Growing out of your home?

I was speaking recently with our mortgage broker about the fact we have several clients who bought their home when they didn’t have children or had one child and now have several children. They have literally grown out of their home. Unfortunately, due to the market, their homes are now worth less than when they bought and they owe more on their home than what it is worth. They are fortunate as they have not lost their jobs and are able to continue making their house payments. They don’t have the money to buy another home without selling theirs first. However, they cannot sell their home without it being a short sale and hurting their credit.

The ultimate question: “How can I buy a larger home to accommodate my growing family while the home I have is underwater (price is less than loan amount)?”

According to Scott Eaton from Landmark Mortgage in Pleasanton, the way to do this is to rent your current home and purchase a new home. You can put as little as 3.5% down with FHA financing on the purchase. The new purchase must be a move up. If your income can support the debt on both homes, within debt to income guidelines, this is the route to take. Gifts from family members are allowed. The more money for a down payment you have, the easier the qualifying is for you. If your income is not enough then we may need to factor in the rent you will receive on the existing house. In order to take this route you must have proof of renting the place for a period of time (6 months to a year). So perhaps you move into a rental, rent your house out and get the rent clock ticking. After at least 6 months you can purchase a new home.

Please feel free to call or email us with any questions. The sooner you take action by finding out what is possible for you, the sooner you can be in a larger home for you and your growing family.

Are Short Sale tax exemptions about to expire?

Under present legislation, any debt forgiven by a lender in a short sale, loan modification, or foreclosure is exempt from federal taxation. However, this exemption is scheduled to expire Jan. 1, 2013.

If the government allow the currently exemption to expire, borrowers will have to count mortgage relief from lenders as income on their federal tax returns, That means, for example, a borrower would have to pay taxes on a $100,000 reduction in principal owed on a loan, or taxes on a $20,000 write-off in the amount owed after a short sale.

Hopefully, an extension of the tax exemption – established under the Mortgage Forgiveness Debt Relief Act of 2007 – is a strong possibility.

However, given that Congress now has to grapple with serious fiscal issues with the election now behind us, there is no guarantee the exemption will emerge from those negotiations intact.

The Debt Relief Act exemption applies only to canceled mortgage debt used to buy, build, or improve a primary residence, not a second home. The maximum exemption is $2 million. Reinstating the tax would undercut the the effect of the National Mortgage Settlement reached earlier this year in the federal government’s investigation into banks’ mishandling of foreclosure documents.

Under the terms of the settlement, five of the biggest mortgage lenders must put some $17 billion toward debt relief that enables borrowers to stay in their homes. Smaller portions are reserved for short sales and refinancing. Even so, there will still be many borrowers who will still find themselves doing a short sale or being foreclosed upon.

Hopefully both the Federal and State governments can pass the necessary legislation to extend so families don’t end up with a large tax bill on top of loosing their family home.

New Guidelines Streamline Short Sale Processes to Prevent Foreclosures and Help Communities Stabilize

The new short sale guidelines just announced by Fannie Mae will streamline documentation requirements, waive deficiencies for borrowers that successfully complete a short sale and set standard payments for subordinate lien holders, the organization reports. The new guidelines are for servicers to follow as part of the Federal Housing Finance Agency’s Servicing Alignment Initiative. In addition, all servicers will have the authority to approve and complete short sales that conform to the requirements without receiving individual approval from Fannie Mae.

“Short sales have become an increasingly important tool in preventing foreclosures and stabilizing communities,” says Leslie Peeler, senior vice president, National Servicing Organization, Fannie Mae. “We want to help as many homeowners avoid foreclosure as possible. It is vital that servicers, junior lien holders and mortgage insurers step up to the plate with us. These new guidelines will open doors to help more homeowners qualify for short sales, remove barriers to completing short sales, and make the process more efficient for homeowners and servicers.”

Under the new guidelines, servicers will be permitted to approve a short sale for borrowers who have certain hardships but have not yet gone into default. Those hardships include the death of a borrower or co-borrower, divorce or legal separation, illness or disability or a distant employment transfer. In addition, Fannie Mae is significantly reducing the documentation required to complete a short sale, including requiring no documentation of a borrower’s hardship 90 days or more delinquent and have a credit score lower than 620. This will remove barriers for those homeowners who are most in danger of foreclosure and increase servicer efficiency in completing a short sale.

Fannie Mae will also limit subordinate-lien payments to $6,000. Previously, subordinate lien holders often attempted to negotiate higher payments. The servicer will be able to offer the maximum payment of $6,000 in order to facilitate the transaction. By setting a standard payout amount and a limit for every transaction, Fannie Mae is removing the guess work and standardizing the transaction to help accelerate the short sale process.

Fannie Mae has taken a number of steps to make the short sale process more efficient, including implementing a Short Sale Assistance Desk to help real estate professionals in targeted markets work out challenges in individual short sales, requiring servicers to complete short sale evaluations within 60 days and making military families who receive Permanent Change of Station orders eligible for a short sale. Fannie Mae completed 38,717 short sales through the first six months of 2012 and 70,025 in full year 2011.

You can learn more about short sales, modifications and other foreclosure alternatives at www.knowyouroptions.com.

Short Sales

Short Sale Help

Chances are, you or someone you know in the Reno-Sparks area who is facing the possibility of foreclosure or the option of a short sale.

You need to understand that you are not alone.

We feel strongly that you need to arm yourself with knowledge when facing a short sale or a foreclosure. That’s why we offer free information to explain your options and help you decide on a course of action. The idea of losing a home can be overwhelming, and we feel it is vital for you to have all the facts necessary to make an informed decision.

Today, nearly 1 out of every 6 homeowners in America is behind on mortgage payments. These are tough and frustrating times. Now more than ever, it’s important to identify your options. Foreclosure can be avoided, your credit can be saved, and your financial future can be salvaged.

Through our experience handling distressed properties, we’ve found that homeowners today have more questions than answers about their circumstances.

If you would like to know more about your options or just have questions, feel free to call us at (775) 432-6300.

Should you prefer to learn more on your own first, you should find the links below to further information very helpful.

We are here to help … in any way we can.

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Short Sale Expertise

We want to provide you with a letter of recommendation for all your help in the successful short sale of our home on Amber Lane.

It was very clear from the outset that you cared deeply about our situation. We know the majority of short sales aren’t successful and it was obvious you were VERY knowledgeable about the short-sale process and had a solid plan for what it would take to maximize our chance of success.

From the beginning you impressed us with your thorough knowledge of the marketplace. You certainly did your homework and came very well prepared for our initial meeting and were very cognizant of the pride we had in our home.

This was a very challenging time for us, and we were very anxious about the situation we found ourselves in . To help relieve our anxiety you conducted weekly discussions with us, and during those you actively sought feedback and together we continuously refined our strategy and action plans. The results were excellent!

We know you spent an inordinate amount of time on our behalf continually in contact with our lender to negotiate and move the short sale process along, while at the same time keeping us, and the buyer up to date on progress. We have since seen other friends going through the same process – WITHOUT THAT LEVEL OF SUPPORT – and we are incredibly pleased with the care and effort you put in on our behalf.

Needless to say we were very relieved when you called to say that you not only had final short sale approval, but that you also had in writing a full release from our lender. What a fantastic result!!

There is no doubt in our minds that we achieved a better outcome than we would have from the mortgage company due to your knowledge and service. The final result was an incredible relief to us, and we will always be grateful for the service, expertise, and hard work you put in on our behalf.

Thank you from the bottom of our hearts!

Ken & Cheryl Colby

Experts at acquiring bank-owned; REO, short sale, and distress properties

We are writing to share our experience having Brett and Annette Junell as our real estate agents when we purchased our new home. We are very pleased with our new home, and with Brett and Annette’s wise counsel and outstanding service.

When we decided to upgrade to a larger home, we interviewed several prominent local agents. Brett and Annette stood out as particularly knowledgeable about the local area, data driven, and analytical in their approach towards helping us select a home meeting our criteria at the best possible price.

Our decision to purchase a home started with the “just looking” phase and evolved into a more serious effort over a period of many months. Brett and Annette were always very patient with us as we worked through what we needed and wanted in a new home. (Annette in particular is an excellent listener, and found properties that appealed to us even before we realized what we really wanted.) We looked at over 50 properties – our agents didn’t bat an eye and gave us plenty of space to make an informed decision.

As it sometimes happens in a difficult market, we selected a distressed property – a “short sale.” Short sales are a tricky, time-consuming and delicate process under the best of circumstances. This was not a problem – Brett and Annette are experts at acquiring bank-owned; REO, short sale, and otherwise distressed properties. Our short sale closed in record time due to the Junell’s expertise and follow-through. The purchasing experience was exciting, and very pleasant.

Brad and Lidia Vereen

Short Sale Help

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