Archive for the 'Short Sales/Foreclosure' Category
Comments Off on Washington Extends Duplex Debt Forgiveness Break
Just before the holidays, there was some good news for distressed duplex owners that got little fanfare.
President Obama signed a bill called the Tax Increase Prevention Act of 2014, which retroactively extended 55 tax provisions that had expired at the end of 2013.
Perhaps the most important provision was the one that provides distressed duplex owners with tax relief on forgiven mortgage debt. The tax provisions are retroactively extended for one year, and will be effective on income tax returns filed for 2014.
Essentially, this is an extension of the Mortgage Forgiveness Debt Relief Act of 2007. This means that property owners who either sold their homes as short sales or in other distressed scenarios may not have to pay taxes on the amount of debt that was forgiven.
The new bill also allows homeowners to count qualified mortgage insurance premiums as interest toward the mortgage interest deduction on their tax bill. In light of the increased rates for many of these premiums, that should help many duplex owners ease some of the sting.
There is no word yet as to whether Congress and the president will extend the act to include short sales in 2015. At some point, the economy will have recovered enough that it likely won’t be deemed necessary.
So if you’re a duplex owner who’s still either upside down on your mortgage or behind on your payments, give me a call. Making a move to resolve the situation now may not only relieve your stress, but reduce your tax burden too.
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According to the most recent report from Black Knight Financial Services’, only one in ten Americans is currently under water with their properties. This is down from one in three in 2010.
That means more people actually have equity in both their homes and investment properties.
The company, which analyzes data for approximately 40 million loans, also noted 55 percent of loans in foreclosure are delinquent by more than two years.
On average, loans are in foreclosure 966 days.
Of all the loans in the U.S., only 5.37 percent are delinquent. This is the lowest number since October, 2007.
In all, the total inventory of foreclosures is down 36.69 percent since this time last year.
For duplex buyers, this is bad news. Fewer foreclosures will mean traditional sellers have fewer discounted properties to compete with, which should result in higher prices.
In other words, if you’re thinking of buying, you’d better act now.
Comments Off on Duplex Foreclosures Taxable: For Now
As the duplex foreclosure crisis wears on, one of the most important things we often forget is traditionally, the forgiveness of mortgage debt through a short sale or foreclosure is a taxable event.
The Mortgage Debt Relief Act of 2007 made forgiven mortgage debt tax-exempt. In order to qualify, the debt had to be on a principal residence, and the amount owed could not exceed $2 million.
On December 31, 2013, this tax exemption expired.
And to date, no extension has been passed.
On Tuesday, Congressmen Bill Foster (D-Illinois) introduced the Homeonwer’s Debt Relief Extension Act, which would extend the exemption for two more years.
To offset the extension, the bill calls for the repeal of a tax break for oil and gas companies.
Keep an eye on the bill, More importantly, if you’re facing losing your duplex or home to foreclosure, or the necessity of a short sale, be sure to consult your tax professional first so you’re fully informed of any tax consequences.
Comments Off on Mortgage Delinquencies Lowest in Five Years
According to a report from the real estate data company CoreLogic, the rate of serious mortgage delinquency in the U.S. was at its lowest level in October since November, 2008.
There were 48,000 foreclosures completed nationally in October. This represents a 30 percent drop from the 68,000 completed foreclosures during the same month in 2012.
To put this in perspective, there were “just” 879,000 homes in the U.S. in October. Last year, there were 1.3 million properties in some stage of foreclosure.
These declines are great news for duplex owners who have been longing to sell, but found themselves underwater. As the volume of distressed properties in the marketplace declines, and in the event interest rates remain low, we should see continued price gains.
However, it’s important to remember prior to the housing crisis, the average number of completed foreclosures per month was around 21,000; less than half the current rate.
In other words, while things are better, we’re far from done.
Comments Off on Duplex Foreclosures Make Halloween Comeback
The duplex market is like a horror movie.
After all, judging by all of the good news the media has featured about a recovering real estate market, you’d think the bad guy is dead, and we can all go on and celebrate.
Just like the villain who appears dead but really isn’t, the foreclosure crisis isn’t entirely over.
Last week, for example, Lender Processing Services, which is the database for approximately 70 percent of the mortgage market, announced there are still 4,594,000 mortgages in the U.S. going unpaid in the U.S.
Of these, 3,266,000 are 30 days or more past due but not yet in foreclosure.
While this sounds horrific, it’s down 32.18 percent from last September’s 5,640,000 unpaid mortgages. In all, the foreclosure rate was 12.63 percent lower than last September’s rate.
Florida, Mississippi, New Jersey, New York and Maine lead the way with the most non-current loans. North Dakota, South Dakota, Alaska, Montana and Wyoming had the lowest percentage of non-performing loans.
Foreclosures certainly aren’t the duplex market monster they once were, but we’re a long way from them truly being dead.
Comments Off on Duplex Mortgage Delinquencies At 5-Year Low
There’s good news for prospective duplex and single family home owners this week as Equifax reported the total balance for seriously delinquent mortgages is at a five year low.
In June, the number of loans either more than 90 days past due or in foreclosure was down 27 percent from last year, to $325 billion. Most of these loans are of an older vintage, as just 7 percent of the current delinquencies were originated in 2010 or after.
Of course, if there are fewer delinquent mortgages, there are subsequently fewer foreclosures. Therefore, it isn’t surprising that the number of loans that moved through the foreclosure process to become bank-owned was down 19 percent as well, to $13.5 billion. This is the lowest level since June, 2007.
What this means for most property owners is a decreasing likelihood of having equity in their duplexes should they decide to refinance or sell.
Comments Off on Completed Duplex Foreclosures Lowest Since 2007
According to a report issued Friday by CoreLogic, completed home and duplex levels are now at their lowest level since 2007.
In fact, in February the 54,000 properties lost to foreclosure were also down 7 percent from January, and a whopping 19 percent from February 2012.
February marked the 16th straight month that we’ve seen a decline in foreclosure inventory. At this time last year, there were 1.5 million homes and duplexes of foreclosure inventory. This year, that number is down to 1.2 million.
However, it’s important to note that while this news is encouraging, it’s a long way from great. Prior to the financial crisis, in a normal month, there were an average of 21,000 foreclosures. So today’s number of 54,000 is still more than twice the size it was in the past.
What this means for duplex buyers is there is still some time to get a good value on an investment property.
And what this means for duplex sellers is while prices are recovering, it might be a while yet before we see prices comparable to 2005 and 2006 levels.
Little inventory, however, has nonetheless made it a great time to sell.
Comments Off on Distressed Duplex Owners Wishes Granted
Every now and then, Minneapolis duplex owners facing foreclosure get a wish granted.
Like Cinderella, they’re always skeptical at best.
What’s the miracle? For some unknown reason, their lender decided to bid less than the amount of their loan at the Sheriff’s Sale and that new number is now the amount they owe on their first mortgage.
In other words, if they can come up with that amount during the six months the state of Minnesota allows as a Redemption Period, they can either keep their property or sell it for a profit.
Before you get too excited, know that it doesn’t happen very often. I watch this pretty closely and while I haven’t kept count, my guess it’s maybe one out of every 30 duplexes that go to auction at the Sheriff’s office.
For the duplex owners who hear me out, this can completely turn everything around. One owner I helped pocketed $85,000, another $45,oo0.
It sounds too good to be true. And most Realtors don’t know about it. I love that. It means I get to play Fairy Godmother.
Comments Off on FHA Rejects Duplex Short Sales
If you’re behind on your duplex payments, and are considering a short sale, you may need to act fast.
Specifically, local attorneys who specialize in negotiating short sales have begun to see a disturbing trend with FHA and VA mortgages. Simply put, if the sheriff’s sale has occurred, most banks are refusing to negotiate a short sale.
In Minnesota, the sheriff’s sale is usually scheduled when a duplex owner is six months behind in mortgage payments. While most short sales and foreclosures in recent years have in fact taken much longer than this, it is best to prepare as if the lender will work within the time frames allowed by law.
The first thing a distressed duplex owner must do is find out whether or not the sheriff’s sale has occured. The bank is required to inform the property owner of the first scheduled sale. If the sale is postponed, the lender is not required to formally notify the seller.
If the sale has happened, it’s important to contact the lender to obtain confirmation that they will still consider a short sale.
If the sale hasn’t occurred, duplex sellers should contact their lender to begin the short sale pre-approval process. If the seller is eligible, the lender will order an appraisal and issue an “approval to participate” document.
This letter will state what the approved sales price is. It’s important to note, however, that it will not stop the short sale process.
If there isn’t time to complete the FHA pre-approval process before the sheriff’s sale, or the seller has a VA loan, the duplex owner may be able to get the sheriff’s sale postponed five months, provided they live in the property. However, obtaining this extension must be done at least 15 days before the sale.
If you’re a duplex seller facing foreclosure, it is probably best to get seasoned professionals on your side, who can help guide you to resources and through the difficult months ahead.
Please don’t hesitate to contact me for solutions.
Comments Off on Distressed Duplex Owners Face Fiscal Cliff
In the coming weeks, amidst the media noise about the “fiscal cliff”, duplex owners who are either struggling to pay their mortgage or behind on payments need to listen closely for one piece of news: has the Mortgage Deft Forgiveness Debt Relief Act been extended another year?
The act, which was passed in 2007, prevented distressed duplex owners who occupied their property from paying some taxes on the amount of debt forgiven on a short sale, loan modification or principal reduction. It is set to expire at the end of this year.
Without an extension, these struggling duplex owners may be required to pay income tax on the amount of their loan that was forgiven.
It’s important to note that duplex investors who never occupied their properties, may or may not face tax consequences for debt forvieness. Each case is unique, and largely contingent upon how taxes were filed during ownership of the investment property. Individual investors should consult their tax professional for guidance.
The non-profit group the Center for Responsible Lending, and the Financial Services Roundtable, which includes representatives from the country’s biggest banks are working together to ask Congress to extend the Mortgage Debt Relief Act.
Housing is starting to recover. However, both groups are concerned this fragile rebound will suffer without an extension.
You can help. Write or call your Congressperson and Senators to ask them to act.