Huntington Beach Short Sales: Will I Owe Income Tax After A Short Sale?
Published 02-07-11 by Tony Hunthausen
Huntington Beach CA – This is one of the first questions potential short sale sellers ask us. “I heard of something called “forgiveness of debt income and that it is taxable. How does that work?” they ask.
The following article is my personal opinion only. I recommend that you consult with a competent legal or tax professional before moving forward with a short sale.
In most cases the answer is that a short sale will usually not cause you to owe income tax.
Discover how other sellers successfully did a short sale to avoid foreclosure by clicking here.
It used to be that you owed income tax on any forgiveness of debt.
When a lender decides to forgive all or a portion of a borrower’s debt, the forgiven amount is considered as income for the borrower and is liable to be taxed.
Here are the following ways you can qualify to short sale a property without any tax liability.
Short Sale of a Primary Residence. The Mortgage Forgiveness Debt Relief Act of 2007 (and it’s extension in the 2008 Federal Bailout) now allows you to short sale a primary residence without any tax liability.
Today when a homeowner short sales a primary residence, they can file a simple form and the forgiven debt is no longer taxable.
The amount of forgiven mortgage debt allowed to be excluded from income tax is limited to $2 million per year.
Short Sale of a Non-Primary Residence: If the property you are selling is not a primary residence, then you may be eligible for tax relief if you are considered insolvent.
I don’t know the exact guidelines, but insolvent is usually considered when your total gross debts are more than your total gross assets. I’m sure a good tax professional can give you more information.
Click here to view the IRS’s website about the Mortgage Forgiveness Debt Relief Act and Debt Cancellation.
Click here to view the article on the IRS’s Website: Mortgage Workouts Now Tax-Free for Many Homeowners.
Thinking about a short sale? I can help you short sale your property and never pay the bank another penny. Send me an e-mail at Tony@HunthausenGroup.com. I will contact you for a free consultation.
When we talk, I will explain how the process works in detail and answer any questions you may have. Or, if you prefer, you can call me at 714-334-7808
Discover how other sellers successfully completed a short sale and request a free consultation by clicking here.
Thinking about a loan modification? Our Huntington Beach loan modification kit has the instructions you will need to get a loan modification approved with your bank. Click here to request a copy.
Thanks for reading this, Tony Hunthausen.
Tony is a Real Estate Broker Associate at Remax Select One. Huntington Beach Short Sales Realtor:
Phone: 714-334-7808. Tony@HunthausenGroup.com.
Helping One Homeowner At A Time
View My homes for sale at
www.SellingHuntingtonBeach.com.
Tony Hunthausen specializes in loan modification assistance and short sales in Huntington Beach California. Huntington Beach Loan Modification Help, Huntington Beach Short Sales. Huntington Beach Short Sale Realtor Short Sale Realtor. Huntington Beach CA Short Sales. Huntington Beach Realtor.
Copyright 2010 SFI Marketing Institute, LLC. All Rights Reserved. This is not intended as legal, technical, or tax advice. Please speak with a licensed professional before making any decision. Information is deemed reliable but not guaranteed as of the date of writing. The views expressed here are Tony Hunthausen’s personal views and do not reflect the views of Remax Select One.
This information on Huntington Beach Short Sales: Will I Owe Income Tax After A Short Sale? is provided as a courtesy to our viewers to help them make informed decisions.
Huntington Beach Short Sales: Loan Modifications can be a recipe for disaster
Published 01-28-11 by Tony Hunthausen
Huntington Beach CA – The Star Tribune, a newspaper in Minneapolis, recently ran a story about loan modifications. Here is an excerpt from the article:
“Many people who sought help under a federal program created to keep them from losing their homes are instead getting saddled with huge, unexpected bills.
Thousands now face a stark choice: Go deeper into debt, or foreclosure.
Lenders routinely approved short-term “trial” loan modifications that reduced payments for desperate borrowers under the umbrella of the Obama administration’s Home Affordable Modification Program. But lenders continued to count the mortgages as delinquent or in default.
Now instead of granting permanent modifications, lenders often are reinstating the original loan terms and demanding big back payments.
Carl Christensen, a Minneapolis real estate attorney, said he is getting 15 telephone calls a week from shocked borrowers.
“The banks put out their hand and say, ‘We’re going to help you,’ and then stab people right in the back,” Christensen said.
Patti, 51, and Scott Weddle, 57, of Harris, Minn., were ecstatic when J.P. Morgan Chase offered in November 2009 to cut their monthly mortgage payments by about 20 percent under a trial modification. Patti was out of work with a neck and back injury, and the Weddles were having difficulty making ends meet.
Nearly a year later, the Weddles were told that their application for a permanent modification was denied and that they would have to pay $24,228 to bring their mortgage current and avoid foreclosure.
The Weddles insist the demand came as a shock, because they had made all their payments on time under the trial modification. “We did everything that was asked of us, and it only pushed us deeper in the hole,” Patti Weddle said.
A growing number of critics contend the loan modification program, known within the industry as HAMP, may be doing more harm than good. Many homeowners are draining their savings and incurring new loans to make the temporary payments only to end up in foreclosure anyway when they can’t afford the large, lump-sum payments demanded at the end of the process.
When the Weddles got turned down for permanent relief under HAMP, they decided to stop making their monthly payments. They expect to receive foreclosure papers any day and most of their belongings are packed. “If we had $24,000 lying around, then we wouldn’t have sought help to begin with,” Patti Weddle said.
A spokesman for J.P. Morgan Chase said the risks were disclosed to the Weddles. Under the trial modification signed by the couple, J.P. Morgan reserved the right to terminate the plan at any point and begin foreclosure. The bank also reserved the right to determine the final amounts of unpaid interest and any other delinquent amounts.
“We work with customers to try to keep them in the home whenever possible,” said Thomas Kelly, a bank spokesman. “And the HAMP documents clearly explain the steps along the way.”
Paula Viehman, 60, recalls the day she was approved for a trial modification in June 2009. After a 30-minute conversation, a CitiMortgage representative agreed to cut her monthly payment by half to $929. “It was the answer to my prayers,” said Viehman, a state employee who lives in Minneapolis.
Fifteen months later, CitiMortgage sent two letters claiming she was in default on her mortgage and owed $13,569 in back payments, late fees and other charges. When Viehman called to complain, she learned that CitiMortgage had denied her application for permanent relief under HAMP, though the bank had never notified her.
Viehman refuses to make the lump-sum payment, largely on principle, because that would mean accepting Citi-Mortgage’s claim that she’s in default. Though she continues to make monthly mortgage payments, she suspects the bank will eventually foreclose on the house where she’s lived for 25 years.
“The longer I go through this, the madder I get,” she said. “I did everything they asked and more.”
Citigroup, CitiMortgage’s parent company, declined to comment about Viehman’s complaints because of privacy concerns. However, in a written statement, the bank said the original terms of a mortgage remain in place during a trial modification. Borrowers only receive relief from delinquent payments if they get permanent modifications.
Many borrowers say they never would have signed up for HAMP had they known the risks.
Lynda Devine, 49, of Faribault, said she had not even heard of HAMP until she called her mortgage servicer, Aurora Loan Services of Colorado, about a routine matter. While on hold, she found herself listening to a recorded message that said she might qualify for HAMP. She checked it out and learned it was a program sponsored by the Obama administration. “It all seemed very legit,” she said.
Aurora agreed to cut her monthly payment to $1,400 from $2,000 under a trial modification. But Devine, a children’s mental health social worker and waitress, soon found herself mired in a bureaucratic nightmare. As she sought permanent relief, Aurora kept asking for the same documents — including bank and tax statements. Devine estimates she has faxed documents to Aurora more than 60 times.
Nonetheless, she received notice in July that she was in default. Soon after, she got a letter from Aurora’s law firm saying she would have to come up with $13,496 or face foreclosure. Devine couldn’t stomach the idea of losing her 1920s-era farmhouse and her 35 acres, where she keeps three beloved horses.
Aurora did not return repeated calls seeking comment.
Devine borrowed against her truck and horse trailer to pay the $13,496, but she’s considering suing Aurora to get the money back.”
I think that what these banks are doing is very unfortunate. In my opinion, half the reason that loan mods aren’t approved is because the lenders are too lazy to process the files.
In fact, the article continues and tells us how the lenders are actually rewarded for not processing loan modifications. Here is what it says.
“Incentives favor foreclosure. It would seem to be in a mortgage company’s interest to modify a mortgage, because lenders often recover only a small fraction of a loan after a foreclosure. But only 12 percent of all delinquent mortgage borrowers are receiving permanent relief under HAMP.
Last month, a congressional panel predicted it would prevent just 700,000 to 800,000 foreclosures — far fewer than the Obama administration’s original goal of 3 million to 4 million.
Some lending experts argue that the root of the problem lies in the complicated way in which mortgages are bought and sold. Most end up with institutions or investment trusts that hire servicers to collect monthly payments.
Servicers, unlike lenders, don’t generally lose money on a foreclosure. In fact, servicers actually can collect more in fees on a foreclosure than from modifying a mortgage, according to a 2009 study by the National Consumer Law Center.”
I think the entire system is flawed. The only people that get relief are people that fight for it. If you feel like you have been turned down for a loan modification, then I would recommend that you protest in front of the lender’s local branch.
Nothing is going to change until people know about what is happening. Thinking about a short sale?
I can help you short sale your property and never pay the bank another penny. Send me an e-mail at Tony@HunthausenGroup.com. I will contact you for a free consultation.
When we talk, I will explain how the process works in detail and answer any questions you may have. Or, if you prefer, you can call me at 714-334-7808
Discover how other sellers successfully completed a short sale and request a free consultation by clicking here.
Thinking about a loan modification? Our Huntington Beach loan modification kit has the instructions you will need to get a loan modification approved with your bank. Click here to request a copy.
Thanks for reading this, Tony Hunthausen.
Tony is a Real Estate Broker Associate at Remax Select One. Huntington Beach Short Sales Realtor:
Phone: 714-334-7808. Tony@HunthausenGroup.com.
Helping One Homeowner At A Time
View My homes for sale at www.SellingHuntingtonBeach.com.
Tony Hunthausen specializes in loan modification assistance and short sales in Huntington Beach California. Huntington Beach Loan Modification Help, Huntington Beach Short Sales. Huntington Beach Short Sale Realtor , Short Sale Realtor. Huntington Beach CA Short Sales. Huntington Beach Realtor.
Copyright 2010 SFI Marketing Institute, LLC. All Rights Reserved. This is not intended as legal, technical, or tax advice. Please speak with a licensed professional before making any decision. Information is deemed reliable but not guaranteed as of the date of writing. The views expressed here are Tony Hunthausen’s personal views and do not reflect the views of Remax Select One.
This information on Huntington Beach Short Sales: Loan Modifications can be a recipe for disaster is provided as a courtesy to our viewers to help them make informed decisions.
Another tip to improve the odds of your short sale offer being approved
Published 01-28-11 by Tony Hunthausen
Huntington Beach CA – If you are selling your home, then ask the buyer to write a letter about why they want to purchase the home. If you are a buyer, then write that letter.
Discover how other sellers successfully did a short sale to avoid foreclosure by clicking here.
The listing agent will submit that letter along with the short sale paperwork. With a little luck that letter will help “grease the wheels” and cause the short sale to be approved faster.
Short Sale negotiators are human beings. They have emotions that can be touched by a good story.
These letters might sound like a joke, but they can make a huge difference. I’ve even seen home owners lose money on their sale because they liked a certain buyer over another one.
In that case, the seller sold their home for several thousand dollars less to a buyer that they liked. The other buyer had been rude and the seller didn’t like them.
If that made a difference when the seller was losing their own money, then think about the difference it will make to a short sale negotiator who isn’t losing their own money.
Put a good story in your letter. Here are a few examples.
You might say something like this: “We are a first time home buyer looking for our first home. We just want to move out of our cramped apartment and are looking forward to our first home where we can plant a garden.”
Or, maybe it would be like this: “We have looked for a while and finally found this home on Elm Street that we love. We are selling our current home so we can buy a house with a yard.
Our two boys, Tim and Julian, have been begging us for a swing set. We never had room in our old condo.
If you approve our short sale offer, then we will finally be able to give them the large, fenced backyard they’ve always wanted with a swing set.
We’ve already picked out the swing set plan and Tim and Julian are so excited about it. So, don’t approve the short sale offer for us, approve it for them.”
See how I’m pulling the negotiator’s heartstrings. Unless your short sale negotiator is absolutely heartless, it will make a difference for you. Thinking about a short sale?
I can help you short sale your property and never pay the bank another penny. Send me an e-mail at Tony@HunthausenGroup.com. I will contact you for a free consultation.
When we talk, I will explain how the process works in detail and answer any questions you may have. Or, if you prefer, you can call me at 714-334-7808
Discover how other sellers successfully completed a short sale and request a free consultation by clicking here.
Thinking about a loan modification? Our Huntington Beach loan modification kit has the instructions you will need to get a loan modification approved with your bank. Click here to request a copy.
Thanks for reading this, Tony Hunthausen.
Tony is a Real Estate Broker Associate at Remax Select One. Huntington Beach Short Sales Realtor:
Phone: 714-334-7808. Tony@HunthausenGroup.com.
Helping One Homeowner At A Time
View My homes for sale at www.SellingHuntingtonBeach.com.
Tony Hunthausen specializes in loan modification assistance and short sales in Huntington Beach California. Huntington Beach Loan Modification Help, Huntington Beach Short Sales. Huntington Beach Short Sale Realtor , Short Sale Realtor. Huntington Beach CA Short Sales. Huntington Beach Realtor.
Copyright 2010 SFI Marketing Institute, LLC. All Rights Reserved. This is not intended as legal, technical, or tax advice. Please speak with a licensed professional before making any decision. Information is deemed reliable but not guaranteed as of the date of writing. The views expressed here are Tony Hunthausen’s personal views and do not reflect the views of Remax Select One.
This information on Another tip to improve the odds of your short sale offer being approved is provided as a courtesy to our viewers to help them make informed decisions.
Huntington Beach Short Sales: Why Should I Short Sale?
Published 01-19-11 by Tony Hunthausen
Huntington Beach CA – We often get asked if a short sale is even worth the effort. “Why don’t I just let the bank have the property”, sellers tell us. “I don’t ever think I’ll be able to fix my credit to be able to buy another house.”
Discover how other sellers successfully did a short sale to avoid foreclosure by clicking here.
When you are having a tough time financially, it may seem like you will never get back on your feet. But, most people do get back on their feet.
They find another job and start making money again. Their credit will usually be back to normal in 2-3 years, sometimes even sooner depending on the extent of the financial difficulties..
Why not buy a new home at that time? If you short sale, then you will be eligible to do that. Fannie Mae will consider you for a new loan 2 years after a short sale.
You would have to meet all of their credit guidelines and other lending criteria. Most derogatory credit items such as late payments or collections won’t have as much of an impact when they are 2 years old.
In addition, there are many ways to get derogatory items removed from your credit. The other great option is an FHA loan. FHA allows you to buy a home with only 3.5% down.
Current FHA guidelines will loan to you 3 years after a short sale. Contrast that with the 5-7 year wait required if the home is foreclosed on by the lender.
That is the number one benefit of a short sale. You can get back on your feet and buy another home a lot faster than if the lender forecloses on your home. Thinking about a short sale?
I can help you short sale your property and never pay the bank another penny. Send me an e-mail at Tony@HunthausenGroup.com. I will contact you for a free consultation.
When we talk, I will explain how the process works in detail and answer any questions you may have. Or, if you prefer, you can call me at 714-334-7808
Discover how other sellers successfully completed a short sale and request a free consultation by clicking here.
Thinking about a loan modification? Our Huntington Beach loan modification kit has the instructions you will need to get a loan modification approved with your bank. Click here to request a copy.
Thanks for reading this, Tony Hunthausen.
Tony is a Real Estate Broker Associate at Remax Select One. Huntington Beach Short Sales Realtor:
Phone: 714-334-7808. Tony@HunthausenGroup.com.
Helping One Homeowner At A Time
View My homes for sale at
www.SellingHuntingtonBeach.com.
Tony Hunthausen specializes in loan modification assistance and short sales in Huntington Beach California. Huntington Beach Loan Modification Help, Huntington Beach Short Sales. Huntington Beach Short Sale Realtor , Short Sale Realtor. Huntington Beach CA Short Sales. Huntington Beach Realtor.
Copyright 2010 SFI Marketing Institute, LLC. All Rights Reserved. This is not intended as legal, technical, or tax advice. Please speak with a licensed professional before making any decision. Information is deemed reliable but not guaranteed as of the date of writing. The views expressed here are Tony Hunthausen’s personal views and do not reflect the views of Remax Select One.
This information on Huntington Beach Short Sales: Why Should I Short Sale? is provided as a courtesy to our viewers to help them make informed decisions.
