• Borrowers (Homeowners). Borrowers/homeowners qualify under the FAP if they meet minimum eligibility requirements for the Home Affordable Modification program but don't qualify for a modification or do not successfully complete the three month trial period. Before proceeding with a foreclosure, servicers must determine if a short sale is appropriate.
• Incentives. Incentives include: (1) $1,000 for servicers for successful completion of a short sale or deed-in-lieu of foreclosure; (2) $1,500 for borrowers/homeowners to help with relocation expenses; and (3) up to $1,000 toward the cost of paying junior lien holders to release their liens (one dollar from the government for every $2 paid by the investors to the second lien holders).
• Standardized Documents. The program will include streamlined and standardized documents, including a Short Sale Agreement and an Offer Acceptance Letter. The goal is to minimize complexity and increase use of the short sale option.
• Property Valuation by Appraisal or BPO. Servicers will independently establish both property value and minimum acceptable net return, in accordance with investor requirements. The price may be determined based on an appraisal or one or more broker price opinions (BPOs), issued no more than 120 days before the date of the short sale agreement.
• Timeline. In the Short Sale Agreement, servicers must give borrowers/homeowners at least 90 days to market and sell the property, or up to one year, depending on market conditions. Property must be listed with a licensed real estate professional with experience in the neighborhood. No foreclosure may take place during the marketing period (at least 90 days) specified in the Short Sale Agreement.
• Commissions. The Short Sale Agreement must specify the reasonable and customary real estate commissions and costs that may be deducted from the sales price. The servicer must agree not to negotiate a lower commission after an offer has been received.
• No Borrower Fees. Servicers may not charge fees to borrowers/homeowners for participation in the FAP.
• Program Expiration. The program is in effect through 2012.
• Deed-in-Lieu of Foreclosure Option. Servicers have the option to require the borrower/homeowner to agree to deed the property to the servicer in exchange for a release from the debt if the property does not sell within the time allowed in the Short Sale Agreement (plus any extensions).

Homebuyer Tax Credit Up To $8,000.00

It is presently a great time for homebuyers to purchase a home.  In addition to the low prices and low interest rates, the federal government is offering a tax credit up to $8,000 for first-time homebuyers.  On February 17, 2009, President Barack Obama signed into law a $787 billion economic stimulus package called the American Recovery and Reinvestment Act of 2009.  The major housing stimulus provision of the Recovery Act is the first-time homebuyer tax credit.

A first-time homebuyer may receive a refundable tax credit up to $8,000 for purchasing a principal residence in the U.S. from January1, 2009 to November 30, 2009.  No repayment is required if the buyer owns and occupies the property for 36 months.  This tax credit provides an incentive for first-time homebuyers to purchase homes.  Once the word is out, I think the new homebuyers will jump on board and hopefully it will spur our economy.  I hope this will start to happen by early summer.

A tax credit is a dollar for dollar reduction of tax owed.  This is much better than a tax deduction which is merely a reduction of taxable income.  For the purposes of the $8,000 tax credit, a first-time homebuyer is defined as any individual with no present ownership interest  in a principal residence during the 3 year period ending on the date of the purchase of the principal residence to which the tax credit applies.

The maximum tax credit for an individual first-time homebuyer is 10 percent of the purchase price, not to exceed $8,000.  For married individuals filing separate tax returns, the tax credit is capped at $4,000.  The tax credit may be reduced by the taxpayer's income.  The tax credit starts to phase out for an individual taxpayer with a modified adjusted gross income from $75,001 to $95,000 (or $150,001 to $170,000 for joint filers).  The tax credit is eliminated entirely if an individual's modified adjusted gross income is over $95,000 (or $170,000 for joint filers).

It is important that you talk with you tax consultant regarding this matter concerning your own personal situation prior to entering into an agreement to purchase a home.

Harold Avent, CRS, CRB, GRI, e-PRO

RE/MAX Execs

www.HaroldAvent.com

Harold@HaroldAvent.com

What Are Short Sales?

Many of you may have heard of the term "Short Sale". However, you may not have a clear understanding of what it is. A short sale is a sale of real property where the proceeds of the sale fall short of the balance owed on the loan that secures the real property that is being sold. For a short sale, the lender agrees to discount the loan balance due to a financial or economic hardship of the homeowner. In many cases, the homeowner will authorize a Realtor to handle the negotiations for them with the lender. The negotiation is done through discussions with the lender. Most lenders have a special department to handle these negotiations and it is usually called the loss mitigation department. A buyer is obtained for the real property and the sale must be approved by the lender of record if it is for an amount that is less than the balance owed on the loan. Circumstances usually determine whether lenders will discount a loan balance. These circumstances are usually related to the borrower's financial situation and the current real estate market.

A short sale is usually obtained to keep a home from going into foreclosure. However, the lender's decision to proceed with the short sale is based upon whether the lender believes that this procedure is more cost effective than allowing the home to go through foreclosure. With foreclosure, there are holding costs, possible vandalism and extra time to market and close the sale. Moreover, with short sales, the homeowner usually remains in the home until closing and the time period from beginning to end may be shorter.

Harold Avent, CRS, CRB, GRI, e-PRO

REMAX Execs

310-493-0711

Harold@HaroldAvent.com

www.HaroldAvent.com

Torrance, Ca. 90505