All posts in Short Sales

This was interesting and something I did not know.

“While canceled debt originally used to buy or build a house can be exempted from tax filings, debt used for other purposes cannot. “I just thought I’d get out from under the house and that would be that,” she says.”

Make sure to always consult a CPA.  Another thing that is happening in South Florida right now is that they are going after people who claimed their property as a Homestead property, meaning they occupy the property as their primary residence, but it really wasn’t.  State and local governments are looking for ways to make up for lost revenue so you better be careful.

http://online.wsj.com/article/SB20001424052748703686304575228783947789118.html?mod=djemITP_h 

That’s quite a headline.  Unfortunately it is true and I am sure it is making people irate.  I would guess that this can happen because the banks are so unstaffed.  I have to imagine that it is pretty hard to staff up and take on more employees to handle foreclosures and short sales when the distressed sales are exactly why everyone had to let go of their employees. 

Apparently another reason this happens is due to disorganization.  “Communication breakdowns occur because of the way the servicers are structured. One division typically deals with modifications and another with foreclosures. Servicers also hire a local trustee or attorney to actually pursue foreclosure.”

I think it’s a combination of being understaffed, disorganized, and having employees who just don’t’ know what they are doing.  Everything to do with the mortgage business right now is a learning curve even for those who have been in the business for over 20 years.  You could never begin to understand this unless you were in the business so next time instead of yelling and screaming, try being more sympathetic.  Whether you are right or wrong you will get much further with that mindset.   

http://www.usatoday.com/money/economy/housing/2010-05-05-foreclosures05_CV_N.htm

This is just a proposal but it’s a bill filed in the US House of Representatives would allow mortgage borrowers to remain in their homes, as renters, for up to five years after receiving a foreclosure notice.

I guess it’s not a bad idea if the borrower who is not making their mortgage payments decides to make their rent payments.   It would create cash flow for the bank and allow home values to regain some value assuming that the market does stabilize. 

There are stipulations in order to qualify for this.  Yep, always a catch and you always need to read the fine print.  The right to rent program would be limited to homes purchased at or below the median price for its metropolitan statistical area, and must have been the borrower’s principal residence for no less than 2 years. Only mortgages originated before July 1, 2007 will be eligible.

http://www.housingwire.com/2010/04/29/house-democrats-introduce-right-to-rent-bill-for-borrowers-facing-foreclosure/?utm_source=rss&utm_medium=rss&utm_campaign=house-democrats-introduce-right-to-rent-bill-for-borrowers-facing-foreclosure 

I’m not going to hold my breath but here is what they are saying on Florida. 

Florida, which would receive $418 million, proposed using the majority of its allocation toward making mortgage payments for up to nine months for up to 12,000 unemployed borrowers. It also would commit $40 million toward providing up to $15,000 in down payments for 4,000 prospective home buyers.

http://online.wsj.com/article/SB20001424052748704464704575208390699479772.html?mod=djemITP_h

I don’t recall reading this last week but I am sure it will make some very irate.  ” I find it interesting that before the plan even went into effect today, the Administration upped the incentives a week ago, doubling the amount of cash to $3000 offered as borrower “relocation expenses” and juicing the payoffs to the others as well. Of course they want to push short sales because of course they know that their modification program isn’t working as planned.”

The reason the program will struggle and probably be as helpful as the other programs is because the banks need to “weigh what’s going to save them the most money and cause them the least bleeding on their books.”  It’s all about their balance sheet and since the mark-to-market accounting rules were changed to let banks keep loans on their books as “performing” even if the values of the underlying properties have fallen below the loan amount.  I guess time will tell.

http://www.cnbc.com//id/36179757 

The article makes a great point that I wasn’t aware of with people in California being able to walk away so easy which is frustrating to this individual who wrote in because so many made a fortune in CA during the boom. 

“California is one of 11 states where lenders are prohibited by law from filing deficiency judgments against borrowers to collect the difference between what was owed and what was collected when the asset was sold. The others are: Alaska, Arizona, Iowa, Montana, North Dakota, Oregon, Pennsylvania, South Carolina, Washington and Wisconsin. But your worries may be unfounded. And besides, you may be able to work out a deal in which the lender agrees not to come after you.”

http://www.marketwatch.com/story/walking-away-from-property-isnt-always-so-easy-2010-03-12?siteid=rss&rss=1