Register Real Estate Advisors

Here is some great information about short sales and the Mortgage Forgiveness Debt Relief Act written by Bryan Ellis.

Short sales are becoming more and more common, but that could change if the tax break that currently does not force homeowners who do short sales to claim the forgiven debt on their tax returns is not extended. At the end of this year, the Mortgage Debt Relief Act, also called the Mortgage Forgiveness Debt Relief Act, will expire if changes are not made to the legislation. When this happens, the amount a short sale falls short of the amount owed on a property will, once again, be viewed as income to the former homeowner and will likely make short sales far less attractive to nearly every distressed property owner.

Additional fallout could take the form of more strategic defaults once short sales are no longer an option, warn analysts. If homeowners stand to lose money in the form of additional taxes on the “forgiven” debts on their homes, they may simply opt to walk away from the property all together and hope that the lender ultimately recoups the bulk of the debt when the property is auctioned off or otherwise sold. Of course, in the case of strategic defaults – or other forms of foreclosure as well – lenders can pursue the delinquent borrowers for the difference between the amount that they owed on the property when they stopped paying and the amount the lender was able to make when the property was sold.

These debts are often difficult to collect, but some lenders opt to wait years before pursuing them in order to allow former homeowners to get back on their feet. Others sell the debts to third-party collections companies. Even if this part of the debt is ultimately written off, it can create tax problems years down the road for homeowners because when the debt is written off it may be considered income to the homeowner.

For the most part, real estate professionals are hoping that the Mortgage Debt Relief Act will be extended before it expires on December 31 of this year. If not, “it will be a shock to many taxpayers after 2012,” warns Mark Steber, a tax officer for Jackson Hewitt Tax Service. If the legislation is not extended, more homeowners may opt to declare bankruptcy in order to avoid paying income taxes on their “forgiven” debts.

Do you think that the Mortgage Debt Relief Act should be extended through 2013? Article Compliments of: Bryan Ellis

8-Day Window to Submit Backup Offer

Based on agent feedback and to reduce overall cycle times, changes are bring made to the short sale process. If it becomes necessary to submit a backup offer during a short sale, you now have a reduced window for making the submission. Instead of 14 days, backup offers must now be submitted within eight calendar days after the initial offer becomes invalid.

When a backup offer becomes necessary:

• Contact your short sale specialist immediately.
• Let the specialist know if you have a backup offer to submit.

Within eight calendar days, resubmit the listing data, submit the short sale offer, and upload the offer documents and supporting documents.  Any backup offer will require analysis and investor approval, regardless how similar it may be to the previous offer.

If no backup offer is available:

• The short sale will be closed in Equator by your short sale specialist.
• You should return to marketing the property.

You may initiate a new short sale in Equator when you receive a new offer on the property.

This information is primarily for Bank of America, but could be applied to other short sale situations.

PLANO (HousingWire.com) – Many jobless homeowners unable to make their monthly mortgage payments will soon get a little help from Fannie Mae and Freddie Mac.

The government-sponsored housing finance companies have announced plans to allow such borrowers to defer part or all of their mortgage payments for up to 12 months while they are out of work.

Fannie Mae will require mortgage servicers to install a new program providing forbearance relief to unemployed borrowers beginning March 1.

Servicers will be able to provide up to six months of relief without getting approval from the government-sponsored enterprise. Special consideration can be given to borrowers who require up to 12 months of forbearance.

Freddie Mac will begin offering 12-month forbearance plans on Feb. 1.

Delinquent borrowers and others on the verge of default are eligible for the program. Second homes and investment properties will not be considered.

Servicers must determine that a borrower has less than 12 months worth of mortgage payments in reserves and has monthly housing expenses above 31 percent of their income before extending a forbearance plan.

COLLEGE STATION (Real Estate Center) – Foreclosure activity in Texas was down last month, according to the latest figures from RealtyTrac.  November foreclosure filings for the Lone Star State totaled 10,124, down 24.3 percent from a year ago. Total year-to-date (YTD) filings were at 115,222, down 18.9 percent.  Nationally, there were 224,394 filings, down 14.5 percent from November 2010. Total YTD filings were at 2.5 million, down 30.1 percent.  There were 6,247 posted foreclosure sales in Texas last month, down 19.1 percent from a year ago. YTD postings were down 17.3 percent, at 69,473.  Meanwhile, there were 96,540 posted foreclosure sales nationally last month, down 38.3 percent from last year. YTD postings were at 994,887, down 33.2 percent.  Real Estate Center Research Economist Dr. Jim Gaines said the impact of foreclosure moratoria from the pending agreement with states’ Attorneys General slowed foreclosures for all of 2011. But that will likely mean more foreclosure activity going into the new year.  “The pent-up foreclosure processing is expected to bust loose in 2012, so we expect to see significant percentage increases in the monthly reports for at least the first half of 2012, if not the whole year,” he said.  But that’s nationally. Gaines said Texas should fare better.  “Posted delinquencies here are falling, and Texas is a non-judicial foreclosure state, so many lenders haven’t stopped processing foreclosures, thereby preventing a backlog from forming,” he said.

Have you found your dream home?  Chances are there are many other buyers competing for the very same house.  Maybe it hasn’t been taken off the market because they are waiting to sell their house or maybe they are waiting on their pre-approval letter.  If you wait until tomorrow to put in the contract…it might be sold!  This can be a stressful situation for home buyers.  This is one of the reasons you need a Realtor to help you with your home purchase.  Many times on a foreclosure property they will get multiple bids and ask for the highest and best offer to be submitted.  I can take the stress out of house hunting and help you get int the home of your dreams without losing so much sleep!   Call Register Real Estate Advisors today at 281.288.3500 for an experienced Realtor that can help when you need to compete for a home.

Houston Association of Realtors reports that the share of sales that were foreclosures for the period ending September 2011 was 19.9%. Don’t let friends get foreclosed on. For more information on how to prevent foreclosure visit http://rrea.us/ss

Hey guys! I am here for another White Board Monday, RREA’s educational series published every Monday.

This week is about the difference between short sales and foreclosures, when they are needed, and how to minimize the impact on your credit.

We are specially trained experts in helping people in these situations. If you or someone you know is having trouble with their mortgage, please have them call us anytime to find out their options. The sooner you get assistance with this, the less impact on your future. Call us at 281.288.3500 or email me at sheryl@rrea.com .

A Foreclosure Seminar will be held at Register Real Estate Advisors in Spring, Texas on Thursday, September 1, 2011. This foreclosure counseling will help consumers understand how they can stop the foreclosure process and sell their home as a short sale. It will also look at how to buy short sales and explain foreclosure purchasing. If you or someone you know is at risk of losing their home, please have them come to this seminar or contact a Realtor in confidence for help. Please forward this information to them becuase there is help for distressed homeowners. The seminar will be held at 1614 Louetta Rd. Ste I Spring, Texas, 77388 from 6-7pm. These informative seminars will be hosted by Realtors and will sometimes have guest speakers such as Title Company Representatives, Lenders, Inspectors, Appraisers, and other industry experts. We hope you will attend and bring your questions!

Due to the amount of short sales and foreclosures we have endured over the past two years, it has been my prediction that there will be a lot of well incomed homeowners that need housing that cannot get a mortgage due to these losses.  Therefore, owning houses and selling them to consumers through seller financing instead of with regular mortgage loans will be very lucrative in the coming years.  I predict it will be the new trendy way to generate income instead of flipping real estate or holding onto rentals.  That is just my opinion, of course, but that is what I am predicting.  Below is an article from last month’s Realtor Magazine that explains Seller Financing Pros and Cons that I think every potential seller financing buyer or seller should be aware of.

When traditional lending avenues fail, seller financing can help seal the deal.  But watch out for pitfalls.

If you’re working with sellers who have seen offers collapse
because buyers can’t get a mortgage loan, you might want to suggest they
consider offering some variation of seller financing.  If structured carefully, seller financing not
only makes deals possible but also can typically help transactions close
quickly, as less due diligence is required.
After all, who knows the property better than the sellers?

There are other perks, too:
Sellers can often negotiate an interest rate that’s more favorable than
would be available for other sorts of investments.  And they might also get a higher selling
price as compensation for assisting the buyers.
Finally, there can be some tax benefits; if the seller structures the
loan as an installment sale, for example, there can be tax advantages based on
how recognition of the capital gain is timed.

But against these benefits is the big downside of seller
financing:  the potential for buyer
default.  This risk is compounded if the
deal is structured as a wrap-around deed of trust, as many are.  With a wrap-around deed of trust, the seller
issues a promissory note and deed of trust for the dollar gap between the
amount of the first mortgage and the buyer’s down payment.  When structured this way, the seller’s
performance on the underlying first mortgage is linked to the buyer’s
performance.  If the buyer defaults, the
seller will likely default, too.

Here are some ways to help sellers minimize such pitfalls,
no matter how the transaction is structured:

• Request a
  credit report and credit references.
  Sellers can get a credit report from any credit reporting agency, but
  they’ll want to get a signed consent letter from the buyer first.  For credit references, one place to go is the
  buyer’s landlord, if they’re renting.
  Sellers should also ask for independently audited financial statements.
• Consider
  loan assumption.  In many cases, the
  seller’s existing mortgage loan has a due-on-sale clause that requires the
  principal to be paid upon sale of the property.
  Having to settle their own financing makes it hard for many sellers to
  offer financing, especially if they’re buying a house themselves and need their
  sale proceeds to make their own down payment.
  In these cases, it might be better to simply have the buyer assume the
  seller’s existing loan.  The buyer still
  must submit to the lender’s underwriting analysis and get the lender to approve
  a modification, but the process should be less time-consuming than if they were
  applying for new financing.
• Provide
  expanded remedies.  For many sellers,
  the only remedy for buyer default included in their loan documents is
  foreclosure.  But it’s best to include
  lower-level remedies so foreclosure doesn’t have to be the only option.  Suggest that sellers set rules for imposing
  late charges or default interest.  Or
  suggest that sellers hire a property manager to keep track of incoming payments
  and to spearhead collection efforts, because these activities can be
  time-consuming.
• Understand
  the risks to buyers, too.  Although
  it might seem like most risks are on the sellers’ side since they’re putting
  their resources on the line, there are risks to buyers as well—and if you’re
  working with buyers, you’ll want to be aware of them.  First, buyers could pay the loan in full but
  still not receive title if there are encumbrances that were never divulged by
  the seller.  Second, if the transaction
  is structured as a wrap-around deed of trust and the sellers are supposed to be
  making payments on senior debt, the buyers could be at risk if the sellers fail
  to make their loan payments, even if the buyers are scrupulous in holding up
  their end of the deal.  Third, buyers might
  not have the protection of a home inspection, mortgage insurance, or an
  appraisal to ensure they’re not paying too much.

These are challenging times in credit markets, so there’s a
role for seller financing.  But be aware
of risks so you can help protect your clients.

WASHINGTON, D.C. (Realtor.org)
– Fannie Mae has implemented new measures that will require mortgage
servicers to act more quickly and consistently in helping troubled homeowners
avoid foreclosure.

“We want homeowners to be able to understand their options when facing
foreclosure, and we want servicers to reach homeowners early in the process,
communicate frequently and clearly, and help homeowners avoid
foreclosure,” said Jeff Hayward, senior vice president of Fannie Mae’s
national servicing organization.

Among the changes, mortgage servicers will be required to:

• contact
  homeowners verbally and in writing within 120 days after a loan first
  becomes delinquent;
• complete
  a loan modification or other option that keeps the borrower in their home
  or helps the borrower avoid the foreclosure process;
• follow
  a clear timeline if foreclosure is unavoidable and begin the
  foreclosure process once a loan has been delinquent for more than 120
  days; and
• make
  it clear when a property in the foreclosure process will be sold.