Great News for People Who Did Short Sales in 2012 and 2013 in California!

Great News for People Who Did Short Sales in 2012 and 2013 in California!

Just got this great letter and had to pass it along!

December 4, 2013

Dear Robin,

The good news just keeps continuing.

As we anticipated, C.A.R. today received a letter from the California Franchise Tax Board (FTB), obtained by the State Board of Equalization, clarifying that California families who have lost their home in a short sale are not subject to state income tax liability on debt forgiveness “phantom income” they never received in a short sale.

Last month, in a letter to California Sen. Barbara Boxer, the Internal Revenue Service (IRS) recognized that the debt written off in a short sale does not constitute recourse debt under California law, and thus does not create so-called “cancellation of debt” income to the underwater home seller for federal income tax purposes. Following the IRS’s clarification, C.A.R. sought a similar ruling by the California FTB. Now with the FTB’s clarification, underwater home sellers also are assured that they are not subject to state income tax liability, rescuing tens of thousands of distressed home sellers from California tax liability for debt written off by lenders in short sales.

We are pleased with the recent clarifications issued by the IRS and the California Franchise Tax Board, which protect distressed homeowners from debt relief income tax associated with a short sale in California. We would like to thank Sen. Boxer and BOE member George Runner for their leadership in obtaining this guidance from the IRS and FTB. Distressed California homeowners can now avoid foreclosure or bankruptcy and can opt for a short sale instead, without incurring federal and state tax liability, even after the Mortgage Forgiveness Debt Relief Act of 2007 expires at the end of this year.

Sincerely,

Kevin Brown
2014 President
CALIFORNIA ASSOCIATION OF REALTORS®

Copyright © 2013 CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.)

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FREE Loan Modification Help is Coming to the Bay Area in Oakland, CA THURSDAY, OCTOBER 17 – MONDAY, OCTOBER 21

FREE Loan Modification Help is Coming to the Bay Area THURSDAY, OCTOBER 17 – MONDAY, OCTOBER 21
Losing your home? Been turned down for a loan modification by your bank? Need another modification, but your bank won’t help?

If you answered yes to any of these questions and you only own one property, your primary residence and you want to keep it, you need to make time to attend
NACA’s SAVE THE DREAM EVENT
OAKLAND, CA – Oakland Marriott City Center
1001 Broadway, Oakland, CA 94607
THURSDAY, OCTOBER 17 – MONDAY, OCTOBER 21
Hours are 8:00 a.m. to 6:00 p.m. each day
ALL NACA SERVICES ARE FREE!

Register: http://www.naca.com or call 1-888-499-6222. Walk-ins are Welcome!
NACA did a modification for my home in 2009 after my bank turned us down and was able to reduce our payment by $1500 per month! They cannot help everyone, but it is free and worth a shot. Plan to get there early and stay late–there is usually a line starting at 5:30-6AM and they are often there until midnight after they close the doors–you don’t have to stay that long, but many people do. Bring snacks, breakfast, lunch, dinner, drinks and something to read or do along with your bank statements, pay stubs, mortgage statements, tax bill, estimates or actual costs for your monthly expenses, and any other relevant financial paperwork you have and something to write with! It will likely take you two-three days to get through the process, so be prepared to wait and be patient. They will walk you through the process so don’t freak out. Just bring your stuff and be patient and if the servicer for your loan has delegated authority to make a decision on your loan, then you should know by the end of your process if you qualify for a loan modification or not and what the exact payment and details will be. If they do not have delegated authority, NACA will package your loan modification and negotiate it with your bank for you (even if you have been previously turned down by your bank and even if you are currently in a loan modification with your bank!)

I do not work for NACA or get anything for referring people to them. I just know they were able to help me as well as other people I know. They were not able to help everyone I know who went, but that had to do more with the investor who owned their loan and not NACA’s ability to help. It is worth a shot!

 

If you attend, let me know how it goes!

It is Now Legal to Short Sale Your Home, Lease it Back, and then Buy it Later at Today’s Low Price!!

Ever since I have been helping homeowners short sale their properties since 2007, I have been asked two common questions:

 

1) Can I stay and lease back my house from the new owner?

2) Can I short sale the property to myself or buy it back later after I do a short sale?

 

Until recently, many banks would not allow a seller to remain in a property as a renter after they completed a short sale and none would allow an agreement that would arrange up front for the seller to potentially buy back the home at the cheaper price.

 

Now, those two things are legally possible if the seller/borrower qualifies and their bank agrees!

 

Making Home Affordable Program – Administrative Clarifications Supplemental Directive 11-02 March 30, 2011 Page 8 states the following:

 

Supplemental Directive 11-02 March 30, 2011 Page 8 states the following:

 

Sales to Non-Profit Housing Organizations

Section 7.3 of Chapter IV of the Handbook requires that a short sale be an arm’s length

transaction. This Supplemental Directive amends this restriction to allow servicers the discretion to approve sales to non-profit organizations with the stated purpose that the property will be rented or resold to the borrower, so long as all other HAFA program requirements are met.

 

Servicers offering programs of this type must include program descriptions and conditions in their HAFA Policy. Servicers must retain in the servicing system and/or mortgage file the evidence provided during the HAFA evaluation demonstrating that the organization was a nonprofit organization.

 

Under these circumstances, servicers must remove certain of the applicable “arm’s length

transaction” requirements from the SSA, the Request for Approval of Short Sale and the

Alternative RASS. These forms will be updated to reference these changes and will be available on www.HMPadmin.com.

 

Not All Agents Are Certified to Assist Homeowners With This Process!

 

In order to provide the service to homeowners, agents have to be certified with one or more of the approved NonProfit organizations. I am one of the very few agents in the East Bay, Tri-Valley area who are certified with one or more of the approved NonProfit Organizations to offer this program to homeowners. Fresh Start is one of those programs.

 

 

Like with any program, not every homeowner will qualify, but if you would like more information about the HAFA Short Sale Lease back Program and to see if you may qualify, feel free to give me a call at 925-577-8692, send me a message through this site.

 

My goal is to always help homeowners know what all their options are in order to avoid foreclosure so  they can make the best choice for their situation and family. I love helping people find a way to stay in their home when that is what they really want to do and I look forward to being able to help people do just that with this program!

Free Loan Modification Help from NACA will be available in San Jose June 17-22 and LA June 25-29

If you have a loan that is not affordable and you would like to see if your loan can be modified so that you can stay in your home with an affordable long term mortgage payment, get down to the San Jose Convention Center June 17-22 or the LA Sports Arena Center June 25-29.

I have blogged about NACA in the past–they are the organization that was able to get me and several people I know and thousands of others great loan modifications after our banks had already denied us…and they did it for FREE! They saved me about $1620 per month!
If you only own one property (the American Dream), or one property that has a mortgage on it, then NACA may be able to help you too, even if your bank has already denied your loan modification in the past, once, twoce, or even more times than that! They cannot help everybody, but free is free and it is worth a shot! NACA has special contracts with varoius lenders, so if they cannot get you a modification, I do not believe anyone can.

You can attend one of the events like I did which can take 2-3 days to get done or you can do the process online and/or via one of their local offices; Oakland is the closest office to the Bay Area.

From what I have heard, people have the best success by attending the events. A “same day solution” may take 2-3 days to actually happen because of the large number of people who attend the events in person, but it is well worth all the time sitting and waiting, and overnight expenses if they are able to help you. I suggest taking food and drinks in with you so that you do not have to pay the high food prices and eat junk food while you are there. Take a good book or something to read or do to occupy your time while you wait. If you cannot get through the entire process at one event, you can go to one of the future events. A friend of mine started her process in San Francisco and finished it in Florida! It was well worth it for her because she was able to get them to forgive a very large part of the balance and got her interest rate reduced as well.

If your loan is owned by the bank you make your payments to and the bank is one that they work with, then you should have your modification terms before you leave the event, aka your “same day solution.” If your loan is only serviced by the bank you write your check to, and is actually owned by an investor or group of investors, then they can write up a proposal of new loan terms that represent an affordable mortgage solution for you and get them submitted to your lender, but you will usually have to wait 30-45 days or so to see if the investor(s) who own(s) your loan will agree to the changes. Please note that some investors will NOT modify a loan regardless of circumstances so in those cases, NACA will not be able to help you, but you will not know unless you go and if you want to keep your home it may be a good alternative to forclosure for you.

From the NACA.com website:
“NACA’s historic Save the Dream Tour has been an incredible success with hundreds of thousands of participants. Thousands of homeowners received same day solutions saving hundreds some over $1,000 a month. All of NACA’s services are FREE.

You can get a list of the cities they plan to be in and event dates along with more details about NACA and theor Save the Dream Tours at http://NACA.com

Visit NACA.com to find out more.
If you go to NACA, I would love to hear your feedback!
If NACA cannot help you and you decide that you need to sell your home or you would like to know if you have other options you did not know about, my team would be happy to help you! You can contact me directly at 925-577-8692.

Good luck!

Your Friend in Real Estate,

Robin

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Some Active Military & Veterans Can Buy a New Home with a VA Loan Even if Their Current Home is Upside Down and Even if They Have Done a Short Sale on a Property in the Past!

The biggest challenge for people whose homes are upside down (that is, they owe more money on it than it is worth) is buying a new home. Typically, they will one of two alternatives:

1) They will have to short sale their property and wait 2-4 years before a lender will loan them money to purchase another home.

2) Buy another property when their current one is upside down .

In order to do option 2, your payments on the first property have to be current, you have to have a legitimate reason for purchasing a new home (cannot just be buying another home so you can bail on the first home), and you have to qualify for the payments on BOTH the old and new properties! If the underwater property is a rental property and you can provide evidence that you have been renting it out for at least 2 years, then a portion of the rents can be used to off-set the ability to pay for both properties.

Active Military and Veterans have a third option because the VA does not have what they term a Departing Residence Rule; that is, they do not have an equity requirement for the home that the person is leaving. That means that they will loan money to buyers who have an upside down property. Of course, there are some requirements and they all have to do with the new lender doing their due diligence to make sure that the buyer is not planning to do a buy and bail. I never have understood why a new lender would care what the buyer does as long as they pay their new mortgage that they are underwriting, but after the huge numbers of buy and bails that happened in the not so distant past, there have been new guidelines put in place to help prevent that from happening as much as possible in the future.

Here are the main non-credit score related guidelines for the third option per my understanding after speaking with several VA lenders:

1)       The current under water property cannot be secured by a VA loan.

2)      The current property cannot be on the market for sale.

3)      Person must be current on the payments for the underwater property.

4)      The buyers have to adequately answer the buy and bail related questions that the lender asks them (for example, why are they moving. If the person is moving to a comparable home in the same area simply because it is cheaper, that would not pass. There needs to be a reasonable explanation as to why the person needs to move).

5)      Buyer must be planning to rent out their current property OR qualify to pay both mortgages.

6)      If the buyer is planning on renting out the original property, then they will usually have to provide adequate documentation to the lender showing that they have secured a tenant for the home prior to the loan being funded. They used to accept a copy of a signed rental agreement, but since those can easily be forged, they usually require additional proof that you have a real tenant and not just a friend or make believe person on the rental agreement. Things like copies of the deposit check or perhaps evidence of the deposit being cashed or other things may be required.

7)      If the property is being rented, then the amount of the rent can be used to off-set the amount of the “be able to make both payments” requirement.

According to the VA lenders I have spoken to, there is not a requirement regarding how long the property has to be rented before it can be sold, so if being a landlord and renting the property does not work out for you for the long haul, then there would not be a reason that you could not sell it later.

Be aware, however, that if your home us still under water when you decide to sell it,  your short sale lenders for your property may require you to bring some amount of money to the table to do the short sale if they do not perceive you as having a hardship, especially after being able to purchase the new property. One explanation for your financial ability to purchase the property is the $0 downpayment requirement for VA loans and the rent from your tenant, so that latter part should not factor in too much especially if you had a real reason for needing to move…aka…a viable hardship.

In California, if you have original purchase money loans, you can often not pay anything to the short sale lenders to do the short sale because of the loans being non-recourse in the state of California. Refinanced loans and HELOCs, even original purchase money HELOCs, are treated a little differently, so I would advise you to consult with an attorney and tax professional to find out any potential implications for your particular situation. If you are current on all of your payments, old property and new, I can almost guarantee that you will need to pay them something, unless the loans are original purchase money loans and there is not a HELOC involved.

I have some great Active Military past clients whom I helped short sale their primary residence a couple years ago and they moved back into their previous primary residence which they had rented out. Since moving back into their previous home, they have had another child and their home just is not big enough for them anymore, especially when the husband is deployed and they need an extra bed for the additional adult who comes to stay with them to help take care of the children while the mother is working. Just last month, I helped them get into contract on a brand new home big enough to accommodate their family. They plan to rent their current home, just as they did before they moved back into it a couple years ago, so will just need to secure a renter and provide documentation of the rental agreement prior to the loan being funded.

The VA loan limit in Alameda and Contra Costa County is $1,000,000 and is $417,000 in harder hit areas like San Joaquin and Solano Counties. If the property the person is wanting to buy is more than the loan limit, the buyer will have to pay the difference, or if you use the lender my clients are using, you only have to pay 25% of the difference!

If you or someone you know is eligible for a VA loan and currently own an upside down property and need to move, give me a call or send me an email and we can discuss your situation to see if we might be able to get you into a new home using your $0 down VA loan. My cell is 925-577-8692.

I am glad there are at least some lending perks for our military folks right now since they put their lives at risk so we can all have the American Dream.

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