Olympia Short Sales – Independence Real Estate -

Olympia Short Sale – Avoid Foreclosure

Posted on February 13, 2013 by John Clabaugh Leave a comment

Are you upside down in your home?
Do you owe more than your home is worth?
Are you behind on payments and facing foreclosure?
Did you try a mortgage modification, only to get double crossed by your bank and saddled with heavy penalties and additional fees?

Many people have been left behind in this turbulent economy. Much of the time, it is not their fault. Job loss and medical problems are all too common and creep up unexpectedly. Once a person falls behind, it is hard to catch up.

On top that many banks are abusing the borrower. A common tactic is to string you along for months with a song and dance about a mortgage modification or payment reduction. They’ll work out a payment plan, and after you’ve faithfully made a few reduced payments like they said, they suddenly decide that you “don’t qualify” and saddle you with a mountain of fees and certain foreclosure. They’ll even charge you a penalty for paying the reduced mortgage payments… that they agreed to accept. They’re trying to squeeze everything they can out of you before they foreclose.

So who is on your side? WE ARE! And we want to help you avoid foreclosure!

We specialize in short sales. In a short sale, we convince your lender to allow you to sell the home for less than the amount of your mortgage. This will allow us to sell your home at current market values, and the bank agrees to take the loss. That’s right, in most situations the cancelled debt will be forgiven by your lender and you won’t have to pay the difference between what you owe and what the house sells for. On top of that, a short sale is not as bad for your credit score as a foreclosure is.

The best part is that this service costs you nothing. We charge no upfront fees, and you don’t have to bring cash to the closing table. If we cannot complete a successful short sale of your home, you don’t owe us a dime! And if your bank refuses to release you from the obligation to pay the cancelled debt, or puts unacceptable conditions on the short sale, you can back out of the deal!

Call us for a free consultation. Use the “Contact Us” box on the right or at the bottom, or call 866-559-8546. We will discuss the specifics of your situation with you and help you determine whether a short sale can be successful for you.

To learn more about short sales, please keep reading.

What is a Short Sale?

A short sale occurs when a home is sold for less than the amount owed on your mortgage
Your bank agrees to take a loss on the mortgage in order to avoid the expense of foreclosure
You may be eligible for money at closing for relocation

Why would a bank approve a short sale?

Foreclosure is very expensive for banks
There are legal fees, property taxes and assessments, and maintenance costs associated with foreclosed property that cost banks a lot of money
It allows the bank to “cut its losses” up front without having to complete the foreclosure process

Why should a you consider a short sale?

A short sale may not damage your credit as much as a foreclosure
A short sale does not impact the community as negatively as a foreclosure

When may a short sale be a good option for you?

You owe more than the house is worth
You have experienced a financial hardship
You have no funds available to bring to closing
There is only one mortgage against the property, or both mortgages are held by the same bank

When may a short sale not be a good option for you?

There are other liens against the property (i.e. IRS, homeowner association or mechanics liens)
There is insufficient time prior to a foreclosure auction to market the property
You have a significant amount of liquid assets
There is more than one mortgage against the property and the second mortgage is not with the same bank as the first
You used the funds from a refinance, equity loan, or line of credit for something other than property improvements (i.e. cars, vacations, etc)

How can Independence Real Estate help? We will:

Offer a complimentary consultation and market analysis to assess the chances of completing the short sale on your behalf
Assist you by contacting your bank and starting the short sale process with them
Help you put together the “short sale package” of paperwork required by your lender
Remain in contact with your lender throughout the process
Help you determine an appropriate asking price to market your property
Provide full service marketing of your property
Solicit and present offers from potential buyers
Offer support and consultation throughout the selling process
Cost you nothing out of pocket. We are paid in commission upon the closing of a successful sale

Our area of expertise is determining whether your short sale transaction can be successful, and assisting with the marketing, sale, negotiation, and successful close of the property.
Because everyone’s personal financial situation is different, Independence Real Estate will advise you to seek legal and tax advice regarding whether the short sale is your best option. This type of advice is outside our area of expertise and outside the scope of our real estate license. There are some free resources we can refer you to.

To learn more please call 866-559-8546 or contact us below:

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Short Sales, Mortgage Forgiveness, and Tax Consequences

Posted on February 2, 2013 by John Clabaugh Leave a comment

In a short sale, the proceeds from the sale of a home are not enough to pay off the outstanding mortgage. In other words, the seller and the seller’s lender agree to sell the home for less than the amount of the mortgage. Learn about short sales.

The difference between the proceeds from the sale of the home and the amount owed on the mortgage is called a deficiency. For example, assume you owe $200,000 on your home mortgage. If the net proceeds (after deducting selling costs) of the sale are $150,000, then the deficiency is $50,000.

In the ideal short sale situation the lender has “forgiven” the $50,000 deficiency and released you from the obligation to pay it. Sounds great so far.

But wait! Many people don’t realize that the IRS generally considers debt forgiveness as taxable income. Ordinarily you have to pay taxes on that $50,000 of forgiven debt. Not so great…

The Mortgage Forgiveness Debt Relief Act of 2007 temporarily changed those rules, allowing you to exclude from your taxable income the amount of mortgage debt forgiven on your primary residence. If your loan and property qualify under the Act, you don’t have to pay tax on that forgiven debt. It still must be reported on your tax return, but it is not taxable.

In order to qualify, the loan must have been used to buy, improve, or refinance your primary residence, and be secured by your primary residence. Second homes and investment properties do not qualify: Debt forgiveness in those cases is still taxable.

There’s just one catch — the Mortgage Forgiveness Debt Relief Act expires at the end of 2013. Beginning in 2014, debt forgiveness on your primary residence will again be taxable.

Congress could extend the act, but the prospects of that happening do not look good. Many in Congress are focused on reducing the budget deficit, and view the Act as a cost (in missed tax revenue) that should be cut. If Congress does not extend the Act, then you would have to pay taxes on forgiven mortgage debt. That means short sales, principal reductions, and other forms of debt forgiveness could end up costing you tax money that you may not have.

Bottom line: If you are considering a short sale of your primary residence, you should do it as soon as possible in order to avoid potential tax consequences. You should always seek professional legal and tax advice before attempting a short sale.

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Short Sales Will Be Allowed Even If Your Mortgage Payments Are Current

Posted on August 22, 2012 by John Clabaugh

Easier to Qualify

Government-backed mortgage giants Fannie Mae and Freddie Mac have loosened some of their restrictions on short sales. As long as there is a qualified hardship, a borrower does not have to be delinquent on their mortgage or miss payments in order to qualify.

“Short sales have become an increasingly important tool in preventing foreclosures and stabilizing communities,” said Leslie Peeler, senior vice president, National Servicing Organization, Fannie Mae. “We want to help as many homeowners avoid foreclosure as possible. It is vital that servicers, junior lien holders and mortgage insurers step up to the plate with us. These new guidelines will open doors to help more homeowners qualify for short sales, remove barriers to completing short sales, and make the process more efficient for homeowners and servicers.”

Qualified Hardships

Hardships that may qualify a borrower for a short sale include:

Job loss or reduction in income
Illness or Disability
Death
Divorce
Job transfer greater than 50 miles
Military personnel who are permanently transferred

Reduced Documentation

According to a press release, “Fannie Mae is significantly reducing the documentation required to complete a short sale, including requiring no documentation of a borrower’s hardship 90 days or more delinquent and have a credit score lower than 620. This will remove barriers for those homeowners who are most in danger of foreclosure and increase servicer efficiency in completing a short sale.“

Does Your Loan Qualify?

Together, Fannie Mae and Freddie Mac own or underwrite about 50% of the mortgages in the U.S., so chances are good that your loan is one of them. You can verify online whether you loan is owned by Fannie Mae or Freddie Mac.

Tax Laws Change in 2013: Act Now Before it is Too Late!

The Mortgage Forgiveness Debt Relief Act of 2007 expires December 31, 2012. The Act shields most borrowers from tax consequences on forgiven mortgage debt. Beginning January 1, 2013 forgiven mortgage debt will be considered taxable income once again. In order to take advantage of this favorable tax law, we should start the short sale process right now!

Call John @ 866-559-8546!

The short sale services that Independence Real Estate provides are at no cost to you! We specialize in Olympia short sales, including Tumwater, Lacey, and the greater Thurston County area.

For a totally free, no-obligation, no-cost honest and professional consultation and analysis of your situation, call John at 866-559-8546 or use the contact form below:

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Short Sale Success Story in Olympia

Posted on July 24, 2012 by John Clabaugh

Last week we successfully closed a short sale transaction on Manito Drive in Olympia. It was the quickest short sale transaction I have participated in – from mutual acceptance to closing was a little over 60 days. It went very smooth, and I wish they could all go like this.

At the end of a transaction I like to look back at what happened that made it successful. Here are the positive factors that came into play.

There was only one mortgage on the property. We didn’t have to negotiate a second mortgage. This is probably the biggest factor in the quickness of the transaction.
The buyer was financially strong and well qualified.
The buyer’s broker was experienced with short sales.
The seller’s bank (Bank of America) has a specific short sale procedure mapped out, and they have lots of great information on their website to help real estate agents facilitate a successful short sale.
The seller was gracious and cooperative, and working with them was a pleasure. They even cleaned the carpets after they moved out!
It was a HAFA (Home Affordable Foreclosure Alternatives) short sale.
The seller received money at closing for relocation expenses.
The bank waived the deficiency. The seller will not be responsible for repaying the forgiven debt.
Thurston County Environmental Health did an excellent job on the septic stuff. They completed the time of transfer and issued a new operational certificate in less than a week. The paperwork we needed from them came through just in time.

This deal is the perfect example of how short sales are supposed to work. Now that the big banks finally have some infrastructure and resources in place to be able to handle short sales, I hope that more short sales can be quick, smooth, and successful.

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Olympia Short Sales – New Law Protects Sellers

Posted on May 9, 2012 by John Clabaugh Leave a comment

On June 7, 2012 the “Homeowners in Crisis – Assistance” bill (HB 2614) will go into effect in Washington State. The bill provides several protections for homeowners that sell their home for less than the amount owed on the mortgage (a short sale). The biggest protection is the mandate that banks must tell the seller whether they will still owe money after the short sale. It’s about time!!

In a short sale, the difference between the amount of the mortgage and the sale price of the home is called a deficiency. Click Here to learn more about Olympia short sales.

Your bank must tell you whether you will still owe money after the short sale.

Upon “first written notice” from a bank to a borrower approving a short sale, the bank must clearly state whether they “reserve” or “waive” the right to enforce the deficiency.

This means that the bank must clearly tell you whether they will or will not pursue the borrower to make up the difference between the amount of the mortgage and the sale price of the house.

The bank must use specific language to notify you whether you will still owe money after the short sale.

This is the language that the law says that banks must use:

“Please take note that [name of beneficiary or mortgagee, or its assignees], in releasing its security interest in this owner-occupied real property, [waives or reserves] the right to collect that amount that constitutes full payment of the secured debt. The amount of debt outstanding as of the date of this letter is $. . . . . .. However, nothing in this letter precludes the borrower from negotiating with the [name of beneficiary or mortgagee, or its assignees] for a full release of this outstanding debt.”

This will help a short sale seller to know and understand the financial consequences of a short sale.

Previously, banks used obscure and confusing language, or said nothing, about whether you will still owe money after a short sale. This uncertainty was very frustrating for sellers.

There has never been a better time to avoid foreclosure with a short sale!

New laws designed to protect borrowers, combined with federal programs like HAFA and initiatives by several large mortgage companies to standardize and speed up the short sale process will make short sales quicker and easier than they have been in the past.

Don’t forget that the Mortgage Forgiveness Debt Relief Act expires at the end of 2012. If the Act is not renewed by Congress, there could be heavy tax consequences for doing a short sale in 2013.

Act now before it is too late!

The short sale services that Independence Real Estate provides are at no cost to you! We specialize in Olympia short sales, including Tumwater, Lacey, and the greater Thurston County area.

For a totally free, no-obligation, no-cost honest and professional consultation and analysis of your situation, call John at 866-559-8546 or use the contact form below:

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