Category: Orlando Foreclosures

Great News for Orlando Short Sales!

Posted on by Jenny Zamora

Mortgage Forgiveness Debt Relief Act of 2007 has been Extended

The mortgage debt relief act has officially been extended for another year. This is a law that exempts those who are in a foreclosure or short sale situation [primary residences only] from having to pay federal income taxes on the deficiency balance of their mortgage after the transaction is complete.

This law was passed back in 2007 right when the Florida real estate market crashed. The main purpose of the law was to allow people to complete the short sale on their home and not be taxed on the deficiency as if it were income. This is a huge incentive for homeowners that are upside down to short sale their home.

I know many people have been holding their breath as the ending of the Mortgage Forgiveness Debt Relief Act of 2007 would have signaled a harmful blow to the real estate industry. Well now they can breath a sigh of relief, the Mortgage Forgiveness Debt Relief Act is now set to expire on January 1, 2014 and only applies to only a primary residence. Most homeowners that were on the fence about doing a short sale on their home would have probably chosen to file for bankruptcy as opposed to working something out with the lender.

Here’s an example of exactly what this means; Let’s say that a struggling homeowner sells their home for $100,000 and they owe $175,000, they are not taxed on the $75,000 that the bank had to write off. This is great news for homeowners that are struggling. Prior to the Act, homeowners were taxed on the forgiven debt, known as debt discharge income. If this act wasn’t in place, even people that have lost their homes to foreclosure would be taxed on the deficiency balance between what the house owed and what it sold for.Unlike any other liens or judgments, I.R.S. liens will follow you for the rest of your life and if you try to avoid paying them off, the I.R.S. will garnish your wages.

 Orlando Realtors are Thrilled that “the Act” was extended

For realtors like myself that specialize in doing Orlando short sales, this great news. It means that short sales are still going to be the best way to go for struggling homeowners who can no longer afford to pay their mortgage. I would imagine that BK attorneys were hoping that the act wouldn’t be extended so that more homeowners would have opted for filing bankruptcy as opposed to short sale. at the end of the day, it’s a win win for all parties involved in the transaction.

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Orlando Homeowners Rush to Short Sale Their Homes before the Mortgage Forgiveness Debt Relief Act of 2007 Expires

Posted on by Jenny Zamora

Orlando homeowners are in a panic to sell their homes before the end of the year when the Mortgage Tax Debt Relief Act of 2007 is set to expire.

There’s a chance that the Act could be extended but, if Congress fails to extend the Mortgage Forgiveness Debt Relief Act of 2007 before the end of the year, homeowners will have to start paying income taxes on the portion of their mortgage that is currently being forgiven in a foreclosure, short sale or principal reduction.

That would mean that a homeowner who sells a $150,000 home for $100,000 in a foreclosure, could be taxed by the IRS on the remaining $50,000. If you’re in the 25 per cent tax bracket that would mean paying $12,500 in taxes and similar taxes would apply to forgiven amounts in short sales and principal reductions.

Consequently, Orlando homeowners are rushing to short sell their homes before the end of the year. More than 50,000 homeowners face foreclosure each month so, should the tax breaks expire, a large number of mortgage borrowers would be affected.

Over the past three years, the number of short sales has tripled to about a half million per year. Under the terms of the foreclosure abuse settlement, about one million borrowers may have their mortgage debt lowered through principal reductions over the next couple of years. The cost of the settlement would be $25 billion.

It is speculated that, now that the election is over, there will be very little legislation moving forward before the end of the year. Plus, the cost of a one-year extension is estimated at $1.3 billion, which makes it a huge point of contention.

Others feel that Congress will act before the end of the year because both houses agree that the Mortgage Tax Debt Relief Act needs to be renewed and it’s only a matter of how quickly the process will move forward.

Some Orlando homeowners may have nothing to worry about, as not all borrowers with forgiven mortgage debt will have to pay extra taxes. Even if the Mortgage Forgiveness Debt Relief Act expires on December 31st, special circumstances could exempt them. Specifically, no taxes would be owed if a debt is discharged in a bankruptcy or in the case of a homeowner being insolvent, that is, they had more debt than assets at the time the debt was forgiven.

In addition, certain states treat foreclosures differently so that some borrowers are protected against paying the tax.

 

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Fixing your credit after an Orlando short sale

Posted on by Jenny Zamora

Getting your credit score back on track after your short sale is complete

 

The local economy is recovering “slowly but surely”, the housing market is getting stronger and the term  “Orlando short sale” has become a household name. Delinquent homeowners generally elect to pursue a short sale as opposed to going through foreclosure or bankruptcy.
Short sales have become so common in fact that it’s hard to find someone that hasn’t heard of a short sale as opposed to just a few short years ago when most people had no clue what a short sale was.

 

A short sale is when a mortgage holder tries to sell their property for less than what is owed. The delinquent homeowner must first get permission from their lender in order to pursue the short sale. Homeowners will typically seek out a short sale when they can no longer afford to pay the mortgage or the house owes much more than what the property is worth. Banks have come to the realization that they actually lose more money by taking a property to foreclosure as opposed to a short sale.

 

Many people will argue that a short sale will affect you far less than a foreclosure but the truth is that whether a seller does a short sale or foreclosure the points you lose are about the same. Fair Issac says the average points lost on a FICO score are as follows:

30 days late: 40 to 110 points
90 days late: 70 to 135 points
Foreclosure, short sale or deed-in-lieu: 85 to 160
Bankruptcy: 130 to 240

 

People who Opt for an Orlando short sale will have a much better chance of qualifying for a mortgage in the future.

It depends a lot on how the lender records or reports the sale once the transaction is complete. A short sale is usually recorded by the lender as a settlement as opposed to a paid debt. When the lender reports the sale as “settled”, it appears on a credit report as the lender accepting less than what  was owed. This will always have a negative affect on credit scores. However, if you’re able to get the lender to record the sale as “paid”, then your credit score will not suffer any further. The chances of this happening are slim to none and it takes some really good negotiating skills by your Orlando realtor with the short sale lender in order to accomplish this improbable task.

 

 

According to some mortgage brokers that I work with, it’s much easier to get someone a loan that has a short sale on their credit as opposed to having a foreclosure on their credit, even after several years have passed. The best thing to do once your short sale has gone to closing, is to contact several of these Credit repair companies and find out what they are offering. My suggestion, as always would be to  Google “credit repair companies” and contact all the companies that appear on page 1. Credit repair has become very competitive and most companies will work with you on an affordable payment plan.

 

 

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Orlando Real Estate: Investors hurting first-time homebuyers

Posted on by Jenny Zamora

Savvy Orlando real estate investors are beating first time home buyers to the punch

1st time home buyers looking for their ” dream home” are no competition for the seasoned Orlando real estate investor. People looking for their 1st house to move into with their families are finding themselves being squeezed out of the Orlando real estate market by investors looking to capitalize on the current market conditions. With a growing number of people being foreclosed on each week , Orlando short sales are everywhere and investors know that the rental market will keep getting stronger as homeowners that have been foreclosed on scramble to get into rental properties in addition to people moving into the Orlando area from another state or country.

1st time Orlando home buyers grow increasingly frustrated

I feel bad for my clients who are just looking to buy their first home so that they can get their family moved in and settled. These people have no intention of flipping the house for a quick profit, pulling an equity line on it or renting it out for additional cash flow. They just want to move in, raise a family and do their best to “live happily ever after”. The problem with first time home buyers is that they have to qualify for financing which can take a while sometimes and there’s never a guarantee that they will get approved.

Today’s average seller is very educated on how different types of buyers and terms could affect them. It’s not just about taking the highest offer that you receive.

3 Tips for Sellers when looking at offers

1- Is the buyer pre-approved? I personally won’t even show one of my listings unless I have proof that the potential buyer has already done their due diligence as far as going to a mortgage broker or lender and getting pre-qualified for a loan. The buyer will also know what an affordable purchase price will be for them.

2- Will the house appraise for the amount of the asking price? A seller could have a contract on the property with a pre-approved buyer willing to pay full asking price and the deal can still fall apart. These days lenders will almost always insist on an appraisal being done on the property with an appraiser of their choice, [not the buyer or seller’s choice]. Once the appraisal is ordered by the lender, the lender will work off of the appraisal value and sometimes the property just doesn’t appraise for the amount of the contract price.

Things that can happen if the house doesn’t appraise for asking price.

a- The seller comes down on the asking price in order to make the deal happen. This is what usually takes place because the seller realizes        that he will probably run into the same problem again and will ultimately have to lower the price in order to get the house sold.

b- The buyer will have to come out of pocket to make up the difference. This rarely happens unless the buyer is absolutely in love with the home and the seller is unwilling to lower the price.

c- The deal just falls apart.

3- Are your buyers Cash buyers? Cash buyers are almost always investors looking for their next investment property.

Things to consider when you have an “all cash offer”


a- A cash buyer will not pay you full retail price for your house. Whether they are buying with the intent of flipping or renting it out, they are going to want a deal that makes sense to them, [dollars and cents]

b- Cash buyers can close quickly. One of the benefits of working with cash buyer is that there are no lenders involved. Experienced investors will already know what the numbers are even if there are repairs involved. They will rarely get an appraisal done which means that there are not many things that can get in the way of this deal getting done, usually within 3 days or so.

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Orlando Real Estate remains strong, despite a dip in prices at the end of summer

Posted on by Jenny Zamora

 

Summer’s gone and Orlando Real estate takes a drop

Prices of Orlando real estate dropped slightly last month for the first in a year. Don’t panic Orlando homeowners, this happens every year at this time. The reason for the drop is mostly due to the end of the peak of the summer buying season. Two facts remain true, Orlando real estate inventory is low and demand for great Orlando properties remains high. As long as these factors remain a part of the Orlando real estate market, sellers will be able to get top dollar for their Orlando Home.

Other factors indicating a strong Orlando Real Estate market

Orlando homes are selling faster and for more than they did a year ago. Studies show that Orlando homes are spending less than 80 days on the market before coming under contract and selling for almost  97% of the listing price. A year ago, Orlando Realty was selling for less than 95% of the listing price, and these properties were listed on the MLS for over 100 days.

Great mortgage interest rates are still being offered by lenders. The average interest rate currently being offered for Orlando home buyers is at 3.78 percent as opposed to a year ago when homebuyers paid an average interest rate of 4.26 percent. This is a huge incentive right now for potential Orlando home buyers and anyone interested in buying real estate in Orlando should definitely take advantage of these historically low-interest rates.

There are more regular listings in the Orlando real estate market than has been in years. Although Orlando’s short sales and REO’s still rule Orlando’s real estate inventory right now, there is another quieter group that is not desperate to sell their Orlando properties.  Believe it or not, everyone one in three homeowners owns their house “free and clear”. This group as well as homeowners with very small mortgages on their home are able to ask for top dollar on their Orlando home and they don’t care if it sells or not. Their way of thinking is “I will sell for the right price and if not then I’m not selling”. I’ve had several clients like this over the years, and homeowners like these actually help to maintain property values up in their neighborhoods because their listing prices remain high and they really don’t care how long it takes to sell.

Right now is  a great tome to sell your Orlando Home

Considering all the factors in play right now with Orlando Real Estate, it’s a great time to sell your home. Whether you need an Orlando short Sale done or you’re o of the few and fortunate people that own your property Free and Clear. If you’re interested in seeing how much your Orlando property will sell… click on “How much is my Orlando property worth?” or you can come and see me for a free consultation and I would be happy to sit and talk with you.

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