Mortgage Rates Drop to 5-Week Low — 2 days agoThe 30-year fixed loan rate dropped to 6.04 percent this week, while the 15-year fixed rate slid below 6 percent.

And all time low Housing prices…………. Now is the time to buy!

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Serves 6

14oz Can Chickpeas, drained (keep the juice just incase)

Juice of a Lemon

4tbsp Tahini

2 garlic cloves, peeled & Crushed

5tbsp olive oil

Salt & Pepper

2 tbsp pinenuts, toasted

1. Blend the Chickpeas, lemon juice, tahini, garlic and olive oil together in a food processor until smooth. Season to taste. If you feel its to thick add some of the saved juice.
2. Spoon into a small dish, top with the pinenuts and chill until needed.
3. Serve with warm pitta or other flat breads.

What Is A Short Sale?

Homeowner Question: We are in financial trouble. Our house will not sell for enough money to even pay off the mortgage, let alone a real estate commission. Our real estate agent suggested that we do a “short sale“. What exactly is a short sale?

Answer: This is a method of disposing of your home without having the lender foreclose on you.

You are unfortunately what lender’s call “upside down.”

Let’s take this example: you bought the house last year for $500,000, and foolishly took advantage of the mortgage broker’s sales pitch and obtained a 100 percent loan. Now, the house will probably only sell for $475,000, and you lost your job and cannot afford to continue with the monthly mortgage payments.

A short sale is an arrangement with your lender whereby they will allow you to sell the property for less than the amount of the current mortgage.

Why would a lender permit this? First, you should understand that not all lenders will allow a short sale. Their decision depends on a number of factors: where is your house? how much loss will the lender suffer? What is the possibility that a speculator/investor will buy at a foreclosure sale?

Lenders have their own requirements, so I can only provide general information; you will have to consult your specific lender to determine what they need in order to move forward with the short sale process.

The first step is to contact your financial and legal advisors. Do not contact the lender until you fully understand the potential risks involved. Under Federal law, when a debt is forgiven, it can be treated as ordinary income on which tax must be paid. Thus, if your lender allows you to sell the property to $475, less a 2 percent commission, you will pay off your $500,000 mortgage and have a deficit of almost $35,000. According to many tax professionals, you will have to pay income tax on this amount even though you did not actually receive the money.

Furthermore, you want to make absolutely sure that even should the lender approve the short sale, you will not be obligated to make up this difference, which is called a deficiency. Unfortunately, most lenders will not put their agreement in writing, so your legal advisors will have to satisfy themselves — and you — on this matter.

In fact, many lenders have been known to use this “forgiveness of debt” issue as a way of dissuading their borrowers from pursuing the short sale approach.

After you are satisfied that you understand the concept and are prepared to move forward, you should contact your lender. Go up the corporate ladder as high as you can and talk with the manager of the short sale department. Typically, the lender has a “loss remediation” department that handles these matters.

If you have authorized your attorney or your real estate agent to act on your behalf, the lender will need a letter of authorization from you. The Privacy Laws enacted after 9-11 prohibit lenders from discussing personal and financial information with a stranger without such written authorization. This letter will include your name, property address and loan number.

You (or your agent) should then prepare a comprehensive letter explaining why you are requesting the short sale. Emphasize — but not as a “sob story” — your hardship. It would also help if you include a market analysis which will show what houses in your area are currently selling for. And finally, spell out your request in detail: what price are you asking the lender to approve, what percent commission will the real estate agent be allowed to accept, and what closing costs will be associated with the settlement. Keep in mind that in many jurisdictions, there is a recordation and transfer tax which is typically split between buyer and seller.

Your proposal should be as specific as possible. You don’t want to learn at settlement that you still have to come up with a lot of cash, because your lender did not authorize certain out-of-pocket expenses.

You should also request from your lender the amount of your outstanding balance. The lender has a legal obligation to provide this to you on request, and the burden is on the lender to provide an accurate accounting. Review this carefully to make sure that there are no charges which have been erroneously added. If you have missed some payments, you will be assessed late fees. When you present your proposal to the lender, try to get these charges deleted from the amount of the outstanding mortgage balance.

Your proposal should also include your financial situation. Keep in mind that many loans in the past few years were what are called “no-doc” — in other words, the lender made the decision to fund your loan based on the value of the property and not on your financial status. In your case, since you lost your job, include proof with your letter.

The more documentation you can provide the lender, the faster the decision will be. However, currently lenders are swamped with these requests, since you are not the only one facing a possible foreclosure.

Thus, the earlier you can start the process, the better chance you have of getting it approved.

But the lender’s approval to proceed with a short sale does not end the process. When you or your real estate agent find a prospective purchaser, the contract must state that it is contingent on lender’s approval. You have to send the contract to the lender, and it would help if you would include an accounting of all expenses which you will have to pay at settlement, and a final number that the lender will receive when settlement takes place.

In fact, if you can have a HUD-1 settlement statement prepared, this would be helpful and would expedite the process. Your lender will then review the documentation, and may reject certain expenses. For example, if the contract provides that you will give your buyer XX dollars for “closing costs” — or that you will pay some items which are traditionally the buyer’s obligation (such as title search and survey) — the lender may not allow such payments.

You want to go into the settlement knowing exactly all of the terms and conditions on which your lender will accept the short sale, including whether or not you will have to come up with money at the settlement table.

You are in financial trouble. If you have already missed some payments, your lender may already have reported this information to the credit reporting companies. You should try to convince the lender not to report any more delinquencies, but unfortunately, that’s in your lender’s sole discretion.

The short sale process works, but is complicated, time-consuming and uncertain. If you can start now — before you are actually in default — you will be ahead of the game.

ALL………

If you have friends or family who need help & advice, call me with their name and number and I will help them

Hi Everyone,

Check out this system that basically helps you pay off your mortgage so much quicker!

 www.homemortgagementor.com/hoa

Call myself or Brian with questions

Jane

MORTGAGE DEBT CANCELLATION RELIEFH.R. 3648 – Public Law 110-142Signed December 20, 2007 

Summary:  Generally, individuals who are relieved of their obligation to pay some portion of a mortgage debt on a principal residence between January 1, 2007 and December 31, 2009 will not be required to pay income tax on any amount that is forgiven.

Background:  A fundamental principle of the income tax is that a taxpayer must recognize income and pay tax any time a debt of the taxpayer is forgiven or discharged.  Exceptions are provided in several circumstances, including bankruptcy, insolvency (as defined by state law) and for some investment real estate.  Until this new rule was enacted, however, no exception applied to any amount debt forgiven on a mortgage for a taxpayer’s principal residence.  Thus, until now, when some portion of a mortgage debt was forgiven, that amount has been treated as taxable income and the borrower has been taxed at ordinary income rates on the forgiven amount, even though there is no cash. 

The newly-enacted relief for mortgage debt forgiveness is Congress’s response to the problems generated by the subprime crisis, short sales, rising foreclosure rates and price corrections in some markets.  Thus, when a lender forgives some portion of a borrower’s mortgage debt in a short sale, a foreclosure, a workout with the lender or some similar circumstance, the borrower will not be required to recognize income or pay tax on the forgiven amount.  This relief applies to debts forgiven between January 1, 2007 and December 31, 2009.

Provisions: General. 

• No income limitation:  All borrowers receive the relief, no matter what their income.
• Dollar limitation:  No more than $2 million of mortgage debt is eligible for the exclusion ($1 million of debt for a married filing separately return). 
• Relief applies only to an individual’s principal residence.
• The forgiven mortgage debt must have been secured by that residence.
• No relief is available for cash-outs, whether the cash-out takes the form of a refinanced first mortgage, a second mortgage, home equity line of credit or similar arrangement. 
• Eligible debt is what is called “acquisition indebtedness.”  This is debt used to acquire, construct or rehabilitate a residence. 
  • Refinanced debt qualifies, so long as the debt does not exceed the original amount of the debt.  (Same rule as Mortgage Interest Deduction)
  • Home equity debt (or second mortgages) qualifies if the funds were used to improve the home.  (Borrower must have adequate records, as under current law.)
  • See cash-outs, above.  No amount of a cash out may be treated as acquisition debt.

Additional Information: 

Refinanced Mortgages:  The relief does apply to refinanced debt in some circumstances.  The rules seek to assure that any debt eligible for the relief is directly related to the acquisition or improvement (such as rehabilitation, expansion, renovation, reconstruction) of the principal residence.  Debt used for furnishings (i.e., any movable property) in the home is not eligible for the relief.  When the proceeds of any refinanced debt is used for any purpose other than acquisition or improvement, those proceeds are not eligible for the relief. 

Principal Residence:  A principal residence is defined in the same manner as the rules that apply to the capital gains exclusion on the sale of a principal residence.  An individual may not have more than one principal residence at any given time.

Second Homes:  As a general matter, the relief does not apply to any debt forgiveness on any mortgage for any second home of the taxpayer.  However, if a taxpayer uses a residence (other than his principal residence) solely as an income-producing rental property, already-existing relief provisions might apply, depending on the taxpayer’s situation.  If the second home property was acquired as a speculative investment (such as for resale rather than rental), relief provisions are unlikely to be available. 

In all events an individual who is in a short sale, foreclosure, workout or similar situation on a residence (including condos) other than his principal residence should consult a tax adviser to determine what, if any, relief provisions might be available. 

Other Provisions in H.R. 3648 

Mortgage Insurance Premiums:  The deduction for mortgage insurance premiums is extended through tax year 2010.  Income limitations on the deduction will continue to apply.

Surviving Spouses/$500,000 Exclusion:  In some circumstances, a surviving spouse is denied eligibility for the full $500,000 exclusion on the sale of his/her principal residence.  This most frequently occurs when the residence is not held in joint ownership at the time the spouse who is not on the title dies.  In that case, the deceased spouse had no ownership interest, so there is no basis step-up on that half of the property.  The surviving spouse is thus eligible only for an exclusion of $250,000.  (Had the home been sold during the deceased spouse’s lifetime, the full $500,000 exclusion would have applied, so long as they filed a joint return.) 

Challenges for the surviving spouse are compounded when this circumstance occurs late in the year.  The surviving spouse is often unable to sell the property within the same year that the spouse died.  This legislation provides that a surviving spouse may claim the full $500,000 exclusion not only in the year of the deceased spouse’s death, but also during the two years after the spouse’s death.

Second Homes Converted to Principal Residence:  The original House-passed version of this legislation included a provision that would have limited the application of the $250,000/$500,000 exclusion when a second home is converted to a principal residence and later sold.  This change was not included in the final legislation that the President signed. 

Welcome to Jane Rose’s Blog! This blog will provide you with valuable information, tips, and general insight into the real estate market in the Eastbay. I hope to form a community with past clients and future ones looking for advice and current information all things real estate and more, I really would love to see you contribute!