New Jersey has seen a 71% increase in foreclosure filings in 2013.Â But, because we are a judicial state, meaning foreclosure filings must work their way through a complex and lengthy court proceeding, the impact has not hit yet.Â
Here is a link to the full story: http://www.nj.com/business/index.ssf/2014/01/nj_may_soonlead_nation_in_foreclosures.html#incart_river
I keep my eye on the pre-foreclosures in Morris County where I do most of my business.Â And, while I am weary of the headaches associated with dealing with the banks, there are still many people who need our help in so many ways.Â They need someone to help them weigh their options.Â If the loan cannot be modified, they need someone to help them sell their home and deal with the bank.Â And, they need realtors as a community to push their representatives in Congress and the State House to do all they can stop an already difficult situation from getting worse.
If you are a short sale specialist, now is NOT the time to get out of the short sale business, in fact, it's probably a good time to get in!Â And, whether you want to deal with short sales or not, you can help by calling your Congress people in Washington and demanding they extend the Mortgage Debt Forgiveness Act of 2007.Â NAR has been working on this extension and we can all help by makiing a few short phone calls.
In all the talk of budgets and jobs one thing seems to have gotten lost,
the Mortgage Debt Forgiveness Act of 2007.Â Yes, the housing market is
strong and getting stronger, but jobs are lagging and as a result many
families still face foreclosure and/or short sale of their homes.Â
Unless this Act is extended, they will also face tax liability on the
forgiven debt.Â In New Jersey, because our home prices are relatively
high, it is not unusual to have $100,000 of the debt forgiven in a short
sale situation.Â If the client is in a 30% tax bracket (also not
unusual) that means they would, in effect, have an additional $100,000
of 'income' and incur a tax liability of $30,000 on top of losing their
home.Â This is unconscionable, unforgivable and unacceptable.
called both my Senators and my Representative in Washington today and
encouraged them to have some compassion, show some mercy, and work to
extend the Act.Â Won't you please join me?
During all the Hoopla of the recent budget discussions there is one thing Congress failed to do, renew the Mortgage Debt Forgiveness Act of 2007.Â We still hear about the sad lack of jobs but no one is talking, any longer, about the millions of Americans still losing their homes to short sales and foreclosures due to the stagnant economic recovery.Â And now, unless Congress acts, those homeowners will face tens of thousands of dollars in tax liability as the forgiven debt will be counted as income during 2014.Â This is patently unfair, in fact it is incredible.Â Personally, I feel the tax code should be changed permanently, forgive debt can no more equal income than money can equal speech, but at the very least Congress should extend the Act until the economy is more fully recovered.Â Please join me in calling your Congressman and The White House today to urge them to extend the Mortgage Debt Forgiveness Act for at least one more year.Â Our Government spent trillions of dollars bailing out the big banks, the least they can do is provide some protection for ordinary citizens as well.
The Mortgage Forgiveness Debt Relief Act which is due to
expire December 31, 2013. Prior to its being passed, if a home was short sold,
and the balance of the mortgage debt was forgiven, the difference, in other
words the forgiven debt, was considered income and taxed at the same rate as
regular income.Â So, if a homeowner owed
$100,000 on his mortgage, but his home only sold for $50,000, the other $50,000
was taxed at their regular rate and could have subjected short selling
homeowners to a tax liability of $15,000 if they were taxed at the rate of 30%
of their income.
Since the Act was passed in 2007, however, mortgage debt on
primary residences has been exempt from income taxes.Â The Act was set to expire in 2012 but was extended
one year and is now set to expire at the end of 2013.While we've seen a lot of progress in the real estate market recovery, there are still many, many of our neighbors who are finding it necessary to short sell their homes.Â So, while we are all hoping it will
be extended at least one more year into 2014, there is no guarantee that
this will happen. Â We need to call
Washington and tell them to pass the following bills:
H.R. 2788: Mortgage Forgiveness Tax Relief Act
Introduced: Jul 23, 2013
Sponsor: Rep. Joseph Heck [R-NV3]
Status: Referred to Committee Mortgage Forgiveness Tax
Relief Act â€“ Amends the Internal Revenue Code to extend through 2015 the
exclusion from gross income of income attributable to the discharge of
indebtedness on a principal residence.
H.R. 2994: Mortgage Forgiveness Tax Relief Act of 2013
Introduced: Aug 02, 2013
Sponsor: Rep. Tom Reed II [R-NY23]
Status: Referred to Committee
Status: This bill was assigned to a congressional committee
on August 2, 2013, which will consider it before possibly sending it on to the
House or Senate as a whole.Â Mortgage
Forgiveness Tax Relief Act of 2013 â€“ Amends the Internal Revenue Code to extend
through 2014 the exclusion from gross income of income attributable to the
discharge of indebtedness on a principal residence.
Please join me in encouraging our elected officials in
Washington to extend the Mortgage Debt Forgiveness Act for one more year, itâ€™s
the least we can do for our neighbors who are suffering through this economic
Anyone who has done a short sale knows that the biggest obstacle is the time frame.Â Short Sales take an inordinately long time to close.Â The danger is that the buyer will lose patience and walk away.Â It seems to me, at least in my experience, that this situation has gotten monumentally worse in the last six to eight months, especially with FHA insured short sales.
Yesterday, I had a rather nasty experience with Bank of America.Â We had been getting bad information for some time but we were finally being promised an approval letter, 'July 11th worst case'.Â Well, July 11th came and went.Â We were advised that BofA had to request a variance from HUD for the ATP (approval to participate) and the appraisal, which was strange because we had previously been told that FHA does ONE appraisal, that's it, that's all, you're stuck with it.Â The variance, they said, was still with HUD.Â And to make matters worse, our buyer was threatening to walk away.
Late on the day, on July 11th, I called the escalation department.Â Now, there is one very important thing to know about escalating a file.Â It's not fast, it takes at least 48 hours to get a response.Â There ARE no emergencies at Bank of America, period.Â And, they don't do much, it seems to me it is merely the threat that upper management is now watching that they depend on to get things done.Â And it is a hollow threat.Â Then, on July 12th, I called HUD and found out the variance had been approved the day before.Â I adviced Bank of America of this fact, giving the woman's name and phone number at HUD and, low and behold, they located the variance approval.Â Now, they said, Quality Assurance had to do their review, which could take up to... you guessed it....48 hours.Â
When I asked the negotiator and his superior if this process could not be expedited since the file had just come OUT OF QA in order for the Variance Request to be sent to HUD in the first place, he got nasty and said, in an email "There will be no more escalations on this file."
Well, I wasn't taking 'no' for an answer.Â These people had been wrong at every step of the way about their own process, so I once again called the escalation department.Â Â I got TWO supervisors on the phone and learned that a file can ALWAYS be escalated and it SHOULD BE escalated whenever the buyer is threatening to walk.Â The supervisor was wrong.Â
The moral is this:Â ANYTIME your buyer is threatening to walk away, take your issue to the escalation team, or the office of the CEO or whoever can get some action.Â Don't take 'no' for an answer and don't assume these people know what they are doing, go straight to the source for both guidance and direction and to follow up to see where things stand.Â
Oh, and in case you were wondering, we had our approval letter within two hours.Â
I am expecting an approval letter for a short sale I have been working on since September at any moment.Â However, the fact that this transaction is closing is no thanks to the servicer, Bank of America.Â This offer was a 'no brainer'!Â Bank of America and HUD got an offer that was FULL APPRAISED VALUE.Â Nobody could have asked for more, but did Bank of America care?Â Oh, no, they did not.Â They continued with their stall tactics until the buyer was about to walk away.Â The last straw was their insistence that they needed a variance from HUD for the Approval to Participate and the appraisal.Â They PROMISED we would have our approval letter yesterday.Â Then they continued to say they were waiting for HUD and there was nothing they could do, that is until I called their bluff and reached out to HUD directly.
Turns out, the variance was approved the day before.Â I have no idea WHO at Bank of America was holding onto that document, but I do know they had it and there WAS something they could do, they could issue the approval letter and they continued to stall.
If you are having difficulties with an FHA short sale, and the bank is blaming HUD, call their bluff.Â HUD can be reached at 877-622-8525.Â You will need your cilent's FHA case number and the full name and employee ID number of the person at the bank handling the issue.Â HUD got back to me within an hour with a solution!
Now, WHY would you nominate this particular person to this particular office?
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