Category Archive: News

During the Fiscal Cliff negotiations, the Mortgage Forgiveness Debt Relief Act was extended through December 31, 2013. This is great news for homeowners who are considering a short sale on their principal residences. Generally, if a bank lends you money to purchase your home, and the bank later cancels or forgives the debt balance, you may have to include the cancelled balance as income for tax purposes. The Mortgage Forgiveness Debt Relief Act allows a homeowner to exclude this amount, which saves a homeowner thousands of dollars in tax liability.

For example, if a homeowner owes $200,000 on a home, and the homeowner and the bank agree to a short sale on the property for $75,000, there is a $125,000 principal balance left over. Without the Mortgage Debt Relief Act, the homeowner would have to pay federal taxes on the $125,000 balance, because the government would consider the $125,000 “earned income.” Because the Act is in place for 2013, the tax debt owed by the Homeowner will be waived, if the closing takes place in 2013. If you are considering a short sale of your principal residence, it will be beneficial to have it resolved this year so that you can take advantage of this Act before it expires.

Feel Free to Contact Us for more information about the extension and what it means to you.

Bank of America is excited to offer enhanced relocation assistance. Qualified homeowners who initiate a Pre-approved Price Short Sale could be eligible to receive $5,000 – $30,000 in relocation assistance and owe no more on their mortgage with the sale of their property, depending on the investor involved.

Once you initiate the short sale, BOA will evaluate the homeowner to determine if they qualify for the enhanced relocation assistance.

The homeowner must participate in one of the Preapproved Price Short Sale Programs, such as:
•HAFA (Home Affordable Foreclosure Alternatives)
•Bank of America’s Cooperative Short Sale Program

Specific investor participation and eligibility criteria do apply to these programs.
Homeowners not meeting eligibility requirements for the enhanced relocation incentive may still qualify to receive $2,500 – $3,000 in relocation assistance from government- and bank-sponsored programs.

Frequently Asked Questions:

Q: How can I find out if my client qualifies for this limited time offer?
A: Contact us

Q: Do I have to do anything special when initiating or completing the short sale?
A: No. But act quickly by initiating the short sale. This is a limited-time offer that your clients won’t want to miss out on.

Q: If a short sale is initiated with an offer, will it qualify for this enhanced relocation assistance?
A: No. Short sales initiated at the time an offer is received do not qualify for the enhanced relocation assistance funds.

Q: Is the enhanced relocation assistance eligible to non-owner-occupied properties?
A: Yes, it is available to non-owner-occupied properties.

Q: Will the relocation assistance funds be reported on the HUD-1?
A: Yes, funds received at closing will be documented on the HUD-1, and a 1099-MISC will be issued.

Q: Can the relocation assistance funds be used to pay off existing liens?
A: Yes, the homeowner may use funds to pay off existing liens or to help with relocation expenses.

Q: Is the enhanced relocation assistance added to any other incentives, such as the HAFA or Bank of America Cooperative Short Sale Program incentives?
A: The homeowner incentive will be inclusive of the $3,000 HAFA incentive. For example, if the homeowner is eligible for $5,000, then $3,000 will be from the HAFA funds and the remaining $2,000 will be from Bank of America homeowner incentive funds.

The Federal Housing Finance Agency laid out new rules aimed at speeding up the short sale process, a move that could keep many homes from falling into foreclosure.

In a short sale, the bank that holds the mortgage must agree to accept a price for the home that is less than what is owed. Even though short sales are considered a better alternative to foreclosure, banks often take so long to review and approve short sales that the deal falls apart and homes get repossessed.

“Delays in approving short sale requests remain a significant challenge for realtors and consumers and often results in canceled contracts and the property going into foreclosure,” said Moe Veissi, president of the National Association of Realtors.

In California, which accounts for a disproportionate number of the nation’s short sales, 60% of short sale offers failed to result in a closed sale last year, according to a California Association of Realtors member surveyFlood of foreclosures coming.

The organization attributed much of the closing problems to extended lender response times. Some agents said that lenders even foreclosed on the homes before a short sale could close.

To help avoid the trend from continuing, the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, laid out rules that will require lenders to review and respond to short sale requests within 30 days and make a final decision within 60 days. The lender is also required to provide weekly status updates to the borrower if the offer is still under review after 30 days.

The new guidelines, which go into effect on June 1, can prove to be beneficial for all of the parties involved.

For lenders, it could mean saving a distressed property from falling into foreclosure, saving them tens of thousands of dollars in lost property value and costs.