Ok so let’s picture this situation. You live in a beautiful home with your family which you currently have a mortgage for. But during the real estate boom, you decided to buy another home at relatively outrageous price. As we all know now, that home’s price is anything but outrageously low, but you still owe quite a bit on it.

Now you are paying mortgages on your current home, AND another property that’s worth almost 50% of what it was worth. Not to mention the economic times are getting tough and prices of about everything are going up except our properties.

Does it make any sense to shell out an additional one thousand? Two thousand? Maybe even three thousand dollars a month on a home worth a lot less than what you bought it for? No, not really at all.

But there’s a solution! It’s called a short sale. Yes I know this word pops up like a hundred times throughout the day and it may even have a bad connotation to it, but let me explain what it is exactly. A short sale is simply a deal done with the bank to sell the property for less than what’s owed. Often times, the original debt is than wiped out and the homeowner walks away owing no more money, and the bank recovers some of their losses.

Full Article

For More Information Visit: http://www.floridalawattorney.com

The “short” in short sale simply means that the amount paid at the sale of a property on behalf of the borrower for an outstanding mortgage is less than the amount owed. But there is nothing “short” about the process. In fact it should be called “long sale” because real estate professionals who specialize in short sale transactions are well aware that – patience, diligent follow up and a long wait – is the name of the game. Due to the increasing numbers of distressed homeowners, there has been an upsurge in the number of potential short sales available to real estate agents. Many of these homeowners need someone to negotiate their short sale once they have decided that it is the best option for them to use to avoid foreclosure. The sheer amount of documents to be prepared as well as the time spent on the phone going back and forth with lenders makes investing in a Virtual Assistant (VA) a strategic decision. Now, “How can hiring a VA ensure that each short sale negotiation is carried out more efficiently and effectively?” To answer this question, let’s go through the entire process and then point out crucial areas where a virtual assistant can complement the agent’s efforts.

<a href="For More Information Visit: http://www.floridalawattorney.com“>Full Article

For More Information Visit: http://www.floridalawattorney.com

The year 2009 was ground shattering for the housing market. The foreclosures in the country continued to increase exponentially and many lenders went out of business. The government tried unsuccessfully to stabilize the crisis by giving money to the lenders (instead to help homeowners). Many taxpayers will be receiving 1099-C tax forms if they went through foreclosure or short sale. The fact that the lender is sending those 1099 forms means that they are not going to pursue a deficiency judgment. This is good news. Usually, the amount of debt cancelled is considered an income. However, there are exceptions.
-If your home has been foreclosed on, box 2 of 1099-C will show the amount of debt forgiven. Usually, at the sheriff’s sale, your lender buys the house back and it becomes an REO (real estate owned). The intention of the Bank is to sell the house as soon as possible, but sometimes it takes many months to get rid of it. The good news is that your amount of debt cancelled is based on the fair market value of the house (box 7 of 1099-C). This is important: the difference between the FMV and the loan amount is what matters to you and shows in box 2. However, if it is a primary residence, according to The Mortgage Debt Relief Act of 2007, the amount of debt cancelled is excluded from the income.
-If you had a short sale, which means that your home has been sold at a discount (with your lender’s approval), you will still receive 1099-C. The only difference in this case is that in order to calculate the debt cancelled the actual purchase price is used. Again, if it is about your primary residence, it is excluded from income (form 982 has to be prepared).
-If the debt cancelled was a business debt (for example rental property), then the loss of the property results in a “sale”. Therefore gain or loss has to be calculated. Make sure you find an experienced tax professional who knows how to handle cancellation of debt.
-Income from the cancellation of debt is excludable for an insolvent buyer to the extend that the liabilities exceed the FMV of their assets. In plain English this means that if you have more debt than assets, you have the right to exclude a certain amount from your income. For example, if you have debt cancelled of $100,000. Your liabilities are $180,000 and your assets are $150,000. Your insolvency is for $30,000. Therefore, instead of reporting $100,000 as an income, you will report $70,000 only.

Full Article

For More Information Visit: http://www.floridalawattorney.com

For BOTH Homeowners AND Investors There is a very common misconception out there about the tax consequences after foreclosure. It goes something like this: tax liabilities are inevitable for a property owner (either a Homeowner or an Investor) and that if a property goes through foreclosure, there may be less potential tax consequences to deal with as opposed to the property being sold through a Short Sale. This misconception is causing many property owners to make decisions (for instance – not proceeding with a Short Sale that actually would be in their best interest) that could literally cost them thousands of dollars or throw them into bankruptcy. While there is no question that any type of debt forgiveness can trigger a 1099, the 1099 after a Short Sale and the 1099 after a foreclosure can be handled in such ways as to effectively minimize the actual tax paid on the debt cancellation amount and in many cases handled correctly there will be no tax payments necessary.

I will first start off by saying that I am not a tax attorney or an accountant. So for a complete understanding of the following concepts, I would recommend seeking professional advice. What I am writing is based upon my reading, understanding and discussion of the legislation and of the IRS publications that are commonly available. I will include links to those documents for those of you that are interested in understanding this topic better.

In the early part of the foreclosure crisis, Congress enacted legislation called ‘The Mortgage Debt Relief Act of 2007′. The main part of this legislation was directed at the primary residence homeowner. Following this legislation, it became widely believed that only the primary residence homeowner received tax relief from a 1099 received after foreclosure or after Short Sale. What this misconception overlooked is that the tax liability following the receipt of a 1099 could still be effectively reduced by other provisions in the tax code that deal with issues of insolvency. Many Investors felt dismay and became quite forlorn when they felt that their underwater single family house purchases were ‘going down’ and dragging them with them. Not only that, when all was said and done they feared that they would be hit with big 1099′s and resulting big Income Tax payments in the following years that would throw them into bankruptcy. Why wouldn’t they? After all many of these small portfolio investors were usually good people who never missed a payment on anything in their life and had no prior reason to consider or understand anything about the meaning of insolvency.

Full article

For More Information Visit: http://www.floridalawattorney.com

The housing market continues to decline, and more people are finding themselves under water. In Phoenix, Arizona, people are selling their homes because they can no longer afford the mortgage. While foreclosure is an option, short sales are fast becoming the more frequently chosen route. Why? This article will explain the benefits so that anyone who finds themselves in this position can make an intelligent decision.

Due to the declining housing market, many homes are now worth less money than they were when the owner bought the home. If a homeowner gets behind on their monthly payments, they are unable to refinance since the home is worth less. Many feel at this point that foreclosure is the only option, but Phoenix realtors have noticed an increase in short sales. This is advantageous for the seller in several ways.

One advantage is your credit rating. While a short sale does have a negative impact on your rating, it is less severe than foreclosure. When you go into foreclosure, your credit rating drops by 250-280 points, and you usually cannot purchase another home for at least 36 months, usually 4 years or longer. When you choose to go the short sale route, your credit score is reduced, but it is usually around 80-150 points and you may qualify for another mortgage in only 18-24 months.

Full Article

For More Information Visit: http://www.floridalawattorney.com

If you live in the Phoenix Arizona area and are selling your home, you may want to discuss the possiblity of a short sale with a reputable realtor. Of course there are good points and bad points to nearly any type of transaction you choose, but you may find that this option is very beneficial to you and your family. This article will explain a little more in-depth, so that you better understand how this works.

No one likes to go through foreclosure. It destroys your credit and can make you feel embarrassed. In many instances, you will not be eligible to purchase another home for five years, which means you will have to rent. Short sales are not the perfect solution if your mortgage is pulling you under, but it is certainly better than the alternative in many situations. Here are a few of the advantages of this option:

Benefits of Short Sales:

As mentioned before, you won’t have to face the embarrassment of being in foreclosure. You can maintain your dignity, knowing that you sold your home. You will no longer have mortgage payments to make, unless you choose to do so. Under Fannie Mae guidelines, you will most likely be able to purchase another home in only two years, instead of having to wait for five. Additionally, if your credit report shows no late payments past a 60 day time period, you may be eligible to purchase another home immediately.

Full Article

For More Information:http://www.floridalawattorney.com

Research by Moody’s Economy.com predicts that in 2009 1.8 million borrowers will lose their home to foreclosure. This figure rises from 1.4 million homeowners in 2008. Moody is a leading independent provider of economic, financial, country, and industry research. Moody attributes the increase in foreclosure rate to the rise in unemployment. At the start of the housing crisis in 2007, the unemployment rate was about 4.6%. Last month it reached 9.4%. Many believe it reach 10% by the end of the year. This unemployment figure does not account for those self-employed individuals unable to collect unemployment, those that have a reduced wage, and those that have not given up. Other experts believe the true unemployment figure to reach closer to 15%. In San Diego unemployment is predicted to hover around 11-12%

As the start of the housing crisis, homeowners that had subprime loans were the first to lose their homes. Now unemployment is the biggest factor driving foreclosures today. “It’s a much harder nut to crack, unemployment,” said Mark Calabria, director of financial regulation studies at the Cato Institute. “It’s much easier to bash lenders than to create jobs.”

Full Article

For More Information:http://www.floridalawattorney.com

When a property is deemed to be sold as a short sale and a buyer is ready to buy the property, with the bank or lender having taken the decision to sell the property as a short sale, there are a few factors that might still surprise you, as far as the lender’s behavior is concerned. The fact is that you could be on either of the sides of the business, be a buyer or the seller, and still be surprised about some new developments. You need to always bear in mind that a short sale is the last option explored by the lender under any circumstances, hence he might try to defer it as long as possible. This is because the lender is still not sure that what he is doing is right for him, as he shall end up incurring some amount of losses due to a short sale.

A lender is always changing his short sale and loss mitigation process to figure out how he can reduce his losses. It will change at the decision of those assigned to review the pipeline disaster, which is their loss mitigation department. And, time and again, the changes usually are not for the best. They only further complicate the process. Since the banks are in the business to lend money; they are always exploring options to increase returns or reduce losses, and in the case of a short sale, the latter is more applicable.

Full Article

For More Information:http://www.floridalawattorney.com

During an economic boom where there are people actually competing to buy homes, a short sale would not be an option. However, with the state of today’s economic climate and the increase in the number of homeowners in Phoenix, Arizona in a negative equity situation, sometimes it is the only sensible option to avoid foreclosure.

Lenders do not want to own real estate, nor do they want to go through the lengthy foreclosure process. Both these options are costly to the lender and most would like to avoid incurring any extra costs when they have no alternative but to call in a loan.

If you have been served with a foreclosure notice and have no idea what to do next; you really should consider trying to negotiate a short sale.

What you will have to do is to try and show your lender that, in these circumstances, they have more to gain if they agree to a short sale. You will have to provide them with hard facts and figures in order to persuade them that it will be in their best interests. You will need to show them, using facts, figures and statistics that it will benefit them more than foreclosing on the property and then having to sell it themselves.

However, negotiating such a sale is a very complex and time consuming process and usually beyond the scope of most homeowners.

Your could try speaking to your real estate agent but the problem here is that most have never negotiated this kind of sale. So you really need to be thorough in your research. Ask lots of questions in order to determine if the real estate agent has any actual experience in negotiating a short sale. This kind of sale required extra training that not many real estate agents have. Don’t despair there is a better option.

Full Article

For More Information:http://www.floridalawattorney.com

Many people are conflicted between short sales vs. foreclosure. This article provides a summary of the two financial options available to borrowers who can no longer afford to make their mortgage payments. Individuals facing foreclosure or considering applying for short sale approval should consult with a real estate attorney to determine which option is best for their situation.

Short sales vs. foreclosure require borrowers to adhere to certain protocol established by their mortgage lender. Neither option allows homeowners to remain in their home. Short sales gives borrowers the opportunity to sell their home for less than is owed on the mortgage note, while foreclosure forces borrowers to return the keys to their lender and relinquish the property.

Short sales generally offer the best financial solution for borrowers who have become delinquent on mortgage payments but have not yet received foreclosure notice from the bank. This type of real estate transaction requires approval from the lender. Both borrowers and their property must meet certain criteria before short sale approval is granted.

With short sales, borrowers must contact their bank’s loss mitigation department. Delinquent mortgage accounts are assigned to a loss mitigator who works with homeowners throughout the process. When lenders agree to enter into short sale arrangements, borrowers are required to undergo financial examination.

Borrowers must submit a short sale packet consisting of numerous financial documents. Lenders generally request copies of banking and investment statements, payroll records, tax returns, list of income and expenses, and real estate related expenses such as property tax records and homeowners’ insurance premiums.

Most banks require homeowners to submit a short sale hardship letter outlining events which caused them to become delinquent on their mortgage note. Lenders prefer handwritten letters of hardship providing dates and details of events that caused their financial demise, along with actions taken to rectify the situation.

Mortgage lenders usually require borrowers to have a qualified buyer lined up before approving short sale transactions. Some banks will give borrowers time to list their home through a realtor and locate a buyer. This is usually two or three months. If a buyer is not located, lenders commence with foreclosure action.

There are two types of short sale agreements. The first is Payment in Full without Pursuit of Deficiency Judgment. This is the preferred choice for borrowers because lenders accept the sale price of the property as payment in full toward the mortgage note.

The second agreement is a Deficiency Judgment. Some lenders hold borrowers responsible for the deficiency amount between the sale price and loan balance. If borrowers are unable to pay the deficiency at the time of closing, the lender issues a judgment which remains on borrowers’ credit history until full repaid.

Foreclosure generally takes between three and twelve months to complete. Banks initially issue a Lis Pendens, which gives borrowers time to work with their lender to obtain a loan modification.

Loan modifications are sometimes offered to borrowers who have encountered a temporary financial setback. When banks modify loans they alter the terms of the note to help borrowers get back on track. This can be accomplished by temporarily reducing or suspending mortgage payments, or by rolling the delinquent amount to the end of the loan.

If borrowers do not qualify for a modified loan or do not possess the financial ability to continue making payments, the bank has no choice but to foreclose on the real estate. When property is foreclosed, the bank first places it for sale through public auction. If the house does not sell through auction, it is returned to the bank.

Full Article

For more information please visit: http://www.floridalawattorney.com