Southwest Florida Title Insurance & Real Estate Blog -

Whew, thank God 2013 is over! That’s not to say that our company had a horrible year, because we didn’t.

In fact, we had a great year of redefining our purpose so that we can continue to rock it out for you in 2014 and beyond.

Our re-defined purpose is as follows:

To help improve your ability to earn more repeat & referral business while creating exceptional experiences for your real estate consumers.

And so far, I must say, our referral partners appreciate what we bring to the table.

Check this out ↓

But to get back to my initial comment about 2013…the reason why last year was great, is because (much like in 2007 when we first started) the slow times forced us to focus on developing new processes that would distinguish our company.

Some of the new improvements we made include:

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Mortgage Debt Relief Act Expiration

Posted by Chris On January 2

What About the Tax Break for Short Sellers?

Mortgage Debt forgivenessIn a clear indication of where our market is today compared to where it has been over the last few years, there has been an eerie quietude regarding the expiration of the Mortgage Debt Relief Act.  Indeed, neither NAR’s nor Florida REALTORS® sites are treating this as front page news.

With short sales comprising a much smaller portion of our market, this treatment is somewhat understandable.  But you ought to be aware of what is happening in Congress and how it may affect your clients’ interest in short selling their property.

You will recall that the Mortgage Debt Relief Act of 2007 exempted from taxation certain types of cancelled debt.  Ordinarily, cancelled debt is treated as income by the federal tax code.  Under the Act someone who closed a short sale in 2013, for example, and whose lender cancelled the deficiency balance (i.e., the difference between the total owed and what the lender netted from the sale), might have been able to avoid having to pay income tax on that deficiency balance.

The Act was a boon to many who have successfully closed short sales or who have received principal reductions over the last handful of years; and the Act provided a much needed boost to the real estate industry by smoothing the way for more of those deals to close.

The Act officially expired yesterday, January 1, 2014, after which short sellers must carefully consider the tax implications of their potential cancelled debt.  There are efforts afoot in Congress to extend the Act and to do so retroactively.  According to a HousingWire.com article, “the extension has strong bipartisan support”, which is not surprising and which should breed some hope in the minds of distressed homeowners.

Unfortunately, though, there is no guarantee that the provision will be extended retroactively.

So what do we do in the meantime?

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Since the United States shut down last Tuesday, I decided to research how this could affect the real estate industry especially when it comes to government loans.

Here’s what I found:

  1. The IRS isn’t processing any 4506-T forms which is used to verify tax transcripts during mortgage loan qualifications.
  2. Short sales will also slow down due to the issue stated above.
  3. USDA loans will not be approved during the shut down. This will affect those who are applying for a rural loan.
  4. FHA loans will be slowed down a bit only if it’s a single family dwelling. But there will be no new applications for multi-family homes processed.

Hit us up in the comments below if you’d like to opine!

Chris

Why not consider purchasing a distressed sale?

BusinessDictionary.com defines a distressed sale as an urgent sale of normal or distressed goods, at deeply discounted prices.

For the purpose of this article, “distressed goods” refers to homes that sell at deeply discounted prices via either a short sale or foreclosure.

We have been and still are in a housing market unlike any we’ve seen in years. The economy of the past few years has produced more properties that are either in foreclosure or short sales status.

From our point of view, many buyers (we’ll call Group A) routinely steered clear of distressed sales because they had the idea that these properties were damaged money pits and very likely to be trashed. Therefore they avoided taking such a risk on a big investment.

But then there are others (we’ll call Group B) who enter the market either for the first time or as a seasoned buyers, who view distressed sales as an opportunity.

They’re searching for (and finding) great properties that have been overlooked by those people describe above who categorically excluded foreclosures and short sales.

If you’re part of Group A, you may want to reconsider purchasing a distressed sale because they make great sense, especially when the market is tight.

What is the difference between a Foreclosure and a Short Sale?

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Bank of America (Photo Courtesy of Flickr User MoneyBlogNewz)

Lately, we have been advised by many lenders’ that you can’t use electronic signatures on short sales.  The major lending institutions really do not like to see electronic signatures.

Despite an announcement in late May of 2012 that Freddie Mac will allow it, the servicers usually frown upon it.

On February 22, 2013 Bank of America recently advised us that they will now accept electronic signatures on most documents collected throughout the processing of short sales; however there are specific requirements that must be met in order for the documents to be accepted.

Real Estate agents choosing to use electronic signatures will need to check with their electronic service provider to ensure the below requirements can be met prior to initiating a short sale.

DocuSign, is one of the providers that has shown they have the capability to meet Bank of America’s security requirements.

The requirements are as follows:
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Promissory note

This is the 6th tip of “10 Questions You Should Ask About Florida Short Sales” eBook, which is available as a FREE download.

Lenders occasionally require a new obligation in exchange for approving a Florida short sale. This new obligation is typically in the form of a promissory note.

Most promissory notes required after short sales are unsecured debt obligations – not unlike the note you signed for your original home loan but without the mortgage to secure the debt.

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Credit Card Picture

This is the 5th tip of “10 Questions You Should Ask About Florida Short Sales” eBook, which is available as a FREE download.

If you are considering a short sale, the effect of such an occurrence may not be the most pressing issue. It could be that unemployment, curtailment of income and other market forces have already wreaked havoc on your credit score.

Nonetheless, or if you are considering a short sale for more strategic reasons, it is important to understand that a short sale will affect your credit worthiness.

Credit scoring is very complex.

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This is the 4th tip of “10 Questions You Should Ask About Florida Short Sales” eBook, which is available as a FREE download.

It is not uncommon for homeowners and real estate professionals to consider a short sale impossible if there is more than one mortgage involved or junior liens (i.e., liens or judgments that affect the title to the property). This is not surprising for a number of reasons but is nonetheless a misconception.

As you may imagine, there are plenty of homeowners who have more than one mortgage on their properties. Perhaps they took out an equity line to pay for a child’s college or bought a property with 80/20 financing.

There are plenty of these situations and you may be in one and wonder rightfully whether or not you can successfully short sell your property on a second mortgage short sale.

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Naples Short Sales - Checking Figures

This is the 3rd tip of “10 Questions You Should Ask About Florida Short Sales” eBook, which is available as a FREE download.

This is a very frequent question, and its analysis is a bit complex because “cost” is such a broad term. Later in the eBook, we will look at Promissory Note requirements, cash contributions and association dues as potential “costs” of completing a Naples short sale. For this section, let’s simplify things a bit and look at standard transaction or closing costs and what you should expect to pay (or not pay).

With regard to ordinary closing costs, a short sale should cost you very little. Here’s why. In a short sale, the lender will agree to absorb many of the ordinary closing costs that are customarily the seller’s responsibility. In our experience with Florida short sales, lenders will usually agree to absorb at least the following closing costs:

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Short Sale Process - Old Mortgage Note

This is the 2nd tip of “10 Questions You Should Ask About Florida Short Sales” eBook, which is available as a FREE download.

In a nutshell, the lender’s right to pursue you for the deficiency after a short sale stems from your obligation to the lender under the Note. If you remember, when you took out your home loan (whether to refinance or to purchase), among the hundreds of pages were two very important documents:

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NOT LEGAL ADVICE: This information is not to be construed as legal advice. Legal advice must be tailored to the specific circumstances of each case. Every effort has been made to assure that this information is up-to-date as of the date of publication. It is not intended to be a full and exhaustive explanation of the law in any area. This information is not intended as legal advice and may not be used as legal advice. It should not be used to replace the advice of your own legal counsel.

Winged Foot Tite, LLC is not associated with the government, and our [short sale orchestration] service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan.