Short Sales Vs. Foreclosure Defense

Home Foreclosures. 

They are here with us, and will be in the news for the next few years.

First – lets put the last few years in perspective.  Over 2 Million people have lost their homes to foreclosure since 2008.

The lenders know that some of those foreclosures were completed with less than stellar paperwork.  That’s why the largest servicers agreed to a $25 Billion payout in the settlement last week.   I use the term “payout” loosely.

If you lost your home to foreclosure in the last few years, and can prove any type of mistake in the foreclosure process, there is $1.5 Billion that will go into a trust fund to pay others like you.  There are estimates that up to 750,000 people will receive a check for $1,500 to $2,000.

“Sorry you no longer have a home of your own, here is a check for $2,000.”

That makes some people upset.   The LA Times had a pretty good article last week about the settlement here.

You can also find the link athttp://articles.latimes.com/2012/feb/11/business/la-fi-hiltzik-20120212

Second, lets talk about the current situation.

There are estimates that over 4 Million people are still at some risk of immediate foreclosure, and closer to 11 million more are underwater on their mortgages.

When I talk with banks and attorneys across the DC area, most agree that we are 2 or 3 years, and some are saying as much as 5 years, from real resolution to this mortgage situation.

I tend to agree.  In the servicing settlement last week alone, the banks have up to three years to implement the entire plan.

Some people are upset with the pace that these banks are proceeding.  Some homeowners are choosing to fight for their individual situations.  Most people outside of government agencies are upset with what appears to be lopsided settlements with the largest lenders, banks and servicers.

Join us this month at our Washington REIA meeting as we invite attorneys from a local law firm to visit with us and discuss some of the foreclosure defense strategies they are using to assist homeowners in this struggle.You might be very surprised at some of the updates from the “front lines” of the legal community.You will hear about actual cases that homeowners have won locally, and other cases that are working through the appeals process.Lastly– Monday night learn how you can increase your leads by helping homeowners who are upset, but don’t know how to proceed.Let’s give homeowners who may be facing foreclosure what they need most – guidance  – and work with them to suggest legal alternatives to foreclosure that are in their best interest.  Sometimes a short sale agreement will work out fine for all the parties involved.  However, in some cases, more aggressive legal options are truly best for the homeowner.Remember we will be at a new location in 2012 – The Womans Club of Bethesda.  Location and registration details are below.

And as always, let me know if I can help with your real estate investing here in the DC area.

See you on Monday!

John Peterson

301-881-5541
Washington REIA Network, President
Profitable Property, Founder
Find video updates on the Profitable Property Channel at

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Register early for the Feb. 27th WREIA meeting online, and skip the registration line!

 You will also find the registration link at http://feb2012-wreia-wreiacom.eventbrite.com

Mortgage Forgiveness and the IRS

Ahh, those pesky 1099 forms we all have to file with our taxes.

Small business owners are always on the lookout for deductions.  I was combing through my files from last year, and came across something I thought you should keep in mind during 2012.

Most of us real estate investors have found ourselves working with short sales, or foreclosures over the last few years.  You and your clients should be aware of a BIG advantage written into the IRS code.

“The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence.”

Until a few years ago, many investors had never seen a form 1099-C.  Lenders are required to report any cancelled debts to the IRS using this form, 1099-C, Cancellation of Debt.

Here is a simplified example –

  • Homeowner pays 100k for a new home.
  • Recession hits, and homeowner sells their home for 80k through a short sale.
  • The following January, the lender sends homeowner 1099-C for 20k.

Before 2007, the homeowner would be required to pay income taxes on $20,000.

Today, if the situation qualifies, (your accountant can help you understand the full guidelines), you can exclude the full amount from your income.

This provision applies to debt forgiven in calendar years 2007 through 2012.

The Mortgage Debt Relief Act expires this year.

If you want to read about more details, you will find full details at the IRS link here.

PDA and smartphone users will find the details at http://www.irs.gov/individuals/article/0,,id=179414,00.html

There is motivation to get these short sales completed this year.  I realize it is only February, but it’s not too early to be paying attention to these items.

Short sales and the issue of foreclosure can still be a tricky area for real estate entrepreneurs.  We will be spending an entire evening discussing these topics at our Feb. 27th WREIA meeting.

Join us this month at our Washington REIA meeting as we invite attorneys from a local law firm to visit with us and discuss some of the foreclosure defense strategies they are using to assist homeowners in this struggle.You might be very surprised at some of the updates from the “front lines” of the legal community.Short sales and the issue of foreclosure is still a tricky area for investors.  We will be spending an entire evening discussing these hot topics at our Feb. 27th WREIA meeting.And as always, let me know if I can help with your real estate investing here in the DC area.See you on Feb. 27th!

John Peterson

301-881-5541
Washington REIA Network, President
Profitable Property, Founder
Find video updates on the Profitable Property Channel at

***

Register early for the Feb. 27th WREIA meeting online, and skip the registration line!

You will also find the registration link at http://feb2012-wreia-wreiacom.eventbrite.com

Changes in Short Sales Since July 2011

When we last focused on Short Sales at Washington REIA, we talked about how banks were paying 12-20k in assistance to homeowners – if they agreed to go through a short sale.

What a difference just a few months makes.

There was a recent article in Business Week reporting how some homeowners were receiving as much as $35,000 to agree to a short sale.

You can find the full article here.

PDA and smartphones will find the article at

Short sales have become a fashionable buzzword lately in the investor community, and perhaps in the larger public as well.This is due in large part to the fact that almost 10% of the recent sales across the country are – short sales.  To put that in perspective, in 2008, closer to the beginning of this housing mess, short sales were about 2% of the total sales.We are working with some homeowners right now, who are selling their home through a short sale on their personal residence.  Their last regular mortgage payment was in 2006.

These lenders have started to realize that it can take a few year to take a home through foreclosure, and rack up legal expenses as high as 60k or more, or they can pay the homeowner HALF that amount now, and get the property back in relatively decent condition.

Why are banks willing to pay out that amount as an incentive?

Well, why are the banks agreeing to their 25 Billion dollar mortgage servicing settlement?

In both cases – by working with the homeowners, the lenders are reducing their liability on possible fraudulent or criminal activity.

The lenders realize that if they have to answer to a judge or jury for the things that they have been doing with these mortgages over the last few years, they might not look so good.

Some homeowners are fed up with what they view as injustices by their lenders.  Some people are fighting back and starting to win their cases.

Join us this month at our Washington REIA meeting as we invite attorneys from a local law firm to visit with us and discuss some of the foreclosure defense strategies they are using to assist homeowners in this struggle.

You might be very surprised at some of the updates from the “front lines” of the legal community.
Short sales and the issue of foreclosure is still a tricky area for investors.  We will be spending an entire evening discussing these hot topics at our Feb. 27th WREIA meeting.

And as always, let me know if I can help with your real estate investing here in the DC area.

See you on Feb. 27th!

John Peterson

301-881-5541
Washington REIA Network, President
Profitable Property, Founder
Find video updates on the Profitable Property Channel at

***

Register early for the Feb. 27th WREIA meeting online, and skip the registration line!

You will also find the registration link at http://feb2012-wreia-dchm.eventbrite.com