http://www.keytlaw.com/blog/2009/11/confusion-about-short-sales-and-anti-deficiency/
Great source of information for individuals debating whether to short sale or foreclosure. 2 considerations must be observed. One has nothing to do with the other as many people confuse the two.
Anti Deficiency Statue has to do with the lender seeking recourse for their loss after the fact. The anti deficiency law in Arizona affects short sales different than foreclosures (mainly that the anti deficiency law only protects in a foreclosure). Everyone involved in a short sale must make sure language in specific and clear in bank settlement letter to protect your clients from further recourse from bank. I particulary found the statue of limitation information valuable. 90 days for a foreclosure and 6 years for a short sale. In most cases both homeowners and investors are covered under this statue....in most cases emphasized.
The Mortgage Debt Relief Act has to do with Uncle Sam. Whether you short sale or foreclose the bank will issue a 1099 unearned income. Now you have a situation with your taxes to deal with. Whatever amount the banks writes off as a loss is conveniently reported to you as unearned income. This means you have to pay taxes on that income (doesn't this just seem wrong). In any case, Former Pres. Bush enacted the Mortgage Debt Relief Act and Pres. Obama has extended it. It protects owner occupied (not investors or second homes) from having a tax obligation on this unearned income.
The link above is a valuable research tool for those trying to decide between their options. There are many many gray areas that until court cases start setting precendence will possibly be further setbacks for those who foreclose or short sale.
I am not an attorney or capable of giving legal advice. This is information as it has come known to me through my own research.
Monday, March 29, 2010
Friday, March 19, 2010
HAFA - Home Affordable Foreclosure Alternatives CHANGES COMING APRIL 5TH
I hope this is not just another program the banks DONT have to follow. This is a step in the right direction. Second lien holders do not realize how many people are filing for bankruptcy after a foreclosure because of the second lienholders lack of cooperation during a short sale. Dealing with one mortgage has always been a much smoother transaction.
I am launching http://www.westvalleyshortsale.com/ by the end of the month as a place for resources and/or alternatives to foreclosure.
As taken from email from Desiree Montgomery, MSSC of Realty Executives
"The mortgage modification process thus far has been very confusing for all parties involved. Now there is another program coming that will hopefully aid in some relief for homeowners. The Home Affordable Foreclosure Alternatives (HAFA) is a Short Sale Alternative to foreclosure where once the mortgage lien holders approve the Short Sale, the the homeowner will not be pursued for the difference. Also, under HAFA, the homeowner who participated in good faith will also receive relocation assistance at the close of the transaction.
On April 5th, new the HAFA changes are coming that affect Short Sales. Even though you can go online to see the participating banks, my staff has been literally calling each of the Banks to see if they are going to be ready by the launch date.
Just a few highlights:
Participating Banks were provided a streamlined process that you must follow, to the letter
Approvals are given within 10 business days
Buyers have a minimum of 45 days to close
Contracts and settlement statements will require specific requirements to be approved
Seller's may have to negotiate terms with second lien holders BEFORE requesting approval under this program
Contracts in your current pipeline will require a different set of documents and tools"
I look forward to this!
I am launching http://www.westvalleyshortsale.com/ by the end of the month as a place for resources and/or alternatives to foreclosure.
As taken from email from Desiree Montgomery, MSSC of Realty Executives
"The mortgage modification process thus far has been very confusing for all parties involved. Now there is another program coming that will hopefully aid in some relief for homeowners. The Home Affordable Foreclosure Alternatives (HAFA) is a Short Sale Alternative to foreclosure where once the mortgage lien holders approve the Short Sale, the the homeowner will not be pursued for the difference. Also, under HAFA, the homeowner who participated in good faith will also receive relocation assistance at the close of the transaction.
On April 5th, new the HAFA changes are coming that affect Short Sales. Even though you can go online to see the participating banks, my staff has been literally calling each of the Banks to see if they are going to be ready by the launch date.
Just a few highlights:
Participating Banks were provided a streamlined process that you must follow, to the letter
Approvals are given within 10 business days
Buyers have a minimum of 45 days to close
Contracts and settlement statements will require specific requirements to be approved
Seller's may have to negotiate terms with second lien holders BEFORE requesting approval under this program
Contracts in your current pipeline will require a different set of documents and tools"
I look forward to this!
Tuesday, March 9, 2010
Thought for the Night about the Mortgage Interest Deduction
At dinner tonight, conversation turned some friends of the family who just lost their home. Not because they do not make enough money, just the opposite, but because they got involved in a really bad business venture that has been tied up in the court system for a long time and drained their savings over the last 4+ years. Like everyone else they took out the equity of their home and their retirement to start this business which ultimately failed.
It started the rotation of logic in my mind that I know of a few people in their situation. They make good money but made bad decisions. All these people who make good money will be doing their taxes this year and next to a very rude awakening. What happened to their mortgage interest write off?!?!?!?!? So we are going to have literally millions of people paying in an enormous amount of money in taxes to the government. Am I wrong in this thinking? Not only that but what about all the taxes having to be paid on the 1099 unearned income statements from the short sales and foreclosures. Sure some people are covered under the "Debt Relief Act" assuming they were primary residences but many more were not.
So when I hear about all the tax cut programs because of lost revenue from property taxes, I have to think about all the revenue they are getting from people not having the greatest tax shelter which was their home. Maybe in the big picture of things this amount is insignificant, but it was a thought none the less.
It started the rotation of logic in my mind that I know of a few people in their situation. They make good money but made bad decisions. All these people who make good money will be doing their taxes this year and next to a very rude awakening. What happened to their mortgage interest write off?!?!?!?!? So we are going to have literally millions of people paying in an enormous amount of money in taxes to the government. Am I wrong in this thinking? Not only that but what about all the taxes having to be paid on the 1099 unearned income statements from the short sales and foreclosures. Sure some people are covered under the "Debt Relief Act" assuming they were primary residences but many more were not.
So when I hear about all the tax cut programs because of lost revenue from property taxes, I have to think about all the revenue they are getting from people not having the greatest tax shelter which was their home. Maybe in the big picture of things this amount is insignificant, but it was a thought none the less.
Wednesday, March 3, 2010
Realty Times - What Canada's New Mortgage Rules Mean to You
Realty Times - What Canada's New Mortgage Rules Mean to You: "What Canada's New Mortgage Rules Mean to You"
FHA 90 Day Flip Rule My Experience Thus Far
Please email me feedback if you have run into this scenario.
We have all been receiving emails and information about how the 90 day flip rule was to be waived for a year starting February 1st, 2010. What all the information is not telling you is that this "Rule" is really an initiative by HUD, not a law. This means the banks do not have to abide by it. So of the 10 investors my lender deals with only 1 is willing to finance my FHA buyers within the 90 days of the previous purchase date.
So is this rule a pharce or what? Irritated.
Check out http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf
Beware with your FHA buyer's mortgage company. Verify that indeed they will fund on a home that has been flipped within 90 days. Listing agents do not rely on buyers agent to know this. If you do not want your deal to fall apart call the mortgage co yourself to verify they will financing the deal.
We have all been receiving emails and information about how the 90 day flip rule was to be waived for a year starting February 1st, 2010. What all the information is not telling you is that this "Rule" is really an initiative by HUD, not a law. This means the banks do not have to abide by it. So of the 10 investors my lender deals with only 1 is willing to finance my FHA buyers within the 90 days of the previous purchase date.
So is this rule a pharce or what? Irritated.
Check out http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf
Beware with your FHA buyer's mortgage company. Verify that indeed they will fund on a home that has been flipped within 90 days. Listing agents do not rely on buyers agent to know this. If you do not want your deal to fall apart call the mortgage co yourself to verify they will financing the deal.
Tuesday, March 2, 2010
Fannie Mae IS NO LONGER requiring you to use their Title Co.
Copy and pasted from Email sent by Toni Taylor at American Title Service Agency 602.330.4144 ttaylor@atsaaz.com
BREAKING NEWS!!!!!
As you may know all banks use their own addenda for REO sales. For many years now Fannie Mae has been using basically the same addendum which stated that the buyer MUST use the seller's title agent.
The addendum has been DRAMATICALLY CHANGED in that it now states: "The closing shall be held at a place so designated and approved by the Purchaser". This is an absolute turnaround from previous versions wherein it stated that the purchaser MUST use seller's title agent! The buyer's right to now select the escrow company can be found in Section 2B, page 1, line 4. When representing a buyer, do not allow the REO agent to dictate the title company any longer on Fannie, as this would not be fiduciary. If the agent challenges you, simply educate them on where the Addendum gives the buyer this right. We have the addendum - email me for a copy.
The net effect of this new addendum is that the buyer can now make his/her own selection as to title agent and will then be better protected against any prior title defects.
We are very excited to know that our Realtor clients have been put back in the driver's seat on these REO transactions and we look forward to being able to work with you on these!!
BREAKING NEWS!!!!!
As you may know all banks use their own addenda for REO sales. For many years now Fannie Mae has been using basically the same addendum which stated that the buyer MUST use the seller's title agent.
The addendum has been DRAMATICALLY CHANGED in that it now states: "The closing shall be held at a place so designated and approved by the Purchaser". This is an absolute turnaround from previous versions wherein it stated that the purchaser MUST use seller's title agent! The buyer's right to now select the escrow company can be found in Section 2B, page 1, line 4. When representing a buyer, do not allow the REO agent to dictate the title company any longer on Fannie, as this would not be fiduciary. If the agent challenges you, simply educate them on where the Addendum gives the buyer this right. We have the addendum - email me for a copy.
The net effect of this new addendum is that the buyer can now make his/her own selection as to title agent and will then be better protected against any prior title defects.
We are very excited to know that our Realtor clients have been put back in the driver's seat on these REO transactions and we look forward to being able to work with you on these!!
Qoute of the Day
"Mercy is the quality that sees the inner need behind its expression. It looks behind anger and sees the sadness."
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