Have you suffered a hardship? Loss or reduction in income, death of a spouse, large medical bills.
Is your home worth less than you paid for it?
Have you been unsuccessful in getting a home loan modification?
If you are having problems making your mortgage payment each month and need help, please contact me or a Short Sales and Foreclosure specialist in your area. Keep in mind, that it is illegal in many states to ask for up front fees to handle a short sale. If they ask for money, look elsewhere. Real Estate agents trained in Sales and Short Sales will be able to help you for free.
When you find yourself behind, the very first thing to do is talk to your lender. A large number of people that lose their homes in a foreclosure never spoke to the lender about their hardship. Request a loan modification. Many banks will reduce your interest rates, extend the terms, or give you interest only loans to get you back on your feet.
I was turned down for a loan modification and my home is worth less than what I owe
A good option for you may be a short sale.
Will I have to pay federal taxes on the money my lender loses in the short sale? There are several different scenarios talk to a tax adviser about your particular situation. When you do a short sale, your lender is agreeing to settle the debt on the property for less than the amount they are owed. The IRS therefore allows them to write off this loss, which is why your lender will send you a 1099-C after the short sale. Mortgage Debt Relief and Emergency Economic Stabilization Act
Prior to the Mortgage Debt Relief and Emergency Economic Stabilization Act of being put into effect, money forgiven by a lender in a short sale was
considered taxable income. In many circumstances, the new law no longer
requires taxpayers to pay federal income tax on the forgiven debt, provided the
property is their principal residence.
This only covers your first mortgage on your primary home. If you have a second mortgage or a home equity loan a short sale will have to be negotiated with that bank as well. (Even if the second loan is with the same bank as your 1st mortgage)
All other short sale scenarios – if you pulled cash out on your primary residence but spent it something other than upgrading your home or if you are doing a short sale on a second home or investment property – result in a taxable event unless you qualify for the “Insolvency” exclusion.
The IRS does not require you to pay taxes on the loss the lender takes in a short sale if, at the time of the short sale, you are insolvent. Insolvency means your debts (including your mortgage) exceed the value of all your assets. In other words, if, at the time of the short sale, you have more debt than you do money or assets, you are considered insolvent.
Many people who find themselves facing a short sale are in exactly this situation and are thus excluded from paying taxes on a short sale. We recommend you check with your CPA or accountant to help you figure out the best way to go.
So what is the process in a short sale
When I list your home for a short sale, I will have you fill out an Authorization to release information letter. This authorization lets me talk to your bank and negotiate your short sale.
Every bank is different. Some banks will order a Broker Price Opinion and then set a list price. Some banks do not set a price but will order a BPO to determine if the offer we bring in is acceptable
Every short sale will have a short sale package. Some banks want us to turn in all of the package except for the offer when we first list the property, some want to wait until the offer comes in.
Sample Short Sale Package (items may vary depending upon the lender):
Home Affordable Foreclosure Alternatives This offers all the alternatives