San Diego short sale


Sunday, December 30, 2007

california short sale - Google Search

f you are looking to do a short sale in San Diego or anywhere else in California, I say buyer beware. Do not work with a newly minted short sale specialist. Do now work with a Realtor who claims to loss mitigator or any of the other terms they like to put on their cards, unless they truly have the experience to get the job done. And even then you still have to have a back up plan. Ask your Realtor what you are going to do you don't find a buyer or the lender does not accept your offer. Ask them what percentage of their short sale listings have sold in the last there months.

A short sale is only one part of the pre-foreclosure workout. For reference I put the sponsor searches for California short sale below. The first paid advertiser was in the horizontal space. The next group was on the side and can be seen below.

california short sale - Google Search: "Sponsored Links
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RETRAN Foreclosure Lists
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Short Sales Course
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Friday, December 21, 2007

Deed-In-Lieu of Foreclosure

Deed-In-Lieu Frequently Asked Questions - HUD: "A Deed in Lieu of foreclosure (DIL) is a disposition option in which a mortgagor voluntarily deeds collateral property in exchange for a release from all obligations under the mortgage. A DIL of foreclosure may not be accepted from mortgagors who can financially make their mortgage payments.

QUESTION 1 - When a mortgagor has been approved for utilizing a DIL of foreclosure, how much time does a mortgagee have to complete the DIL?

ANSWER -A DIL of foreclosure must be completed within 90 days of initiation of the process.

QUESTION 2 - Does HUD allow $2,000 to pay off second liens when determining if a mortgagor is eligible for a DIL?

ANSWER - Effective with Mortgagee Letter 2002-13, HUD increased the DIL of foreclosure consideration to not to exceed $2,000. Therefore, with the mortgagor's consent, this consideration may be utilized to pay off junior liens to clear the title as stated in Mortgagee Letter 2000-05."

California Deed in Lieu of Foreclosure

What is a Deed in Lieu of Foreclosure?

As defined by HUD a A Deed in Lieu of foreclosure (DIL) is a disposition option in which a mortgagor voluntarily deeds collateral property in exchange for a release from all obligations under the mortgage. A DIL of foreclosure may not be accepted from mortgagors who can financially make their mortgage payments.

A mortgagor and lender have about 90 days to complete the process.
Once you have decided to offer a deed in the lieu, the lender will probably wish to send out an appraiser.

Can a deed in lieu be done if there is more than one lien holder.
Yes, but it takes negotiation and we recommend that you have a lawyer drafting or at least reviewing all the paperwork. Working with the second can be especially tricky and you might wish to get your attorney involved before you stop paying your loans.

Thursday, December 20, 2007

San Diego short sale Specialist - watch out for scams

If your Realtor is claiming or claimed to be short sale specialist or short sale expert. The problem with the Real Estate industry is that it is not well self regulated. The association of realtors is self regulating to a large extent and they allow their Realtors to make all sort of scary claims.

Ask your short sale specialist how many short sales he or she has closed in the last three months and in their career. Ask to see their short sale package. Ask them if they have a lawyer reviewing the closing paperwork.

Ask what clauses you should add to the listing agreement in addition to the Short Sale Listing addendum.

Ask them what clauses you should have in your purchase and sale agreement in addition to the Short Sale addendum.

Ask them if you can speak with the attorney on their team about alternatives to a short sale such as a deed in lieu. Ask the attorney what you should do when the Notice of Default shows up and the notice of sale.

Ask the realtor what to do if the loan broker inflated your earnings on the loan app.

Ask you Realtor if he or she understands why you should or should not be concerned about a sold out junior.

The list goes on and on. You Realtor should have experience negotiating a sale with the lender and your Realtor should also have a lawyer on to make sure you are protected as well. A short sale specialist without a lawyer is hack.

Ask your short sale specialists a few questions.

Wednesday, December 19, 2007

san diego short sales - tax liablity

GovTrack: H.R. 3648: Text of Legislation: "Resolved, That the bill from the House of Representatives (H.R. 3648) entitled `An Act to amend the Internal Revenue Code of 1986 to exclude discharges of indebtedness on principal residences from gross income, and for other purposes.', do pass with the following


Strike out all after the enacting clause and insert:


This Act may be cited as the `Mortgage Forgiveness Debt Relief Act of 2007'.


Thursday, December 13, 2007

San diego short sales and short sales in San Diego county

Should you short sale a San Diego property if you have purchase money protection under california code of civil procedure 580b.

Have negotiated a release from deficiency in writing
Has the bank agreed in writing to not report a 1099.
Do you have a letter from a lawyer explaining you don't have to self report the loan forgiveness as income
Did you get a lawyer to draft specific language in the purchase agreement - language which is not in any Caliornia Association of Realtors addendum?

Are you legally insolvent?

Sunday, December 2, 2007

Short sales and non recourse loans

This topic is discussed in the comments a many blogs. Below is a sample. I think the post author probably has a good understanding of the issue. If the security does not go back to the lender, why would the entire debt be wiped out. Consequently loan forgiveness tax liability might attach.

Why would Seller with non recourse loans agree to do a short sale without legal advice. A non recourse seller may be able to protect her/himself by negotiating certain language into the transaction, but I am willing to bet not one transaction done without the aid of california real estate attorney has that language.

Below is the quote:

L.A. Land : Los Angeles Times : Sept. sales: 67% below bubble peak: "he non-recourse deal doesn't just apply for short sales where the borrower sells before they lose title to the property. It applies for foreclosures/trustee sales too, where the bank takes possession, and sells it at auction or as an REO. If their recovery from that process still does not cover loan amounts due, the borrower is still personally liable for the debt, except when the loan is non-recourse. Short sales can occur on recourse loans too. If the note-holder wants to cut its losses and avoid costs of later litigation and rapidly declining asset value, it can approve a short sale AND forgive the personal liability of the loan. Forgiveness is possible but not likely, since it costs relatively little to get a debt judgment in court, then monitor property records to make sure the borrower doesn't win the lottery or something."

Cancellation of debt income - non recourse loan

Should a California homeowner with purchase money loans - agree to do a short sale?
One of the major issues is whether the short sale will create tax liability for loan forgiveness.

As I review some of the case law on this issue - my first question would be whether the loan is a non recourse loan on its own. (non necessarily as a result of California anti deficiency statutes). A careful and detailed review of the situation should be conducted by an attorney before an owner consents to a short sale.

Debt Forgiveness - Deed in lieu of foreclosure

Note the information below is consistent with the information provided by the legal department of the California association of Realtors. Please consider there are at least to concerns. You must consider capital gains and loan forgiveness.

Debt Forgiveness Outside the B Word: "In a true nonrecourse situation, there is no debt forgiveness because the debtor never has any legal obligation to respond personally on the debt. IRC § 61(a)(12) is, therefore, inapplicable. That does not mean, however, that no adverse tax consequences exist as a result of a nonrecourse foreclosure, because they most certainly do. A foreclosure on a nonrecourse debt is treated the same as a sale or exchange of the property securing the nonrecourse debt [Treas.Reg. § 1.1001-2(a)(1)]; a 'sale' also occurs when a debtor voluntarily conveys (e.g., deed in lieu of foreclosure) [Freeland v. CIR, 74 TC 970 (1980)] or abandons [Middleton v. CIR, 77 TC 310 (1981) aff'd per curiam, 693 F2d 124 (CA11 1982)] the property. The amount of the nonrecourse obligation extinguished is treated as the amount realized. A taxpayer computes the amount of the gain (or loss) realized and recognized by comparing the tax basis in the property to the amount of the nonrecourse obligation extinguished at the time the foreclosure sale is completed [Commissioner v. Tufts, 491 US 300 (1983)]. The character of the entire gain (or loss) is determined by the character of the property securing the obligation: if the property is a capital asset, the gain (or loss) is capital [subject, of course, to the recapture rules of IRC §§ 1245 and 1250]; if the"