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Real Estate & Finance News That Affects Your Home                                                     September 2008 - Page 2

SHORT SALES Continued New Law Waives Income Tax On Forgiven Debt Until recently, mortgage debt forgiven by a lender was considered to be part of the borrower's taxable income, meaning the taxpayer would have to pay income taxes on the forgiven amount. That rule has changed: On December 20, 2007 President Bush signed into law the Mortgage Forgiveness Debt Relief Act of 2007, which excludes forgiven mortgage debt from taxation. The exclusion only applies to a taxpayer's principal residence and to indebtedness forgiven between January 1, 2007 and January 1, 2010. The excludable amount of debt is limited to $2 million. Other restrictions apply; consult a knowledgeable tax professional for all the details. Short-Sale Process Requires Professional Help Conducting a short sale is not a simple process, as it requires negotiations with the lender (often more than one lender is involved) as well as the buyer, who may not understand the unique intricacies of the process. That's where our expertise becomes essential. We understand the complexities and critical timing of short-sale procedures and can guide you--whether you want to sell your property as a short sale or you're interested in purchasing a short sale. Please feel free to give us a call for more information. We'll be happy to discuss all your options! Interested In Purchasing A Bank Owned Property? One of our responsibilities is matching sellers with buyers. Be sure to call us if you're looking to buy a bank owned home! LOAN LINGO With so much media attention on the housing market and mortgage industry recently, you may be hearing and reading some unfamiliar terms. Here's a glossary to help: Deed in lieu -- when a lender agrees to accept a property's deed (rather than foreclose on the property) to settle the borrower's obligation. Jingle mail -- when a borrower mails the home's keys to the lender to transfer control of the "collateral" behind the loan. Liar loans -- no-document, stated-income loans. Lis pendens -- Latin for "legal action pending," the formal notice that begins the foreclosure process. LTV -- Loan To Value percentage, e.g., 80% LTV on a $100,000 sales price is an $80,000 loan. NOD -- a Notice Of Default filed in court by a lender to begin foreclosure on a defaulting borrower. Redemption period -- The period during which the homeowner can reclaim his or her property after it sells at auction (only in some states). REO -- Real Estate Owned by a lender (after foreclosure) or a corporation (that buys transferring employees' homes). Repo -- a lender-repossessed property. Repo bus -- a bus tour organized by a real estate broker for interested buyers to visit foreclosed properties. Step sale -- a property sold at auction "on the courthouse steps." Short sale -- when a lender agrees to accept as full payment the proceeds of a property sale that are less than the balance owed on the mortgage. Upfront equity -- down payment. Upside down (also, "under water) -- when the loan balance is greater than the home's value.

 

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