Don't Let Your Short Sale Leave You Taxed!

If you, or someone you know, owe more on your home than it's worth and need to sell NOW is the time to contact me!  Time is running out to save yourself from what could be a significant tax implication in the future.

In 2007, the Mortgage Forgiveness Debt Relief Act was passed in an attempt to help the millions of homeowners who, due to the housing crisis and economic crash, suddenly found themselves in danger of losing their home to foreclosure.

The act has helped many distressed homeowners find solutions that help them avoid foreclosure and opened up options to them that were previously unavailable.

However, the Mortgage Forgiveness Debt Relief Act was always intended to be a temporary solution and it is now set to expire at the end of 2013. For distressed homeowners, this means that time is running out for them to take advantage of the program and potentially save themselves tens of thousands of dollars.

If you know of anyone who may need my expertise, please have them visit my website www.HomesByCindyB.com for a copy of my recent report entitled “Don’t Let Your Short Sale Leave You Taxed”  or you can contact me for a copy.

And then contact me for a confidential consultation today so we can get started!

SHOULD YOU WALK AWAY FROM YOUR MORTGAGE?

This is the fourth in a series to help homeowners facing default.  Many homeowners don’t realize that there are options available to them other than losing their home to their lender through foreclosure.  If you have missed the previous posts, please go back and check them out.

Many of you will say, “If I’m this far underwater, why not just walk away and be done with it? The bank is going to take it anyway.”  While this may sound like a plausible argument there are many reasons why that is not the best alternative.

I could go into a lot of detail as to the difference in the effect on your credit depending on the type of loan that you have but I’m going to spare you the pain.  The bottom line is that your credit takes much less of a hit with a short sale vs. a foreclosure.  With a foreclosure your credit score may be lowered 200 – 300 points, while with a short sale the report to the credit bureaus in most cases states that the loan is “paid as negotiated” or “paid in full, settled.”  Also keep in mind that the foreclosure can remain on your credit report for 7 years or more. That’s a long time to have to answer for just walking away.

Two other important consequences of a foreclosure that most people don’t consider is the potential loss their current employment and having to pay the bank even though the bank took the home.  If you have a job that requires any type of security clearance or are employed in some type of a sensitive position, possibly handling money for instance, your job may be in jeopardy.  Employers have the right and are actively checking the credit regularly of all employees who are in these sensitive positions.  A foreclosure in many cases is ground for immediate reassignment or termination.  In addition, future job employment may be affected since employers require background and credit checks on all applicants.

In 100% of foreclosures (except in those states where there is no deficiency) the bank has the right to pursue a deficiency judgment against you for the difference between the proceeds from the sale of the property and the amount that was owed on the property.  In many successful short sales it is possible to convince the lender to give up their right to pursue a deficiency judgment against the homeowner.  If the bank does not grant the waiver of deficiency judgment, homes that are sold as a short sale typically sell for a higher price than those that sell as an REO and therefore that deficiency would be much less. In a foreclosure all bets are off.  The lender can come back to you for the difference in what they were able to sell the property for and the amount that you owed.

Another consideration with trying to do a short sale versus letting the bank just take it back is pride.  If you’re having a difficult time paying your mortgage no doubt your other bills are affected and friends and family may know that you are struggling.  But what about the neighbors?  Do they know your situation?  Wouldn’t you rather sell your home, than for everyone to know that you lost your home when the bank foreclosed?

If you are having a difficult time paying your mortgage or facing foreclosure check out my resource website at www.IndyShortSaleQueen.com or contact me to check out your options.  No one should lose their home to foreclosure; there are too many options available.

Next: Do I Qualify For a Short Sale?

HOW MUCH TIME DO I HAVE?

This is the third in a series to help homeowners facing default.  Many homeowners don’t realize that there are options available to them other than losing their home to their lender through foreclosure.  If you have missed the previous posts, please go back and check them out.

HOW MUCH TIME DO I HAVE?

If you are like most people, the first question on your mind once you know you have missed your first mortgage payment is “How soon until the sheriff comes to kick us out of our home?” Well, let me reassure you that it won’t be any time soon. 

Every state is different but in Indiana we are what is termed a “judicial foreclosure” state.  This means that the lender has to go to court and get a judgment that allows them to take back the property.  You can see from the timeline above that the mortgage is considered in default when the borrower is 16 days past due on their payment.  Usually at this point the lender will call you requesting that you make a payment if you plan to stay in the home.  If the lender hasn’t called, give them a call, explain your situation and talk to them about your options.

The timeline lays out the time frame of the process from the first missed payment to the Sheriff’s Sale. One thing to keep in mind is that the time frame is the earliest date at which these things can occur.  They can occur much later.  But don’t use that as your plan.  We’ve all heard of people being in their home for one, two, even three years before the sheriff kicks them out but don’t plan on that.  Talk to your lender, talk to a CDPE agent and talk to a real estate attorney to find out your options. 

You do have options available to you!

Next: Why Not Just Walk Away?

THEY ARE NOT THE ENEMY!

 

If you are a home owner who is finding it more and more difficult to pay their monthly mortgage you may have come to the realization that foreclosure is going to happen sometime in the near future.  Maybe you are even one of those homeowners who have already missed one or more mortgage payments.  Either way, you may not realize it, but now is the time for you to spring into action to protect your and your family’s future.

Missing a mortgage payment or two does not have to mean that you are going to be kicked out of your home and that you will be out on the streets before you know it.  You have options!

Depending on your specific set of circumstances, there could be a wide variety of options available to you to help you deal with your situation.

Contrary to popular belief, lenders don’t want to take your home.  Banks and mortgage companies are in the business to loan money, they are not in the business to own and manage homes. So what should you do?  Get the lender on the phone, ask them what options you have and then evaluate those options.  You will most likely need the expertise of a CDPE (Certified Distressed Property Expert) agent to help you out.  Your attorney and tax preparer can also give you good advice as to how the different options will affect your and your family’s future.

Here are some of the options that the lender might suggest:

Reinstatement

Homeowner requests the total amount owed to bring mortgage payments current and pays it.

Forbearance or Re-payment plan

Homeowner negotiates with the mortgage company to allow them to repay back payments over a period of time.

Sell the Property

Homeowner with sufficient equity lists their property with a qualified agent that understands the foreclosure process in their area.

Rent the Property

Homeowner with a mortgage payment low enough that market rent will allow it to be paid converts their property to a rental.

Mortgage / Loan Modification

Homeowner negotiates with lender to modify the interest on the loan, the principal balance, or any combination of these, resulting in a lower payment.

Home Affordable Foreclosure Alternatives Program (HAFA)

Homeowner qualifies for HAFA and is offered pre-approved short sale terms and cash incentives for relocation assistance.

Short Refi

Homeowner negotiates with lender to refinance a mortgage for less than what is owed on the property.

Deed-in-Lieu of Foreclosure

Homeowner returns the property to the lender rather than go through the foreclosure process.

Deed for Lease

Homeowner returns the property that is FHA-insured back to the lender and leases the property for a twelve month period.

Refinance

Homeowner with significant equity in his/her property and good credit standing refinances their mortgage.

Bankruptcy

Homeowner with significant non-mortgage debt who is unable to pay these debts or his/her mortgage payment files for bankruptcy which liquidates assets and/or reorganizes debt to pay back creditors.

Service Members Civil Relief Act (SCRA 303)

A member of the military who is experiencing financial distress due to deployment (and can prove entered into debt before employment) qualifies for temporary relief under this act.

Homeowners Assistance Program

A member of the military or federal employee qualifies for this program which has a variety of assistance programs including private sales, government purchase, and/or foreclosure assistance.

Short Sale

Homeowner has a financial hardship and qualifies for a sales

As a CDPE, I am uniquely qualified to help you work through this maze and help clarify the options that are available to you.  Regardless of the option that you choose, you need to act quickly! 

Get the lender on the phone, see what options are available to you.  If you qualify for a short sale, then don’t wait another day.  Contact me and let’s get started towards getting back on track for a better future.

For more information on each of these options please visit my website at www.IndyShortSaleQueen.com and click on Foreclosure Solutions.

Next: How Much Time Do I Have?