Anna May & Greg Jones, REALTORS

ISLIP, NY – FEBRUARY 09: A padlock hangs from a door of a foreclosed home on February 9, 2012 in Islip, New York. (Image credit: Getty Images via @daylife)

For homeowners with a home that’s worth less than the balance(s) owed, what does this mean to you? This means taking the chance of the debt forgiveness law being extended past the end of the year or getting off the fence and exploring your options for a short sale now.

After a foreclosure or a short sale, the former homeowner is not taxed on forgiven debt under federal and state laws that will expire at the end of this year.  In both cases, the lender likely ends up receiving less than the full amount of the outstanding balance.  If so, the amount the borrower is no longer responsible for paying to the lender is considered “cancellation of debt” income and, thus, income to the borrower that – prior to the adoption of the federal and state protections – was subject to income tax.  Those federal and state protections are scheduled to expire at the end of 2012.

Pride comes before a fall. We know of many people who have simply walked away from their homes that fall into foreclosure, perhaps because they are too proud to ask for help. Not only do borrowers ruin their credit unnecessarily with a foreclosure rather than pursuing a short sale, foreclosures are devastating to entire neighborhoods by dragging down property values of the homes around them. Do you know of someone in your neighborhood who needs help but is too proud to ask for it?

Short sales are a common part of the real estate landscape these days. The best thing we can do is to help get the word out about what homeowners’ options are so that they can make informed decisions…

Has anyone out there considered renting out an extra room in your home to help with the housing expenses? I’ve been surprised at all the folks we know who have made the decision to do so. The rationale behind renting out a room is often that the space is wasted otherwise and also, they’re helping out a friend who can’t afford a place of their own in this economy. All this in addition to the fact that it certainly helps with the monthly housing expenses.

The rules are much different renting out a room in your own residence versus renting out an investment property. Renting out an investment property comes with many rules and laws governing tenant’s rights. There are also numerous fair housing laws one must adhere to which can be avoided if renting out space in your own residence.

Homeowners looking to rent out space in their home may not fall under the same, strict guidelines of California Landlord Tenant Law and HUD guidelines. This is YOUR residence and YOUR space, after all. For more information, visit the California Department of Consumer Affairs website at: http://www.dca.ca.gov/publications/landlordbook/discrimination.shtml

We have three extra rooms in the house that are mostly unused, except for storing items that Greg still has not unpacked since he moved in a couple years ago. For us, renting out a room is a matter of privacy — we’d like to wear whatever we want (or not) and throw parties whenever we want without worrying about who else is in the house. Admittedly, however, it would be nice to have some extra dough coming in each month…

Laws vary from state to state too, so check your local rules to make sure you’re on the safe side of renting out your space…

CLICK HERE to learn more about a Historic Neighborhood Designation being considered for the Prospect Hill neighborhood.

CLICK HERE to read an article featuring Prospect Hill!

(Stay tuned for more details and photos this week…)

Capital Building (Photo credit: Wikipedia)

Working a lot causes our brains to freeze or pause in the middle of important tasks. How about a couple who works together? Is it MORE work to run a business with your spouse? We’re in the midst of juggling our client base with a lot of other activity as well, all of which make us better and sharper at our profession in the real estate industry.  

We are leaders in our Women’s Council of REALTORS Tri-Cities Chapter and as President and President-Elect, we have the responsibility of traveling to Sacramento, California and Washington DC this year. The goal is to promote our Chapter to other Chapters nationwide for referrals — our members will ultimately benefit from how well we’re able to effectively market ourselves and our chapter at the conferences.

We hear all this talk about how important it is for homeowners to stay current on their mortgages whilst in the middle of a short sale transaction. There has been talk about how after homeowners sell their homes for less than the balance owed, they’ll be eligible for financing a purchase again, immediately, in some cases.

However, as short sale agents, our seller clients are often turned down for short sales because “they do not qualify as having a financial hardship”.

Wait a minute. Isn’t the purpose of a short sale to AVOID foreclosure? As responsible homeowners, they foresee that they won’t be able to afford their mortgages for much longer, which is why they put their short sale home on the market in the first place! Inevitably, these seller clients are pushed into becoming delinquent on their mortgages by short sale lenders who turn down their short sales initially after insisting these homeowners had no financial hardship.

Although we’d never advise a homeowner to stop making payments on their mortgages, we can cite our experience in dealing with short sale lenders. Our experience has indicated to us time and time again that unless a borrower stops paying, the short sale lender will pay them little mind. The way I see it, as long as a lender is getting their money every month, they have no incentive to agree to a short sale.

If a seller decides to stop paying their mortgage, we let them get that bit of advice from their accountant or attorney, NEVER from us. In many cases, a lender will come right out and tell a borrower that unless they’re delinquent on their mortgage, they won’t be considered for a short sale.

Here’s a kicker:

Do you really think that Bank of America or Chase holds your loan? In many cases, Bank of America or Chase are just the entities “servicing” the loan for an investor. The “investor” could be anybody — a conglomerate out of China or Germany or a  trust where many generations of a family’s money is invested. The “investors” are the ones who make the rules about whom to approve for a short sale and whom to turn down. They don’t give a hoot about who you are or what a great person you are – - they are NUMBERS-DRIVEN only. All they care about is the money. (Well, you would too if you were them, yes?)

Smaller, local lenders are the best to work with in short sale transactions. Lenders such as Fremont Bank and Bank of the West are a couple of my favorites. They’re faster, more responsive and more sensitive to the borrowers’ plight. Also, the representatives of these smaller local banks have a higher likelihood of having to look their customers in the eye.

If you need assistance with your mortgage, there are several options available which may help. CLICK HERE for more info. Debt forgiveness protections expire this year so it’s a good idea to at least explore your options now…

“If you’re a California homeowner struggling to make your mortgage payments…” starts the recording when I called “Keep Your Home California” today at (888) 954-5337.

What does one consider to be a struggle? Lower income than when the home was purchased?

Check!

Savings being dipped into to pay the bills?

Check!

Behind on mortgage payments?

(crickets…)

A while back I blogged about making myself a test case for a loan modification. I was turned down twice! I’ve never been late on mortgage payments and all the bills have been paid on time. Now that my husband is in charge of all the bills, they’re STILL paid on time every month.

So why don’t the lenders want to assist? It’s because they’re still getting their money out of us every month. The loan is at 6.375% interest. Pretty darn good return on their money, eh?

What if we stop paying the mortgage? THEN they’ll pay attention! I don’t qualify for this federally funded Keep Your Home California program. Here’s why:

• I’m not collecting unemployment benefits. (Here I’m using “I” vs. “we” because the hubby is not on the loan. We got married only a year and a half ago. He often rolls his eyes about the possibilitly of getting kicked out by my family should I kick the bucket.)
• We’re current on mortgage payments.
• We can afford the mortgage payments (for now).
• We can afford to stay in the home.

Where’s the love? Must we exhaust all our resources before we’re offered relief? (sigh)

We just signed up three new sets of Buyer Clients who seek the following types of properties:

1. Up to $650,000 in a downtown neighborhood near shops, cafes, etc. The home would have “funky” character and preferably with views and LOTS of privacy. Fixer okay if the home has enough character overall.
2. Up to $260,000 with 3+ bedrooms, 2+ bathrooms and at least 1400 square feet. Must be in good condition due to FHA financing.
3. A “Crash Pad” for an aviator and a doctor, up to $300,000. Prefer a home in the hills with a view with easy access to the bridge. No “cat” smell, please!