If you are financially distressed in the state of California and can no longer afford your home and are pursuing a short sale or a deed in lieu of foreclosure, you may be eligible for financial help with your relocation to alternative housing. The funds come from the Transition Assistance Program (TAP), part of the Keep Your Home California Program.
The state of California is providing up to $5,000 in transition assistance to qualified homeowners who can no longer afford to stay in their homes. You must:
• Maintain your property until your house is sold or returned to the lender via a negotiated deed in lieu of foreclosure.
For qualified homeowners, these state funds may be used in addition to any other transition assistance that you may receive by participating in the Federal Home Affordable Foreclosure Alternatives (HAFA) program or in any other pre-offer short sale program.
To learn more about the Transition Assistance Program’s guidelines, and how you may qualify, please visit the website at http://keepyourhomecalifornia.org. Or call 1.888.954.5337 if you are a Bank of America customer.
Short sales have become a part of the normal fabric of real estate business. At a minimum, most people now understand the term “short sale” doesn’t mean the sale will be short, will take less time, or that the price the home will sell for will be much less than market value.
Surprisingly though, there is still a large segment of the population unaware of what may probably be three of the most important benefits to completing a short sale. With that being said, you too may be surprised to learn that, if you complete a short sale there may be:
1. No cost to you, the seller
That’s right. For the majority of sellers, to complete a short sale is totally free. The proceeds from the sale cover the costs associated with the sale, and your lender approves all fees. For example: title and escrow fees, state mandated items (NHD reports), broker fees for service (commissions), and most lenders even pay outstanding property tax liens!
You should never be asked to pay a fee to complete your short sale. If an agent asks you to pay a fee as a requirement to start or complete your short sale, find another agent.
2. Zero Tax Liability, Zero Deficiency Liability Tax Liability – In the past, when you completed a short sale, your lender would send you a 1099 and view the forgiven difference as taxable income for the year. This gets filed with your next tax return and, unless you have an exemption, you must pay taxes on the forgiven income. This would, of course, push most people into a new tax bracket requiring you to pay taxes on that forgiven difference.
Loan Amount Owed $300,000
-Short Sale Price $160,000 Difference $140,000
However, for owner occupied residences, the Debt Forgiveness Act allows tax liability protection on the difference up to $250,000 if you are single, and $500,000 if you are married. President Obama recently extended the act until December 31, 2013. So let’s apply this law to our example above:
Loan Amount Owed $300,000
-Short Sale Price $160,000 Difference $140,000 = FORGIVEN!!
Up to $250,000 (single); $500,000 (married)
In addition, there are numerous exemptions that apply which can enable you to avoid this tax even if it is not your primary residence.
Deficiency (In the state of California) – The California Legislature passed Senate Bill 931 adding Section 580e to the California Code of Civil Procedure and stating that the senior lien holder could not pursue a deficiency judgment after a short sale which they had previously approved. The law equally applies to purchase money, hard money and refinance – as long as there was no cash out.
They later passed Senate Bill 458, amending Section 580e and extending the protection of SB 931, by making it applicable to junior liens as well. In addition to not being able to get a deficiency judgment it provides that after a short sale, no deficiency shall be owed or collected and no deficiency judgment shall be requested or rendered provided the short sale closed escrow and the lender was paid the amount they agreed to accept.
The amended law further provides that the holder of a note shall not require the seller to pay any additional compensation, aside from the proceeds of the sale, in exchange for their consent to the short sale.
How’s that for protection? So, to recap – you get to complete a short sale at no cost to you, your debt and deficiency are also forgiven, and the lender cannot ask you to come in with any additional funds above the amount they agree to accept. What more could you ask for? How about cash back?
3. Cash Back to You
Lenders learned rather quickly the magnitude of the financial responsibilities which came with foreclosed properties; tax liens, outstanding utility bills, property damage, vandalism, etc – all at a very large price tag and not including their standard attorney fees. So not only did it make sense to pay the seller an incentive to remain in the home and keep the home in good condition until close of escrow, but it also helped the seller with moving expenses as well. This turned out to be a win-win situation for everyone. Thus, relocation assistance was born and adopted.
How much assistance you will receive and specific assistance guidelines will vary. For example, if you short sale under HAFA (Home Affordable Foreclosure Alternative), you could receive $3000. However, many lenders now have their own in-house incentive programs which offer relocation assistance anywhere from $3000 to as much as $30,000 or more.
So if you are facing foreclosure, contact Mathews & Co Realty Group with Century 21 Landmark Networ at (916) 678-1803 or me, Keisha Mathews, (team short sale specialist) via direct email at SacramentoShortSaleLady@gmail.com. I would be happy to meet with you to go over your options helping you avoid foreclosure, and explain how you could reap the many benefits as well.
The information contained above is not to be construed as legal or tax advice. Each individual’s personal situation may vary. We at Mathews & Co Realty Group are not tax professionals or attorneys. Please consult a real estate attorney or tax advisor to determine whether the information above is applicable to your individual situation.
Recently, well last year, I wrote about both the National Mortgage Settlement (In February 2012, 49 state attorneys general and the federal government announced a historic joint state-federal settlement with the country’s five largest mortgage servicers), and the Independent Foreclosure Review (Ten mortgage servicing companies subject to enforcement actions for deficient practices in mortgage loan servicing and foreclosure processing reached an agreement in principle with the Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board to pay more than $8.5 billion in cash payments and other assistance to help borrowers).
Today I received an e-newsletter from BPE Law Group which summarizes the most recent happenings with both lawsuits settlements. I thought it was very well put together and so I’m sharing it with you below. I highly recommend BPE Law Group (info at the end of this post) should you have any further questions regarding these legal matters, and how they might affect you.
If your loan was owned or serviced by any of the settling banks – BofA, Wells Fargo, Chase, Citi, or Ally – and your home was foreclosed upon between January 1, 2008 and December 31, 2011, you may be eligible to receive a cash payment as part of the settlement. A settlement administrator has been appointed to accept claims and to oversee the distribution of settlement payments.
Claim forms must be submitted by no later than January 18, 2013.
In addition, a separate Program had been lauched previously creating a Independent Foreclosure Review for those who may have been foreclosed between 2009-2010. However, the processing has been a nightmare. Last week, a Settlement was reached whereby the settling lenders agreed to pay $8.5 Billion to a fund and the Foreclosure Review was shut down. Within the next few weeks, a process will be set-up to submit claims. Watch your mail box for more. You can learn more at: http://www.federalreserve.gov/newsevents/press/bcreg/20130107a.htm
None of the above Settlement programs bars a foreclosed party from asserting separate damage claims against their lender, assuming they have the financial capacity to do so. A few Class Action lawsuits have been set up around the country although they, like individual lawsuits, appear to be bogged down in the Courts.
If you have questions concerning your rights and possible recovery against your lender, you may want to have a follow-up consultation with us.
This home loans crisis is destroying hopes and dreams and families across our nation. If you know anyone struggling with these problems, please do them a favor and pass this newsletter along to them. We have a flat fee $200 consultation that guides you in identifying the problems and risks and creates a strategy to deal with them. A similar program is being set-up for Commercial Property Owner Consultations.
Steve Beede, Founder and Managing Partner
BPE Law Group, Inc.
Main: 11140 Fair Oaks Blvd., Suite 300, Fair Oaks, CA 95628
Satellite: 9245 Laguna Springs Dr., Suite 200, Elk Grove, CA 95758
Don’t miss out on an opportunity to get your financial house in order.
In the news, there is talk of a housing recovery. Experts feel more optimistic about the state of housing industry in America. However, if you or someone you know is one of the millions of homeowners who is stuck with a home on which you owe more than the property is worth, the feeling of helplessness can be overwhelming and frustrating.
Many people don’t realize that just because they are in danger of losing their home to foreclosure doesn’t mean they have to wait around for it to happen. With help, they can take matters into their own hands.
CLAIM YOUR TICKET TO FREEDOM!
As a Certified Distressed Property Expert (CDPE), I make it my business to know all of the ins-and-outs of the options that are available for people who are in danger of losing their homes and help the challenges head-on.