Short Sale Information Update
If you are contemplating a short sale because the market value of your home is below what you owe, the process has improved substantially since short sales became such a major part of the Real Estate world. The US Department of the Treasury established rules and incentives for hardship short sales in 2009 by creating HAFA. Coming up on February 1st, 2013, there will be further changes to make the process even more streamlined. HAFA was created to help and protect homeowner / borrowers during this process. There are programs to help all borrowers in distress and provide cash to the occupant (tenant or owner) for relocation assistance. The homeowner / borrower can even be current on their payments (and do a pre-approved short sale) if they qualify based on having a profession that requires their having a security clearance which also requires their FICO score be to standards (i.e. Military Officers, Police Officers, etc). Any borrower can qualify homeowner / borrower can qualify for a pre-approved short sale (current on payments) by applying and documenting hardship. In other HAFA shortsales the hardship starts with being 90 days late on mortgage payments.) The new HAFA revisions effective 2/1/13 have simplified the hardship qualification to being 1)90 days late and 2) having a FICO score of less than 620. There is a program for you, regardless if you are occupying the property or renting it and regardless if you own multiple properties.
Fiscal Cliff: As of December 16th, we are still awaiting US Congress to pass a bill to balance a new budget. This is commonly being referred to as the “Fiscal Cliff”. Included in this, pertaining to real estate ownership and short sales are deductability of mortgage interest (THE cornerstone to the benefit of owning a home verses renting) as well as the extension of the Mortgage Debt Relief Act of 2007. This act provides an offset on debt forgiveness associated with a short sale. This debt forgiveness is considered income by the IRS and is a taxable event. The offset eliminates this “income” on your tax return as long as the Mortgage Debt Relief Act of 2007 is still in place. What ever happens there is and always will be options in case of personal insolvency. Please always remember that any information you receive regarding your taxes should always be confirmed by your personal tax professional. If you have any further questions about planning a short sale, please feel free to contact me at any time at 951-833-8302 or email me at email@example.com.
At your service,
Robert Bodemer, Realtor