Another Year to Short Sale your Home

YouWalkAway.com, a foreclosure agency, conducted a survey of its clients and revealed 78 percent of those who responded said they were walking away from their primary residence. In addition, at least 74 percent of all respondents would be eligible for tax relief through the Mortgage Debt Relief Act of 2007.

The Mortgage Debt Relief Act allows forgiven debt through a short sale, loan modification, or foreclosure to be excluded as taxable income.
The act faced expiration December 31, 2012, but Congress extended the act for another year on January 2.

“This extension hasn’t been well publicized but it is important to homeowners and realtors nationwide. Had this law not been extended, it could have brought a drastic halt to short sales and had a devastating effect on underwater homeowners,” said Chad Ruyle, YouWalkAway.com co-founder.
In a report, the foreclosure agency explained the one-year extension is not likely to encourage a new wave of mortgage defaults in early 2013.
While it could be argued that extending the act could encourage underwater homeowners to strategically default, YouWalkAway.com does not expect to see new defaults. Strategic default occurs when borrowers decide to stop making payments on a mortgage they could afford. Oftentimes, strategic defaulters are underwater.
Instead, YouWalkAway.com expects the one-year extension to provide tax forgiveness for just the homeowners currently in the foreclosure process since new defaulters would have just a year to receive tax forgiveness, which is not enough in certain states with lengthy foreclosure timelines that exceed a one-year period.
On average, 85 percent of YouWalkAway.com clients have not made a monthly mortgage payment in 14 months. Thus, the agency concludes, a 12-month extension is not encourage new strategic defaulters.
Instead, the 12-month extension will motivate homeowners to seek options outside of the lengthy foreclosure process and seek alternatives such as a short sale, deed-in-lieu, or a modification, the agency explained.

Search current properties in Pismo Beach.

http://www.dsnews.com/articles/mortgage-debt-relief-acts-extension-to-lead-more-short-sales-report-2013-01-08

Reprieve for those Wronged in Foreclosure Process

Ten Banks Reach $8.5B Deal with Regulators in Foreclosure Settlement

01/07/2013 By: Esther Cho

Ten major mortgage servicers reached an agreement with federal regulators to pay more than $8.5 billion over alleged foreclosure abuses, the Federal Reserve announced in a release Monday.

Of the $8.5 billion, $3.3 billion will go toward direct payments to eligible borrowers, and $5.2 billion will be used to assist borrowers in other ways, such as through loan modifications.
The servicers involved in the agreement include Aurora, Bank of America, Citibank, JPMorgan Chase, MetLife Bank, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo.
In April 2011, the Office of the Comptroller of the Currency, the Fed, and the Office of Thrift Supervision (OTS) first announced enforcement actions after investigations led to allegations of abusive foreclosure practices.
As part of the consent orders, the servicers were required to hire third-party consultants to conduct a free Independent Foreclosure Review for borrowers who believed they incurred financial harm due to faulty foreclosure practices. The reviews were for foreclosure actions that occurred in 2009 and 2010.
The agreement with the 10 servicers replaces the Independent Foreclosure Review process with a new framework allowing eligible borrowers to receive compensation more quickly.

Under the settlement, eligible borrowers will receive compensation even if they did not request a foreclosure review. Eligible borrowers should receive anywhere from hundreds of dollars to $125,000, depending on the individual’s situation.
According to the release, the OCC and the Fed “accepted this agreement because it provides the greatest benefit to consumers subject to unsafe and unsound mortgage servicing and foreclosure practices during the relevant period in a more timely manner than would have occurred under the review process.”
“We have learned a great deal from the reviews that have been conducted to date. However, it has become clear that carrying the process through to its conclusion would divert money away from the impacted homeowners and also needlessly delay the dispensation of compensation to affected borrowers. Our new course of action will get more money to more people more quickly, and it will speed recovery in the nation’s housing markets,” said Comptroller of the Currency Thomas J. Curry in a statement.
The enforcement actions in 2011 included 14 servicers. Since all 14 servicers were not part of this agreement, the Fed announced it is working toward a similar agreement with the other servicers who were subject to the enforcement actions.
In response to the settlement, several banks issued statements, including Citi, which said, “We are pleased to have the matter resolved and believe this agreement is a positive development that will provide benefits for homeowners.”
In U.S. Bancorp’s response, the bank said it “has long been committed to sound modification and foreclosure practices. We have always regarded foreclosure as a last resort, and have helped thousands of borrowers over the past several years to stay in their homes through a variety of modification programs.”
Mike Heid, president of Wells Fargo Home Mortgage, stated, “This agreement allows us to move forward and continue our focus on doing all we can do to provide relief to our customers and restore stability to housing markets across the country.”

http://www.dsnews.com/articles/ten-banks-reach-85m-deal-with-regulators-in-foreclosure-settlement-2013-01-07

"Fiscal Cliff" Cliff Notes for Real Estate

Real Estate Provisions in “Fiscal Cliff” Bill

On Jan. 1 both the Senate and House passed H.R. 8 legislation to avert the “fiscal cliff.” The bill was signed into law by President Barack Obama on Jan. 2.
Below is a summary of real estate related provisions in the bill:

Real Estate Tax Extenders

• Mortgage Cancellation Relief is extended for one year to Jan. 1, 2014
• Deduction for Mortgage Insurance Premiums for filers making below $110,000 is extended through 2013 and made retroactive to cover 2012
• 15-year straight-line cost recovery for qualified leasehold improvements on commercial properties is extended through 2013 and made retroactive to cover 2012
• 10 percent tax credit (up to $500) for homeowners for energy improvements to existing homes is extended through 2013 and made retroactive to cover 2012

Permanent Repeal of Pease Limitations for 99% of Taxpayers

Under the agreement so called “Pease Limitations” that reduce the value of itemized deductions are permanently repealed for most taxpayers but will be reinstituted for high income filers.  These limitations will only apply to individuals earning more than $250,000 and joint filers earning above $300,000.  These thresholds have been increased and are indexed for inflation and will rise over time.  Under the formula, the amount of adjusted gross income above the threshold is multiplied by three percent.  That amount is then used to reduce the total value of the filer’s itemized deductions.  The total amount of reduction cannot exceed 80 percent of the filer’s itemized deductions.
These limits were first enacted in 1990 (named for the Ohio Congressman Don Pease who came up with the idea) and continued throughout the Clinton years.  They were gradually phased out as a result of the 2001 tax cuts and were completely eliminated in 2010-2012.  Had we gone over the fiscal cliff, Pease limitations would have been reinstituted on all filers starting at $174,450 of adjusted gross income.

Capital Gains

Capital Gains rate stays at 15 percent for those in the top rate of $400,000 (individual) and $450,000 (joint) return.  After that, any gains above those amounts will be taxed at 20 percent.  The $250,000/$500,000 exclusion for sale of principal residence remains in place.

Estate Tax

The first $5 million dollars in individual estates and $10 million for family estates are now exempted from the estate tax.  After that the rate will be 40 percent, up from 35 percent.  The exemption amounts are indexed for inflation.

http://www.realtor.org/articles/real-estate-provisions-in-fiscal-cliff-bill?om_rid=AAKj0R&om_mid=_BQ5jQiB8v$B8GF&om_ntype=NARWeekly

If you've been looking to invest, now is the time before the inventory continues to decrease!

The residential shadow inventory of distressed homes continues to shrink according CoreLogic's monthly report for October.   The improvement is across all metrics; number of units, months supply, dollar volume and transition rates.
The inventory as of October was 2.29 million units or a 7.2 month supply at the current absorption rate.  The number of units in the inventory represented a 12.3 percent decrease from October 2011 when the inventory consisted of 2.62 million units, an 8.6 month supply.  The volume of the inventory in October was $376 billion, down from $3.99 billion a year earlier.  In September the inventory stood at 2.31 million units or a 7.7 month supply.

The shadow inventory represents the number of properties that are seriously delinquent, in foreclosure, or in bank inventories (REO) but not listed on Multiple Listing Services. CoreLogic uses the rates of transition of properties from delinquency to foreclosure and foreclosure to REO to identify the currently distressed unlisted properties most likely to become REO properties. Properties that are not yet delinquent but may become delinquent in the future are not included in the estimate of the current shadow inventory.
Of the 2.3 million properties currently in the shadow inventory 1.04 million units are seriously delinquent (3.3 months' supply), 903,000 are in some stage of foreclosure (2.8 months' supply) and 354,000 are already in REO (1.1 months' supply).

Roll rates from current to 90 days delinquent have decreased from 0.50 percent in October 2011 to 0.46 percent in October 2012.  Rates from 90+ days to foreclosure are down from 6.74 percent to 6.17 percent but rates for transitions from foreclosure to current increased slightly from 0.81 percent to 0.83 percent.

"The size of the shadow inventory continues to shrink from peak levels in terms of numbers of units and the dollars they represent," said Anand Nallathambi, president and CEO of CoreLogic. "We expect a gradual and progressive contraction in the shadow inventory in 2013 as investors continue to snap up foreclosed and REO properties and the broader recovery in housing market fundamentals takes hold."
"Almost half of the properties in the shadow are delinquent and not yet foreclosed," said Mark Fleming, chief economist for CoreLogic. "Given the long foreclosure timelines in many states, the current shadow inventory stock represents little immediate threat to a significant swing in housing market supply. Investor demand will help to absorb the already foreclosed and REO properties in the shadow inventory in 2013."
Forty-five percent of the inventory in held in five states, Florida, California, Illinois, New York and New Jersey down from 51.3 percent one year earlier.  Over the three months ending in October 2012, serious delinquencies, which are the main driver of the shadow inventory, declined the most in Arizona (13.3 percent), California (9.7 percent), Michigan (6.8 percent), Colorado (6.8 percent) and Wyoming (5.9 percent).

http://www.mortgagenewsdaily.com/01022013_foreclosures_shadow_inventory.asp

Mortgage Relief Act Gets Extended for One More Year!!

                                                                                 

You can all exhale! Congress just passed a bill, The American Taxpayer Relief Act of 2012 (Sec. 202) which extends the Mortgage Forgiveness Debt Relief Act through December 31, 2013. This legislation extends dozens of other tax cuts that have expired or are set to expire at the end of the year, including one that extends homeowners’ ability to deduct the cost of mortgage insurance on a qualified personal residence.

Under the federal tax code, all types of forgiven debt are treated as income, subject to regular taxes.  Because of the Mortgage Forgiveness Debt Relief Act, homeowners who get their mortgage debt forgiven through either a short sale or loan modification won’t be taxed on the amount forgiven up to $2 million. This law was set to expire December 31, 2012. If it hadn’t been extended, any forgiven amount of debt would be considered taxable income, which would be devastating for homeowners who are already experiencing financial hardship.

There was an awful lot of concern among borrowers either in or considering a short sale that the tax ramifications of a short sale would change with the expiration of the 2007 law. The extension saw to it that anyone who has purchase mortgage debt forgiven in, for example, a short sale would not have the forgiven debt treated as taxable income. 

There is always small print as to what qualifies, so all are encouraged to consult with their CPA, attorney or financial professional for specific advice, but the current law will continue unchanged, and that is good news. 

Are Stainless Steel Appliances a Thing of the Past?

The kitchen in a Phoenix home for sale.

Not so long ago, a repairman could tell the age of an appliance by the color of its finish. If it was avocado or harvest gold, it had to be from the 1970s or early ’80s. Poppy red meant the appliance was made in the 1970s, and harvest wheat, coffee or almond meant your oven or fridge was new in the early 1980s.

Stainless appliances first burst onto the scene in the late 1980s, and they’ve had a remarkable run. But there are those in the industry who sense “stainless fatigue” among homeowners.
It should come as no surprise, then, that major manufacturers have their own ideas about the next hot appliance finishes:

Slate could be great  

In September, GE introduced a new finish called “Slate” across its line of appliances.
The company’s news release about the launch details how its industrial designers spent countless hours conducting consumer research and reviewing design trends in the kitchen, home furnishings, home entertainment products, and automotive interiors and exteriors.
The result was Slate, a warm, gray metallic with a low-gloss finish that is a natural complement to the wide spectrum of wall colors, countertop materials and floor/cabinetry finishes found in today’s homes.
“As people transition their kitchen appliances over time, it was important to us to find a finish from a palette that is timeless and harmonious, yet distinctive,” said Lou Lenzi, whose team of designers created the new finish. “Slate is a universal, neutral finish that will suit consumers who want a premium finish that can complement or even replace stainless steel.”

Ice may be nice

Whirlpool Corp. introduced its “Ice Collection” of appliances in July, including a glossy white finish for dishwashers, microwave ovens, ranges and refrigerators.
“White is the new stainless,” the company’s news release said. The collection also includes a sleek Black Ice finish.
Patrick Schiavone, Whirlpool’s vice president of global consumer design, has said he “is over” stainless steel and set out to update the style and appearance of black and white appliances. The collection is defined by silver accents, elegant lines, sleek handles and streamlined controls.

Is black back?  

When high-end cooking appliances manufacturer Wolf introduced its newest model in early 2012, its news release boldly proclaimed: “Black is the New Stainless Steel.”
The company’s Black Glass model comes adorned with a black glass tubular handle and cobalt blue interior. In addition to the oven, Wolf is also offering black glass trim kits for its warming drawers and convection and standard microwaves.
“Our commitment to design has always been on par with Wolf’s dedication to innovation and quality,” Michele Bedard, vice president of marketing for Sub-Zero and Wolf, said in a news release. “Introducing a new finish elevates the line and opens a whole new realm of design possibilities for designers and consumers alike.”

Can color triumph?  

Viking Range Corp. offers 23 color alternatives to stainless steel in its high-end open-burner range; the company most recently expanded its palette of finishes to include Cinnamon, Dijon, Kettle Black and Wasabi.
All those choices, yet stainless steel reigns supreme.
“I’d say 80 percent of our sales are still stainless steel,” says Brent Bailey, design director at Viking Range. “I could add another 100 colors, and the percentage wouldn’t change much.”

http://homes.yahoo.com/news/stainless-dethroned-king-kitchen-221839187.html