The IRS recently released information on processing issues that are impacting a small percentage of tax returns involving repayment of the First Time Homebuyer Credit (FTHB), primarily involving 2008 home purchases. While most of these returns are processing normally, the IRS recognizes the hardship caused by delayed refunds, and it has assigned additional staff and resources to address the issues promptly.
It is important to note that taxpayer returns claiming a home purchase in 2010 are not affected, and those returns are being processed as are the vast majority of other homebuyer returns.
Here’s an update on the source of the processing issues:
1. Married Filing Joint taxpayers who received the FTHB credit on a 2008 purchase
There seems to be an identified processing issue primarily impacting refunds for married couples filing joint returns this year who received the First Time Homebuyer credit on their 2008 tax return. This credit was an interest-free loan, and must be paid back beginning this year under the provisions of the law.
This issue, related to Form 5405, First-Time Homebuyer Credit and Repayment of the Credit, primarily impacts Married Filing Jointly taxpayers who filed their tax returns this year before Feb. 22. The IRS is working aggressively to manually process tax returns for this group of taxpayers. It expects most, if not all, of these refunds to be available by April 5, and others the following week. (The date assumes that there are no other issues with their return, and that their refunds are not subject to any offsets for unpaid federal taxes or other debts.)
2. Taxpayers who received the FTHB credit and are now reporting the sale or disposition of their home
3. Taxpayers who received the FTHB credit and are attempting to pay back more than the amount required (typically $500)
These two issues require changes to IRS’ core tax processing systems. The IRS is actively working on the development and testing of the required changes that will allow these impacted tax returns to be processed and appropriate refunds issued. The IRS does not currently have a definitive date for when these changes will be complete, although it will be in April.
What should taxpayers do?
The IRS understands that taxpayers affected by this issue are anxious to get the status of their refund. For those who have already filed, no action is necessary. They can check “Where’s My Refund” at www.IRS.gov for updates. Because the IRS is already aware of this issue and is taking corrective action, there is no need to call.
For those who have not yet filed and are making a repayment of a First Time Homebuyer Credit this year, there is a simple step taxpayers can take to help speed processing. Couples filing a joint return for tax year 2010 who received the credit on their jointly filed 2008 tax return should file two 5405 forms, one for each taxpayer. For couples filing a joint return for 2010 but who had a different filing status in 2008 and only one spouse received the credit, the IRS recommends filing one Form 5405 for the taxpayer who received the credit.
For more information visit www.IRS.gov.
RISMEDIA, March 26, 2011
Saturday, March 26, 2011
Friday, March 25, 2011
Do you really understand "As Is"?
As part of continuing education, I recently had the pleasure of attending a presentation by a noted Author and Professional Expert who explains "As Is" in this News Article...
• Do You Really Know What “As Is” Is? By Barbara Nichols
Most standard real estate contracts for existing construction sales, now have a clause included, which states that the property is sold “as is.” In questioning both buyers and sellers, and real estate sales agents, it is apparent that there exists some confusion regarding this term.
When a contract is signed by a buyer and seller, which includes the “as is” clause, this means that at the time of signing it is the seller’s desire not to repair, or credit the buyer any funds, for any defects the buyer may find in the property through the process of their inspections, or investigations. The buyer agrees to the “as is” clause, but usually has the contingency to inspect the property for defects, and the right to withdraw from the transaction if those defects are of a number, or type, or cost to repair, the buyer deems to be unsatisfactory.
The “as is” clause in no way limits the right of the buyer to determine what the “as is” is, through their diligent inspection of the property. It is strongly recommended that no buyer eliminate their inspection right contingency in a real estate purchase.
The “as is” clause does not reduce, or eliminate, the duty of the seller or agents to fully disclose all property defects, and other material facts, of which they may be aware.
A contract is an agreement between the parties, which can be changed by further agreement between the parties. Should the buyer discover significant defects in their inspection process, either unknown to the seller or agents, or more significant and costly to repair, than previously believed; they have every right to request credits toward those repairs, or that the repairs be made by the seller.
Because of the “as is” clause, the seller has the right to say that they will not give credits, or make repairs, and that the buyer may withdraw from the transaction if this is not acceptable to the buyer. However, the seller may now have new information on his property’s condition he did not have before, and this new information must be disclosed to the next prospective buyer.
The usual result of this situation, is that the buyer and seller agree to some credits, or some repairs, through further negotiation, and thereby change the agreement, in spite of the prior “as is” clause. Although in hot markets, with multiple offers, the buyer may have to accept the property “as is,” or cancel the transaction and look for another property.
• Do You Really Know What “As Is” Is? By Barbara Nichols
Most standard real estate contracts for existing construction sales, now have a clause included, which states that the property is sold “as is.” In questioning both buyers and sellers, and real estate sales agents, it is apparent that there exists some confusion regarding this term.
When a contract is signed by a buyer and seller, which includes the “as is” clause, this means that at the time of signing it is the seller’s desire not to repair, or credit the buyer any funds, for any defects the buyer may find in the property through the process of their inspections, or investigations. The buyer agrees to the “as is” clause, but usually has the contingency to inspect the property for defects, and the right to withdraw from the transaction if those defects are of a number, or type, or cost to repair, the buyer deems to be unsatisfactory.
The “as is” clause in no way limits the right of the buyer to determine what the “as is” is, through their diligent inspection of the property. It is strongly recommended that no buyer eliminate their inspection right contingency in a real estate purchase.
The “as is” clause does not reduce, or eliminate, the duty of the seller or agents to fully disclose all property defects, and other material facts, of which they may be aware.
A contract is an agreement between the parties, which can be changed by further agreement between the parties. Should the buyer discover significant defects in their inspection process, either unknown to the seller or agents, or more significant and costly to repair, than previously believed; they have every right to request credits toward those repairs, or that the repairs be made by the seller.
Because of the “as is” clause, the seller has the right to say that they will not give credits, or make repairs, and that the buyer may withdraw from the transaction if this is not acceptable to the buyer. However, the seller may now have new information on his property’s condition he did not have before, and this new information must be disclosed to the next prospective buyer.
The usual result of this situation, is that the buyer and seller agree to some credits, or some repairs, through further negotiation, and thereby change the agreement, in spite of the prior “as is” clause. Although in hot markets, with multiple offers, the buyer may have to accept the property “as is,” or cancel the transaction and look for another property.
Thursday, March 24, 2011
FreddieMac working Social Media to disseminate information to borrowers
Freddie Mac Turns to YouTube to Dispel Common Foreclosure Myths
Freddie Mac (OTC Bulletin Board: FMCC) is helping consumers separate foreclosure fact from fiction in a new video series launched today on its YouTube Channel (http://www.youtube.com/FreddieMac). Each 90- to 120-second video dispels one of five common myths that could prevent people from keeping their homes if they face foreclosure. It is based on content from the Freddie Mac Get the Facts on Homeownership education and outreach materials.
News Facts
Myth 1: If my house is foreclosed, I can never buy a house again -- the foreclosure will stay on my record forever.
Truth 1: Foreclosure can have a devastating effect on your finances and you personally, but you can recover. Use the time after foreclosure to prepare yourself for successful homeownership the second time around by creating a spending and savings plan and rebuilding your credit.
Myth 2: I should stop paying my mortgage so I can get assistance with my mortgage payments.
Truth 2: Stopping payment on your mortgage only hurts your situation and can expose you to foreclosure and credit difficulties that could require years to rebuild.
Myth 3: If I'm late on my monthly payments, I'll lose my house.
Truth 3: If you have a financial hardship and fall behind, it's possible to keep your house and get back on track if you contact your lender as soon as possible to discuss your options. You can also contact a HUD-approved housing counselor by calling the Homeowner's HOPE Hotline at 888-995-HOPE (4673).
Myth 4: I am getting many offers for help from a variety of people. They are probably all scams.
Truth 4: Scam artists often target homeowners who are struggling to meet their mortgage commitment or anxious to sell their home. It's important to always open and respond to communications from your lender, particularly if you've already missed a mortgage payment. In addition, if you are in a financial crisis or facing foreclosure, make sure you work with your lender or a HUD-approved counseling agency to avoid common scams.
Myth 5: My lender is not responding to my inquiries, so I should just give up and face foreclosure.
Truth 5: Whatever you do, don't walk away, and don't give up. It may take several attempts to reach your lender because their call volume can be very high.
Freddie Mac (OTC Bulletin Board: FMCC) is helping consumers separate foreclosure fact from fiction in a new video series launched today on its YouTube Channel (http://www.youtube.com/FreddieMac). Each 90- to 120-second video dispels one of five common myths that could prevent people from keeping their homes if they face foreclosure. It is based on content from the Freddie Mac Get the Facts on Homeownership education and outreach materials.
News Facts
Myth 1: If my house is foreclosed, I can never buy a house again -- the foreclosure will stay on my record forever.
Truth 1: Foreclosure can have a devastating effect on your finances and you personally, but you can recover. Use the time after foreclosure to prepare yourself for successful homeownership the second time around by creating a spending and savings plan and rebuilding your credit.
Myth 2: I should stop paying my mortgage so I can get assistance with my mortgage payments.
Truth 2: Stopping payment on your mortgage only hurts your situation and can expose you to foreclosure and credit difficulties that could require years to rebuild.
Myth 3: If I'm late on my monthly payments, I'll lose my house.
Truth 3: If you have a financial hardship and fall behind, it's possible to keep your house and get back on track if you contact your lender as soon as possible to discuss your options. You can also contact a HUD-approved housing counselor by calling the Homeowner's HOPE Hotline at 888-995-HOPE (4673).
Myth 4: I am getting many offers for help from a variety of people. They are probably all scams.
Truth 4: Scam artists often target homeowners who are struggling to meet their mortgage commitment or anxious to sell their home. It's important to always open and respond to communications from your lender, particularly if you've already missed a mortgage payment. In addition, if you are in a financial crisis or facing foreclosure, make sure you work with your lender or a HUD-approved counseling agency to avoid common scams.
Myth 5: My lender is not responding to my inquiries, so I should just give up and face foreclosure.
Truth 5: Whatever you do, don't walk away, and don't give up. It may take several attempts to reach your lender because their call volume can be very high.
Wednesday, March 16, 2011
Ladies, you don’t have to be a Jack to be a Jack of all trades.....
What Makes Us Tick…
If you're like many of us, the idea of taking on home improvement projects might seem beyond your realm. You may have convinced yourself that you don't have the skills, you're not physically able, or that home improvement is just too scary. Well, we're here to let you know that you can change your home on your own. You can take on any home improvement task, and you can turn the house you live in into a home you'll love.
Ladies, you don’t have to be a Jack to be a Jack of all trades. You can Be Jane.
And once you tackle home improvement, then life improvement and even world improvement are just around the corner.
That’s right. At Be Jane, we believe that when women gain the confidence to enhance their homes, they also become inspired to remodel their lives and from there impact the lives of those around them.
That’s why Be Jane is more than just the women’s home improvement community. We’re the women’s home power portal!
Once Upon a Time…
We envisioned an online neighborhood where women of all ages and DIY skill levels could find the inspiration, information and encouragement to change their homes. So we created a dynamic community for all women, be they beginners who have never picked up hammers, weekend do-it-herselfers, or professionals in the industry.
Be Jane offers an ever expanding range of home improvement articles, tips and tricks, videos, tutorials and how-to guides. We're here as a resource for you to turn to whether you're in the planning stage or knee-deep in plaster and having an "Ai yai yai, what have I done?!" moment (and trust us, we've been there).
What differentiates us from other DIY sites is our focus on home improvement from a woman's perspective. No, that doesn't mean that we're all about pink. It means that we not only show you the "how-to" that gets the project done in a way that's relatable and easy to follow, but we also focus on how that project will enhance your life—or, what we like to call the "why-to."
Building the Jane Community…
Be Jane continues to grow with your help. No matter how big or small you may think your project or experience is, know that your story—whether it's a spark of inspiration (like the faux finish you put on your bedroom walls), a relatable issue that begs to be told (such as your dealings with the rude tile guy), or that sense of empowerment you felt from doing it yourself—is worth telling. After all, there might be a Jane out there who just needs some words of encouragement to get through her project. Whatever you have to say, we want to hear from you!
Vision for the Future…
As you may have noticed, we've recently relaunched our new website with a new look and design, more DIY projects and community features, and novel inspirations for becoming empowered Janes in our homes, communities, and world. We’re expanding our reach to include a breadth of information, social networking tools, services and user generated content across multiple home channels, including Home Improvement, Home Decor, Home Buying, Home Building, Finance, Mommy Jane, and Going Green. We want to be the place where you plug in and get charged, fueled with ideas and encouragement to extend the full reach of your Jane power.
Be Jane is here to lead you to the next level of positive change and self expression, so get ready for some powerful motivation and mobilization. Remember: Do-It-Yourself doesn't mean you have to do it alone! BeJane.com is part of the Builder Homesite, Inc. family of home sites. ABOUT BUILDER HOMESITE, INC.
Builder Homesite, Inc. was founded with a mission to bring homebuilding industry leaders together to develop world-class technology solutions. Builder Homesite is a consortium of 35 of the nation's largest homebuilders, and its flagship product is NewHomeSource.com, a consumer website offering the Internet's most comprehensive information and selection of new homes available. For more information about Builder Homesite, visit BuilderHomesite.com. BeJane.com offers a full range of home improvement articles, tips/tricks, videos, and how-to guides.
reprinted from the website, I hope you find this useful -
Roger A. Sullivan (760) 610-3245 http://LQRealtor.com
If you're like many of us, the idea of taking on home improvement projects might seem beyond your realm. You may have convinced yourself that you don't have the skills, you're not physically able, or that home improvement is just too scary. Well, we're here to let you know that you can change your home on your own. You can take on any home improvement task, and you can turn the house you live in into a home you'll love.
Ladies, you don’t have to be a Jack to be a Jack of all trades. You can Be Jane.
And once you tackle home improvement, then life improvement and even world improvement are just around the corner.
That’s right. At Be Jane, we believe that when women gain the confidence to enhance their homes, they also become inspired to remodel their lives and from there impact the lives of those around them.
That’s why Be Jane is more than just the women’s home improvement community. We’re the women’s home power portal!
Once Upon a Time…
We envisioned an online neighborhood where women of all ages and DIY skill levels could find the inspiration, information and encouragement to change their homes. So we created a dynamic community for all women, be they beginners who have never picked up hammers, weekend do-it-herselfers, or professionals in the industry.
Be Jane offers an ever expanding range of home improvement articles, tips and tricks, videos, tutorials and how-to guides. We're here as a resource for you to turn to whether you're in the planning stage or knee-deep in plaster and having an "Ai yai yai, what have I done?!" moment (and trust us, we've been there).
What differentiates us from other DIY sites is our focus on home improvement from a woman's perspective. No, that doesn't mean that we're all about pink. It means that we not only show you the "how-to" that gets the project done in a way that's relatable and easy to follow, but we also focus on how that project will enhance your life—or, what we like to call the "why-to."
Building the Jane Community…
Be Jane continues to grow with your help. No matter how big or small you may think your project or experience is, know that your story—whether it's a spark of inspiration (like the faux finish you put on your bedroom walls), a relatable issue that begs to be told (such as your dealings with the rude tile guy), or that sense of empowerment you felt from doing it yourself—is worth telling. After all, there might be a Jane out there who just needs some words of encouragement to get through her project. Whatever you have to say, we want to hear from you!
Vision for the Future…
As you may have noticed, we've recently relaunched our new website with a new look and design, more DIY projects and community features, and novel inspirations for becoming empowered Janes in our homes, communities, and world. We’re expanding our reach to include a breadth of information, social networking tools, services and user generated content across multiple home channels, including Home Improvement, Home Decor, Home Buying, Home Building, Finance, Mommy Jane, and Going Green. We want to be the place where you plug in and get charged, fueled with ideas and encouragement to extend the full reach of your Jane power.
Be Jane is here to lead you to the next level of positive change and self expression, so get ready for some powerful motivation and mobilization. Remember: Do-It-Yourself doesn't mean you have to do it alone! BeJane.com is part of the Builder Homesite, Inc. family of home sites. ABOUT BUILDER HOMESITE, INC.
Builder Homesite, Inc. was founded with a mission to bring homebuilding industry leaders together to develop world-class technology solutions. Builder Homesite is a consortium of 35 of the nation's largest homebuilders, and its flagship product is NewHomeSource.com, a consumer website offering the Internet's most comprehensive information and selection of new homes available. For more information about Builder Homesite, visit BuilderHomesite.com. BeJane.com offers a full range of home improvement articles, tips/tricks, videos, and how-to guides.
reprinted from the website, I hope you find this useful -
Roger A. Sullivan (760) 610-3245 http://LQRealtor.com
Sunday, March 13, 2011
Listingbook - the people's champ for property searches in the desert
Listingbook is a new product available to Realtors. I happen to subscribe to it so that I am able to offer it to my clients and friends. Whether a Seller, Buyer or just interested in property trends, you can enter the site and request an account or receive an invitation from a subscribing Realtor. Account setup is real simple. Some Realtors will restrict account approval by requiring you to include your phone number when signing up - here is one that doesn't require that ... http://DesertListingBookFree.com
The property data is solely for available properties / active listings and is updated every 15-30 minutes so no bothering with properties that are already in contract or sold. Other than the Multiple Listing Service 'MLS' is has the most photos of any search site and includes: days on the market, price history, map reports, price reduction notifications, new listing alerts, virtual tours and property favorites folder (You can keep data on properties that interest you ... along with keeping multiple separate searches). With the MLS, you can't keep all the search data and results for future review.
Upon successfully opening you account, you will find that the sign-in scenario is not too cumbersome and I think you may find the results help you immensely. So, whether you are Selling, Buying, or curious about neighborhood activity (what your neighbor has listed their property for), this is the cream of the crop in property data websites...
more free listingbook domains: http://DesertListingbookRealtor.com, http://LaQuintaListingbook.com, http://IndioListingbook.com, http://IndianWellsListingbook.com, http://RanchoMirageListingbook.com, http://CathedralCityListingbook.com, http://DesertListingbookRealtor.com, http://ListingbookIndio.com, http://ListingbookLaQuinta.com, http://ListingbookIndianWells.com, http://ListingbookPalmDesert.com, http://ListingbookDesert.com, http://ListingbookRanchoMirage.com, http://ListingbookCathedralCity.com, http://ListingbookPalmSprings.com...so along with http://DesertListingbookFree.com... your future search efforts for Desert property should be much improved.
The property data is solely for available properties / active listings and is updated every 15-30 minutes so no bothering with properties that are already in contract or sold. Other than the Multiple Listing Service 'MLS' is has the most photos of any search site and includes: days on the market, price history, map reports, price reduction notifications, new listing alerts, virtual tours and property favorites folder (You can keep data on properties that interest you ... along with keeping multiple separate searches). With the MLS, you can't keep all the search data and results for future review.
Upon successfully opening you account, you will find that the sign-in scenario is not too cumbersome and I think you may find the results help you immensely. So, whether you are Selling, Buying, or curious about neighborhood activity (what your neighbor has listed their property for), this is the cream of the crop in property data websites...
more free listingbook domains: http://DesertListingbookRealtor.com, http://LaQuintaListingbook.com, http://IndioListingbook.com, http://IndianWellsListingbook.com, http://RanchoMirageListingbook.com, http://CathedralCityListingbook.com, http://DesertListingbookRealtor.com, http://ListingbookIndio.com, http://ListingbookLaQuinta.com, http://ListingbookIndianWells.com, http://ListingbookPalmDesert.com, http://ListingbookDesert.com, http://ListingbookRanchoMirage.com, http://ListingbookCathedralCity.com, http://ListingbookPalmSprings.com...so along with http://DesertListingbookFree.com... your future search efforts for Desert property should be much improved.
Wednesday, March 9, 2011
CALIFORNIA ASSOCIATION OF REALTORS® working for us all
Tomorrow morning the following letter will appear in major newspapers throughout the state...the Bakersfield Californian, Fresno Bee, Los Angeles Times, Mercury News, Sacramento Bee, San Diego Union-Tribune and San Francisco Chronicle.
March 10, 2011
An important message from the CALIFORNIA ASSOCIATION OF REALTORS®:
I write on behalf of the CALIFORNIA ASSOCIATION OF REALTORS®, whose 170,000 members continue to witness the devastating consequences the home foreclosure crisis is having on California’s families, neighborhoods, and communities on a daily basis.
The number of families affected by foreclosure is staggering. During the past three years, more than 640,000 Californians have lost their homes. With the number of homeowners who owe more than their home is worth hovering at 30 percent, experts predict there will be many more foreclosures in 2011 and 2012. Unless we take immediate, aggressive action to assist these homeowners, any meaningful recovery in the housing market and overall economy will continue to be delayed.
Tragically, only a fraction of those who face foreclosure will remain in their homes when all is said and done. Those whose incomes and financial circumstances meet strict guidelines may qualify for a loan modification that will reduce their monthly payment to more affordable levels. Yet the federal Home Affordable Modification Program (HAMP) is expected to prevent only 700,000 to 800,000 foreclosures nationwide before it expires at the end of 2012, and the program does little to help those homeowners who are unemployed or otherwise no longer able to meet their financial commitments. Their last hope is to sell their home, which often means convincing their lender or the investor who “owns” the loan (and, in many cases, the holder of a second mortgage lien and the mortgage insurer) to accept a “short sale.”
With a short sale, homeowners with a proven hardship negotiate an agreement to sell their home for less than the balance owed. Although not every homeowner or mortgage is eligible, those who are able to finalize a short sale avoid a foreclosure on their credit record and can move on with their lives. Last year, 20 percent of home sales in our state involved short sales.
Short sales can play an important role in our state’s economic recovery by accelerating the pace of home sales and reducing the inventory of bank-owned homes on the market. There are other benefits as well. Homebuyers who can qualify for a mortgage at today’s low interest rates also are able to purchase a home at below-market prices. Banks get a nonperforming asset off their books and avoid the headaches associated with disposing of assets they don’t want to own in the first place. Neighborhoods have fewer abandoned homes, and local businesses have more customers with money to spend.
Unfortunately, many homeowners are unable to successfully negotiate a short sale. According to a recent survey of 2,150 California REALTORS® who have assisted clients with a short sale, only three out of five transactions closed – even when there was an interested and qualified buyer.
What’s the problem? For one, no two mortgage agreements are the same, so it can be difficult to standardize short sale processes and procedures. Many homeowners have second mortgages, which further complicate matters. Then there’s the challenge of convincing multiple parties to take a financial loss or, in the case of loan servicers, to forego fees they otherwise might earn during the course of the foreclosure process. Poor and slow service by many banks and servicers has only exacerbated the problem. Horror stories abound from potential homebuyers and REALTORS® forced to wait 90 or more days for a response to a purchase offer or being required to fax short sale applications or other paperwork as many as 50 times. These delays discourage potential homebuyers from considering a short sale purchase and undermine the process for those who short sales are intended to benefit – the hundreds of thousands of families facing foreclosure.
Increasing the number of closed short sales by speeding up and streamlining the short sale process is one important way we can help California families avoid foreclosure and move our economy closer to recovery. That’s why the California Association of REALTORS® is taking steps to enable more families to arrange a short sale. Recently, we advocated for improvements to short sale guidelines established under the federal Home Affordable Foreclosure Alternative (HAFA) program. We’re meeting with major banks, U.S. Treasury officials, government-sponsored entities (including Fannie Mae and Freddie Mac), and others to urge them to standardize processes, comply with federal guidelines, improve communication with other stakeholders and increase staffing with the goal of eliminating service issues. We’ve also offered our members training in every aspect of the short sale process so they can assist their clients.
But we can’t do it alone. That’s why we’re focusing the spotlight on short sales and calling on regulators, elected officials, nonprofits, business organizations, companies, and individuals with a stake in California’s economic future to resolve this issue and others that get in the way of a recovery. It won’t be easy, and some compromises will be required. The important thing is that we need to act today. Our families and our communities can’t wait any longer.
Sincerely,
Beth L. Peerce
President
CALIFORNIA ASSOCIATION OF REALTORS®
March 10, 2011
An important message from the CALIFORNIA ASSOCIATION OF REALTORS®:
I write on behalf of the CALIFORNIA ASSOCIATION OF REALTORS®, whose 170,000 members continue to witness the devastating consequences the home foreclosure crisis is having on California’s families, neighborhoods, and communities on a daily basis.
The number of families affected by foreclosure is staggering. During the past three years, more than 640,000 Californians have lost their homes. With the number of homeowners who owe more than their home is worth hovering at 30 percent, experts predict there will be many more foreclosures in 2011 and 2012. Unless we take immediate, aggressive action to assist these homeowners, any meaningful recovery in the housing market and overall economy will continue to be delayed.
Tragically, only a fraction of those who face foreclosure will remain in their homes when all is said and done. Those whose incomes and financial circumstances meet strict guidelines may qualify for a loan modification that will reduce their monthly payment to more affordable levels. Yet the federal Home Affordable Modification Program (HAMP) is expected to prevent only 700,000 to 800,000 foreclosures nationwide before it expires at the end of 2012, and the program does little to help those homeowners who are unemployed or otherwise no longer able to meet their financial commitments. Their last hope is to sell their home, which often means convincing their lender or the investor who “owns” the loan (and, in many cases, the holder of a second mortgage lien and the mortgage insurer) to accept a “short sale.”
With a short sale, homeowners with a proven hardship negotiate an agreement to sell their home for less than the balance owed. Although not every homeowner or mortgage is eligible, those who are able to finalize a short sale avoid a foreclosure on their credit record and can move on with their lives. Last year, 20 percent of home sales in our state involved short sales.
Short sales can play an important role in our state’s economic recovery by accelerating the pace of home sales and reducing the inventory of bank-owned homes on the market. There are other benefits as well. Homebuyers who can qualify for a mortgage at today’s low interest rates also are able to purchase a home at below-market prices. Banks get a nonperforming asset off their books and avoid the headaches associated with disposing of assets they don’t want to own in the first place. Neighborhoods have fewer abandoned homes, and local businesses have more customers with money to spend.
Unfortunately, many homeowners are unable to successfully negotiate a short sale. According to a recent survey of 2,150 California REALTORS® who have assisted clients with a short sale, only three out of five transactions closed – even when there was an interested and qualified buyer.
What’s the problem? For one, no two mortgage agreements are the same, so it can be difficult to standardize short sale processes and procedures. Many homeowners have second mortgages, which further complicate matters. Then there’s the challenge of convincing multiple parties to take a financial loss or, in the case of loan servicers, to forego fees they otherwise might earn during the course of the foreclosure process. Poor and slow service by many banks and servicers has only exacerbated the problem. Horror stories abound from potential homebuyers and REALTORS® forced to wait 90 or more days for a response to a purchase offer or being required to fax short sale applications or other paperwork as many as 50 times. These delays discourage potential homebuyers from considering a short sale purchase and undermine the process for those who short sales are intended to benefit – the hundreds of thousands of families facing foreclosure.
Increasing the number of closed short sales by speeding up and streamlining the short sale process is one important way we can help California families avoid foreclosure and move our economy closer to recovery. That’s why the California Association of REALTORS® is taking steps to enable more families to arrange a short sale. Recently, we advocated for improvements to short sale guidelines established under the federal Home Affordable Foreclosure Alternative (HAFA) program. We’re meeting with major banks, U.S. Treasury officials, government-sponsored entities (including Fannie Mae and Freddie Mac), and others to urge them to standardize processes, comply with federal guidelines, improve communication with other stakeholders and increase staffing with the goal of eliminating service issues. We’ve also offered our members training in every aspect of the short sale process so they can assist their clients.
But we can’t do it alone. That’s why we’re focusing the spotlight on short sales and calling on regulators, elected officials, nonprofits, business organizations, companies, and individuals with a stake in California’s economic future to resolve this issue and others that get in the way of a recovery. It won’t be easy, and some compromises will be required. The important thing is that we need to act today. Our families and our communities can’t wait any longer.
Sincerely,
Beth L. Peerce
President
CALIFORNIA ASSOCIATION OF REALTORS®
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