We are almost six (6) years into the
Foreclosure/Mortgage Crisis. Although, the economy is changing, I find
that homeowners are still walking away from their homes. They are
being foreclosed on without seeking professional help. In the Southern
California marketplace, particularly in the San Fernando Valley
inventory is extremely low. Prices are up and homes may be worth more
than the homeowners are aware. With regard to distressed homeowners,
some are walking away from equity completely oblivious as to what is
happening in the marketplace.Short sales have been a staple in the community for six years. There is benefit for the distressed homeowner. If a distressed homeowner completes a short sale, the debt would be considered paid by the investor bank. For example: A homeowner, who is facing foreclosure, first mortgage is $500,000. A Buyer writes an offer for $300,000. The bank accepts this offer as full payment for the loan. This is a SHORT SALE. The difference of the $200,000 is what is short. It has nothing to do with the time-frame to get the property sold.
Not only that, a distressed homeowner, may not be aware of the Mortgage Forgiveness Debt Relief Act of 2007, which has saved distressed homeowners millions of dollars in tax liability since its passage. This Act has been extended through 2013.
As in the example above, if the homeowner completes a short sale… the difference of $200,000 is forgiven by the IRS. Otherwise that difference would be considered income and they would have to pay taxes. (Please consult your CPA or tax attorney for specifics). Walking away which leads to foreclosure can adversely affect persons with security clearance jobs.
This information is still critical to distressed homeowners and we need to get the word out. Do you think you have to pay for the Short Sale? In a word, NO! The bank usually pays for most of the fees incurred. However, if there is deferred maintenance, to get the property SOLD there may be necessary negotiations between the Seller, Buyer and the Short Sale Bank.
Homeowners, there is long term effects to foreclosure. Don’t walk away, talk to knowledgeable professional Realtor®. There are options. I am here to help, please contact me at 818.335.0732.
