First, homeowners should never have to pay anything up front for a loan modification or information on how to negotiate with their lender, says Roy Oppenheim, whose Florida-based law firm Oppenheim Law has handled more than 1,000 mortgage and foreclosure fraud cases over the past 5 years.
“If you’re paying upfront to a non-lawyer who’s claiming they can modify your loan, that’s a big scam,” Oppenheim says.
The foreclosure crisis isn’t over, but a new trend in real estate sales could be the light at the end of the tunnel for many borrowers and lenders. Short sales, which occur when homeowners sell their homes for less than what they still owe, outpaced foreclosures for the first time ever in January,according to a new report from Lender Processing Services, Inc.
The Federal Housing Finance Agency announced this month that mortgage servicers will be required to review and respond to short sale offers within 30 days and make final sale decisions within 60 days. The new requirements, which take effect in June, have kept lenders busy expanding and training the staff needed to catch up with growing short sale demand. (more…)
Maybe you weren’t convinced the first time I told you the era of the short sale was finally upon us.
I can’t blame you for thinking that banks were acting irrationally when it comes to the foreclosure process.
But Lender Processing Services just offered up the most convincing numbers to date that short sales are no longer just some pie-in-the-sky dream for distressed underwater borrowers.
In January short sales made up 23.9 percent of home sales, while foreclosure sales made up 19.7 percent of all home purchases.
Of course that means that over half of all real estate closings are for distressed homes.
A year before, the percentages were skewered in the opposite direction. In January 2011, 16.3 percent of home purchases came through short sales, and 24.9 percent were foreclosures.
Why are the banks now convinced, as I was long ago, that going through the long and harrowing process of a foreclosure is not their best option?
The proof is once again in the numbers. On average, foreclosed homes sold for 29 percent less than non-distressed properties in January.
Homes sold via short sale? They went for 23 percent less. Here in Florida, LPS says short sales have outnumbered foreclosures since July.
That means short sales are a better deal for the banks, plain and simple.
The truth is banks don’t want to own these properties, they certainly can’t handle maintaining these homes, and they just end up laying waste to neighborhoods by hanging on to them. (more…)
That’s because the Mortgage Debt Relief Act, which was passed in 2007, is set to expire at the end of this year. If that happens you’ll have to pay taxes on any forgiven debt that comes out of a short sale.
I remain skeptical that Congress, in this election year, will come through and extend the MDRA, but at least some Congressmen haven’t forgotten how important this legislation is. Then again, in an election year anything is possible.
U.S. Reps. Jim McDermott, D-Wash., Shelley Berkley, D-Nev., and John Larson, D-Conn., have introduced the Homeowners Tax Fairness Act. It would extend the Mortgage Debt Relief Act for another three years.
Let’s hope Congress gets their act together and passes this bill.
It remains to be seen if a foreclosure dismissal will have an impact here in Florida, but none the less it has the chance to be a real game changer.
The case is OneWest Bank, FSC vs Galli. OneWest had tried for a partial summary judgement against the Gallis, but the judge in the case denied it and instead ruled in favor of Mr. and Mrs. Galli.
As I’ve always said, you have to make the banks prove they own the note, but in reality it’s more than that. I could pick up a note off the street and say I owned it, but it wouldn’t necessarily be true. (more…)
It’s easier than ever before to walk away without a deficiency and maybe even thousands of dollars in your pocket.
And to top it off you usually don’t have to pay taxes on the debt you walked away from when you agreed to the short sale on your primary residence.
If you can’t stay in your home, this is frequently the best possible scenario.
You don’t have to pay taxes on that debt because of theMortgage Forgiveness Debt Relief Act, which was enacted in 2007 as President George W. Bush was leaving office.
Even though thebill passed with overwhelming bipartisan support and was enacted by a GOP President, tea partiers and Republican strategists alike seem fixated on the ‘moral contagion’ factor as well as the program’s $2.7 billion price tag.
Which means that if you agree to a short sale on your $200,000 home for only 150K, you could have to cough up taxes on the $50,000 of forgiven debt.
Currently the Debt Relief Act allows for up tax relief on up to $1 million of debt if you’re single, $2 million if you are married.
Once again there’s a lot of talk from some conservatives about the cost to the taxpayer. Never mind the fact that President Obama and the $25 billion settlement has made principal reductions and loan modifications the centerpieces for stabilizing the housing market.
So even the idea that this tax break might not see the light of day in 2013 is a slap in the face to everything the Attorneys General spent months haggling over.
The same government that is dangling the carrot of refinancing in front of you might very well bat it away with a massive tax bill.
Bottom line, if you’re thinking about a short sale, get started NOW. Short sales can sometimes take months to complete, and if you wait til one minute after the clock strikes midnight on December 31st, you run the risk of your beautiful stage coach turning back into a pumpkin.
It is of course an election year, so this lame brain duck Congress cannot be counted on to come through for homeowners. I thoroughly expect them to let the Debt Relief Act lapse, and once again you’ll be on the hook for taxes on ‘loan forgiveness income’.
Loan forgiveness income. If that’s not an oxymoron, then I don’t know what is!
If there was anything positive that came out of the prolonged discussions between the states and the banks on the mortgage servicing settlement,it was that banks were reluctant to go full steam ahead in the foreclosure process while talks were ongoing.
But even before the settlement was announced, we saw signs that pointed to more foreclosures in 2012.
Now that the settlement has been agreed to, the training wheels are off.
It’s petal to the metal folks. One thing that the settlement does for the banks is provide them a blueprint for how to proceed in the foreclosure process without getting their fingers stuck in the cookie jar.
Which means borrowers will once again have to defend themselves just as rigorously as they did pre-robosigning.
I’ve been asked if the settlement changes my advice to homeowners, to which I reply, ABSOLUTELY NOT!
You must continue to stand your ground. If you are in foreclosure or about to enter foreclosure, I will say what I have always said, you must fight the banks and force them to kick you out of your home.
The settlement may have changed the rules for the banks, but it shouldn’t change the rules for you, the homeowner. The banks will not transform into wonderful and charitable companies just because the settlement might penalize them.
Make no mistake about it, they will continue to come at you and come at your hard. (more…)
For 5 years now we’ve been a huge champion of the short sale. We’ve been banging and banging away at the banks because they didn’t share our opinion.
There has long been an institutional reluctance among our nation’s lenders to embrace the short sale, but it appears they are finally coming around.
According to Corelogic’s most recent numbers, short sales accounted for 9 percent of all residential transactions last November.
In January of 2008, they represented only 2 percent. That’s a 350% increase in the amount of homes sold at short sale.
Hallelujah.
It may have taken them a while, but the banks are finally letting go of the arcane notion that foreclosing on a delinquent borrower is always the best option for them.
The short sale has and will always be a much better alternative for the banks. In many cases, when modification isn’t an option, a short sale is better for the existing homeowners as well.
It’s good for the banks because it’s the fastest way to bring down their massive backlog of foreclosures.
Now that more and more foreclosures are lingering in the courts, banks now realize its the simplest way to get these homes back on the market, sometimes in just a few months.
They may not get back the full value of the home but their losses are about 15 percent less than if the home was foreclosed on, according to Bloomberg News.
It’s good for the borrower because they can walk away, legally, with little or no debt at all. Some banks are even offering cash incentives, as much as $35,000 in some cases, to entice homeowners to sell back their homes. (more…)
As 2011 got underway we were presented with a fascinating yet disturbing report by the Florida Association of Court Clerks called “Unfair, Deceptive and Unconscionable Acts in Foreclosure Cases”. It brought these horrible practices into the harsh light of day.
“What we got from this is the state has had the opportunity to see where the laws have been broken,’ Palm Beach County Clerk and Comptroller Sharon Bock said at the time, “and frankly, it is in large part thanks to the work of the defense attorneys.
We cited April Charney from the Jacksonville Area Legal Aid and Peter Ticktin and many others wonderful attorneys who have taken bank officers’ depositions, challenged judges rulings and fought the good fight for the Florida homeowner.
Somewhere along the line, the overly ambitious bankers on Wall Street had the “great idea” of slicing and dicing the interest of the Promissory Note and literally severing it from your Mortgage. Why? Convenience,expediency, and, arguably, greed. And much like Humpty Dumpty after his great fall, the banks couldn’t bring the mortgages and their corresponding Notes all back together again. The banks were accused of fraud and perjury trying to do just that.
If Americans are right, 2012 will finally be the magic year for the housing market. Over 2,000 adults were polled by Trulia and RealtyTrac , and the majority, 22 percent, said most Americans think the housing market will fully recover in the new year. A mere 10 percent thought a recovery would happen this year, while nearly a quarter of those surveyed predicted a bumpy road until 2015 and beyond. (more…)
