This is a repost from fellow short sale pro Kevin Kaufman of Group 46:10 – Arizona’s Premier Short Sale Team

“…why loan mods are nothing more than a delay of the inevitable.” – Kevin Kaufman

If you’re in Arizona and need help with a short sale, then seek the best @ “Arizona’s Premier Short Sale Team” – the dynamic duo of Kevin Kaufman & Fred Weaver.

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50% Of Rescued Mortgages Have Re-Defaulted

Click HERE to view full article.

The latest data from the Office of the Comptroller of the Currency (OCC) shows that over 50% of homeowners who had their loans previously modified in order to avoid foreclosure have re-defaulted. This seems like an awfully high failure rate.

As one might expect, mortgages which were given higher cuts to their monthly payments (during the modification process) have been less likely to re-default. More help prevents re-default.

Hopefully the Making Home Affordable plan has encouraged more aggressive modifications. Past mortgage modifications were clearly just a delaying game, rather than a solution, since in the end more than 1 out of 2 “rescued” mortgages re-defaulted. It should have been done better the first time.

Were financial institutions unable to face the upfront losses which more aggressive mortgage modifications (and the haircuts they might cause) would have caused? Feel free to enlighten us here.

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If you’d like to discuss your personal situation to learn what options are available to you, give me a call at 702-204-3945 or you can contact me via email kenny@tfmcpartners.com or by leaving a comment below.

Kenny Wagner
Short Sale Specialist
Foreclosure Mitigation Specialist
The Foreclosure Mitigation Company

1-702-204-3945 Direct
1-206-971-5033 Fax

kenny@tfmcpartners.com

The common alternatives to foreclosure, such as short sales, and deeds-in-lieu of foreclosure are all “not paid as agreed” accounts, and considered the same by your FICO® score. This is not to say that these may not be better options for you from a financial perspective, just that they will be considered no better or worse for your FICO score.

If you are considering bankruptcy as an alternative to foreclosure, that may have a greater impact to your FICO score. While a foreclosure is a single account that you default on, declaring bankruptcy has the opportunity to affect multiple accounts and therefore has potential to have a greater negative impact on your FICO score.

If you’d like to discuss your personal situation to learn what options are available to you, give me a call at 702-204-3945 or you can contact me via email kenny@tfmcpartners.com or by leaving a comment below.

Kenny Wagner
Short Sale Specialist
Foreclosure Mitigation Specialist
The Foreclosure Mitigation Company

1-702-204-3945 Direct
1-206-971-5033 Fax

kenny@tfmcpartners.com

Typically, the tax consequences will be less severe vs. letting the home go to foreclosure.

If the home is sold at foreclosure auction, you will still receive a 1099-A for the amount the lender lost due to the sale.

In a short sale, most lenders, except for those that are out of business and not worried about the O.T.S. – Office of Thrift Supervision, will ALWAYS give you a 1099-C for the amount they have lost due to the short sale, if they decide to not seek a deficiency judgment. And we’ve found that in almost EVERY case they will opt to send you a 1099-C for the amount of the loss versus seek a deficiency due to the costs and length of time it would take to exercise that option.

We always recommend that you consult with a CPA regarding taxes, and ask that you become familiar with and ask your CPA about IRS form 982 prior to deciding if you want to pursue the short sale as form 982, if you qualify, would absolve you of paying the taxes on the deficiency due to you being deemed insolvent.

I am not a CPA or qualified as a licensed professional in the field of taxes so I strongly suggest you seek competent professional counsel for your tax related questions.

If you’d like to discuss your personal situation to learn what options are available to you, give me a call at 702-204-3945 or you can contact me via email kenny@tfmcpartners.com or by leaving a comment below.

Kenny Wagner
Short Sale Specialist
Foreclosure Mitigation Specialist
The Foreclosure Mitigation Company

1-702-204-3945 Direct
1-206-971-5033 Fax

kenny@tfmcpartners.com

Did you do what I did when I first heard that?  That is, did you ask yourself, “Isn’t that illegal or isn’t that some scam that we’ve been told to avoid?  Give up my deed and I can stay in my home…”.

On November 5th, 2009 FANNIE MAE announced their “DEED FOR LEASE” program that allows homeowners to lease their home in exchange for their deed.

WASHINGTON, DC — Fannie Mae (FNM/NYSE) is implementing the Deed for Lease™ Program under which qualifying homeowners facing foreclosure will be able to remain in their homes by signing a lease in connection with the voluntary transfer of the property deed back to the lender.

So it is official, but this brings to mind a couple questions:

Does this really help you the homeowner?  It says that you can “qualify” for up to a 12 month lease with potential for a renewal.  Does this mean that it could be shorter?  Looks like FANNIE MAE is trying to stem the amount of foreclosures they are acquiring each month in addition to trying to create some revenue to stem their mounting losses.

After reviewing the announcement from FANNIE MAE & reading an article in the LA TIMES on this announcement, I just see this as a temporary band aid to a growing problem for FANNIE MAE, which is all the foreclosures that they are acquiring.  What about the tax ramifications?  Giving up their deed for a lease is very similar to a deed in lieu except that the homeowner gets to stay in their home for a period of time but versus a short sale the tax ramifications are greater for both a deed in lieu of foreclosure or a deed for lease.  So who does this really help?  The homeowner or FANNIE MAE?

Moreover, for this to work, any subordinate lien holders must release their lien.  It’s been my experience that subordinate lien holders would rather short sale and receive something than voluntarily give up their lien position for nothing.

Here is what Jay Ryan, VP of FANNIE MAE has to say about the program:

“The Deed for Lease Program provides an additional option for qualifying homeowners who are facing foreclosure and are not eligible for modifications,” said Jay Ryan, Vice President of Fannie Mae. “This new program helps eliminate some of the uncertainty of foreclosure, keeps families and tenants in their homes during a transitional period, and helps to stabilize neighborhoods and communities.”

My first initial reaction is that it doesn’t address the issue head on.   I believe short sales are the answer and until they help with streamlining their approval process with short sales FANNIE MAE, along with other lenders, will continue to acquire more properties through foreclosure.  Homeowners do not want a temporary fix where they are allowed to lease back their house where they eventually have to move anyways.  Homeowners want an immediate solution to their current problem which allows them to move on and start building a new life.

For additional information about the Deed for Lease Program, including full details on program eligibility, please review the Guide Announcement on www.efanniemae.com.

If you’d like to discuss your personal situation to learn what options are available to you, give me a call at 702-204-3945 or you can contact me via email kenny@tfmcpartners.com or by leaving a comment below.

Kenny Wagner
Short Sale Specialist
Foreclosure Mitigation Specialist
The Foreclosure Mitigation Company

1-702-204-3945 Direct
1-206-971-5033 Fax

kenny@tfmcpartners.com

You may be facing foreclosure… so what are your options?!?  Try to look at the situation more from a financial standpoint rather than an emotional standpoint.  This way you can more successfully analyze which option might best suit your needs and desires to move you towards resolving your financial difficulty.  One very important thing to remember: Time is of the essence. Take time to think through your situation and make a decision.  Then, take action right away so you have enough time to complete the solution you choose.

Nine options when facing Foreclosure

1. Do Nothing – If a homeowner does nothing, they most likely will lose their home at foreclosure auction.  Loan applications generally ask if the applicant has ever been foreclosed upon.  Credit reports also disclose this damaging information. Not the best option.

2. Payoff/Refinance – Completely paying off the entire loan amount plus any default amount and fees.  Usually this is accomplished through a refinance of the debt.  New debt is at a normally higher interest rate and there may be a prepayment penalty because of the recent default.  With this option, there should be equity in the home.

3. Reinstatement – Paying the entire default amount plus interest, attorney fees, late fees, taxes, missed payments and fees.

4. Loan Modification – Utilizing the existing mortgage company to refinance the debt or extend the terms of the loan.  This may allow the homeowner to catch up at a more affordable level.  To qualify, you must prove to the lender you have fixed the problem that caused the late payment.

5. Forbearance – Lender may be able to arrange a repayment plan based on the homeowner’s financial situation.  The lender may even be able to provide a temporary payment reduction or suspension of payments.  Information will be required from the lender to show that you are able to meet the new payment plan requirements.

6. Partial Claim – A loan from the lender for a 2^nd loan to include back payments, costs and fees.

7. Deed in Lieu of Foreclosure – Give the property back to the bank instead of the bank foreclosing.  Banks generally require the home be well maintained, all mortgage payment and taxes must be current.  Most loan applications ask if this has ever happened.

8. Bankruptcy – This option can liquidate debt and/or allow more time.  I can refer you to a qualified bankruptcy attorney.

–Chapter 7 (Liquidation) To completely settle personal debt.

–Chapter 13 (Wage Earner Plan) Payments are made toward a plan to pay off debts in 3-5 years.

–Chapter 11 (Business Reorganization) A business debt solution.

9. Sale – If the property has equity (money left over after all loans and monetary encumbrances are paid). The homeowner may sell the home without lender approval through a conventional home sale.  In this case, the homeowner will get cash from the sale.  On the other hand, a Short Sale, also known as a pre-foreclosure sale, can be negotiated with your lender by your Real Estate Professional if what is owed is MORE than the property’s value.

I affirm that I have read this and understand that I have several options available to me and that there may be more than those listed above.  I affirm that I have been advised that I should consult an Attorney and CPA.  Understanding this I know that I have the option to choose to use The Foreclosure Mitigation Company to assist me in negotiating the short sale of my home.

If you’d like to discuss your personal situation to learn what options are available to you, give me a call at 702-204-3945 or you can contact me via email kenny@tfmcpartners.com or by leaving a comment below.

Kenny Wagner
Short Sale Specialist
Foreclosure Mitigation Specialist
The Foreclosure Mitigation Company

1-702-204-3945 Direct
1-206-971-5033 Fax

kenny@tfmcpartners.com

Hello Neighbor,

If you find yourself in a position where you owe more than your home is worth and you need to sell, a short sale may be your best option. But don’t get taken for a long, stressful ride by a self proclaimed ‘expert’…

“What is a short sale?”

Simply put, a short sale is a real estate transaction where the homeowner owes their lender more than what their property is worth and they need to sell. In a short sale, the lender must approve and accept less than what they are owed as full payoff (this means they may settle for $400,000, even if you currently owe them $500,000…even if the loss is hundreds of thousands of dollars).

Are you facing a financial hardship that you know will decrease your income?

Are you getting behind on your mortgage and you’re not sure if you can catch up?

Or do you just need to sell quickly but your home is worth less now than when you bought it?

If you are facing any of the situations above, and you think a short sale might be your best option, then read on. If you’re still not sure and just want more info, then email us to request a free copy of our article “The 9 Alternatives When Facing Foreclosure”

Don’t worry. It’s not your fault…

You gotta remember, we’ve all had our ups and downs in life and a lot of other good people are also in the same tough spot as you. Life seems scary when you’re facing the reality of foreclosure and I know how you feel when you just don’t wanna answer the phone any more…

We all agree that we’re in the middle of a national mortgage crisis and that, in many cases, homeowners who have bought or refinanced in the last few years have been seriously abused by unethical lending practices!!

You bought your home and hoped (like we all did) that it would increase in value (and some folks were even promised it would!), but most likely the harsh reality is that now your home is worth less than when you bought it and the value is still declining sharply.

I’ve helped hundreds of homeowners in this position to get the help they deserve. I’ve also, helped train hundreds of real estate professionals both locally and across the nation to do the same for their clients.

It’s sad but true!

Did you know that nearly 90% of the homeowners nationwide who try to “short sale” their home will end up losing their home to foreclosure due to an uneducated or lazy agent?

Don’t allow this to happen to you!

I hate to say this about my fellow agents, but the majority of them that are “trying to help” have not been properly trained and sadly, they are misinformed as to how to even negotiate with lenders. Some even get so far as to submit your ’short sale packet’ and then just sit back and wait for a response! In the end, they simply don’t know how to help you and you will become one of those “90%” that were not helped.

“Short sales are not easy!”

…unless you seek the help of an expert agent with a proven track record. I have been personally trained by a former Chief Loss Mitigator who is a career loss mitigator and asset manager with 20 years in the business (he is ultimately the guy at the bank who accepts or declines short sales). Actually, I went so far as to make him my partner and train my entire office. We are now helping save even more folks from foreclosure.

We have successfully negotiated short sales for hundreds of families and as you can see from my recent approval letters below (I swap out some of my recent approvals every couple months, so you will notice these will have been from within the last 90 days), we actually get the banks to say YES to our short sales. Before you agree to have an agent help you sell your home, ask him/her to show you just one short sale approval within the last 6 months… I doubt they can.

The best part is, my business partner, has taken his tips and tricks from working INSIDE THE BANK and taught my team and I exactly how to ethically BEAT THE BANK… 93.2% of the time!

My one partner most recently worked for IndyMac Bank, a top ten lender, as the head of their HELOC loss mitigation division and the other for WAMU as a FVP of Operational Risk in the Mortgage Division.  Both of their insider knowledge and broad base of industry contacts allows us to get our approvals faster than any other agents in the states that we actively work in!  In fact, we are constantly solicited by agents nationwide to ‘help them’ get their short sales approved.

If you have any questions that will help you better understand how the short sale process works, please contact me directly.

See Below for a sample of successful results…approval letters for short sales.

If you’d like to discuss your personal situation to learn what options are available to you, give me a call at 702-204-3945 or you can contact me via email kenny@tfmcpartners.com or by leaving a comment below.

Kenny Wagner
Short Sale Specialist
Foreclosure Mitigation Specialist
The Foreclosure Mitigation Company

1-702-204-3945 Direct
1-206-971-5033 Fax

kenny@tfmcpartners.com

Welcome to My Ethical Real Estate Pro Blog.

To start off my Blog I thought I would provide you with a great post from a colleague of mine on “Tax Consequences of A Short Sale: Dealing with a 1099C”

I copied this from a colleague’s website Matthew Smith @ Short Sales Des Moines.
Matthew presented this so simply & clearly that I wanted to share it for your benefit.

Matthew Smith is a top notch short sale specialist in the Des Moines, IA market.

If you are in his market & need help or have any questions please contact him as he comes highly recommended.

Kenny

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If you are a homeowner going through a foreclosure of Short Sale, it is important that you become well versed on 1099C’s.

This will prevent 2 things:

1.) A Coronary on or before February 2, 2010 when you receive your 1099C.

and

2.) Having to pay taxes on monies that were ‘forgiven’ by your bank in the short sale or foreclosure

Let us first talk about exactly what is a 1099C .  A 1099C is a Cancellation of Indebtedness form that a lender is required to fill out when the forgive a debt greater than $600.  The lender is supposed so send these out to you before February 2 in the year following the discharge of the debt.

Not all cancelled debt is considered a taxable event such as the following off the IRS website:

• Bankruptcy: Debts discharged through bankruptcy are not considered taxable income.
• 
  
• Insolvency:  If you are insolvent when the debt is cancelled, some or all of the cancelled debt may not be taxable to you.You are insolvent when your total debts are more than the fair market value of your total assets.Insolvency can be fairly complex to determine and the assistance of a tax professional is recommended if you believe you qualify for this exception.
• 
  
• Certain farm debts:If you incurred the debt directly in operation of a farm, more than half your income from the prior three years was from farming, and the loan was owed to a person or agency regularly engaged in lending, your cancelled debt is generally not considered taxable income.The rules applicable to farmers are complex and the assistance of a tax professional is recommended if you believe you qualify for this exception.
• 
  
• Non-recourse loans:A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral.That is, the lender cannot pursue you personally in case of default.  Forgiveness of a non-recourse loan resulting from a foreclosure does not result in cancellation of debt income.  However, it may result in other tax consequences.

If your lender does not issue you a 1099C and you have had debt forgiven or discharged in the prior year, you still are required to report this. If you follow the formula under Section 3 on the IRS site you can easily figure out the amount that was forgiven (you may need to call your lender to verify the amount of the payoff prior to the sale).

Here is the good news….

The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.

This provision applies to debt forgiven in calendar years 2007 through 2012.
Up to $2 million of forgiven debt is eligible for this exclusion ($1
million if married filing separately). The exclusion does not apply if
the discharge is due to services performed for the lender or any other
reason not directly related to a decline in the home’s value
or the taxpayer’s financial condition.

More information, including detailed examples and qualifications can be found in Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments. Also see IRS news release IR-2008-17.

So, if you are like me, you may be saying now, “Ok, thats fine and dandy, I understand I don’t have to pay the taxes
… but unpack this for me a bit, how do I actually go about doing this? What forms do I need, what do I fill in the blanks with?”

I’m glad we asked that question, so here it goes. You need to get yourself an IRS Form 982 and it looks something like this:

Now, if the only debt you are reporting forgiven that you are excluding is due to a foreclosure or short sale then you only need to complete lines 1e, 2 and 10b. What you do is go back to the 1099C that you received from your old lender and go to box 2 (see below), That number is what you will enter in box 2 and 10b of your form 982.

So, that is pretty much it. If you have further questions, check out the following sites:

The Mortgage Forgiveness Debt Relief Act FAQ

Publication 4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments with detailed examples

IRS New Release IR-2008-17

Tax Payer Advocate Service – 1-877-777-4778,

Home Foreclosure and Debt Cancellation (good for figuring out how to calculate your own 1099C income if bank fails to send you one)

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If you’d like to discuss your personal situation to learn what options are available to you, give me a call at 702-204-3945 or you can contact me via email kenny@tfmcpartners.com or by leaving a comment below.

Kenny Wagner
Short Sale Specialist
Foreclosure Mitigation Specialist
The Foreclosure Mitigation Company

1-702-204-3945 Direct
1-206-971-5033 Fax

kenny@tfmcpartners.com