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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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!

Seeking a Career in Real Estate at a High Tech Real Estate Company?

Seeking a career in Real Estate at a High Tech Real Estate Company?

If you or someone you know in the Tri-Valley are/is a newer real estate agent or has recently taken their real estate exam and may be looking for a high tech real estate office to join, learn and grow their business in, contact me ASAP! Realty World-No Pressure Realty only has 4 spots left in its up-coming agent training cohort designed to help agents get their businesses up & running & make the most of the up-coming Spring and Summer home buying and selling rush. If you asre considering joining an office or making an office change, visit http://nopressurerealty.com/agent-careers/ and contact me today.

Experienced agents are always welcome to apply for a position with us. They may also sit in on the new agent trainings if they like as well. We also offer a lot of online and in person advanced training in high and low tech methodologies that work to help even the most seasoned agents grow their businesses even more.

Just a couple of the great benefits of becoming a part of Realty World-No Pressure Realty is that we offer in house short sale processing and Transaction Point transaction coordination services so agents can spend their time getting more business and making more money rather than shuffling paperwork and calling banks! Contact us today to find out more!

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Livermore Real Estate Market Update–Probably have not hit bottom yet

You may need to short sale or do a loan modification if you have been struggling to make payments hoping your underwater home would increase in value so you could do a regular sale.

Lots of folks have asked me if home prices have increased in Livermore and I the answer is, not right now. In the first part of 2010, home prices did get a little better, but that was probably due to the tax credit incentive that the government was offering increasing demand for homes and with increased demand comes increased prices. Once no new real estate purchase contracts would qualify for the tax credit, home prices peaked in the second quarter of 2010, and began decreasing steadily in the second half of the year and home prices have returned to about the same as their Sept 2009 low, which were about the same as Livermore Home Prices in 2003 prices. Below, I have provided 3 charts to demonstrate the market data.
The first is a 10 year Livermore home price market history; the second a 5 year history; and the third is the real estate home price history from Oct 2009-Oct 2010 (the latest Zillow data available).If you have questions, let me know.

Looking into the would-be crystal ball that so many people think I have, I do not think we have hit bottom yet. I think as long as we are dealing with mostly foreclosures and short sales in the market, home prices will not increase and I think we will likely hit bottom in our around the end of 2012. Only time will tell.
So, for you homeowners who owe more money on your home than it is worth and are struggling with your mortgage payments hoping the market will come back in time so that you can sell your home via a regular sale and not a short sale or possibly lose it to foreclosure, you should realistically consider a different option since it will be quite some time before home prices will be back to where they were just 5-6 years ago. If you want to consider a loan Modification, I highly recommend working with NACA. Their services are free and if your loan is not investor owned, but is actually owned by the bank you write the check to, you can usually get a loan modification completed in just 2-3 days if you attend one of their save the dream events. They have one coming up this month that I will be blogging about, but you can check it out on their site at NACA.com. Their services are much better at the Save the Dream Tour Events than they are using the services online and the process is much quicker! I and folks I know have personally used NACA to complete loan modifications and I highly recommend them. If you have questions, let me know.

If loan modification is not the right option for you, a short sale may be what you need. I have been specializing in short sales for almost 4 years now and have lots of experience helping home owners get out from under upside properties usually with little or no out of pocket costs to the seller! Our goal is a non-deficient short sale for our client so that when the property closes escrow, the home owner has no more obligation to the bank. Many agents do not even know the difference between a deficient and non-deficient short sale. If you would like to know more, just let me know. I am happy to give free Alternatives to Foreclosure as well as Short Sale consulations to homeowners in Livermore, Alameda County, Contra Costa County, and parts of San Joaquin, Santa Clara, Solano and other counties.Just send me an email or give me a call.

Livermore Historic Market Data-Last 10 years

Livermore Zillow Home Value Index

Livermore Historic Market Data-Last 5 years

Livermore Zillow Home Value Index

Oct 2009-Oct 2010 ONLY- Livermore Market Data

Livermore Zillow Home Value Index

Buying a Home in the Bay Area after doing a Short Sale in Livermore, the Tri-Valley, East Bay Area & California

I had a very exciting thing happen to me a couple days ago while sitting in my Realty World-No Pressure Realty office in downtown Livermore, CA.  A couple of great past clients called me wanting to purchase a home. What was great about these clients is that I helped them short sale their primary residence in Vacaville, CA  in Solano County a little over two years ago and they want to buy a home in the Concord, CA area in Contra Costa County because it would be closer to the wife’s new job location.  They were interested in conventional financing options as well as possibly using a VA loan since the husband is in the military.

They have a unique situation…they had moved into their rental property in Fairfield, CA after they did a short sale on their primary residence in Vacaville, CA. That property is also under water, so I needed to find out how they would be able to buy a new home in Bay Area while still owning a property that was upside down.

As soon as they contacted me, I contacted a few of the loan consultants that I work with to see if they would be able to help them get a loan for a new property.

On December 1, 2010. Margalit Ir, Mortgage Loan Officer at Bank of America stated:

The guidelines at Bank of America to purchase a property after a short sales is as follows:

 Loan to Value > 80%  will be 5 years from the date of the short sale

 Loan to value < 80% will be 2 years from the date of the short sale.

Credit must be re-established with good repayment history.  Rental Income can only be considered if rent has been received for two years and is declared on the 1040 Tax returns.  Schedule E.

I also spoke to Delmy Steward, a great Sr. Loan Consultant at J.W. Bradley. She responded to their scenario of getting a loan after doing a short sale as follows:

I will check into it but I think we need 3 years from the date of a short sale/foreclosure.  They are viewed the same on the guidelines.  I do VA loans also and they do require a 3 year period from the short sale/foreclosure …

Since they are occupying a home that is upside down and does not have 30% equity even if they put on the application they will rent it out, we can’t use rental income to offset payment.  They will have to qualify with the old and new payment . I will have run their credit to be sure where they stand.

Both Delmy Steward and Margalit Ir are fantastic very resourceful loan agents who can work quickly and often get loans done when others cannot. 

If you or someone you know would like to speak to Delmy Steward or Margalit Ir about getting pre-qualified or preapproved for a loan, Margalit Ir can be contacted by phone at (925) 208-2475 and via email at margalit.a.ir@bankofamerica.com ; her website is http://mortgage.bankofamerica.com/margalitair . . Delmy Steward can be reached by phone at 925-864-7717 and via email at delmy.steward@wjbradley.com.

Another possibility is FHA financing after completing a short sale. If the short sale was non-deficient and the seller had not been late on any of their mortgage payments, and a few other guidelines, there is an FHA loan program that does loan to people right away after doing a short sale. Given the current California housing market and the fact that most of the properties for sale in Livermore, Alameda County, Contra Costa County, Solano County, the tri-valley, and East Bay, Bay Area are either short sales or foreclosures, a person using the special FHA financing after doing a short sale would likely need to rent or live in some sort of transitional housing for a few months until a new property could be identified and purchased. There is definitely a benefit to using FHA financing…with its very low 3 1/2% down payment, so the inconvenience of transitional housing may be worthwhile for many.

I will keep you posted to let you know how things turn out with my great clients.

Are you considering buying a home in California before or after doing a short sale? Have you already bought a home after completing a short sale? Did you use conventional or FHA financing? Who did your loan? Did you get a loan from a bank or a mortgage broker? I would love to hear about it!

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