If you have been thinking about short selling your house you might want to start the process sooner rather than later. If you decide to short sell your property and the sale does not close until after December 31, 2012 you could incur Federal income tax liability for the amount of the forgiven debt. Currently, The Mortgage Debt Relief Act of 2007 (“MDRA”) allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure or short sale qualifies for the relief. The MDRA expires at the end of 2012 so debt forgiveness that would be non-taxable through December 31, 2012, would become taxable starting January 1, 2013. While it is possible that Congress could extend the deadline for the MDRA there is no indication at this time that it will. In short, if you or one of your friends has been contemplating a short sale, the time to act is now. For more information please visit the IRS website at http://www.irs.gov/individuals/article/0,,id=179414,00.html or consult your tax professional.
Jenny Winford July 23rd, 2017
Posted In: Uncategorized
Foreclosure Prevention Seminar
2122 S. El Camino Real, Suite 201
Oceanside, CA 92054
Direct: (760) 754-2121
Fax: (760) 754-1831
Email: Michael@dreamhouserealtyinc.net
Foreclosure Prevention Seminar
January 18, 2011
By Michael Gaddis, Esq.
Syllabus of Discussion Topics
1. Options Available for Distressed Homeowners
2. How Does the Foreclosure Process Work?
3. What is a Short Refinance?
4. What is a Loan Modification? What is the Loan Modification Process?
5. Entities that Assist with Loan Modifications?
6. What is HAMP & MHA Plan?
7. Do All Lenders and Investors Participate in HAMP?
8. Hardships and Imminent Default
9. Principal Reductions: Fact and Fantasy
10. What is Net Present Value?
11. Serviced Loans v. Portfolio Loans
12. How is Credit Affected by a Loan Modification/Short Sale?
13. Forensic Analysis of Loan Documents
14. Litigation: Does it Work?
15. Recourse Loans v. Non-Recourse Loans
16. 1099 Tax Liability for Debt Forgiveness
17. Mortgage Debt Relief Act of 2007
18. What is HAFA?
19. Deed in Lieu of Foreclosure
20. Does Filing a Bankruptcy Help Save Your House?
21. Beware of Foreclosure Rescue Scams
New FHA Loan Limits Could Potentially Drive Housing Prices Down
On October 1, 2011 the Federal Housing Administration (FHA) loan limits changed for the remainder of the 2011 year. The implemented change lowered the FHA loan threshold in San Diego County from $697,500 to $546,250. In Riverside County the drop was from $500,000 to $417,000 and in Orange County the drop was from $729,750 to $625,500. If the value of your home is below the new FHA loan limit the drop will probably not have an impact on the value of your home. However, if the value of your home is above the new FHA loan limit the pool of potential buyers for homes like yours has been drastically reduced. In the real estate world, as in every market, housing prices are dictated by what a buyer is willing AND ABLE to pay. Since most real estate transactions involve a loan of some sort, the lowering of the FHA loan limits seriously hurts the pool of potential buyers. Obviously, if there are fewer buyers and if the supply of housing increases as much as is projected by foreclosure analysts prices will drop accordingly. The law of Supply and Demand is in full effect. Organizations such as the California Association of Realtors and the National Association of Mortgage Brokers continue to lobby to have the limits raised again. In the meantime, if the value of your house is currently affect by the FHA loan limit changes; expect some fluctuation in the value of your home in the near future.
The number of notices of default (“NOD”) filings rose by 33% in the month of August. In California, NODs are the beginning stages of the foreclosure Process. Once a NOD is filed the lender has to wait 90 days until it can file a notice of trustee sale (“NOT”). Once a NOT is filed the sale date can take place no sooner that 21 days from the date of filing of the NOT. It is important to note that while a NOD filing is very serious, there may still be time to resolve the housing issue through a loan modification, short sale, reinstating the loan by bringing the loan current or a deed in lieu of foreclosure.
Jenny Winford July 23rd, 2017
Posted In: Uncategorized
The Home Affordable Foreclosure Alternatives (HAFA) program is a government sponsored foreclosure assistance program that provides $3000 of relocation assistance for distressed homeowners. Of course, most homeowners desiring to short sell their homes would like to qualify for this program. However, issues may arise that can make qualification for HAFA either difficult or impossible. The general criteria for HAFA eligibility is as follows:
The first problem that can arise is that you must live in the home or have lived there within the past 12 months. However, some lenders refuse to approve HAFA if the house is vacant at the time that the lender’s valuation was completed. In other words, if you move out of the house prior to the lender’s broker price opinion (BPO) and the agent completing the BPO makes a note that the house is vacant, this could cause a problem. Not all lenders are strict about this but there are some that are very strict. Another problem arises when there are 2 liens involved. Second lien holders that participate in HAFA are required to provide a full release for the amount forgiven. The problem is that there is no regulation that states that second lien holders have to participate in HAFA or agree to a short sale at all. Stubborn lenders or collection companies that have acquired an interest in the lien can simply not cooperate at all. Another HUGE problem is the restriction on how much a first lien holder can allocate to a second lien holder in a short sale transaction. Prior to March of 2012 the first lien holder could allocate no more than $6,000 to the second lien holder, period. This means that if a second lien holder agrees to a short sale but issues an approval for more than $6,000 the HAFA short sale is in jeopardy. If the real estate agent negotiating with the second lender cannot get them to reduce their approval to $6,000 the HAFA short sale will not be accepted and the homeowner will be forced to obtain a traditional short sale approval. It does not matter if the buyer or real estate agent or seller is willing to contribute the difference, the HUD cannot state any more than $6,000. The HAFA guidelines have recently changed to allow the second lien holder up to $8500, however, most lenders have not implemented this change in their systems yet and are still holding to the $6,000 limit. For example, Citi Mortgage indicated that although they are aware of the HAFA guidelines changing, their system will not be ready to process this change until the middle or end of June 2012.
In summary, homeowners need to realize that while most real estate agents will work very diligently to try and obtain a HAFA short sale for them, the circumstances might be such that HAFA is not possible.
Jenny Winford July 23rd, 2017
Posted In: Uncategorized
Indymac Short Sale
Michael Gaddis recently closed an Indymac short sale in Carlsbad, CA. The property was located at 3080 Monroe St. The borrower qualified for the HAFA Indymac short sale program and received $3,000 in relocation assistance. The home, while in good condition, was very dated, and finding a buyer for a price the bank wanted was somewhat challenging. Eventually, a FHA buyer was located who, at the onset, was attempting to obtain a FHA 203k loan. However, the process in obtaining the 203k loan proved too lengthy and the buyer converted to a traditional FHA loan. Although there was only one lien holder, for some reason the negotiation process took a long time with this short sale. Michael Gaddis and his staff literally had to call the negotiator 3 times a day as well as email him constantly to keep this loan modification moving along. Typically the big problem in these prolonged short sale situations is the buyer walking around the same time that the approval is procured. In this instance the buyer stuck around and Michael Gaddis was able to close the short sale.
The property sold for $410,000 and closed escrow on November 21, 2012.
Homeowners need to realize that not all real estate professionals are the same. A homeowner’s friend or acquaintance might have a real estate license but that does not mean that they are qualified to properly handle a short sale. For more information on how to select a real estate professional for a short sale please click the following link: https://sdshortsaleattorney.com/how-do-i-find-a-realtor-for-a-short-sale/.
Jenny Winford July 23rd, 2017
Posted In: Uncategorized
Michael Gaddis recently obtained short sale approval for a Green Tree 2nd lien. The subject property was a rental and the 2nd lien was a recourse 2nd. Quite simply, recourse means that if the 1st lien holder forecloses the 2nd lien holder could pursue the homeowner. Thus the homeowner was worried that in the event of a foreclosure Green Tree would pursue him for and force him 1) to file bankruptcy or 2) to negotiate a settlment with Green Tree that would cost him thousands of dollars. The homeowner realized that the best opportunity for he and his family to resolve this situation was to try and get Green Tree to accept a settlement through a short sale. The homeowner also realized that this matter was too important to entrust to just any real estate agent so the homeowner chose Michael Gaddis, a real estate agent that is also a licensed California attorney. The homeowner felt that his best chances at getting this matter resolved would be if Michael Gaddis was handling the transaction. The homeowner’s decision to use Michael Gaddis paid off as Green Tree put up a staunch fight demanding unreasonable settlement amounts. Michael Gaddis kept putting pressure on them until, finally, a settlement was reached that was acceptable to all.
Jenny Winford July 23rd, 2017
Posted In: Uncategorized
The Federal Reserve and the Office of the Comptroller of the Currency announced that the deadline for homeowners desiring to have their foreclosures reviewed by a third party has been extended from April 30, 2012 until July 31, 2012. Homeowners are eligible for a review if they were involved in the foreclosure process between January 1, 2009 and December 31, 2010. The home must have been owner occupied. The list of servicers participating in this independent review, include, but is not limited to, Countrywide, Bank of America, Chase, Citibank, Wells Fargo, EMC and Wachovia.
Jenny Winford July 23rd, 2017
Posted In: Uncategorized
Michael Gaddis of Dream House Realty, Inc. recently received approval for a HAFA short sale for a homeowner located in Carlsbad, CA. The short sale process was rather lengthy due to the numerous offers and counter offers that went back and forth between Indymac and the Buyer. The home, while in good shape, was dated and in desperate need of updating in order to bring the condition of the house close to market value. Eventually, Indymac agreed that the price needed to be lowered in order to reflect the dated condition of the house. The homeowners were extremely happy to learn that they would be receiving $3000 in relocation assistance as a result of the HAFA approval. The property is now in escrow with a close of escrow date set for 10/08/2012.
Jenny Winford July 23rd, 2017
Posted In: Uncategorized