Selected Excerpts

"The general rule is that a home purchaser cannot deduct the full amount of points in the year paid. Because points are considered prepaid interest, the homeowner must deduct them over the life of the mortgage. However, there is an exception allowing the points to be deducted in the year paid if the purchaser meets all of the following nine tests:

  1. The loan is secured against the purchaser's main home.
  2. Paying points is an established business practice in the area where the loan is made.
  3. The points paid were not more than the points generally charged in that area.
  4. The purchaser uses the cash method of accounting. (Meaning they report their income in the year they receive it and deduct expenses in the year they pay them.)
  5. The points were not paid in place of amounts that ordinarily are stated separately on the settlement statement, such as appraisal fees inspection fees, title fees, attorney fees, and property taxes.
  6. The funds the purchaser provided at or before closing, plus any points the seller paid, were at least as much as the points charged.
  7. The purchaser used the loan to buy or build his main home.
  8. The points were computed as a percentage of the principal amount of the mortgage.
  9. The amount is clearly shown on the settlement statement as points or an expense charged for the acquisition of the mortgage."

"In Virginia, if a foreclosure sale is completed before the property's owner files a bankruptcy petition, the bankruptcy will not affect the foreclosure sale or the purchaser's ability to take, hold, and enjoy title. In the District of Columbia and Maryland this is not the case. If a debtor owner files bankruptcy after a D.C. foreclosure sale but before the conveyance of a deed by the trustee, the foreclosure trustee must file a motion with the Bankruptcy Court to obtain relief from the automatic stay of execution before he can convey a deed to the purchaser. In Maryland, the title companies will require relief from any stay if the entire process, including the judicial ratification procedure, was not completed before the bankruptcy filing."