Real Estate, Short Sale & Foreclosure Info
PURCHASES
President signs federal tax credit extension President Obama today signed a bill extending and expanding the Federal Tax Credit for Home Buyers. The bill passed the U.S. House of Representatives yesterday and the U.S. Senate late Wednesday. The tax credit will be extended through April 30, 2010, with a 60-day extension if a binding contract is in place prior to the deadline. First-time home buyers will continue to receive a tax credit of up to $8,000, while existing homeowners will receive a reduced credit of up to $6,500. Existing homeowners will be eligible for the $6,500 if they have lived in their current residences for at least five years. The bill also will increase the qualifying income limits from $75,000 for single tax filers and $150,000 for joint filers, to $125,000 and $225,000, respectively. The purchase price of the home is capped at $800,000.
Under additional provisions in the bill, taxpayers can claim the credit on purchases completed in 2010 on their 2009 income tax returns. The bill maintains the provision that home buyers do not have to repay the credit provided the home remains their primary residence for 36 months after purchase, and waives this requirement for active duty military personnel who move due to a military order.
SHORT SALES
A short sale is a transaction in which a lender allows the real property securing the loan to be sold for less than the remaining mortgage amount due and accepts the proceeds as full payment of the loan. A lender may accept a short sale when the borrower is in severe financial straits and market conditions make a short sale the best choice to mitigate the lender’s damages. This saves the lender the costs of foreclosure and the borrower avoids having a foreclosure on his or her credit report. Increasingly, lenders are making loans in amounts that become too difficult for borrowers to repay. Some of these borrowers may not be able to fulfill their mortgage obligations. When a borrower is no longer in a position to make the mortgage payments, is facing foreclosure and the current market value of the property is less than the loan on the property, the borrower may consider a short sale.
MORTGAGE FORGIVENESS DEBT RELIEF EXTENDED - Updated 04/13/10
On April 12, 2010, SB 401, the Conformity Act of 2010 was enacted. It allows taxpayers who had all or part of the loan balance on their principal residence forgiven by their lender to exclude the forgiven debt from California gross income. The new law applies to discharges of qualified principal residence indebtedness on or after January 1, 2009, and before January 1, 2013.
THE MORTGAGE FORGIVENESS DEBT RELIEF ACT OF 2007
Tax Relief Granted for Forgiven Debt HR3648. For the next three years, the IRS won't count as income debt forgiven by lenders when troubled borrowers negotiate short sales or workouts on their primary residence that involves forgiveness of their past debt. Senate Bill 1055 or SB1055 now conforms to the Federal Mortgage Forgiveness Debt Relief Act of 2007. Under this new law, taxpayers who have a portion of their mortgage debt "forgiven" when they sell their homes for less than they owe, their mortgage lenders will no longer be required to pay state income taxes on the "forgiven" debt. This brings state tax law into line with the Federal changes passed last year.
SHORT SALE v. FORECLOSURE
As you may know a Foreclosure is the banks way of taking back a house that has fallen behind in payments. Did you know that a bank is willing to do a Short Sale in lieu of a Foreclosure? A Short Sale helps both you and the bank resolve an otherwise difficult situation. Each situation is different and a personal interview is the only way to determine if a Short Sale is right for you. We put your house up for sale, get an offer to the bank, negotiate the debt on your behalf, and allow you some control over your situation.
CREDIT IMPLICATIONS
A seller who wants to buy another home after foreclosure will end up waiting about 48 to 72 months before a lender will offer any kind of interest rate that makes sense. The good news is a short sale will allow the consumer to obtain an institutional loan for a new home within two years.
SOLUTIONS
We know this is a difficult time for many households and we want you to know you have somewhere to turn for help. We understand that people have lost their jobs, divorced, and relocated and that the market has dropped significantly. If your mortgage has gone up due to an adjustable rate increase or any other situation which has caused you to fall behind in your payments, we may be able to help.
TAKE ACTION
Do not hope it just goes away or that the government “bailout” people will knock on your door asking if they can help you. Don’t let another day or month go by without seeking help. If you are unsure if you qualify for assistance, please contact us for a free, no obligation consultation to discuss your options. We look forward to meeting with you to discuss your options.
Obama Administration Announces Financial Incentives and Uniform Process for Short Sales
Responding to the call of the National Association of REALTORS®, on May 14, 2009, the Obama Administration announced incentives and uniform procedures for short sales under its new Foreclosure Alternatives Program (FAP). For borrowers who are unable to retain their home under the Making Home Affordable Loan Modification Program, the servicer may consider a short sale or, if that is not successful, a deed-in-lieu of foreclosure. Participating servicers must comply with program requirements so long as they do not conflict with contractual agreements with investors.
Borrowers (Homeowners): Borrowers/homeowners qualify under the FAP if they meet minimum eligibility requirements for the Home Affordable Modification program but don’t qualify for a modification or do not successfully complete the three month trial period. Before proceeding with a foreclosure, servicers must determine if a short sale is appropriate.
Incentives: Incentives include: (1) $1,000 for servicers for successful completion of a short sale or deed-in-lieu of foreclosure; (2) $1,500 for borrowers/homeowners to help with relocation expenses; and (3) up to $1,000 toward the cost of paying junior lien holders to release their liens (one dollar from the government for every $2 paid by the investors to the second lien holders).
Standardized Documents: The program will include streamlined and standardized documents, including a Short Sale Agreement and an Offer Acceptance Letter. The goal is to minimize complexity and increase use of the short sale option.
Property Valuation by Appraisal or BPO: Servicers will independently establish both property value and minimum acceptable net return, in accordance with investor requirements. The price may be determined based on an appraisal or one or more broker price opinions (BPOs), issued no more than 120 days before the date of the short sale agreement.
Timeline: In the Short Sale Agreement, servicers must give borrowers/homeowners at least 90 days to market and sell the property, or up to one year, depending on market conditions. Property must be listed with a licensed real estate professional with experience in the neighborhood. No foreclosure may take place during the marketing period (at least 90 days) specified in the Short Sale Agreement.
Commissions: The Short Sale Agreement must specify the reasonable and customary real estate commissions and costs that may be deducted from the sales price. The servicer must agree not to negotiate a lower commission after an offer has been received.
No Borrower Fees: Servicers may not charge fees to borrowers/homeowners for participating in the FAP.
Program Expiration. The program is in effect through 2012.
Deed-in-Lieu of Foreclosure Option: Servicers have the option to require the borrower/homeowner to agree to deed the property to the servicer in exchange for a release from the debt if the property does not sell within the time allowed in the Short Sale Agreement (plus any extensions).
President signs federal tax credit extension President Obama today signed a bill extending and expanding the Federal Tax Credit for Home Buyers. The bill passed the U.S. House of Representatives yesterday and the U.S. Senate late Wednesday. The tax credit will be extended through April 30, 2010, with a 60-day extension if a binding contract is in place prior to the deadline. First-time home buyers will continue to receive a tax credit of up to $8,000, while existing homeowners will receive a reduced credit of up to $6,500. Existing homeowners will be eligible for the $6,500 if they have lived in their current residences for at least five years. The bill also will increase the qualifying income limits from $75,000 for single tax filers and $150,000 for joint filers, to $125,000 and $225,000, respectively. The purchase price of the home is capped at $800,000.
Under additional provisions in the bill, taxpayers can claim the credit on purchases completed in 2010 on their 2009 income tax returns. The bill maintains the provision that home buyers do not have to repay the credit provided the home remains their primary residence for 36 months after purchase, and waives this requirement for active duty military personnel who move due to a military order.
SHORT SALES
A short sale is a transaction in which a lender allows the real property securing the loan to be sold for less than the remaining mortgage amount due and accepts the proceeds as full payment of the loan. A lender may accept a short sale when the borrower is in severe financial straits and market conditions make a short sale the best choice to mitigate the lender’s damages. This saves the lender the costs of foreclosure and the borrower avoids having a foreclosure on his or her credit report. Increasingly, lenders are making loans in amounts that become too difficult for borrowers to repay. Some of these borrowers may not be able to fulfill their mortgage obligations. When a borrower is no longer in a position to make the mortgage payments, is facing foreclosure and the current market value of the property is less than the loan on the property, the borrower may consider a short sale.
MORTGAGE FORGIVENESS DEBT RELIEF EXTENDED - Updated 04/13/10
On April 12, 2010, SB 401, the Conformity Act of 2010 was enacted. It allows taxpayers who had all or part of the loan balance on their principal residence forgiven by their lender to exclude the forgiven debt from California gross income. The new law applies to discharges of qualified principal residence indebtedness on or after January 1, 2009, and before January 1, 2013.
THE MORTGAGE FORGIVENESS DEBT RELIEF ACT OF 2007
Tax Relief Granted for Forgiven Debt HR3648. For the next three years, the IRS won't count as income debt forgiven by lenders when troubled borrowers negotiate short sales or workouts on their primary residence that involves forgiveness of their past debt. Senate Bill 1055 or SB1055 now conforms to the Federal Mortgage Forgiveness Debt Relief Act of 2007. Under this new law, taxpayers who have a portion of their mortgage debt "forgiven" when they sell their homes for less than they owe, their mortgage lenders will no longer be required to pay state income taxes on the "forgiven" debt. This brings state tax law into line with the Federal changes passed last year.
SHORT SALE v. FORECLOSURE
As you may know a Foreclosure is the banks way of taking back a house that has fallen behind in payments. Did you know that a bank is willing to do a Short Sale in lieu of a Foreclosure? A Short Sale helps both you and the bank resolve an otherwise difficult situation. Each situation is different and a personal interview is the only way to determine if a Short Sale is right for you. We put your house up for sale, get an offer to the bank, negotiate the debt on your behalf, and allow you some control over your situation.
CREDIT IMPLICATIONS
A seller who wants to buy another home after foreclosure will end up waiting about 48 to 72 months before a lender will offer any kind of interest rate that makes sense. The good news is a short sale will allow the consumer to obtain an institutional loan for a new home within two years.
SOLUTIONS
We know this is a difficult time for many households and we want you to know you have somewhere to turn for help. We understand that people have lost their jobs, divorced, and relocated and that the market has dropped significantly. If your mortgage has gone up due to an adjustable rate increase or any other situation which has caused you to fall behind in your payments, we may be able to help.
TAKE ACTION
Do not hope it just goes away or that the government “bailout” people will knock on your door asking if they can help you. Don’t let another day or month go by without seeking help. If you are unsure if you qualify for assistance, please contact us for a free, no obligation consultation to discuss your options. We look forward to meeting with you to discuss your options.
Obama Administration Announces Financial Incentives and Uniform Process for Short Sales
Responding to the call of the National Association of REALTORS®, on May 14, 2009, the Obama Administration announced incentives and uniform procedures for short sales under its new Foreclosure Alternatives Program (FAP). For borrowers who are unable to retain their home under the Making Home Affordable Loan Modification Program, the servicer may consider a short sale or, if that is not successful, a deed-in-lieu of foreclosure. Participating servicers must comply with program requirements so long as they do not conflict with contractual agreements with investors.
Borrowers (Homeowners): Borrowers/homeowners qualify under the FAP if they meet minimum eligibility requirements for the Home Affordable Modification program but don’t qualify for a modification or do not successfully complete the three month trial period. Before proceeding with a foreclosure, servicers must determine if a short sale is appropriate.
Incentives: Incentives include: (1) $1,000 for servicers for successful completion of a short sale or deed-in-lieu of foreclosure; (2) $1,500 for borrowers/homeowners to help with relocation expenses; and (3) up to $1,000 toward the cost of paying junior lien holders to release their liens (one dollar from the government for every $2 paid by the investors to the second lien holders).
Standardized Documents: The program will include streamlined and standardized documents, including a Short Sale Agreement and an Offer Acceptance Letter. The goal is to minimize complexity and increase use of the short sale option.
Property Valuation by Appraisal or BPO: Servicers will independently establish both property value and minimum acceptable net return, in accordance with investor requirements. The price may be determined based on an appraisal or one or more broker price opinions (BPOs), issued no more than 120 days before the date of the short sale agreement.
Timeline: In the Short Sale Agreement, servicers must give borrowers/homeowners at least 90 days to market and sell the property, or up to one year, depending on market conditions. Property must be listed with a licensed real estate professional with experience in the neighborhood. No foreclosure may take place during the marketing period (at least 90 days) specified in the Short Sale Agreement.
Commissions: The Short Sale Agreement must specify the reasonable and customary real estate commissions and costs that may be deducted from the sales price. The servicer must agree not to negotiate a lower commission after an offer has been received.
No Borrower Fees: Servicers may not charge fees to borrowers/homeowners for participating in the FAP.
Program Expiration. The program is in effect through 2012.
Deed-in-Lieu of Foreclosure Option: Servicers have the option to require the borrower/homeowner to agree to deed the property to the servicer in exchange for a release from the debt if the property does not sell within the time allowed in the Short Sale Agreement (plus any extensions).
