The last thing someone who is threatened with foreclosure wants to think about is
what their next tax return is going to look like. Being upside down on your mortgage
is enough to worry about, and getting through the short sale process is cause for
celebration. But too many people aren’t aware of the tax implications before they
make final decisions about how they deal with the extra debt.

In general, if you owe money and are personally liable for paying it back, and the
debt is forgiven, you received the equivalent of income in current tax law. So if
you are lucky enough to complete a short sale, and the bank agrees to forgive the
amount not covered by the short sale, you are liable for taxes on that amount.

Many people feel that this is not fair, and in many ways it simply adds insult to
injury for people who couldn’t have predicted that they would end up in this kind
of financial situation. No matter how you deal with your home, whether you are
foreclosed on, complete a short sale, or complete a deed-in-lieu of foreclosure, debt
forgiveness associated with the process will be taxable.

There are plenty of ways to decrease the amount of income you record. If the
forgiveness is on your primary home, you have up to $2 million in forgiven debt
that is not taxed, thanks to the Mortgage Forgiveness Debt Relief Act. Work with a
professional accountant to figure out what to include.

On the other hand, you can avoid including forgiven debt as income if you take on
the excess debt and pay it off yourself. The bank may allow you to make payments
on the remaining amount, and you may find it easier to complete a short sale if you
are willing and able to take on remainder debt.

Be Sociable, Share!

• 

The housing market bubble that burst in 2006-2007 has put a lot of people on edge
and scrambling to stay solvent. The situation hasn’t been good for anyone, with
homeowners finding themselves upside down on their mortgage and lenders having
no chance of recouping the amount they originally lent out.

What has been occurring is a sort of evolution of the Arizona short sale market.
At first, banks were quick to foreclose, hoping to recoup some money and going
through the historical motions of dealing with a homeowner who couldn’t pay their
mortgage. But that doesn’t work all that well for banks these days.

Just because the bank owns a foreclosed home, doesn’t mean they get any money
back. In the past, a foreclosed home would be relatively easy to sell because the
price would be fairly low. But because housing values are so much lower than they
used to be, we’re seeing foreclosed homes left empty, lowering their value even
further and giving the housing market even more trouble on the route to recovery.

Short sales have been a kind of compromise that helps both the homeowner and
the bank or lender. If a short sale can be completed, the home is no longer the
bank’s problem and the homeowner walks away without the credit disaster of a
foreclosure in their past.

This evolution of practices from the banks as well as real estate flippers who are
willing to purchase on a short sale has been good for everyone involved. The
housing market still isn’t getting much help, but at least things are moving rather
than stalling. What this means is that the future treatment of foreclosure and short
sales is still anyone’s guess. If you’ve held out for this long and are now considering
a short sale, you are better off than those at the forefront of this downturn.

Be Sociable, Share!

• 

With a Little Help from the Federal Government

Rather than allowing loan servicers to take their time on any Arizona short sale
decision, the Federal housing Finance Agency announced that starting in June,
servicers need to get things moving. Fannie Mae and Freddie Mac announced in
April that loan servicers should take 30 days to make a decision, while providing
weekly status updates. If they need 60 days, that is the absolute longest a loan
servicer can sit on the decision.

Arizona foreclosure rates have slowed down, but that doesn’t mean we’re out of
the woods yet. Across the country, people are hoping to avoid foreclosure by being
considered for a short sale or deed-in-lieu of foreclosure. The Home Affordable
Foreclosures Alternatives program makes this possible, and now Fannie and
Freddie are saying that these decisions need to be made more quickly.

In Arizona, that means that the chances of getting out from under and upside down
home are getting better. The Phoenix foreclosure rates of the past few years have
been devastating and the housing market has yet to recover. But Phoenix short sales
options are helping some homeowners to deal with a situation that is neither their
fault nor under their control.

The timelines are meant to put a little bit of pressure on what Freddie Mac
senior vice president Tracy Mooney calls, “complex…home sales since they may
involve multiple parties and long-distance negotiating.” The weekly reporting
and the expectation that deals will be completed within a month or two will add
transparency, too, giving both home owners and buyers a better sense of what is
going on.

Arizona short sales can be stalled for months when loan servicers are swamped with
requests and the decision is not easy to make. Without a timeline, homeowners are
left sitting on top of a painful waiting process.

Be Sociable, Share!

• 

For the housing market and for everyone involved in the deal

Even the neighborhood where the house stands benefits from a short sale more
than a foreclosure. Foreclosure rates are dropping, pressure is being put on loan
servicers to speed up short sales, and short sales are increasing. Many analysts are
pointing at the negative actions of increased short sales on the housing market and
seeing a pessimistic half empty glass. But others are looking at what this means in
the long term and seeing that things might actually be half full after all.

In the short term, short sale increases do mean that housing prices will not be rising.
This means that an increase in short sales prompts some negative projections in
the short term and many people are quick to say this means a recovery is not in the
works. But looking at that single variable doesn’t give enough of a picture to make
that kind of dire determination.

More sales is still a sign of increased buyer activity, even if those sales are short
sales. And while buying at extremely low prices is part of a short sale buyer’s plan,
at least they are buying. Nothing can get the market to move back up except for an
increase in sales. Foreclosures, on the other hand, are simply more dead weight
for the market to bear, and with the increase in short sales has come a decrease in
foreclosures.

If the market is going to recover, someone has to buy the homes that are out there
and available. Foreclosed homes are not bought homes, and they decrease the value
of the entire neighborhood. Short sale homes have at least been sold, which means
banks are recouping some of the debt owed to them. It might be time for just a little
bit of optimism.

Be Sociable, Share!

• 

I thought the exact same thing you did when you read this. This is crazy. I just received an email this morning with the same title as this blog and I had to write about it. It is unfortunate that so many people are uneducated when it comes to short sales because for 7 out of 10 people this, is a reality.

Let’s take a few steps back and think about this. Let’s say you purchased your home in 2004 for a $200k. In today’s market in 2011, this home this more then likely worth anywhere from 40%-60% of what is was worth when you purchased it. Lets go in the middle and say 50%, which is $100k. So you are paying a mortgage on a house that you owe $100k more then it is worth.

The reason a person buys real estate is to hopefully to make a profit when they sell, if there wasn’t, everyone would just rent. It’s easier to rent…. you don’t have to take care of repairs and you don’t have to pay the HOA. Unfortunately you don’t make any money when you’re renting, much in the same way that you don’t make any money by paying a mortgage that MIGHT get back to your original balance in the next decade or two.

So by you paying your mortgage on a home that you’re $100k upside down on or your LTV (loan to value) is at 100% basically what your doing is paying rent but still have all the hassles of repairs, HOA, etc.  The average rate of appreciation for a home in a NORMAL market is 4%-6% let go right in the middle and say 5%. This means if the market turns tomorrow which is HIGHLY unlikely your home would appreciate 5% annually. On a $100k house that is $5k a year. How many years will it take for your house to be worth what you paid for it? Ready, 20 years and you still have not made any money off of the property. In an essence you just rented a property for 20 years.

Does that make any sense? A short sale can put you in a much better situation.  You can short sale your current home rent a very similar home for half of what your mortgage was before. Rent for 12-24 months while you work on building your credit back to where it was and then purchase the same house you paid $200k for close to half that. Then you own a home again and can start fresh without being upside down. It just makes sense.

If you own a home with negative equity or know of someone with negative equity, please contact me at kyle@kylewylogerealestate.com for a free, no obligation short sale consultation to discuss your options according to your individual personal and financial circumstances.  Consultations are 100% confidential and, as always, our goal is to help you determine the path that is in your best interest personally and financially, both short and long-term.

Kyle Wyloge

Momentum Brokers

480-745-1543

kyle@kylewylogerealestate.com

www.MyArizonaShortSale.com

Source:

http://tinyurl.com/5tud8tm

Be Sociable, Share!

• 

Regardless of what anyone may tell you, a foreclosure, short sale, loan modification or deed-in-lieu of foreclosure can all have a negative impact on your credit. There is, however, a difference in the severity of the damage between them.  The difference between a foreclosure and a short sale to your credit and financial situation can be huge. 

A foreclosure will show on your credit as a foreclosure/repossession, whereas a short sale will show as pre-foreclosure in redemption status, settled, or even as a completely satisfied account.  A foreclosure can prevent you from purchasing a home for 5-7 years, whereas new Fannie Mae and Freddie Mac guidelines have changed the seasoning of a short sale to 2 years – which means you can purchase a home much sooner.

Foreclosures also generally have a more severe impact on your FICO score.  Due to the high number of missed payments many people accrue over the course of their foreclosure, most people report a drop of 200-300 points in their score.  If you are proactive about short selling your home, you can reduce this number by acting quickly to get your home on the market and sold.  Most people who complete a short sale report a drop of 80-120 points in their credit score and some have been able to fully recover in as little as 12-18 months.

The short sale process is far more discrete than a foreclosure.  Your friends, family and neighbors do not need to know you are doing a short sale on your property and your property will be marketed like any other home for sale.  When the property closes escrow, you will move out and move on with your life.  When your home is facing foreclosure, the bank generally posts a notice of trustee sale on your property.  If the property does go to foreclosure and you or a tenant is living in the home there will be an eviction process followed by a listing – where it is generally marketed as a bank owned or foreclosure property.

A short sale allows you to get out of a home that is causing you a financial hardship and rid you of the debt associated with negative equity without facing foreclosure.  We highly recommend that if you are considering a short sale you meet with a professional as soon as possible to reduce the impact on your credit and begin the negotiations with your lender.  Best Wishes!

If you own a home with negative equity or know of someone with negative equity, please contact me at kyle@kylewylogerealestate.com for a free, no obligation consultation to discuss your options according to your individual personal and financial circumstances.  Consultations are 100% confidential and, as always, our goal is to help you determine the path that is in your best interest personally and financially, both short and long-term.

Kyle Wyloge

RE/MAX Infinity

602.790.2588

kyle@kylewylogerealestate.com

www.myarizonashortsale.com

Be Sociable, Share!

• 

Did you know that less than 28% of short sales successfully close?  Because many Realtors are not experienced in negotiating with lenders and do not have the time necessary to commit to such a difficult transaction, over two thirds of short sales still do not close!  Will you wish you had chosen a professional instead of your Uncle Joe the part time Realtor when your home goes to foreclosure?

 Be sure to choose someone with the pricing, marketing, negotiating and closing experience it takes to get your short sale approved and closed!  With MyArizonaShortSale.com, you work with ALL of the vital parties to a short sale transaction – including a full time negotiator with over 250 closed short sales and a Realtor with valuable pricing knowledge due to their experience listing bank owned property.

Before choosing a Realtor make sure they can show you their results – we have approval letters and testimonials right here on our site.  When you choose to work with the professionals at MyArizonaShortSale.com, you are working with the best!

Common Reasons Short Sales Fail:

Lack of Ability and Knowledge
Aside from maybe a class, many realtors have no experience with short sales. It never occurred to them to learn about it until they took a class in order to cash in. We were doing shorts sales before everybody jumped on the bandwagon – and doing it successfully.

Lack of Experience
More than 90% of all licensed real estate agents had NEVER successfully completed a short sale prior to 2007 (source: MBA). No wonder so many short sales fall through.

Laziness
Too many realtors think that once they learned the basics of short sales, their learning curve stopped. Not true. This business changes every single day. True experts know this and constantly stay abreast of changes and improvements.

There are no shortcuts!
We can tell you first hand that there is no “quick” way to work through a short sale. They happen when they happen. We do our best to make it all work out as quickly as possible – by doing it the right way.

Lack of drive
We didn’t get into the short sale business to get rich. We did it to help good people get out of bad situations. We frequently have to sacrifice some or all of our commissions in order to complete a deal. Any “short sale expert” who isn’t willing to do this isn’t worth even calling.

Picking the wrong property
Not every home is a good a short sale candidate. When we meet with you, we’ll analyze your situation and tell you right away. If we can’t help you, we’ll help you find possible alternatives for keeping your home. Our closing percentage is very high because we’re so selective. We won’t waste your time if we can’t help.

They don’t know what to do
This is more common than you think. A realtor who doesn’t know anything about short sales finds someone who does, who’s willing to talk him through it. Ask for proof of experience. We’ll be happy to show you plenty.

They don’t know the market
Some “short sellers” seem to think that because your home is up for a short sale, or headed for foreclosure, then market trends don’t matter. Market trends are everything! How do you think we find an Arizona real estate investor to buy your home?

They don’t care
Arizona short sales require communication, constant attention and sometimes hourly follow-up. These are time-sensitive deals that can fall through the cracks at a moment’s notice! Make sure your short seller is really interested in you and selling your home.

They’re not the boss…you are!
Your realtor works for you. If you’re not getting what you expected when you expected it, fire the realtor. At ArizonaShortSale.com, we work every day to make sure that you receive every service you expected and a satisfactory outcome on your short sale.

If you own a home with negative equity or know of someone with negative equity, please contact me at kyle@kylewylogerealestate.com for a free, no obligation consultation to discuss your options according to your individual personal and financial circumstances.  Consultations are 100% confidential and, as always, our goal is to help you determine the path that is in your best interest personally and financially, both short and long-term.

Kyle Wyloge

RE/MAX Infinity

602.790.2588

kyle@kylewylogerealestate.com

www.myarizonashortsale.com

Be Sociable, Share!

• 

It is important to be aware of foreclosure scams and foreclosure avoidance scams when seeking assistance with your situation. 

Here are a few things you can do to avoid foreclosure scams…

• DON’T SIGN any papers that you don’t fully understand, or you could make bad matters worse.
• DON’T SIGN any papers that you feel pressured into signing. Take your time.
• DON’T MAKE mortgage payments to anyone other than your lender.
• DON’T SIGN over the deed without some closure or agreement for your protection. Talk to your attorney or title company if you need help.
• DON’T EVER pay anyone who claims to stop foreclosure. You can stop the auction yourself. There are several foreclosure assistance programs all over to assist you for free.

MyArizonaShortSale.com never charges an upfront fee and you retain full control over your home.  We make sure that all of our clients fully understand the process and all paperwork before signing anything.  Please use the links below to view current information on foreclosure scams.  If you feel you have been the victim of a foreclosure scam call the mortgage Fraud Hotline at 1-800-4FRAUD8.

If you own a home with negative equity or know of someone with negative equity, please contact me at kyle@kylewylogerealestate.com for a free, no obligation consultation to discuss your options according to your individual personal and financial circumstances.  Consultations are 100% confidential and, as always, our goal is to help you determine the path that is in your best interest personally and financially, both short and long-term.

Kyle Wyloge

RE/MAX Infinity

602.790.2588

kyle@kylewylogerealestate.com

www.myarizonashortsale.com

Be Sociable, Share!

• 

If you are currently facing a financial hardship or you are in a situation which is causing you to miss payments or sell your home there are several ways that you can be proactive and make the process more simple and stress free.  These tips can help make the process easier for you:

Don’t procrastinate. If you are unable to pay your mortgage – even for only one month, contact your lender and make them aware of your situation.  You should also sit down, determine if this is a long term or temporary situation, and review all options available to you.  If you would like assistance in doing this, please feel free to contact us.  We can discuss all of your options for both staying in your home and selling it.

Prioritize. After determining how you will proceed, prioritize your debts.  If you know you plan on staying in your home it is important to make sure you are not spending money that could be used to pay mortgage payments on other less important debts.  Recovering from missed or skipped mortgage payments is far more difficult than recovering from missed or skipped credit card payments.

Know your finances. Make sure you know what is coming in and out each month and budget accordingly.  Your lender will want to see an itemized list of all of your current income and expenses when they discuss your loan with you.

Know your rights and options. If you have questions about the process or your options feel free to use our website as a resource or contact us, along with a trusted tax professional and/or attorney to discuss any questions or issues you may have.

Do not lose your cool! You are not alone in this situation and you are certainly not without options.  Do not allow yourself to become overwhelmed or ignore the situation.  There is help available!

Develop a plan. Whether you choose to sell your home or make an arrangement with your bank, you should create a plan that extends during this process and well beyond.  This will include where you are moving to, how you will spend or save the money you have from missed payments, etc.  You will also want to decide how you will deal with your lender.

Do your research. Make sure that you know everything you possibly can about your options, the foreclosure process in Arizona and your lenders requirements.

Be prepared. Gather all of your financial information – a summary of income and expenses, bank statements, pay stubs, tax returns, mortgage statements, closing documents from when you purchased your home, a list of your reasons for hardship and any other documents you feel might play a role in working with your banking and have them ready before you contact your lender or someone to assist you with your sale.

Work with trusted professionals. If you need advice or assistance, make sure you are working with knowledgeable, experienced and trusted professionals – we would love to give you a referral should you need information outside of our scope of knowledge!

If you own a home with negative equity or know of someone with negative equity, please contact me at kyle@kylewylogerealestate.com for a free, no obligation short sale consultation to discuss your options according to your individual personal and financial circumstances.  Consultations are 100% confidential and, as always, our goal is to help you determine the path that is in your best interest personally and financially, both short and long-term.

Kyle Wyloge

RE/MAX Infinity

602.790.2588

kyle@kylewylogerealestate.com

www.myarizonashortsale.com

Be Sociable, Share!

•