Short Sale Client Testimonial


Anna May, Greg Jones with Kelly Carter

“Anna & Greg were recommended to me by a mutual friend. The last time I had sold a home, I was not single and the process at first seemed daunting. I had to clear out the home I had lived in for many years and it took a while longer than expected. Anna & Greg were sensitive to this and helped to make me feel comfortable and at ease with the whole process. They offered to help by offering boxes, garage sale signs, etc. and were flexible with the postponement of the home being available because of all the work I had to get done first.

It was a short sale, so in addition to removing a near-lifetime of belongings, I also had to deal with the stress of the short sale that would not have allowed me to benefit from any proceeds. Luckily, Anna & Greg were familiar with short sales and I was able to benefit from a “HAFA Relocation Incentive”  that allowed me to walk away with a few  thousand dollars to help with my transition into a new place to live.

“My experience with them was just wonderful. I highly recommend them!”

Gloria “Kelly” Carter

Special thanks to Diana Cohn of Corner Office for the introduction!

Why a Short Sale? (Tax Relief!)

SB 931 Deficiency Waiver on First Mortgage

When the first mortgage holder of your loan accepts full payment and satisfaction of all your outstanding first loan from the successful completion of the sale of your home, your lender is prevented from pursuing a deficiency against you even after a short sale. This is great news! What this means to you as a homeowner in California is that this releases you from further liability (deficiency) when the bank accepts and approves your short sale. Click here to read information on SB 931 and see how this may apply to your individual situation. At any rate, whenever you are negotiating a short sale, it would still be beneficial to have your real estate agent ask for the lender to issue a short sale approval letter with the verbiage indicating a waiver of future deficiency and no promissory note.

SB 458 Second Mortgages- Release of Liability after completing a Short Sale in California by 2012

Effective as of July 15, 2011, California homeowners who sell their homes through a short sale and who have subordinate loans such as home equity line of credit (heloc) or fixed secondary mortgages, are now extended the protection against deficiency. This means that if your second lender agrees to the short sale, your lender must accept the proceeds from the short sale as a payment in full of the outstanding balance of the loans. This means that if you are a homeowner in California who sells your home in a short sale that the bank has approved, you will be released from liability (deficiency) not only on your first mortgage (SB 931) but also on your second mortgage under SB 458 in the event that the bank accepts and approves the short sale event.  Receiving short sale approval is not enough, you would have to complete the short sale. Click here to read information on SB 458 and  consult a real estate attorney see how these short sale related laws may apply to your individual situation.

Short Sale Income Tax Relief from Federal Income Tax thru 2012

Mortgage Forgiveness Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, short sale, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief. This applies to loans that were used to acquire, build, or improve upon on the home. Consult your tax advisor regarding how this tax relief may apply to your individual situation. If the loans forgiven were loans that you used to purchase the home (purchase money loan) or loans used to build or improve the home, most likely you would not have to pay taxes if you complete a short sale before December 31, 2012. A portion or all of the forgiven amount would be considered taxable income if the forgiven amount, or if portions of the loans forgiven were used for other purposes- i.e. cash out refinance used to payoff i.e. car loans, credit cards to pay vacation expenses, or cash to fund a new business, etc. Please consult a tax advisor. Click here to read more information on the Mortgage Forgiveness Debt Relief Act of 2007.

Short Sale Income Tax Relief from California State Income Tax until 2012

In California, homeowners who sell their home through a short sale may qualify for the California Mortgage Forgiveness Debt Relief under SB 401, which was enacted on April 12, 2010. This mortgage forgiveness debt relief act allows taxpayers who have had all or part of their loan balance on their principal residence forgiven by their lender to exclude the forgiven debt from California gross income. This tax relief for those who short sell their homes in California apply to discharges of qualified residence indebtedness on or after January 1, 2009 and before January 1, 2013 (Think until 2012). Read more about this from the California Franchise Tax Board website under SB 401.

The California Tax Relief limits the amount of qualified principal indebtedness up to $800,000 for those who file as married, joint, head of household and up to $400,000 for those who file as married/RDP filing separately. See State of California Franchise Tax Board for more details. In order to claim tax relief, you would need to file Form 540 or Form 540X for a previously filed tax return.

Consult your tax advisor regarding how this tax relief may apply to your individual situation.

Clock is Ticking. Unless, laws are extended, you only have until December 31, 2012 to complete a Short Sale and enjoy these benefits!

A lot of the laws that favor selling your home through a short sale in California expire by December 31, 2012. This means that if you desire to short sell your home and qualify to avoid deficiency and not pay taxes on mortgage forgiven debt associated with a short sale, now would be the time in order to close escrow on a short sale by 2012.

Please note there are exceptions to the law that you need to be made aware of. Consult with your advisors to discuss your own individual situation.

(This message is provided as a courtesy from Marcos Rios of EverBank. Contact Marcos at 510-755-4055.)

So Many Buyers, Not Enough Sellers!


Get Off the Fence!Just a few months ago homes were sitting on the market beckoning for a buyer to want them!

It’s a bit different now. Buyers are abundant and available homes in affordable price ranges are not. Homes garner multiple offers above asking price with many important contingencies shaved off the contract!

Here’s the deal. When a  real estate professional tells you to BUY NOW, they’re not necessarily just trying to make a sale! Any of us agents who’ve been in business long enough have seen the ups and downs of the market and the frustration our clients face when they don’t get off the fence in a  timely enough manner.

If you’ve set a goal for yourself to do something in life such as purchase a home or sell your home, PREPARE NOW! You never know when it will be too late to enjoy maximum benefits.

However, don’t feel pressured — the timing must be right for YOU…

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Debt Forgiveness Protections Expire December 31, 2012

ISLIP, NY - FEBRUARY 09:  A padlock hangs from...
ISLIP, NY - FEBRUARY 09: A padlock hangs from a door of a foreclosed home on February 9, 2012 in Islip, New York. (Image credit: Getty Images via @daylife)

For homeowners with a home that’s worth less than the balance(s) owed, what does this mean to you? This means taking the chance of the debt forgiveness law being extended past the end of the year or getting off the fence and exploring your options for a short sale now.

After a foreclosure or a short sale, the former homeowner is not taxed on forgiven debt under federal and state laws that will expire at the end of this year.  In both cases, the lender likely ends up receiving less than the full amount of the outstanding balance.  If so, the amount the borrower is no longer responsible for paying to the lender is considered “cancellation of debt” income and, thus, income to the borrower that – prior to the adoption of the federal and state protections – was subject to income tax.  Those federal and state protections are scheduled to expire at the end of 2012.

Pride comes before a fall. We know of many people who have simply walked away from their homes that fall into foreclosure, perhaps because they are too proud to ask for help. Not only do borrowers ruin their credit unnecessarily with a foreclosure rather than pursuing a short sale, foreclosures are devastating to entire neighborhoods by dragging down property values of the homes around them. Do you know of someone in your neighborhood who needs help but is too proud to ask for it?

Short sales are a common part of the real estate landscape these days. The best thing we can do is to help get the word out about what homeowners’ options are so that they can make informed decisions…

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What Constitutes a “Responsible” Homeowner?

President Barack Obama takes aim with a photog...
Image via Wikipedia

Today in the newspaper I read that President Obama wants to pursue relief for “responsible homeowners”. Could just be election-year rhetoric, however, who is to judge what is “responsible”?

Common sense may dictate that responsible homeowners have:

  1. made their mortgage payments on time every month
  2. NOT used their home as an ATM machine to buy new cars or boats or ugly jewelry or trips to Barbados
  3. actually READ their loan papers when they signed for their mortgages

In two short sale scenarios with seller clients this past week, the lenders stated that the sellers “do not meet the investor’s criteria for imminent default” of their mortgage.

Wait a minute here. So, our clients have been working diligently to save their money, have NOT made frivolous purchases while being homeowners, and now when they’re honestly and truly under-employed and half of the married couple is out of work, they’re not given relief?

Must they be nearly broke to be granted a short sale right off the bat? Must being responsible invite punishment in the form of nobody offering to help them until they’re further distressed?

What is the incentive to BE responsible when so many homeowners are feeling punished for BEING responsible?

Initial turn-downs are common in short sale negotiations when the sellers are on time with their payments. It’s when the mortgage payments are NOT being paid that we often see lenders ramping up to make the short sale happen favorably for all parties. However, homeowners must consider the credit implications of being behind on mortgage payments…

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