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My Blog
Daily Real Estate News | Friday, March 01, 2013
Home values could surge 35 percent without stretching housing affordability, Raj Dosaj, vice president of the home price index at LPS Applied Analytics, said during a recent webinar hosted by HousingWire. Dosaj says that the increase in home prices could be less than that if mortgage rates rise, which he says they are predicted to do. "During the peak of the housing run-up, affordability was stretched as the market sold off," Dosaj said. "As home prices dropped, affordability dropped." Industry reports are showing home prices rebounding and rising across the country. "There are definite signs that there's room for growth," said Dosaj. "Things are generally looking good for the housing market." Source: LPS: Home prices could skyrocket 35% without affecting affordability, HousingWire (Feb. 28, 2013)
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Ordinarily, if all or part of a home loan is forgiven by the lender, either in a short sale or foreclosure, the amount forgiven is taxable income. Thus, for example, a homeowner who had $100,000 in mortgage debt forgiven through a short sale would have to pay income tax on the $100,000. However, Congress adopted the Mortgage Debt Relief Act of 2007 to save millions of underwater homeowners from this tax disaster. Under the Act, homeowners can exclude from their taxable income up to $2 million of debt forgiven on their principal residence during 2007 through 2012. The Act applies to debt reduced through mortgage restructuring, as well as forgiven in connection with a foreclosure. But the Mortgage Debt Relief Act expires on January 1, 2013. Any mortgage debt forgiven after that date will be fully taxable, unless the Act is extended. To avoid this deadline, a home must not only be sold before the deadline, but the lender must formally forgive the loan in a letter issued before January 1, 2013. Will the Mortgage Debt Relief Act be extended past 2012? No one knows. In its 2013 budget, the Obama Administration asked that the Act be extended for two years. Several bills have been pending in Congress to extend it as well, but so far nothing has happened. No one has any idea what Congress will do, and it likely won't act until after the election on November 8, if then. It may depend on who wins the election. Homeowners who want to take advantage of the Mortgage Debt Relief Act must sell their homes before the end of the year. It may already be too late for most homeowners, since short sales often take many months to complete. But some homeowners may be able to complete a short sale before the deadline if they act now -- it all depends on the property and lenders involved. There will likely be a deluge of sellers trying to meet the end of year deadline. Keep in mind, however, that even if the Mortgage Debt Relief Act is allowed to expire, many homeowners will still be able to avoid paying income tax on their forgiven mortgage debt. One way to do this is for the home to file for bankruptcy and have the debt discharged by the bankruptcy court. Debts discharged through bankruptcy are not considered taxable income. Alternatively, if the homeowner is insolvent when the debt is cancelled, some or all of the cancelled debt may not be taxable. You are insolvent when your total debts are more than the fair market value of your total assets. For these purposes your assets the value of everything you own. This includes things like your interest in a pension plan and the value of your retirement account. For details, see IRS Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments. Stephen Fishman is a tax expert, attorney and author who has published 18 books, including "Working for Yourself: Law&Taxes for Contractors, Freelancers and Consultants," "Deduct It," "Working as an Independent Contractor," and "Working with Independent Contractors." He welcomes your questions for this weekly column.
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Daily Real Estate News | Wednesday, August 22, 2012 The Federal Housing Finance Agency announced Tuesday that it is issuing new guidelines that set out to more quickly qualify borrowers and speed up the short-sale process. Among the new guidelines, home owners with a mortgage backed by Fannie Mae or Freddie Mac will be able to sell their home in a short sale even if they are current on their mortgage, assuming they can prove a hardship. Eligible hardships often include death of a borrower or co-borrower, divorce, disability, or job relocation (such as a job transfer or new employment 50 miles away from their current home). The new FHFA guidelines also permit mortgage servicers to speed up the processing of short sales for borrowers with eligible hardships without needing additional approval from Fannie Mae or Freddie Mac. These new guidelines demonstrate FHFAs and Fannie Maes and Freddie Macs commitment to enhancing and streamlining processes to avoid foreclosure and stabilize communities, FHFA Acting Director Edward J. DeMarco said in a public statement. Also among the new guidelines: -- Military service members who are being relocated will automatically be eligible for short sales, even if they are current on their mortgages. -- Fannie Mae and Freddie Mac will waive the right to pursue deficiency judgments for borrowers who short sale who have sufficient income or assets and can make a financial contribution or sign a promissory note. -- Freddie Mac and Fannie Mae will offer up to $6,000 to second lien holders in order to quicken the pace of a short sale. Previously, second lien holders could slow down the short sale process by negotiating for higher amounts, according to the FHFA. The new guidelines will go into effect Nov. 1. The National Association of REALTORS® worked with the FHFA and the government-sponsored enterprises in creating the new short sale guidelines. NAR applauded the FHFAs approval of the guidelines. REALTORS® appreciate the FHFAs efforts to increase the number of short sale approvals, which limit the losses incurred by home owners, lenders, the federal government and taxpayers, says Moe Veissi, NAR president. We hope these new guidelines will allow many more hardworking American home owners that would have previously been denied a short sale to now be approved and avoid defaulting on their mortgage loan. For more information, give me a call Brian J Reed 816-582-1682
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Daily Real Estate News Home sellers are more than twice as likely to get their homes sold if they use a REALTOR®, rather than trying to sell their home on their own, according to a new survey conducted by HomeGain of 400 home owners nationwide from July 31 to Aug. 10. Seventy-three percent of the home owners surveyed said they used a REALTOR®. On the other hand, 21 percent of those surveyed said they tried to sell their home themselves. The survey found that 66 percent of the home owners who used a REALTOR® were able to successfully sell their home compared to 30 percent of for-sale-by-owners. Whats more, the survey found that 22 percent of the for-sale-by-owners eventually decided to use a REALTOR® to try to sell their home. More than half of those who did were then able to sell their homes too, the survey found. The value of a REALTOR® in a real estate transaction is made strikingly apparent in our 2012 FSBO verses REALTOR® survey of home sellers, says Louis Cammarosano, general manager of HomeGain. A qualified REALTOR® understands the dynamics of the market and can better assist home sellers in the pricing and preparation of their homes for sale.
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For the fourth consecutive month, the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) indicates builder confidence in the market for newly built, single-family homes is on the rise, improving two points to 37 in August, after the Index experienced a six point increase in July. Confidence levels have improved to February 2007 levels.While most news outlets and associations will use this data to show a recovery, it must be noted that any Index reading under 50 percent means that less builders have confidence in the market than those that do, meaning the market has quite a ways to go before there is any consensus that new home construction will be okay. Room for improvement, but good newsFrom the builders perspective, current sales conditions, sales prospects for the next six months and traffic of prospective buyers are all better than they have been in more than five years, said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. While there is still much room for improvement, we have come a long way from the depths of the recession and the outlook appears to be brightening. This fourth consecutive increase in builder confidence provides further evidence of the gradual strengthening thats occurring in many housing markets and providing a needed boost to local economies, said NAHB Chief Economist David Crowe. However, we are still at a very fragile stage of this process and builders continue to express frustration regarding the inventory of distressed properties, inaccurate appraisal values, and the difficulty of accessing credit for both building and buying homes. Specific indices and regional performanceBuilder confidence in the current sales conditions and traffic of prospective buyers both rose three points to 39 and 31, respectively, while the reading for sales expectations in the next six months rose one point to 44. The NAHB notes that all indices were at their highest levels in over five years. Regionally, builder confidence rose nine points to 42 in the Midwest and two points to 35 in the South, but declined nine points to 25 in the Northeast and three points to 40 in the West in August. For the August HMI release, NAHB is introducing an alternative trend comparison of regional HMIs by also showing a three-month moving average of each regions index. The current three-month moving averages show a two-point decline to 29 in the Northeast, a five-point gain to 35 in the Midwest, a three-point gain to 32 in the South and a three-point gain to 38 in the West.
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| Below is a letter I received from Alex Charfen. "Hey Brian, The CDPE designation has helped hundreds of thousands of homeowners avoid foreclosure. But for those who've never had to face it personally, it's easy to gloss it over as a buzz word, and not recognize how personally damaging foreclosure really is. Families, friends, and loved ones who are unfortunately in this position live on the edge every day waiting for a fateful knock at the door... and the shameful eviction process that follows. Children all over this country have been scarred by memories of their parents yelling and crying over "what to do" - then grow up without the sense of security they should've had. I know this... because right before I wrote the CDPE course in 2008, my wife Cadey, and I went through foreclosure and ultimately bankruptcy. It was a pivotal moment in our lives and after the incredible loss, we vowed to fight back and protect other families so they too can stay together. So it's no coincidence the CDPE designation appeared when it did and has helped so many agents help homeowners make a dignified exit out of a bad situation. Where we are today... While a total housing meltdown has been averted, there are still many millions of homeowners waiting for an agent like you to help them... and tomorrow I'll be announcing a new milestone in CDPE history that will allow you to connect with those who need your help the most. I am proud, honored, and excited to invite you celebrate this moment with us. Have a good rest of the day, and I will talk to you tomorrow. With gratitude, Alex Charfen" |
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In 2007, the Mortgage Debt Relief Act was passed in an attempt to help the millions of homeowners who, due to the housing crisis and economic crash, suddenly found themselves in danger of losing their home to foreclosure. The act has helped many distressed homeowners find solutions that help them avoid foreclosure and opened up options to them that were previously unavailable. However, the Mortgage Debt Relief Act was always intended to be a temporary solution and it is now set to expire at the end of 2012. For distressed homeowners, this means that time is running out for them to take advantage of the program and save themselves tens of thousands of dollars. If anyone you know may need my expertise, please have them visit my website www.ReedCanHELP.com for a copy of my recent report entitled Time is Running Out: How the Mortgage Debt Relief Act can save your home.
And then contact me for a confidential consultation.
Brian J. Reed, 816-582-1682, Reed@MaryCarolandReed.com
Sincerely,
Brian J. Reed, CDPE RE/MAX Elite 4243 NE Lakewood Way Lees Summit, MO 64064 (816)582-1682 www.ReedCanHELP.com
RE/MAX Elite, 4243 NE Lakewood Way, Lees Summit, MO 64064 (816)795-2517
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Daily Real Estate News | Wednesday, May 16, 2012 In an effort to curb foreclosures, Bank of America is offering some of its defaulting home owners relocation assistance of anywhere from $2,500 to as much as $30,000 if they agree to complete a short sale. Bank of America and other banks increasingly are becoming more willing to complete short sales than in the past, seeing it as a much less expensive alternative than if a home owner falls into foreclosure. With a short sale, banks are able to get ownership of the property more quickly, which tends to allow banks to keep the homes in better condition for resale and avoid costly other fees. Also, studies have shown that short sale properties tend to sell for more than properties in foreclosure. As such, more banks have tried out special offers to struggling home owners to get them to pursue a short sale over foreclosure. Bank of America first began piloting its short sale relocation program in Florida last year, offering up to $20,000 to home owners who agreed to complete a short sale. JPMorgan Chase piloted a program that offered some home owners up to $35,000 to complete a short sale. Bank of America has now rolled out the program nationally. To participate, home owners must get preapproval on the sales price of the home. The sale also must close by Sept. 26, 2013. "This program can help customers make a planned transition from ownership when home retention options have been exhausted or they have made a decision not to keep the home," says Bob Hora, a Bank of America executive. Source: Bank of America Offering up to $30,000 for Short Sales, CNNMoney (May 15, 2012) and Bank of America
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Daily Real Estate News | Thursday, May 03, 2012 Home buyers who want a bargain may want to act now because the housing market is in the midst of a turnaround, economists say. Home prices have fallen and mortgage rates are hovering near record lows, pushing home affordability for the average family to record highs. Meanwhile, rents have been on the rise, making owning a home cheaper than renting in most areas of the country, according to recent surveys. But the housing deals arent expected to stick around much longer. An improving job market, a decrease in the number of home owners falling behind on their mortgage, and an anticipated improvement in access to mortgages is expected to help home prices start bouncing back by next year, economists say. Investors eyeing profits in rentals also have been snapping up bank-owned properties, which Clear Capitals Alex Villacorte attributes as helping to lead to an increase in prices on foreclosed properties. This could have a significant impact on the market overall in terms of providing a rising floor to home values, Villacorte told CNNMoney. Some areas are already seeing prices rise. In Phoenix, housing prices have already increased 8.4 percent during the three months ending April 30, and Miami saw prices bump up 4.6 percent quarter over quarter, according to Clear Capital data. "Stuff I was selling six months ago for $60,000 to $80,000 is now $90,000 to $110,000," Tanya Marchiol, founder of Team Investments in Phoenix, told CNNMoney. Loan Rates, Demand Predictions Buyers may want to act more quickly because mortgage rates are expected to tick up slightly by the end of the year. The increase is being sparked by greater demand, says Doug Lebda, CEO of LendingTree. He predicts 30-year fixed-rate mortgages will inch up to 4.5 percent by the end of the year, which is still low, however, by historical standards. The Mortgage Bankers Association is also predicting a big leap in mortgage loans next year. For this year, MBA estimates that buyers will take out loans totaling about $415 billion, but by 2013 that number is expected to nearly double to $706 billion.
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Prices for residential real estate, which plunged more than 50 percent in some markets after the housing bubble burst, appear to be stabilizing. Some real estate markets are better than others. But where are the best opportunities to buy discounted foreclosures? Which metropolitan areas offer homebuyers and investors the biggest discounts and the highest potential return on investment (ROI)? To help you find a foreclosure bargain, RealtyTrac has selected the 10 best places in America to buy a foreclosure in 2012. To compile our Top 10 list, we started with the nations 100 largest metropolitan statistical areas based on population. From there, we narrowed the list further by selecting markets with at least 200 sales transactions in January 2012. The list was then pared down by selecting metros where the average foreclosure sales price was at least 30 percent below the average price of a non-foreclosure home. We also looked at unemployment and sales prices and then tabulated which metros were the best to buy foreclosure in. Information provided by RealtyTrac. | Metro Area | January 2012 Foreclosure Sales | % of All Sales | Avg Sales Price | Avg Foreclosure Discount % | | Kansas City | 353 | 28.72 | $73,257 | 51.18 | | Boston | 512 | 18.22 | $195,672 | 48.58 | | Pittsburgh | 274 | 15.33 | $73,142 | 47.95 | | Tulsa, OK | 211 | 22.79 | $86,725 | 38.30 | | San Francisco | 1,995 | 47.48 | $307,803 | 38.05 | | Cape Coral-Fort Myers, FL | 606 | 27.01 | $102,022 | 37.77 | | Charlotte | 303 | 15.85 | $118,808 | 37.56 | | Tucson, AZ | 632 | 43.20 | $112,660 | 34.72 | | Seattle | 988 | 33.56 | $212,565 | 34.64 | | Columbus, OH | 323 | 21.32 | $98,223 | 31.88
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