If your home is NOT a Short Sale, Say So!

NOT a short saleIf you are selling your home and it is not a short sale, say so on the listing.

Because of the housing crash and foreclosure crisis, short sales have gotten a bad rap for taking too long to close. Banks are getting better about approving short sales, but it usually takes weeks or months, and, in some cases, buyers become so frustrated that they back out of the deal.

A study by real estate professors at Florida International University and University of Southern Mississippi shows that by advertising your real estate property listing as “NOT A SHORT SALE,” it will sell quicker and for more money. The study concluded that, on average, homes advertised as not short sales sold eight weeks faster and sold for 2-5 percent more.

Source: Sun Sentinal

Mortgage Debt Relief Act Extended

If your home is facing foreclosure and you were unable to sell your house in 2012, there is good news: The Mortgage Debt Relief Act was extended by Congress for another year as part of the legislation that prevented the nation from the “fiscal cliff.”

This is especially good news to homeowners in South Florida, where home prices have dropped drastically since December 2006.

Mortgage Debt Relief ActNormally, when the bank forgives a portion of your loan, it is considered taxable income. The Mortgage Debt Relief Act allows homeowners who sell their homes through foreclosure or short sale to be exempt from being taxed on up to $2 million in savings. Homeowners who choose Loan Modification are also exempt up to the same amount.

Since it was passed in 2007, the Mortgage Debt Relief Act has saved Floridians alone millions of dollars. The bill will be extended until January 1, 2014.

Due to the extension of only one year, realtors are encouraging homeowners facing foreclosures to act, and some are even calling 2014 “the year of the short-sale.”

If you have questions about foreclosures, short-sales, or any other real estate issue, you should contact a Real Estate Attorney.

Source: Newstimes.com//

Short Sales for Non-Delinquent Borrowers in Florida and Across the U.S.

Starting TODAY, for the first time ever, borrowers, in Florida and across the U.S., who have never missed a mortgage payment will be able to short sell their houses if they can demonstrate a hardship, such as loss of employment or the death of a spouse.

This new rule will allow for underwater homeowners to get rid of their mortgage and also take advantage of the Mortgage Forgiveness Debt Relief Act of 2007, which is expected to expire at the end of the year.

Previously, only delinquent borrowers have been eligible for short sales.

There is a downside. The average person suffers a 150 point credit score loss after a short sale. This will be no different for non-delinquent homeowners because there is no special coding that differentiates them from those who went months without paying their mortgages.

Photo courtesy of stockfreeimages.comThe Federal Housing Finance Agency (FHFA) is currently in discussions with the credit industry to determine if and how this new law will affect credit scoring, but no solution has been found as of yet.

If you are considering a short sale, you should consult an attorney to discuss your options. There are many things changing in the housing market, and it is important to have all of the facts before making a decision.

Source: Inman News

Last Chance for Short Sale Tax Breaks

If you are facing foreclosure or considering short-selling your home, you need to act FAST! The Mortgage Forgiveness Debt Relief Act of 2007 is set to expire December 31, 2012, just over two months from now.

What does this mean?

When you short-sell your home, you end up selling your house for less than the debt owed by making a deal with the bank. The bank will forgive a portion of the mortgage, which becomes a taxable income. The current debt relief act allows homeowners to be exempt from this tax, but this will not be the case starting January 1, 2013.

If short-sellers do not close by the end of the year, they could lose a lot of money, namely 10-35% of the forgiven debt, depending what tax bracket applies. If the bank forgives $200,000 of your mortgage, and you are in the 25% tax bracket, one of the middle brackets, you will have to pay $50,000 in taxes.

While selling your home may not be the most appealing option, it may be the most pragmatic way to prevent future financial hardships.

If you are considering a short-sale or have any questions regarding this or other real estate matters, please contact us at Boyer Law Firm.

Source: Tallahassee.com

Short sale sellers should think about closing in 2012

Since short sales can take months to process, homeowners considering a short sale may want to start the process sooner rather than later.

If a bank writes off debt in a short sale, it’s a “taxable event,” and the lender tells the Internal Revenue Service about the deal by submitting a “Form 1099-C, Cancellation of Debt” at the end of the year. Home sellers must acknowledge the amount when they fill out their federal taxes. Through Dec. 31, 2012, however, the federal government forgives any tax liability associated with forgiveness of a mortgage loan.

“In general, homeowners believe the government will extend this tax provision,” says San Diego Realtor Joy Bender. “However, as evidenced by the First Time Homebuyer Credit expiration in 2010, you can’t always count on the government to bail you out.”

The government generally considers forgiven debt to be income. If a seller has signed legal loan papers to take out a $200,000 mortgage and the lender accepts $100,000 in a short sale, for example, the seller received the equivalent of $100,000 in free money by government estimates. As a result, the IRS taxes it. For tax year 2012, however, the government still forgives the debt; in 2013, it might not.

The tax amount can be significant. On a debt of $100,000, a short-sale seller in the 25 percent tax bracket could end up owing $25,000 in income taxes.

If you are a buyer or seller interested in either conducting or purchasing a short sale, Boyer Law Firm is here to help, we have handled many short sale transactions and know what to look for.

This article has been provided to you thanks to Florida Realtors News & Events: http://www.floridarealtors.org/NewsAndEvents/article.cfm?p=4&id=271220

Clients almost lose their home until Boyer Law successfully closes on the short sale

A local Jacksonville realtor came to us for our help with Client G who was about to lose their home if they did not close as soon as possible on short sale. As the closing agent and attorney for seller we were able to negotiate with the Bank to extend the closing date and drafted all necessary documents including the HUD for the bank to approve. Once the bank approved the short sale closing, we were ready to close.

We closed on the property and the buyer and sellers including the bank were completely satisfied. It is so important to hire a Florida real estate attorney that knows specific laws and regulations in your area, such as Miami, Orlando or Jacksonville. Some of the main advantage points of hiring a real estate attorney is: Ensuring that you receive clear title to your new property; Drafting and explaining to you the appropriate documents; Finalize closing and register the deed in your name.

What a 1099 Form Means in a Short Sale or Foreclosure?

When a property is foreclosed or a short sale closed, the net sale price is applied toward the debt, but it doesn’t satisfy the entire obligation. The rest is usually either forgiven or written off. The number reported on the Form 1099 is the amount of the loan that was not repaid, not the total amount of debt on the property.

The foreclosure or short sale transaction is not a single transaction but two transactions, the sale or exchange of the real property, and secondly the forgiveness of the debt that exceeds the property’s fair market value.

Generally debts are written off or forgiven by a lender. To avoid recognizing taxable income, you must find a tax exception. Some exceptions are the Debt Forgiveness on Principal residence, insolvency exception, bankruptcy exception, etc.

At Boyer Law Firm we have handled such cases and were able to gain successful outcomes for our clients. If you are dealing with a short sale or foreclosure issue, Boyer Law Firm is fully equipped and trained to handle these types of transactions, including the closing. Please contact us with any further questions.

Short Sales leave margin for Fraud in Florida

No kidding? Is there ANY type of fraud that does not occur in here? Here is another good article published in The Miami Herald about fraud in the short sale process.

A recent report shows a new kind of mortgage fraud will likely grow as short sales become a part of the Florida real estate landscape.

BY KIMBERLY MILLER

PALM BEACH POST

A national financial consulting firm has warned that the real estate market is increasingly vulnerable to a new kind of mortgage fraud based on manipulating short sales.

According to a study released by the Santa Ana, Calif.-based company CoreLogic, short sale scams are likely to increase nationally as a new federal foreclosure prevention program to speed such transactions gathers steam and home values remain low.

The report, released last month, estimates fraud already occurs on 2 percent of all short sales nationally, costing banks as much as $310 million annually.

A short sale is when a bank agrees to accept a sales price on a home lower than what the owner owes on the loan, usually because the borrower cannot afford the payment and is headed for foreclosure.

RIPE FOR FRAUD While the types of short sale fraud outlined in the report vary, they generally depend on an agent submitting an artificially low bid from an investor to the bank. The bank unwittingly accepts the price, then the investor flips the property — sometimes the same day — selling it for the higher true resale value.

Florida is second only to California in the number of short sales nationally. In 2009, CoreLogic recorded 27,907 short sales in Florida, more than double the number in 2008.

And with 44 percent of South Florida single-family homes with mortgages underwater — slang for owing more on a loan than the home is worth — it’s likely short sales will be a big part of the local real estate landscape for some time to come.

“There are so many properties, the banks don’t know what they are really worth,” said Jupiter-area Realtor and short sale specialist Skip Yachanin, who is with Keller Williams Realty.

Yachanin said he hasn’t witnessed short sale fraud, but doesn’t doubt it’s happening.

“The Realtor gets a commission and doesn’t feel like they have a duty to the bank to get it the best price,” Yachanin said. “There is a lot of room for fraud.”

In April, the federal government’s Home Affordable Foreclosure Alternative program went into affect, offering monetary incentives to lenders and home owners to complete a short sale. Under the voluntary program, a successful short sale can net the borrower $3,000 for relocation expenses, while a servicer can get up to $1,500. A lender is eligible for up to $2,000.

The plan also requires the bank to agree on a set price for the short sale on the front end, and then respond to any offer within 10 days.

“As the government has pressured us to do short sales faster, we don’t have time to check them out,” said Anthony DiMarco, executive vice president for government affairs for the Florida Bankers Association. “The bad guys know how to defraud the system and will rush in to do it.”

BAD APPLES

Jared Dalto, a Realtor with Palm Beach Gardens-based Seawinds Realty, said he’s seen prices on short sales that were notably lower than those on neighboring properties, an indication that an artificially low bid was accepted. While the homes may have had damage that would justify a lower price, he said there is “shadiness out there.”

Dalto, who specializes in short sales, said one way to avoid fraud is for the bank to get a traditional appraisal instead of relying on a Broker Price Opinion, or BPO.

A BPO is conducted by a Realtor and typically costs hundreds of dollars less than an appraisal. The risk of a BPO exists if the Realtor purposefully undervalues the property so that someone can purchase it at the lower price and then flip it. “There are agents and brokers out there who do things the right way, and then, just like any profession, there are bad apples,” Dalto said.

Read more: http://www.miamiherald.com/2010/09/17/1828717/short-sales-leave-margin-for-fraud.html#ixzz0zlJKy4F3