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  NOTE: No homeowner should ever simply ‘walk away’ or ‘turn in the keys’ without receiving a document that absolves them of all liability. PLEASE NOTE - WE DO NOT DO THE FOLLOWING: NEGOTIATE SHORT SALES - MODIFY LOANS - OFFER LEGAL ADVICE - SELL HOMES - BUY HOMES - SPEAK TO YOUR LENDER - OR SHORT REFINANCES WE ONLY OFFER NEW MORTGAGES WITH FULL INCOME VERIFICATION - THIS PAGE IS FOR INFORMATION PURPOSES ONLY - SEEK LEGAL ADVICE FROM YOUR LAWYER FIRST 1.) On December 16th, 2009 - HUD announced they will waive the 3 year waiting period to buy a home after a short sale to - NO MORE WAITING TIME! -Conditions Apply.
2.) Here is the link from HUD - http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/09-52ml.pdf
3.) You MUST be current on your home in the last 12 months
4.) You must have a case for your move - This program is not to get out of your upside down home - it is designed to allow you to move if you have a situation in which you would have moved normally.
5.) This program is also for short refinance - That is when your lender agrees to take less if you can pay them off in a refinance.
6.) It is possible the next waive of scams would be people telling you to pay a fee to reduce your principal in a refinance. (do a short-refi)
7.) The purchase program is not recognized by 90% of mortgage companies because it is still new - it will become mainstream in the next year, very typical of FHA loans to have overlays.
8.) Both the sale and purchase will be a "normal" transaction in due time, this is the TURN in the right direction instead of a step.
9.) This is the single largest breakthrough in housing since the homebuyer tax credits, the main reason it allows the buyer pool to expand. 25% of the market is short sales right now.
10.) Obama just released 1.5 billion to help in the last week - details for Arizona are unclear but designed to help people STAY in their homes.
11.) For more details visit: http://en.wikipedia.org/wiki/Short_sale_(real_estate)
12.) HAFA will be out April 5th, 2010 - Please read on our web-site!!!
Selling or Buying a Home With a Loan Under Water Increasingly, financially strapped homeowners who owe more than their homes are worth are trying a so-called ''short sale'' as an alternative to foreclosure. In a short sale the lender agrees to accept less than the homeowner owes on a mortgage. Before 1990, short sales were rare. Last year, the National Association of Realtors estimates there were 500,000 short sales, about 10 percent of all sales. Still, there is a great deal of confusion and misinformation surrounding short sales, particularly regarding credit scores. A short sale can hurt a borrower's credit score as badly as a foreclosure, but won't last as long. The blemish from a short sale depends, in part, on how the lender reports the sale to the credit rating agencies, Experian, Equifax and TransUnion. Occasionally, a lender will agree to report the loan as ''paid,'' which according to Experian would not negatively impact credit scores. However, the agency also notes, that doesn't happen often. ''Short sales are reported as either a charge off or a settlement. Either way they can have a catastrophic effect on credit,'' says John Ulzheimer, president of consumer credit counseling at Credit.com. An individual's credit score is one factor that determines whether or not they qualify for a loan or a mortgage. Credit scores (often referred to as FICO scores) also determine the interest rate a borrower pays on credit cards as well as any type of a loan. The good news is that after a short sale, a borrower's credit score starts to improve within the first 24 months. One benefit of a short sale is that consumers usually can buy another home in two to three years, rather than five to seven as is the case with a foreclosure. Don't wait until a foreclosure is imminent to consider a short sale. Many studies show a large number of consumers don't talk to their lenders because they are embarrassed and worried they might start to foreclose. ''People need to make an objective decision before they run out of time,'' says Rob Jenson with RE/MAX Central in Las Vegas. A homeowner doesn't have to be behind on payments to initiate a short sale, but lenders have little incentive to accept less for a property until a borrower has missed a payment. Get the ball rolling ahead of time by investigating state laws and looking for an agent who is an expert at short sales, advises Lance Churchill, an attorney and instructor on short sales at FrontLine Seminars. Also gather all the necessary documentation. In addition to copies of bank statements and proof of income and assets, a short seller also must submit a letter explaining the cause of their financial distress. Contrary to popular perception, short sales are not a steal. But, since they are usually priced slightly below current market value, they are a very good deal. For buyers, the challenge is the length of time to get an offer approved. Two to six months or longer is typical, though lenders are upgrading computer systems and hiring staff to reduce response times. When a short sale is approved, the lender sends an agreement to seller detailing the terms. Pay close attention to the wording and, if possible, have a real estate attorney review it. Most of the time, the lender will release the seller from any further obligation to repay the debt. Some states prohibit lenders from pursuing a seller for the unpaid balance. Note in all states holders of second liens and equity lines of credit can pursue sellers unless there is an agreement in place. Normally, borrowers would have to pay a tax on amount the lender forgives since the IRS views this as income. If they meet of IRS description of insolvency at the time the debt is forgiven they are not liable for taxes. Until 2012, the Mortgage Forgiveness Debt Relief Act sellers will not owe taxes on the amount of debt forgiven for their primary residence. Second homes and investment properties do not qualify. Automated Short Sales on the Way as HAFA Nears The Home Affordable Foreclosure Alternatives (HAFA) program will launch on April 5, 2010, and everyone from asset management companies to software providers are rushing new products to the front lines. HousingWire broke the story on HAFA in October when the US Treasury Department announced the program. HAFA was designed to provide incentives to servicers that provide short sales and deeds-in-lieu of foreclosures to borrowers who do not qualify for a loan modification through the Home Affordable Modification Program (HAMP). The Treasury aims to help 3-to-4m borrowers through HAMP, which launched in March 2009. Through January 2010, participating servicers provided 116,000 permanent modifications. Laurie Maggiano, the Chief of the Homeowner Preservation Office at the Treasury, told HousingWire that there are no current estimates for how many borrowers will receive a short sale through HAFA because of there are so many external factors to consider. With documentation difficulties slowing progress in HAMP, servicers are gearing up for the wave of short sale inquiries on the way in April. MOS Group, a loss mitigation service provider, provides support through a HAFA team that will reach out to borrowers in the mandatory 30 days after a HAMP modification rejection. “In a situation like this, where the borrower has been declined a loan modification, it’s imperative to communicate and follow up with the borrower quickly and effectively, as this first conversation can often mean the difference between a successful short sale transaction and one that falls into foreclosure,” said Greg Hebner, president of MOS Group. Short sale process is ‘absolute crapshoot’ The short sale process isn’t working and has created ”a deluge of pending sales that take forever to close,” says Steve Thomas of Altera Real Estate. As of Thursday,he says, there were 6,706 outstanding pending home sales in Orange County, with 62% of them short sales. Thomas, who does a bi-weekly analysis of the local real estate market, says almost 70% of short sales in Orange County have been pending for more than a month, and many have been pending for longer. He says “The current process for short sales is an absolute crapshoot. Real estate agents, buyers and sellers enter into a pending sale with no definitive timeline. Some lenders are better than others. Some second lenders are better than others. Some Realtors are better than others. 2010 promises to be the year of the short sale. It is the year where a lot of the distressed backlog, often referred to as the ’shadow inventory,’ will finally be properly diminished in the form of short sales. Yes, there will still be foreclosures. Some short sales simply will not go together. Some homeowners will just walk away from their obligations. But, banks and the government have their sights set on going the short sale route. It is in everybody’s best interest. Buyers, sellers and agents have had their sights set on short sales for about a year and half now. If you are skeptical, just take a look at the following chart.” But, he says, short sales should go more smoothly this year, especially with a new process beginning April 5 for Fannie Mae and Freddie Mac loans. Homeowners Looking to Avoid Mortgage Payments with a “Short Sale” Could Face Lawsuits For homeowners facing high monthly mortgage payments, selling your house and walking away from the mortgage may be the only option. However, even after selling your home, you may not be safe from mortgage collectors, who may still have the legal right to recover the unpaid balance on the mortgage despite the fact that the home is not longer in your name. What is a Short Sale? Borrowers who are unable to make their monthly mortgage payments sometimes have the option of selling their homes for less than the amount they owe on it, in order to at least recover some of the value. This is called a “short sale,” and has become more common since the mortgage crisis, causing mortgage lenders to take more aggressive action to recover the unpaid mortgage balances. Many homeowners believe that once they “turn in the keys” on their mortgaged property, they also relinquish all obligations to pay the remaining mortgage. While often this is the case, as lenders realize that homeowners who reach this point have very little income or assets left, there has recently been an increase in the attempts by collection agencies to recoup these losses. Negative Equity on the Rise This problem is expected to continue in the next year, as over 10 million homeowners are believed to currently owe more on their homes than the homes are worth. If you have a mortgage and do not have any other option than a short sale or a foreclosure, be sure to talk to your lawyer or make sure that there is an agreement between you and your mortgage lender before simply walking away from your mortgage. In a press release from the Consumer Credit Counseling Service (CCCS) of Greater Atlanta, Director and professor of law Frank Alexander advised that “no homeowner should ever simply ‘walk away’ or ‘turn in the keys’ without receiving a document that absolves them of all liability.” Take the necessary steps to get the documentation and protect yourself against a post-foreclosure lawsuit, so when you walk away you know that your unpaid mortgage balance will not follow you. Foreclosure and Short Sale Taxes - Home Sellers Might Owe the IRS The IRS says there is no free lunch. If you transfer title on your home, whether voluntarily through a warranty deed or grant deed, or involuntarily through foreclosure, you have sold your home. You might be subject to taxes, even if you sold your home at a loss, either on a short sale or by foreclosure.It doesn't seem fair. What's worse is you might not even find out that you owe taxes until the day you open your mail to find a 1099. I spoke with Julian Block, an attorney in Larchmont, NY, who has been cited by The New York Times as a leading tax professional. Here is what he has to say about taxes, gains and losses on distressed sales such as foreclosures and short sales: Julian Block on Gains and Losses"Sellers who have owned their personal residences for lengthy periods still will realize gains. "But sellers of residences acquired within the past two years or so are going to incur losses. Even assuming no price declines, losses will result because of expenses for real estate brokers, lawyers and the like. Sellers will not be able to deduct those losses. Makes no difference that they are forced to sell because of, for instance, job changes or health reasons. "Besides problems for sellers of personal residences, there are tax troubles for investors who, say, bought several condos in places like Florida and are unable to flip them because prospective buyers are waiting for further price declines. Often, it is not worthwhile for those investors to rent their places; what they receive as rent payments will be insufficient to cover their real estate taxes and mortgage interest. Their only option is to sell at a loss." Block on Offsetting Losses Against Gains"Sellers can offset their capital losses against capital gains. But in the absence of capital gains, the yearly cap is $3,000 ($1,500 for married couples filing separately) on the amount of losses they can offset against their "ordinary income," meaning income from sources like salaries, pensions and withdrawals from retirement plans. The law allows them to carry forward unused losses to later years." Block on Tax Rules for Foreclosures"The IRS has tax rules for foreclosures or repossessions by lenders of homes of owners who have fallen behind on their mortgage payments. There can be severe and unexpected tax consequences for an owner who simply walks away because he or she has little or no equity and the lender takes over and sells the place. "In that situation, cancellation or forgiveness by the lender of the debt usually means the debtor has reportable income, though there are some exceptions -- for instance, insolvency." Block on Personal Liability"An example: Brown buys a condo and uses it as a personal residence. He pays $300,000, down payment of $15,000 and takes a mortgage loan of $285,000. He is personally liable for the mortgage. When the remaining balance of the loan is $280,000, Brown defaults and the lender bank accepts his voluntary conveyance of the unit, canceling the loan. Similar condos at the time sell for $230,000. "The tax code treats the transaction as a sale. Brown incurs a nondeductible loss of $70,000, the amount by which his condo's adjusted basis of $300,000 exceeds its market value of $230,000. No deduction for the loss because Brown uses the condo as a personal residence. "Brown also has reportable income of $50,000 when the bank cancels the loan. The $50,000 is the amount by which the debt of $280,000 exceeds market value of $230,000. "Enter the IRS when the mortgaged property is foreclosed or repossessed, and the bank reacquires it, or the bank knows Brown has abandoned the property. The bank sends a Form 1099-A to Brown and the IRS. Using the numbers in the example, the 1099-A indicates the foreclosure bid price ($230,000), the amount of Brown's debt ($280,000), and whether he was personally liable. Debt cancellation (here, $50,000) is taxed at the rates for ordinary income, same as for salary." Secured Debt Without Personal LiabilityAccording to Kleinrock Publishing, the IRS says sellers who are not personally liable for a debt will realize an amount that includes the full canceled debt, even if the value of the property that is security for the debt is less, which can be offset depending on your adjusted basis in the property. Purchase money loans secured by real property in California carry no personal liability. For example, Ms. Smith buys a home valued at $300,000, puts down $30,000 and takes out a mortgage of $270,000. Smith stops making payments. The bank forecloses on a loan balance of $260,000, and the market value of the home has fallen to $250,000. Smith has an adjusted basis of $295,000, due to a $5,000 casualty loss. The amount Smith realizes on the foreclosure is $260,000. Smith figures her gain or loss by comparing $260,000, which is the amount realized, to her adjusted basis of $295,000. She has a $35,000 realized loss. Before Foreclosure or Selling, Plan AheadBefore you sell on a short sale or go through a foreclosure, seek legal and tax advice. Do tax planning ahead of time, before it is too late. For more information, contact a Certified Public Accountant or check the IRS Web site. A temporary fix, called the Mortgage Forgiveness Debt Relief Act of 2007, provides relief from debt forgiveness taxation for certain owner occupants until December 31, 2012. Call your lawyer to determine if you are exempt from taxation SHORT SALE MYTHS!Short Sale Myth #1: Short Sales Take 12 to 18 Months to Close Here is the time frame for an average short sale when the loan is held by a cooperative bank (and is not a former Countrywide loan):
Short Sale Myth #2: Short Sale Buyers Pay Too MuchIn some metropolitan areas, listing agents may deliberately price a short sale below market value. It's a tactic short sale agents use to attract multiple offers. After all, a listed price on a short sale is fabricated, because you won't know how much a bank will accept until the offer is submitted. But many banks will consider a price at a minimum of 90% of market value. Some banks reject short sales because the offers are unreasonable. Short Sale Myth #3: Short Sale Banks Won't Accept a Severely Discounted PayoffSellers are often astonished to discover that in markets where prices have fallen over a 5-year-period, a home might be worth 50% or less of its original value when the seller bought it. Banks understand declining markets. Moreover, banks will conduct their own research about value and come to the same conclusion. The value of the home is not based on the amount of the mortgage; it's based on recent comparable sales. Short Sale Myth #4: Short Sale Sellers Must Be in Default Before the Bank Will Approve a Short SaleBanks approve a short sale based on the seller's hardship and the value of the home. Some sellers may struggle to make the monthly mortgage payment, yet have not fallen behind in their payments. While it is true that sellers in default receive immediate attention, a seller can also pay a mortgage payment on time each and every month and still qualify for a short sale. An added benefit for being current on the mortgage is a seller may qualify under Fannie Mae guidelines to immediately buy another home. Short Sale Myth #5: Agents Get Paid a Lower CommissionIn the early days of the short sale boom, during the years of 2005 to 2008, banks were treating short sale commissions abominably, often reducing the agent's commission to peanuts. Most banks now pay a traditional or near-traditional commission to agents. On top of which, Fannie Mae established a compensation policy on February 24, 2009, to pay the amount of commission agreed to between the listing agent and the seller, providing the fee does not exceed 6% Short Sale 101 Short sales is a hot buzz phrase. Some sellers who decide that their home won't sell at the price they had imagined often start to wonder if they should do a short sale. A short sale doesn't always solve problems, but it most assuredly can create problems. Short sales are not the "saving grace" some home sellers would like to believe. What is a Short Sale?A short sale happens when the lender is shorted on a mortgage, meaning the lender accepts less than the total amount that is due. If your mortgage is $100,000, but your home is worth, say, $90,000, you are $10,000 short, not including costs to close the sale such as real estate commissions, recording fees or title and escrow charges. Sometimes, to avoid going through the costs of foreclosure, a lender will sanction a short sale by letting a buyer purchase the home for less than the mortgage balance while the home is in pre-foreclosure stage. A pre-foreclosure stage is one of the three stages of foreclosures. Here are sample steps of a short sale:
In fairy-tale land, everybody lives happily ever after. Except the seller. There are consequences. Qualifications for a Short SaleBefore you eagerly climb aboard the short sale bandwagon, consider the following to determine whether you may qualify for a short sale. If you cannot answer yes to all four requirements, you may not qualify for a short sale.
Short Sale ConsequencesA short sale is dependent on a buyer making an offer to purchase. If you do not receive an offer, you will not qualify for a short sale. So even if you meet all the other criteria, it is possible that no one will buy the short sale. It is also dependent on the lender accepting the buyer's offer. If the lender rejects the offer, a short sale will not take place.
Always seek legal counsel before attempting to pursue a short sale. A real estate agent cannot give you legal advice. The inclusion of links does not imply endorsement. We make no representations about whether the content of any external sites which may be linked to this center complies with state or federal laws or regulations or with applicable policies. These links are provided for your convenience only and you rely on them at your own risk.  WJ Bradley Mortgage Capital Corporation - 9237 East Via de Ventura #100 - Scottsdale, AZ 85258 Office Phone: (602) 432-6388 Fax: 480-421-1160 E-Mail: dean@teamdean.com
Arizona Mortgage Banker # BK-0903998
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