Here's another example: assume that an individual home buyer has a modified adjusted gross income of $88,000. The buyer's income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.

Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.

How is this home buyer tax credit different from the tax credit that Congress enacted in July of 2008?

The most significant difference is that this tax credit does not have to be repaid. Because it had to be repaid, the previous "credit" was essentially an interest-free loan. This tax incentive is a true tax credit. However, home buyers must use the residence as a principal residence for at least three years or face recapture of the tax credit amount. Certain exceptions apply.

How do I claim the tax credit? Do I need to complete a form or application?

Participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on Line 69 of their 1040 income tax return. No other applications or forms are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests.

What types of homes will qualify for the tax credit?

Any home that will be used as a principal residence will qualify for the credit. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats. The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences.

I read that the tax credit is "refundable." What does that mean?

The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.

For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed).

I purchased a home in early 2009 and have already filed to receive the $7,500 tax credit on my 2008 tax returns. How can I claim the new $8,000 tax credit instead?

Home buyers in this situation may file an amended 2008 tax return with a 1040X form. You should consult with a tax adviser to ensure you file this return properly.

Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?

Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been "purchased" on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after January 1, 2009 and before December 1, 2009.

In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date.

Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?

Yes. The tax credit can be combined with the MRB home buyer program. Note that first-time home buyers who purchased a home in 2008 may not claim the tax credit if they are participating in an MRB program.

I live in the District of Columbia. Can I claim both the Washington, D.C. first-time home buyer credit and this new credit?

No. You can claim only one.

I am not a U.S. citizen. Can I claim the tax credit?

Maybe. Anyone who is not a nonresident alien (as defined by the IRS), who has not owned a principal residence in the previous three years and who meets the income limits test may claim the tax credit for a qualified home purchase. The IRS provides a definition of "nonresident alien" in IRS Publication 519.

Is a tax credit the same as a tax deduction?

No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $8,000 in income taxes and who receives an $8,000 tax credit would owe nothing to the IRS.

A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $8,000 in income taxes. If the taxpayer receives an $8,000 deduction, the taxpayer's tax liability would be reduced by $1,200 (15 percent of $8,000), or lowered from $8,000 to $6,800.

I bought a home in 2008. Do I qualify for this credit?

No, but if you purchased your first home between April 9, 2008 and January 1, 2009, you may qualify for a different tax credit.

One of the many benefits of owning your own home is taking advantage of more deductions on your tax returns. For the majority of homeowners, this mainly includes deducting interest expense and property tax each year. For the home used for businesses or investments, the tax rules become more challenging.

Is there any way for a home buyer to access the money allocatable to the credit sooner than waiting to file their 2009 tax return?

Yes. Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the down-payment.

Buyers should adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.

Further, rule changes made as part of the economic stimulus legislation allow home buyers to claim the tax credit and participate in a program financed by tax-exempt bonds. Some state housing finance agencies, such as the Missouri Housing Development Commission, have introduced programs that provide short-term credit acceleration loans that may be used to fund a down-payment. Prospective home buyers should inquire with their state housing finance agency to determine the availability of such a program in their community.

If I'm qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?

Yes. The law allows taxpayers to choose ("elect") to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.

Taxpayers buying a home who wish to claim it on their 2008 tax return, but who have already submitted their 2008 return to the IRS, may file an amended 2008 return claiming the tax credit. You should consult with a tax professional to determine how to arrange this.

For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest?

Yes. If the applicable income phaseout would reduce your home buyer tax credit amount in 2009 and a larger credit would be available using the 2008 MAGI amounts, then you can choose the year that yields the largest credit amount.