Short Sale Tax Relief Expires December 31, 2012

The tax relief law that allows certain qualifying homeowners to exclude from income certain debts that have been forgiven by their lender is set to expire December 31, 2012.  Why is this important now?  Because it can take up to 6 months to receive formal short sale approval and close a short sale escrow.  

According to a recent article in the Los Angeles Times, when this provision expires Sellers who participate in short sales  WILL have to report the debt relief they receive from the short sale lender as income on their federal tax returns.  As of today, the tax break is not extended, so time is of the essence …

The following are the main items that escrow looks at/needs when processing a short sale:
1.  Short Sale Addendum to the Purchase Contract
2.  Real Estate Commissions
      a.  Escrow will use the Short Sale Approval letter to determine permissible broker commissions (regardless of what the listing agreement states)
      b.  MLS should provide clear provisions  for short sale lender commission changes
3.  Written Short Sale Approval Letter
      a.  Escrow will verify that the Sales Price and Proceeds amounts match what is stated on the Short Sale Approval letter
      b.  In the case of proceeds to the Lender, escrow will confirm that they receive, at a minimum, the amount stated on the Short Sale Approval letter
      c.  Escrow must close within the stated timeframe or an extension and an updated Short Sale Approval letter will be required

In order to prevent closing delays, Sellers should be made aware of the fees that Short Sale Lenders may not approve and/or require additional information (see a limited, non-inclusive list below).
•      Short Sale Negotiator Fees
•      Home Warranty
•      Retrofit Work *
•      Termite Work *
•      Delinquent Property Taxes**
•      HOA fees***

*   Short Sale lenders typically approve the inspection fee but not the actual retrofit or termite work
**  Resubmission to the short sale lender for a revised short sale approval letter may be needed (and may cause closing delays)
*** Short Sale lenders may approve payment of HOA dues but not always approve delinquencies or certain other HOA fees such as Transfer fee or Document Fee

Typically when the Short Sale Lender does not approve the Seller’s payment of certain escrow/closing fees, the costs may be paid for by the buyer provided its permitted in the Short Sale Approval letter.

This post highlights only some of the provisions of the bill , please revert to the actual bill for specific information
http://www.govtrack.us/congress/bills/110/hr3648/text

For Buying or Selling, it helps to have a guide that gives you straight answers. For more information on buying, selling, or renting out an income property in San Diego, please call Frank Rashid's cell phone at (858) 676-5250 or email him at rashid@rashidrealty.com. More to follow within the next couple of weeks.

California Homeowner Bill of Rights signed into law

California Governor Jerry Brown signed into law the Homeowner Bill of Rights to help struggling Californians keep their homes. This law aims to avoid foreclosure where possible to help stabilize California's housing market and prevent the other negative effects of foreclosures on families, communities, and the economy. The new law will generally prohibit lenders from engaging in dual tracking, require a single point of contact for borrowers seeking foreclosure prevention alternatives, provide borrowers with certain safeguards during the foreclosure process, and provide borrowers with the right to sue lenders for material violations of this law.

Making sense of the story:

• The Bill of Rights prohibits “dual track” foreclosures that occur when a mortgage servicer continues foreclosure while also reviewing a homeowner’s application for a loan modification.
• Under the new law, homeowners must be provided with a single point of contact when negotiating a loan modification.
• It expands notice requirements that must be provided to a borrower before taking action on a loan modification application or pursuing foreclosure.
• Additionally, the bill allows injunctions against foreclosure until violations are corrected and permits civil penalties against servicers that file multiple, inaccurate mortgage documents or commit reckless or willful violations of law.
• These new laws make California the first state in the nation to take provisions in the National Mortgage Settlement, which covered the nation’s five largest mortgage loan servicers, and apply those rules to all mortgage servicers.
• The law will go into effect January 1, 2013.

Read the full story: http://on.car.org/N3TUdT

For Buying or Selling, it helps to have a guide that gives you straight answers. For more information on buying, selling, or renting out an income property in San Diego, please call Frank Rashid's cell phone at (858) 676-5250 or email him at rashid@rashidrealty.com. More to follow within the next couple of weeks.

Tips for the Moving Day!

Moving can be a stressful time, however, there are several things that you can do to make your move a smooth one. If you know that you're moving ahead of time, it's a good idea to start packing as early as possible. Remember, Rome wasn't built in a day and, unless you have to be out in a hurry, it's better to take your time and remember every little detail now than to find yourself with the moving blues later.

A Little Goes A Long Way

If at all possible, pace yourself when packing. It's better to pack a little at a time and make sure that nothing is forgotten than to hurry and try to get everything done within a day or two. It's easy to forget to have your address changed, turn off your phone, internet, water and/or cable service, so take the time to make sure every little detail is ironed out now so that you can enjoy your new home later.

Have A Moving Sale

Get rid of everything that you don't need by having a moving sale. If you haven't used it within a year, sell it. Otherwise, you will just end up with the same clutter in your new house as you've had in the one you're leaving behind. Plus, the more you sell, the less you will have to pack and move. Not to mention, moving is expensive and there's nothing wrong with earning a few extra bucks whenever possible.

Create A Packing List

It will help you to remember things much easier by writing them down on paper as they come to mind. A packing list can act as a shopping list, which will remind you of the things that you need to remember.

Pack Lightly

Moving day is hard enough, so don't make it any worse by loading down your arms with too much weight. If you pack lightly, it may cost you a little more footwork, but your body will thank you at the end of the day.

Pack Smart

Because of their design, boxes are easier to carry and provide an effective way to keep everything stored safely in its place. Rather than just piling everything into the car or U-Haul and hoping for the best, take the time to pack everything carefully (especially breakables) inside of a box. What will not fit, such as furniture and other household essentials, should be tied down and placed in a moving truck. Furniture pads are also a good idea to prevent damage during the move. Make sure you label each box with the contents of each box along with the room it will go in at the new home. This will make unpacking more efficient and save you time.

For Buying or Selling, it helps to have a guide that gives you straight answers. For more information on buying, selling, or renting out an income property in San Diego, please call Frank Rashid's cell phone at (858) 676-5250 or email him at rashid@rashidrealty.com. More to follow within the next couple of weeks.