Before you consider a short sale, and before you let your house foreclose… have you exhausted all attempts to save your home?  First, have you called your lender?  Many lenders have programs to help homeowners.  Sometimes a simple interest rate adjustment may help, sometimes a “short refinance” can be the solution.  But whatever may help you, do you know there are FREE HUD approved housing counseling agenies to help?

From the www.HUD.gov website, and to get more resources around the Bay Area and California visit their site: HUD COUNSELING RESOURCES, PREDATORY LENDING, DEFAULT COUNSELING

. . . on the decision to foreclose or short sale that is.  You must seek counsel of an experienced real estate professional, a qualified tax professional and/or an attorney before making any decisions as to whether to foreclose or attempt a short sale.  Both can have pros, cons, consequences and benefits.  Believe it or not, sometimes foreclosure is the right answer.  Often a short sale is the best solution as it enables you to negotiate up front with the lender for any future recourse.

1. Logistics - there are distinct differences as to how your occupancy of your home will be handled.  In a short sale, you will have to move when the home is sold.  In a foreclosure you may be able to stay months before the sheriff comes knocking on your door during the final steps of an eviction.  Do you know when you’ll have to move?  What is your strategy to secure housing if your credit will be destroyed?
2. Paperwork - in a foreclosure, folks just walk away.  In a short sale, there is a lot of paperwork involved.  Do you know what you need to to assemble in order to ask a lender to accept a short sale?
3. Hardship - did you know that there are many reasons people are in the situations they’re in now with their mortgages?  Does it qualify YOU for a short sale?
4. Scams - did you know that scammers are good at what they do?  Did you know that smart people are signing over the deeds to their homes without realizing it does not relieve them from the obligations they have with the bank?
5. Assets - do you own other assets besides the home you’re in trouble with? Is there a way to protect your other assets (other homes, boats, cars, etc) in either a foreclosure or a short sale?
6. Retirement – most homeowners also have money in their retirement accounts.  Can you still do a short sale with monies in retirement accounts?
7. Privacy – did you know that once a Notice of Default is filed, it is public record? Did you know the Notices of Trustee sales are public notices too?  How can you avoid it getting to that point and maintain privacy in your financial matters?
8. Taxes – did you know that just walking away (foreclosure) may not alleviate your tax liability? Did you know that only some homeowners will feel the effects of the Mortgage Debt Relief Act of 2007?  Can you qualify for Federal tax relief? What about the State?
9. Recourse – did you know that only your purchase money loan(s) is considered a “non-recourse” loan in California? Did you know a “recourse” loan means that the lender can file for a judgement against you if you do not pay your obligation?  Will you be protected against recourse and monetary judgements if you foreclose, or do a short sale?  Are your loans recourse or non-recourse?  Is there a reason to let one of your loans foreclose (i.e. your second) and not the other? (YES there is!)
10. Fraud – did you do a “N-I-N-J-A” loan (No Income, No Job, No Assets), or an all stated income loan with little/no documentation?  Did you fib? At all? Did you bolster your income or assets to get the house? Did you know that is fraud?  And that there is a window of opportunity for the bank to go after you whether you foreclose or short sale if they suspect fraud?  Are you protecting yourself?  What is YOUR best course of action?  

Oh oops, one more:

11.  Bankruptcy – sometimes, for some people, bankruptcy is a solution.  Have you talked to an attorney about the benefits and consequences of filing for Bankruptcy protection?

Realize that for all of these top ten eleven reasons above there may be ten others SPECIFIC to your situation.  NEVER is ignoring the problem the right answer.  The consequences of either a short sale or foreclosure can be significant and can haunt you for years. 

If you need the answers to these, or other questions, call the professional short sale team of Catherine Myers and Terry Osburn of Alain Pinel Realtors in Walnut Creek.  Call 925-683-2125 or 925-381-9944. Or CONTACT US by navigating to our contact page on our site here (see above).

Serving Contra Costa County, and some areas of Alameda and Solano County. 

(Walnut Creek, Danville, San Ramon, Alamo, Lafayette, Orinda, Moraga, Pleasant Hill, Martinez, Concord, Clayton, Bay Point, Pittsburg, Antioch, Oakley, Brentwood, Benicia, Vallejo, Dublin, Pleasanton, Livermore)

As you know, if you’ve been reading this blog, or simply paying attention to our local housing market. Contra Costa, Alameda and Solano counties in the Bay Area are among the many counties in California experiencing record numbers of foreclosures, short sales and property owners in distress.  One hiccup though for many homeowner’s financial future, is to have a short sale accepted, and they are now relieved of their obligation to repay the bank the balance of their loan – but did you know that whatever debt the bank ”forgave” can now be taxed by the IRS as income?  Is that crazy?  If you couldn’t afford to continue your mortgage payments, what makes the IRS think you can now pay taxes on amount that sometimes exceeds your annual income?  For most, you simply can’t. 

The Mortgage Foregiveness Debt Relief Act of 2007 (H.R. 3648) would eliminate tax on debt forgiveness.  This Act has passed the Ways and Means committee and is awaiting Senate Approval.  The hope is that it will pass the Senate and sale smoothly over the President’s desk with a seal of approval.  This will be retroactive and will help anyone who has had a purchase money debt forgiven during 2007.  Stay tuned here for news as we follow the (hopeful) passage of this very important tax relief legislation.

Press Release from Ways and Means Committee:
http://waysandmeans.house.gov/news.asp?formmode=release&id=564

Summary of H.R. 3648 Mortgage Forgiveness Debt Relief Legislation:
http://waysandmeans.house.gov/media/pdf/110/Markup%20Summary4.pdf

You can follow the progress of this Debt Relief Act here:
http://www.govtrack.us/congress/bill.xpd?bill=h110-3648

Remember, we are not attorneys or tax specialists. Seek counsel from your attorney, CPA or tax specialist to advise on your specific situation.

For more information or information about selling your home, short sales, buying foreclosures or REO’s, contact:

Catherine Myers
www.DiabloValley.net

Terry Osburn
www.TerryOsburn.com

Specializing in Contra Costa County: Walnut Creek, Concord, Clayton, Pleasant Hill, Martinez, Lafayette, Alamo, Danville, Antioch, Bay Point, Pittsburg, Brentwood, Oakley.