Debt Forgiveness Law Gets Signed!

Right before congress and the president closed shop for the season a very important piece of legislation got signed. The Mortgage Forgiveness Debt Relief Act has been signed into law!! I am inserting the artice from N.A.R. (National Association of Realtors) exactly as I received it:

Statement on President Bush's Signing of Mortgage Forgiveness Debt Relief By NAR President Richard F. Gaylord

WASHINGTON, December 20, 2007 -

“On behalf of the many individuals and families who would have been burdened by a tax after losing their home, the National Association of Realtors® thanks President George W. Bush for signing the Mortgage Forgiveness Debt Relief Act into law. Today the president offered a Christmas present to many people who have suffered the agony and humiliation of losing their home due to a short sale, foreclosure, deed in lieu of foreclosure or any similar arrangement that relieves the borrower of the obligation to pay some portion of their debt.
“NAR has been advocating for such a change to the IRS tax code for nearly 10 years. We have always believed that it is clearly an issue of fairness and of not kicking people when they are down. By making the forgiven debt taxable income, individuals in already unfortunate situations most likely faced IRS actions because they did not have the money to pay the additional taxes. This legislation will relieve that additional burden and may also encourage families to work with their lender to negotiate terms, knowing they will now not be subject to an IRS bill.
“Today’s bill will ensure that any debt forgiven on a mortgage secured for a principal residence will not be taxed. This is very significant legislation. This may also mean that some day in the future these families can once again achieve the dream of homeownership.” The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.

This is GREAT NEWS for all people affected by this housing correction.

If you find yourself in a situation requiring Financial Intervention and assistance in your home sale, please contact me as I am a trained, skilled Loss Mitigation Negotiator with a full team of professionals to assist you.

Contact

Bobbie Files
www.BerkleyMass.com

bobbiefiles@kw.com

508-238-5000 x.296 Office

What is a short sale and will it help me?

By now we've all heard that defaults on mortgage loans are on the rise, with some industry experts predicting record numbers of foreclosures this year. Whether this will have a dramatic impact here in the Berkley Area is really anybody's guess, but it is a possibility, which leads to my topic today.

What is a "short sale?"

If you've never heard of a short sale, you're in good company. Many (if not the majority) of home owners have never even heard of a short sale. The reasons for this are many, including the rarity of their occurrences. While a short sale is certainly not the answer for many homeowners struggling to keep up with mortgage payments, for others it may be a way to avoid having a foreclosure on that ever important credit report.
Here's how a short sale may come about:
Typically after a homeowner has defaulted (missed) anywhere from one to a couple of mortgage payments, your mortgage lender will send you a "notice of default." In the real estate and mortgage industry this is commonly referred to as an "NOD." NODs are likely to occur in greater numbers in slower or decreasing housing markets.
The NOD essentially states that the homeowner has 90 days to become current on payments due the lender, or else the bank will foreclose on your home. However, as banks are in the business of selling loans, not properties, they prefer not to foreclose on homes. That is not to say that they won't, but it is generally their last resort. For this reason, occasionally banks will approve a "short sale." But, keep in mind, it won't necessarily be easy to negotiate this with your lender.

Suppose you bought a home for $400,000, and opted for a 100% financing loan (which is not uncommon particularly in the last few years.) Everything was going smoothly, until an unforeseen hardship made it impossible for you to make your monthly payments. At this stage you will likely consider selling your home. But, when you go to do so, you find that your house has actually depreciated in value, and it will now only command $325,000 as determined by current market value. In order for you to avoid foreclosing, you would have to sell the home, not to mention come up with $75,000, plus closing costs, commissions and any past due amounts.
Should you determine that coming up with that money is simply impossible; you may opt to seek out a REALTOR® who has expertise in these situations, to try to negotiate a short sale on your behalf with your lender.

Here's how a short sale works.

After you receive your NOD from the lender, first contact a REALTOR® familiar with short sales (also known as short pays). It is urgent that you do this immediately, as you and your REALTOR® have only 90 days to achieve all of the following:
*List and market the property. It will be listed for sale just as any other property would, on the MLS System. It will be marketed as a short sale.
*Receive and accept an offer
*Submit the offer along with an explanation of why you can no longer afford to keep the home (sometimes called a "hardship letter.") to the lender.
*Negotiate with the lender for forgiveness of the remainder of the loan.

Negotiating for Forgiveness

If you did a double take on the last bullet, it's not the least bit surprising. A short sale in its most basic form is the lender forgiving you for figuratively costing them -in the above example- $75,000. They will usually agree to pay the closing costs and commissions for you.
Why would they do such a thing? Frankly, it's because it's easier for them to cut their losses, and at least recoup some of the money for the house, than it is for them to foreclose and sell the home at an auction. But note the following:
*Negotiation between your REALTOR® and lender is not easy, even with a compelling "hardship letter"
*Lenders will not be willing to negotiate at all, unless your REALTOR® provides them with an offer in writing from a buyer
*Lenders are not always expedient with their response to your request, pushing your 90 day deadline to the limit
*Lenders reserve the right to forgive some of the debt, but not all, leaving you to come up with any balance
*You may be subject to taxes on the amount of the loan forgiven. In the above example therefore, you may receive a 1099 statement from the lender for the total amount of debt forgiven. This would include the $75,000, the closing costs, the commissions plus any amounts past due. A 1099 in this instance could potentially put you at risk for owing taxes on an additional $98,000 in taxable income.

So Where Is The Good News?

The sole reason to seek a short sale would be to avoid having a foreclosure on your record. In the eyes of most lenders a foreclosure on your record is reason enough to deny you a loan for another house, even years in the future. At the very least, a foreclosure on your credit would likely relegate you to the "sub prime" category of borrowers, which is the segment of the market currently experiencing tightening guidelines and increasing restrictions. In lieu of having a foreclosure on your credit, you will be marked with the short sale, but it will not affect your credit as negatively as a foreclosure would.
Please note that without the guidance of a REALTOR® trained in negotiating with lenders on your behalf for a short sale, the odds that you will be granted a short pay from a lender on your own are pretty slim. These short sales are not particularly common, and are only granted after much effort on your behalf by your REALTOR®.
However, should you find yourself facing hardship, and a potential inability to pay your mortgage loan, consult a REALTOR® immediately to see if any other options are available.

Contact

Bobbie Files
Keller Williams Realty
508-789-0217 Direct
bobbiefiles@kw.com

Are you waiting to buy?

You first time homebuyers or present time renters... Are you ready to start your exciting but 'scary' property search? Homebuying is a big step...but it shouldn't be frightening...learn to enjoy the process...see it as a 'journey' from rent receipts to 'buying bricks'!

Remember they taught us in school the three major components essential to every family...food, shelter, and clothing...'homebuying' is the biggest ticket item in that picture.

Another thing, is the present market worrying you or causing you to have second thoughts as to whether you should buy now or delay your purchase until better market conditions return?

Let me give you some ideas to consider...

*If your job is relatively stable, and your finances are under control, and you plan on staying in your home for at least 4 or 5 years, then consider purchasing now...interest rates are extremely good...they may not be when the market turns...also if you're waiting for property values to 'bottom out', an increase in interest rates could negate any savings in purchase price...today's sluggish 'buyers market' provides opportunities to capture some additional funds for closing from anxious sellers...and there is plenty of inventory to select from...in other words, let the market 'work for you'!
*Are you ready to buy but lack confidence in our economy...are you leary to 'commit' to a large purchase such as a home? Maybe you can consider looking at properties less expensive than you originally intended...something less expensive to maintain...perhaps not quite so large...something smaller but more energy efficient...instead of that 2,500 square feet 2 story colonial, maybe a 1,600 sq. ft. 'cape cod'! Remember to factor in taxes and insurance. Some homes that appear similar can be more affordable...crunch those numbers...get good at it.
*If you're in a 'moving up' category, the status of the economy is of negligible consequence...what you lose, if anything on your sale, you should be able to make up on your purchase...in fact your purchase can achieve a greater savings than what you may have lost on your sale! Am I getting you confused? Reread it until you get it!

If you're still confused this is where a true real estate professional comes in!
I always advocate for the use of experienced real estate professionals which make the homebuying process a pleasure. Without going into detail, remember the agent that is showing you homes and explaining the financial aspects to you will be paid from the seller's proceeds...in essence you have a true real estate professional 'working to find you a home' at no cost to you! It is bewildering to me why many potential homebuyers take it upon themselves to accomplish this task on their own! You wouldn't pay for a flu shot if you could get one next door at no charge.


How do you find a 'true real estate professional'? It's not as difficult as you may think, call Bobbie Files. I will provide you accurate, reliable service. Putting your needs FIRST.

Bobbie Files

Realtor of Choice

Start your search at http://www.berkleymass.com/

Think Short Sale NOT Foreclosure!

As everyone knows, the real estate and mortgage industry has been in trouble over the past few years. Thousands of families find themselves in financial trouble due to drastic rate increases in adjustable rate or interest only mortgages coupled with home prices that have been steadily declining. Most people failed to consider the possibility of the huge increases upon entering the agreements. Only now, they find themselves with mortgage payments that they cannot afford to pay. Often, foreclosure is seen as the only option available to these struggling families. However, there is one important aspect of a foreclosure that people forget – the resulting tax liability.

Foreclosure is always the last resort for someone struggling to make mortgage payments. People usually think it will be the end of their problems. However, the IRS considers debt canceled through foreclosure to be part of a taxpayer’s income. The IRS feels that it is entitled to the appropriate income taxes on that money. It also has access to every taxpayer’s financial information so it can ensure the appropriate taxes are paid. And as most of the country already knows, the IRS is very aggressive in collecting taxes that they know are outstanding and feel they deserve.

A short sale is a FAR MORE viable and FAR LESS destructive solution.

What is a short sale? A short sale is a method in which a bank accepts less than what is currently due on the mortgage as payment in full. With the market in the situation that it is in banks are becoming more and more receptive to this process. It can create a WIN/WIN for both the bank and the homeowner. Yes, there are tax implications with the IRS on the "forgiven or excused" money. This phantom money will get reported by a 1099 to the IRS for you to claim on your taxes in which you would want to seek a qualified and reputable tax professional to assist you with. However, this is far less money to have to claim than the entire mortgage balance!!

Foreclosure is the absolute LAST result that you should be willing to accept. I understand that it is very hard to face this, I know that it seems easier to hide and not answer the phone or open the letters. BUT the more time that goes by the fewer options you will have. There is a very limited window of opportunity to have a short sale. If you find yourself in this situation contact a Realtor to have them assist you!! Let them try to remove this burden off of your back.

I service the Taunton, Berkley, Freetown, Lakeville, Middleboro areas.

Please contact me if you need assistance.

www.berkleymass.com

To Buy or to Wait ~ That is the question

Everytime the tv or the radio goes on we are overwhelmed with different newscasters and financial gurus giving their opinions and market predictions. Has doomsday happened or is it yet to come? Has the sky fallen or are we still waiting for it to fall? And that oh so lovely bubble....has it burst yet???

I just want to scream!!!

What happened to buying a home that you love JUST BECAUSE YOU LOVE THE HOME?!?! I really can't remember when the change happened. Did it happen when I was sleeping? Did someone flick the switch on the lightbulb? Or did a neon sign light up that said "A home is an overgrown stock ....buy, buy, buy and flip, flip, flip!!!"

Where did "buy and stay" go?

If people looked at a home as a long term "investment" than the question "Is it going to go down more in value next year?" wouldn't be applicable. I know it isn't real life anymore to stay in your home for 30 or so years like our parents did (at least mine did and I am almost, but NOT QUITE, 40 yrs old). I can guarantee you my parents didn't buy their home wondering and worrying what it was going to be worth in 2 months or 2 years. It was a place to raise their family. They scrimped and struggled to make that payment every month, and believe me we did without. But it IS real to buy with the foresight of staying for 7 years or so. And if a home is purchased with that type of range in mind a value loss is no longer a concern. Yes, prices have corrected and yes there could be some more correction to come but then the ball starts slowly rolling the other way. First the ball stops rolling, than it takes a slow but not complete roll the other way, than it starts to creep some more, than it makes one complete roll and than it rolls again and again and again. Before too long prices start rising!!!

Don't think of your house primarily as an investment. Think of it as your home. Find a neighborhood that fits, a house you love, and a fixed-rate mortgage you can afford -- and forget about trying to game the market. If you're happy where you are, you are far more likely to stay there awhile -- which is, of course, the best way to maximize your investment.

Visit Southeastern Massachusetts most informative website.

Bobbie Files
Keller Williams Realty
508-789-0217 Direct
bobbiefiles@kw.com

OPEN HOUSE - Taunton Sun. 10/21

OPEN HOUSE

Sunday 10/21
11:00 ~ 12:30

243 Myricks Street
East Taunton


Come by and take a peek at this fully renovated home. The owners have replaced almost everything - windows, kitchen, both bathrooms, back deck, septic system, and even finished the basement! This is basically a brand new home. A great start for the first time buyer or someone looking to downsize.

Central AC ....Is it a MUST HAVE?

In my September's electric bill there was the usual newsletter from the electric company. Quite frankly I never read these things, but for some reason I picked this one up.
In it was a chart that had certain appliances and how much energy they use. Well the shocker to me is that I thought and have said that central ac is cheaper to run than window ac's, well according to their chart central ac is about equivalent to 5 window ac's. Now I have a home that in our area is considered nice sized, not huge but not small either, and I do not have central ac which was something that was on the future must haves, well I also so not use 5 window ac's. We typically have one large one on the 1st floor that is set for energy save running during the day, and then I have 2 upstairs that get set for 68 degrees and run based on temp. According to my electric company 5 window ac's running for 165 hours per month costs $80.19 the central ac costs $87.41.
That shocked me! I really always thought that the central ac was a cheaper alternative to the window ac's. I know there is a cosmetic improvement when you get rid of those things, but it seems like that is the only improvement. For approx. $12,000 I can have the central ac installed in both floors, and I wanted to do it for the savings AND for the aesthetic appearance. But now I wonder for just 2-3 months of ugly ac's is it worth the expense.

Does central ac make a break your decision to buy?
Is it a requirement on a home that you want to view the inside of?
Or is it just a nice bonus but no big deal if it is there?

I really would like to know what people think on this.

Thanks.