Homeowners Doing a Short Sale Should NEVER Leave The Home Until the Buyer’s Loan is Approved

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There are two websites where you can get more information and find out if this program is right for you:

www.LasVegasShortSaleHelper.com

www.ShortorStayLasVegas.com

A short sale can be one of the most daunting experiences in a homeowners’ life. First the difficult decision to put it up for short sale after realizing the property is underwater. Next, deciding to go ahead with it and then implementing the huge change. Working with agents, trying to keep a straight face while going through showings on the home – all are difficult things to deal with considering the emotional situation at hand.

A common question that is asked of us all the time is about the amount of time the homeowner will be able to spend in the home before having to leave. The answer is largely “it depends” but for the most part it is usually four months or more.

Since the short sale process is a very long one, homeowners should never leave the house until a buyer has completely seen through their financing. The reason for this is that you don’t want the lender to think you have abandoned the property and then proceed with foreclosure action.

There are some good reasons to continue staying in the house, including the ability to save up funds that would otherwise have been used toward the mortgage payment. Another reason not to leave too quickly is that you can prepare for the next transition in life. Of course the last thing you want is the bank to begin foreclosure proceedings if they think you are no longer there and have walked away from the mortgage.

Keep in mind, once an accepted offer comes in on the property it must be approved by the lender before anyone can proceed to the next step. That approval process can be anywhere from 60 to 180 days after submitted to the bank. Even after the approval comes through from the lender, another 30-45 days will go into the financing end of it for the buyer. Depending on the type of financing the buyer chooses it can take more or less time.

In general, most short sales typically take about four to six months before everything is said and done. The single most important thing to keep in mind is that moving anytime before the very end when the buyer has funding in escrow can be seriously detrimental to you.
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If you would like more information on short sales or want to discuss your situation in detail to learn of your options, we invite you to contact us today!

If I Short Sale My Property Will I Owe Taxes On It?

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Many of you are just beginning to consider doing a short sale on your home. If your mortgage is underwater and you feel there are no other options short of allowing the bank to foreclose on the property, a short sale may be the perfect solution. But along with this solution comes some important questions – particularly having to do with taxes.

Will you have to pay taxes on the money you are forgiven from repaying on a short sale?
For the most part, the answer is no. 

If you sell your home, the short sale is approved by the bank(s) and the property makes it to escrow and closing by the end of this year (December 31, 2012) then there is a good chance you will not owe any taxes on that forgiven amount.

Also for the money that is being forgiven, or discharged, if it was entirely used only to purchase the property rather than used as funds you accessed through the equity on your home so that you could spend it elsewhere, then there is a good chance that you will not pay taxes on it.

Rental properties for the most part are also not taxed through the end of this year if involved in short sales.

The important thing to remember is this: every situation is unique and each property has aspects to it that will likely not be like any other short sale situation. For this reason, the best way to truly confirm whether you will owe any taxes on your short sale is to meet and consult with a Certified Public Accountant. If you would like some references for CPAs in our local area, we would be happy to provide them.
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If you would like guidance, advice or even if you would like simply to review your options – contact us today. We look forward to helping you!

There are two websites where you can get more information and find out if this program is right for you:

www.LasVegasShortSaleHelper.com
www.StayorShortLasVegas.com

Worried About What Your Neighbors Will Think If You Short Sale Your Home?

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Two words: don’t be. Here’s the thing. On the one hand you may be concerned with how it may look if and when the neighbors find out you are short selling your home – but on the other hand, you are dealing with one of the most difficult situations you will likely have to face.

There are two websites where you can get more information and find out if this program is right for you:

www.LasVegasShortSaleHelper.com
www.StayorShortLasVegas.com

So how do you get over the fact that everyone you have lived with in the neighborhood will soon enough know your mortgage is under water? You focus on what is really important; you. 

Having said that, it is worthwhile to know that while neighbors might prefer a conventional sale over a short sale – they would MUCH rather have a short sale in the area as opposed to a foreclosure. This is because of the typical types of activity you might expect to see happen in a foreclosed home. A vacant home might attract vandals, sit there for who knows how long and ultimately drag neighborhood home values down.

Your short sale, which you can explain to anyone that asks, is a viable alternative that not only keeps the values at market level but also maintains an owner-occupied status of the home. The key here is to use a real estate agent that knows what they are doing. You could fall into the trap of dealing with a real estate that is less experienced in short sales. We see homeowners falling victim to those inexperienced agents that advise underpricing the home to “attract multiple offers”. THAT is what might set your neighbors off a bit.

So the next time you have any qualms about how others may perceive your much-needed short sale, direct all your energies toward the fresh new start you can get without damaging your credit or your reputation nearly as much as a foreclosure would.

As always, please feel free to call us, email or walk right into our office if you would like a one-on-one discussion about your real estate needs. We look forward to hearing from you!

The Home Affordable Foreclosure Avoidance Program Seeks to Assist Struggling Homeowners

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When President Obama signed the Home Affordable Act into law, many aspects were introduced but all had one common goal; to help homeowners get through the difficult times that have placed them in impossible situations. After the housing market crashed in 2007, countless Americans were faced with the possibility of losing their home to foreclosure – largely due to a sudden dip in values resulting in them owing more on the home than the home was worth.

The Home Affordable Foreclosure Avoidance Program is a benefit that allows qualified homeowners to obtain a waiver of deficiency so that the lender does not come after them once all is said and done. One very attractive aspect of the program to homeowners considering alternatives to foreclosure is that the bank will provide up to $3,000 in moving costs at the time escrow closes.

Though this is a popular program, not everyone qualifies. For starters, the home in question must be the borrowers’ primary residence. There are other considerations too.

To be sure that you are availing the maximum amount of the benefit available to you, be sure to contact a real estate agent that is well versed in the workings of short sales, foreclosure avoidance and the HAFA program in general. There are two websites where you can get more information and find out if this program is right for you:

www.LasVegasShortSaleHelper.com
www.StayorShortLasVegas.com

The first website is a great resource for information. The second website will help you figure out when your property will become an asset again. Both will provide some direction on where you might want to head next.

For a customized consultation about your situation with an expert that has dealt with many, many short sales, contact us today. Keep in mind, not everyone qualifies, there is a specific process that must be followed and not every agent has the expertise to deal with this type of complex transaction. It is critical that you find an agent that is committed to your best interests.

Qualifying for HAFA; Exploring Alternatives to Foreclosure

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Go to www.LasVegasShortSaleHelper.com for more information >>

If you feel you are stuck with a home that has a mortgage larger than its value, it may be time to consider a short sale. For more reasons than ever now, there are programs issued by the government designed to help homeowners through this very difficult time in their lives.

With already existing incentives, such as the $3000 relocation funding that is disbursed in many short sale transactions, there are now some more guidelines that have widened the scope of qualifying homeowners.

First, let’s look at the six must-know items about the HAFA (Home Affordable Foreclosure Alternatives Program) that have been around for some time now:

• The home must have been purchase prior to 2009
• It must be delinquent, in default or seriously in jeopardy of being in default
• An unpaid principal balance of less than $729,750 is the limit
• The lender servicing the loan must be a HAMP (Home Affordable Modification Program)
participating lender
• The home must be the applicants’ primary residence*
• The monthly mortgage amount is not to exceed 31% of the homeowners’ gross income*

Now, having said all this, notice the asterisks on the last two points above. The notes below will share the most recent changes to the program that have enhanced qualification eligibility guidelines.

*Effective June 1, 2012 President Obama Administration made some important changes to the HAMP Program. Among other relaxed guidelines, homeowners with secondary properties that are currently rented or where the homeowner intends to rent them may qualify.

Another change reported to the program is related to homeowners’ debt-to-income ratios. As of the newest guidelines, borrowers that exceed 31% debt-to-income ratio may still be eligible for the program.


We know that not all benefits are available but a lot of it has nothing to do with whether a seller qualifies for it or not. The real reason many homeowners never see light of day on some of these cash incentives is because they are dealing with an agent that has little to no experience with short sales and the HAFA program. A good real estate agent that understands the HAFA process is critical. If you end up working with a real estate agent that is less experienced with these types of sales then you stand to risk losing thousands of dollars. And for no good reason.

It’s all about knowing the timing of the process, filling out all documents precisely and completely, making sure everything is perfect. As far as the $3,000 relocation incentive that is a part of the HAFA program or other potential lender-based incentives, only your lender will actually be able to tell you whether you qualify for an incentive. What we can do is position you to be a strong candidate for what might very well be rightfully yours. For a customized consultation to discuss your specific home and situation, contact us today.

Mortgage Debt Forgiveness Act

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For more help go to www.shortorstaylasvegas.com 

By now, chances are you have probably heard the term “short sale” – especially during the past five years with our housing market struggling to recover from the housing market crisis of 2007. Luckily, we have enjoyed a strong economy and have not seen too much of the same dire circumstances many homeowners across America have experienced. Still, if you owe more on the house than what it is worth and are looking to sell it, a short sale is likely your best option.

Everyone has a pretty good idea of how a short sale might impact one’s credit outlook. Though it may not have as heavy an impact on credit as a foreclosure might, a couple years after a short sale before the homeowner can consider buying a home again. There is, however, a tax implication of doing a short sale that many people are not aware of. The amount of debt that a bank agrees to forgive in order to allow a short sale to take place is forgiven debt and the IRS considers that amount as income. As such, all income is taxable, leaving the homeowner that opts for a short sale with a significant tax bill at the end of the year.

Mortgage Forgiveness Debt Relief Act

In light of our nation’s struggles with property ownership after housing values plummeted, the Mortgage Forgiveness Debt Relief Act was signed into action, allowing homeowners an exemption on discharged or forgiven debt from the sale of a primary residence.

This benefit has been around for some time now and has been extended by the government in the past, however its deadline is fast approaching with a program end date of December 31, 2012. This means that all homeowners considering short sales should complete their transaction before the end of the year.

Short Sale Process Can Take Months

At first, when countless Americans struggling with the economy and declining values, short sales were slowly began picking up pace. Then, when the 2010 robo-signing scandal broke loose, banks again lacked confidence in doling out relief in this form to borrowers, ending up in short sale processes that could take up to a year or even more. 

Today, however, many banks have streamlined the process and even prefer the short sale route versus a foreclosure. Compared to the lengthy process times and extensive legal fees involved in a foreclosure, banks are even willing to pay out cash in some short sale cases.

Window Of Opportunity Will Not Last Long

Since the halfway mark of the year has passed, we strongly advise any homeowner looking to sell their home despite owing more than its current value, to contact us today. Timing is key and with just a few months before the end of the year to take advantage of this benefit, now is the good time to start the process.

Ten Facts the IRS Wants You to Know About the Mortgage Debt Relief Act

1.  Normally, debt forgiveness results in taxable income. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude up to $2 million of debt forgiven on your principal residence. 

  

2.  The limit is $1 million for a married person filing a separate return.

3.  You may exclude debt reduced through mortgage restructuring, as well as mortgage debt forgiven in a foreclosure. 

  

4.  To qualify, the debt must have been used to buy, build or substantially improve your principal residence and be secured by that residence. 

  

5.  Refinanced debt proceeds used for the purpose of substantially improving your principal residence also qualify for the exclusion. 

  

6.  Proceeds of refinanced debt used for other purposes – for example, to pay off credit card debt – do not qualify for the exclusion. 

  

7.   If you qualify, claim the special exclusion by filling out Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, and attach it to your federal income tax return for the tax year in which the qualified debt was forgiven. 

  

8.  Debt forgiven on second homes, rental property, business property, credit cards or car loans do not qualify for the tax relief provision. In some cases, however, other tax relief provisions – such as insolvency – may be applicable. IRS Form 982 provides more details about these provisions. 

  

9.  If your debt is reduced or eliminated you normally will receive a year-end statement, Form 1099-C, Cancellation of Debt, from your lender. By law, this form must show the amount of debt forgiven and the fair market value of any property foreclosed. 

  

10.  Examine the Form 1099-C carefully. Notify the lender immediately if any of the information shown is incorrect. You should pay particular attention to the amount of debt forgiven in Box 2 as well as the value listed for your home in Box 7.

My Credit is Shot, Why Do I Need a Short Sale?

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For more help go to www.shortorstaylasvegas.com 

As a homeowner, if your credit is already shot and you are having financial hardship to the point you cannot pay your mortgage, you should consider a short sale in opposition to foreclosure.  There are many reasons why you should consider a short sale, even if you are just late on your mortgage.  If you are late on your mortgage and do not need to foreclose your property, you will still slip farther into financial difficulties due to the late fees.

When you are late on your mortgage it affects all of your payments.  Your mortgage payment history can affect your credit score by up to 35 percent of the total score.  35 percent of your total score is a huge impact on your credit score, so you must minimize it as much as possible.  If you find yourself in a situation where you have gotten behind on your mortgage payments and your credit score is getting killed, a short sale is a viable option.

A short sale will still impact your credit; however, the impact will not be as severe as a foreclosure.  A short sale will impact your credit score for around 18-36 months, while a foreclosure will impact your credit score for between 5 and 8 years.  Also, if you have credit cards through any company, the contract that you signed with the credit card agency will have a clause stating that if your credit changes significantly, the credit card company can change the interest rates.  So when your credit score drops drastically due to a foreclosure, the interest rates on your credit cards will sky rocket, leaving your in further financial trouble.

Your credit card interest rates are not the only thing affected by a declining credit score.  Your insurance rates are also affected by your credit score.  Insurance companies often times base their rates on a person’s credit.  If you foreclose on your house, in addition to seeing your credit card interest rates increase, your insurance rates will increase as well.

On credit applications, there is a box that asks if you have ever had a foreclosure.  Any time after you have a foreclosure, you will always need to mark this box.  There is no expiration date; it will be with you from that point on.  There is no such box for a short sale.

A short sale is often a much better option than a foreclosure.  A short sale can stem the tide, stop the bleeding, and protect yourself and your family from financial devastation.