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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If you’ve ever worked on short sale transactions in the real estate industry, then you probably know how frustrating it can be when lenders put a value on either an appraisal or even a “drive by BPO” (broker price opinion) without sharing the report with the sellers and or potential buyer.

For me, it’s absolutely infuriating when a lender counters a property’s appraised value but then never tells us what value they arrived at.

Fortunately, things are changing at Bank of America.

Recent changes to Bank of America’s short sale process include providing a valuation report to the customer each time a value is obtained and used as part of the process.

This change improves the customer experience by providing more transparency and clarity to the information used in reaching a decision on a short sale offer. Valuation reports will be supplied each time a value is obtained.

Whether you have initiated the short sale with an offer or are just beginning the short sale process and do not yet have an offer, your customer should understand that:

• A current value for the property must be determined, which then helps determine the market value
• This process typically takes less than two weeks to complete

Note:

• For Equator® short sale files: The valuation report will be available in the Equator record
• Non-Equator short sale files: The valuation report will be mailed to the customer

What can you do to assist with the valuation process?

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What About the Tax Break for Short Sellers?

In 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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